ea cakes-case analysis

7/31/2019 EA Cakes-Case Analysis

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Sagar Talele- 12Shalvi Gautam-13

Snehlata Jha-14Soumillya Chandra-15


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Index

Organization background

Current system description

Objective

Problem definition and way ahead Implementation of Business process

Conclusion and Learning


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Organization Background

EA Cakes Ltd., New Zealand, is a successful foodmanufacturing company

Major share of the market in New Zealand and

the Asia-Pacific region.

It produces over 400 different kinds of fresh and

frozen food products


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Production Planning System


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Faults in the Present System

The lack of communication between the salesand marketing staff on the one hand, and

operations on the other hand.

The time interval for budgeting was too long.

The supply of raw and packaging materials

required a longer time horizon.


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Ineffectiveness of System

Losses in production

Excessive use of overtime

High labour cost variances

Low machine capacity utilisation Decline in sales


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Complete redesign of its production planning system,which was an integral part of an ERP system that usedSAP software

Objective


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What managerial, organisational, and technological

issues are related to this case?

EA Cakes Ltd. had decided to change its production and salesstrategy for long and medium shelf-life products from MTO to MTS.

The MTS strategy costs more in inventory than MTO, but it has two

benefits:

Increased speed to market allows expanding the market share

by attracting new customers and by catching unexpected

opportunities, and

Capacity may be utilised more efficiently using the inventory

cushions instead of capacity cushions.

The decision to change the strategy from MTO to MTS involves not

only companys decision to invest much more money in

accumulation and keeping stocks of finished goods, it requires a

complete redesign of its production planning system.


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What is the overall problem(s) in this case?

IT specialists were sure that existing SAP software could provide

adequate computer support.

The authors of the new production planning system, had a rather

firm position that their planning processes were the most efficient

for EA Cakes Ltd.

The management of EA Cakes Ltd. was presented with thefollowing dilemma:

Believing the IT specialists and continuing to implement the

existing SAP modules on comparatively low cost, but facing all

the risks of losses due to planning inefficiency Believing the planning staff and ordering high cost computer

support in addition to existing SAP system


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How does the change of strategy affect the

information technology applications?

There are several major reasons for making significant changes inproduction planning and IT applications:

MTO is driven by customers orders, MTS is triggered byforecasts; a forecasting system had to be designed andimplemented.

There are no significant stocks of finished goods under MTO, so

there is no need for stock management; for MTS, an inventorymanagement system for finished goods had to be developed.

Under MTO, there are no significant information links between the

company planning and shop floor production planning. Under MTS,

it is vital that the planning system preserves continuity. Thatmeans the plans produced by each level are detailed plans of the

top level. Also, there must be feedback continuity: feedback of thetop levels is an aggregation of bottom level feedback.


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What are the possible alternatives, and their pros and cons, facingthe organisation in dealing with the problem(s) related to the case?

The management of EA Cakes had two alternatives:

To substitute the business processes of the company for

the business processes implemented in SAP, and

To create additional special software for providingcomputer support to production planning.

The production planning system described in the case

carries specific features of production planning of EA Cakes

Ltd. Standard software (and SAP by definition is standard

software), on the other hand, comprises programmes

developed for an anonymous market.


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What are some of the emerging technologies that shouldbe considered in solving the problem(s) related to thecase?

Business Process Implementation Collection of interrelated Tasks initiated in response to an eventthat achieves a specific result for the customer of the process

The concept is central to many areas of business systemsdesign; specifically to business systems based on modern

information technology Substitution for previous functional design

Business process involves several functional areas, andfunctions within those areas.

Business Process in EA Cakes ( Production Planning System) Long-term company level

Medium-term aggregate level

Short-term shop level


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AGGREGATE CAPACITY

PLANNING

Sales Budget development

Optimum production strategy or level strategy

Optimum mixed strategy


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Sales budgeting development

Sales budget is a management tool for control of

company performance by BOD.

Input comes in form of KIP by the board and

marketing department. 2 budgets 1.)current rollover budget 2.) full budget

two versions are than prepared.

Sales budget aggregate production plan.


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Level strategy planning

Planning starts from defining optimum productionstrategy that follows the demand pattern month

by month.


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Optimum mixed strategy

Optimum mixed strategy is converted to ACP.

It combines stock accumulation with overtime. It

plans some overtime at peak seasons and

decreased resource utilization at the beginning of

the year.

The planner uses :

Conversion table, using unit prices

Capacity tables which show the lines capacity(units/hours)

Labor contents tables(labour hours/ machine

hours)


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Master Production Scheduling

MPS gives the ability to ensure that available

capacity is allocated with a customer service focus.

MPS inputs :Aggregate capacity plan for the next two

months

Actual stock level

Short-term demand forecastMain Run-Scheduling performed at the

beginning of the planned week

Control RunWhen the feedback on actual

production as available


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Inventory Model

Opening stock +Production-Sales

Forecast=Closing Stock


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Functions of MPS

1

Produce feasible assignments forall product lines

2 Keep desirable stock levels

3 Implement a speed-to-market

principle


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Shop Floor Scheduling

Performs actual scheduling for the week(with

daily subdivision) as specified by production

lines.

Scheduling constraints have been worked out. Set-up time, planned downtime are known. Main Run-Scheduling performed at the

beginning to work out an optimal weekly

schedule. Control Run-When feedback on actual

production becomes available, the procedure is

run for the rest of the period


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What is the final solution that can be recommended to themanagement of the organisation described in the case?

The final solution is to use SAP.

After implementation

The master scheduler has to check the capacity and to change the

production volumes according to available capacity. Then he must agree

the changes with the Sales Department and the Production Department.

This process will get automated.

Presently at EA Cakes Ltd., scheduling is only done on finished items.After implementation to scheduling can be done components

production level as well.

A reliable method for checking inventory will be available

The manufacturing process requires an updated short-term forecast

each week. Sales managers must produce the forecast, and then it is

automatically processed within the Master Production Scheduling. Sales

figures for individual products have to be provided on a weekly basis for

the current month and the next month. Actual sales made each week

are captured and available for reporting on the following morning. Sales

staff compares actual sales with long-term forecasts . Currently,

forecasts are prepared manually and then put into the database. Itneeds computer support to relieve sales personnel and to eliminate data


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Thank

you

ea cakes-case analysis

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