talent drycleaners case

Talent Drycleaners 1

Nova Southeastern University H. Wayne Huizenga School

of Business & Entrepreneurship

Assignment for Course: OPS 5095Submitted to: Ronald MesiaSubmitted by: Marjorie Joseph

Date of Submission: September 2, 2012

Title of Assignment: Talent Dry Cleaner – Case Study

CERTIFICATION OF AUTHORSHIP: I certify that I am the author of this paper and that any assistance I received in its preparation is fully acknowledged and disclosed in the paper. I have also cited any sources from which I used data, ideas or words, either quoted directly or paraphrased. I also certify that this paper was prepared by me specifically for this course.

Student's Signature: ____ Marjorie Joseph______________

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Talent Drycleaners: Making Things Better, faster and Cheaper

Executive Summary

Patrick Eze the owner of Talent Drycleaners has many years of experience in the dry

cleaning business. Eze’s goal is to deliver quality service, efficient delivery time, high level of

responsiveness, and a variety of service with affordable prices. Eze also wants to expand his

business however he lacks funds and therefore through this paper I will focus on the flow

process and capacity utilization of Talent Drycleaners. Finally various operations management

theories like theory of constraints and Plan-Do-Check-Act (PDCA) cycle which is used to

improve process, efficiency, quality and cost.

Problem statement

Although Patrick Eze has many years of experience in the dry cleaning business,

however he does-not have operations management knowledge. There are constraints in the

process which have become bottle-necks for the entire operations. The time required to accept

orders is high and in case of multiple customer flow the waiting time is very high. The profit

margin is low and so expansion plans do not have adequate amount of capital to expand the

business.

Background

With over 25 years of experience Patrick Eze knows all about the cleaning business.

With a specialty in removing stains, he incorporated stain clinic in the title of his business. His

motto was “If there is any stain I cannot remove, it means there is no one in this country who

can” (Ojadi, 2012). Patrick wanted to deliver his services in a personalized way. Talent dry

cleaners started its operations in January of 2004 with six employees, including the owner.


Talent started in a small apartment which was partitioned into two sections. The smaller

section was used as a reception area to greet customers. The business relied heavily on referrals

for growing their client base. At the beginning, the company would distribute marketing items

such as caps and t-shirts throughout the community to spread the news about Talent Drycleaners

but the lack of funds enabled him to continue to market the business. Clients revealed to Patrick

that most of them were relocating to a newly developing local government area. At the same

time he noticed a flood of other dry-cleaning businesses starting to open up in Anthony village.

In Lagos state, the relative humidity ranged from 30 to 60 percent throughout the year. In

Nigeria, the dry-cleaning business competition was localized. Competitors ranged from local

laundryman and home or personal laundry with limited capability to handle specialized needs

such as beaded clothes (which required the removal of beads before cleaning). The key

competing variables included quality of service, delivery time, high level of responsiveness,

variety of service and price (Ojadi, 2012).

Analysis

Talent Dry cleaners are operating in a highly competitive market and the customers are

highly cost conscious. In such a scenario the business is viable under economies of scale

therefore, Talent Drycleaners need to expand. However, expansion plans require funds which are

difficult under the present scenario. To increase the profit margins Eze has to improve the

capacity utilization and productivity of his present operations. Also quality aspects and delivery

time would give him competitive edge in the market.

Process Constraints

The process constrains are identified below:


Spotting process has two separate operations for dry-cleaning and laundry. Maximum

processing time per item and the peak flow is getting controlled by this activity .It is the

theoretical bottle neck having throughput of 50 items per day.

Finishing process requires about 28-30 minutes in average so per resource the rate is

around 14-15 items per day; assuming that there is eight minutes of ironing time and one ironing

table so the maximum output would be 60 items in an eight hour operation. So it is the hidden

constraints and will arise once the spotting process constraints are elevated.

Process Flow Diagram

Maximum Optimized Throughput

The spotting activity is the primary constraint. The constrain should be elevated by

adding one resource for spotting or training the inspection staff for spotting activity also. The


next constrain will be at the finishing task. The finishing task requires additional ironing table

for increasing the 60 item per day capacity to 100- 110 items per day. So with the removal of

constrains at spotting and finishing tasks the process throughput would be around 95-100 items

per day.

The spotting activity is the primary constraint. The constrain should be elevated by

adding one resource for spotting or training the inspection staff for spotting activity also. The

next constrain will be at the finishing task. The finishing task requires additional ironing table

for increasing the 60 item per day capacity to 100- 110 items per day. So with the removal of

constrains at spotting and finishing tasks the process throughput would be around 95-100 items

per day.

Turn-Around Time

Turnaround time has been fixed at 3-4 days because of following reasons.

Drying process needs 6 hours. So delivery can happen only on the next day.

Because of large batch size of dry cleaning activity, it may get postponed to next day for

full load operation.

Ironing table is a problem and may not be available on peak load days.

Turn-around Time Improvements

The turn-around time can be reduced to 2 days with natural drying option, however less

than that would require dryers. To reduce the turn-around time the work in process inventory at

spotting and iron table needs to be reduced with additional resource and iron table. Drycleaners

having smaller batch size facility should be preferred for future units.

Profit margins


For 50 items per day the contribution margin per shirt is N 45. If we exclude the fixed

cost we get (45*50*24- 33000) = N 21000. Twenty four working days has been considered for

calculation. In similar way for additional 20 percent throughput i.e. at seventy items per day the

extra profit would be 45*20*24 = N 21600 and for 80 percent capacity utilization it would be

45*30*24= N 32400.

Throughput Profit

Margin

50 items per day N 21000



Recommendations

An organization’s service facility reflects its values and is instrumental in implementing

its strategy. Patrick’s facility whether big or small should communicate a message to his

customers and employees that it is modern, pleasant, safe and convenient. Servicescape creates a

package, similar to the packaging of a product that conveys an image suggesting relative quality

(Fitzsimmons, 2011). Lekki-Epe axis and its numerous emerging housing estates started to

develop and most of his clientele were relocating to that area. This will be a good way for

Patrick to open a location in that area with a new feel and look to attract a new target market.

The other aspect related to customer service would be the processing time of clothing collection

at reception. This process has a long wait time in case of multiple customers and therefore

multiple collection counters should be operated in peak hours and also the process time should


be reduce to less than ten minutes. Talent Drycleaners should focus on elevating the constraints

at spotting and final packing units. This would help improve the process time and throughput of

the process resulting in higher income and profit margins. Talent should use Deming’s Quality

Improvement wheel: Plan-Do-Check-Act (PDCA) cycle; to eliminate constraints and variability

in the system. The other aspect which would provide Talent the competitive edge is the quality

and the turn-around time. Talent Dry cleaners should adopt it as a continuous improvement

process as mentioned in Deming’s 14 point program.

What to prioritize

Eze should prioritize on higher capacity utilization because that would help him generate

more funds for expansion. If Eze does not prioritize expansion he could face capacity constraints

and may end up with higher operational cost over time and needing additional resources.


References

Fitzsimmons, James & Mona (2011). Service Management Operations, Strategy, Information

Technology. Process Improvement chapter 8 pg. 182. McGraw-Hill: New York

Google images. (2012). PCDA Cycle. Retrieved on August 14, 2012 from

www.google.com/images

Ojadi, Frank, (2012). Talent Drycleaners: Making Things Better, Faster, and Cheaper

Case study LBS. Pan American University

http://www.google.com/images

talent drycleaners case

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