Capacity Requirements for Delta Synthetic Fibres - Assignment Example

Operations Management (Wordcount: 1980) Question Discuss the likely capa requirements for Delta Synthetic Fibres over the next 6 years and provide a reasoned plan to meet this capacity requirement. The sales forecast of the DSF would help us to estimate the necessary capacity requirements, which would help to design an appropriate plan of action. The data given in the sales forecast shows a dwindling sales volume of Britlene from 24.7 million Kg per year to 10 million Kg per year over a period of seven years. During this period the demand of Britlon need to be built up to the value of 20 million Kg within the seven-year period. Thus the activates for augmenting the facilities for the production for Britlon might take two years for expanding the existing facilities and four years for setting of new plant. Considering the initials sales for Britlon to be carried out in the year 2009, the expanding facilities need to be initiated soon. As the forecasts have shown slightly decreasing level of sales volume during the periods for 2006 to 2009, the full capacity of operation of the existing facilities are not required. Hence, reasonable levels of capacity estimation need to be undertaken for supporting the expected business volumes to be generated. This capacity forecasting is necessary because of the following reasons (Beasley, n.d.). The purchase of raw materials and their procurement process is to be analyzed properly to estimate the stock required to be maintained at each of the production locations. Thus the control on the inventory, planning the production process and its schedule all depends on the capacity that is available. This could also help the sales and logistics to plan their operations to ensure the support systems to meet the target volumes set from each plant. This could also help to give the feed back of possibility of future expansion or necessity in the reduction of the production for the overall operational efficiency. Capacity forecasting would also help the human resources department and financial department to ensure the allocations of resources at specific time to ensure smooth flow of operations. Also this would help to review the operations and help the top management to take strategic decisions that are vital for viable performance of the company. Based on these factors the, overall capacity at DSF is estimated as 40 million Kg of production capacity, which includes 30 million Kg of Britlon and 10 million Kg of Britlene. The production capacity for Britlene is planned to lower from the 5 fully working plants in 2006 to 3 fully working plants in 2009. With the information for the year 2006, the number of plants required would be five. But in 2008, at the existing rate of production, only four full capacity plants are needed. Thus the initial works of modification of facilities could be initiated during this time. One of the plants could stop the production and the necessary modification works could be started. This is expected to consume two years of time and by 2009 one fully operational plant for Britlon would be in place. Thus the expected sales of Britlon would be able to meet with this capacity. Thus in 2009, three plants for Britlene and one plant for Britlon would be in operation. Earlier to this, erection of two new facilities for the production of Britlon would be initiated at two different places attached to the existing sites. This project could be totally separate from the current production patterns. As it involved setting up of new facility, this might not hinder the operations at the above project locations too. This could be initiated in 2006 itself and hence by 2010, it would be possible for DSF to have three fully functional plants for production of Britlene and Britlon. Then the capacity available with DSF would be 15 million Kg of both Britlon and Britlene. Thus as per the forecast this capacity be enough to meet the expected volume of the sales. In 2009, one more Britlene plant could be modified to the have the capacity for the production of Britlon. Thus as this exercise would need 2 years for completion, the remaining two plants for Britlene would be able to handle the demand generated. By 2011, this augmentation work would be completed and with four fully operational plants for Britlon and two for Britlene, DSF would be in a very comfortable position to meet the business target. And thus with having attained the maximum capacity expected , DSF would have considerable amount of time to undertake any system rearrangement process to support the new production process. With this plan, DSF would be certainly be successful to meet the business target aimed to achieve in future. This should be supported by a very efficient supply chain network to carryout its operations. Question 2 In which locations would you make these capacity changes Explain your reasoning. Based on the statistics available it is estimated that the total production capacity required for DSF is nearly 40 million Kg of which 30 million Kg would for Britlon and the remaining for Britlene. The conversion time for the Britlene plant to Britlon plan is mentioned as 2 years while setting of a new Britlon plant is said to take 4 years due to the time needed for locating a suitable site, seeking permission and installation of production facilities and commissioning the plant. And from the sales forecasts made available the average values of business that is expected is nearly 20 million Kg, which at the present production rate needs 4 fully functional plants. Thus even the existing capacity would not be fully used which is near to 25 million Kg. Thus one of the plants could be shut down for the modifying the equipments to produce Britlon. This could be done at Bradford. And the workforce at Bradford could be distributed to Teesside, where strong competition for the workforce is being experienced. And the after two years Bradford would be in operation for producing Britlon and then the modification would then be focused on the Dumfries site. Thus the simultaneous production of both Britlon and Britlene could be initiated initially from Bradford and later from Dumfries. The site at Teesside would not be subjected to change in production methods suddenly. As two units are needed to ensure the supply of Britlene in future also, the two of the Teesside plants shall be utilized for this purpose. Once the production at Dumfries and Bradford turns to full capacity to produce Britlon, based on the operational convenience extensions to the existing plants could be appropriately decided. The third plant at Teesside shall be finally modified based on the business performance, production process and logistical easiness. Also, the Teesside site is proposed to have the least disturbance due to the reasons the competition for skilled manpower by other companies in that region. Thus any apprehension in the minds of the workers during this transition phase could result in their loss, as they tend to move towards more potential opportunities emerging in that area. This has been proposed as per the views expressed by the Chief Executive officer of DSF. The initial modification being made at two locations, which have very, low probability to cause any hindrance to the change process in the production. Also finally no closure of facilities have been recommended and the proposal have incorporated all necessary checks and balances that would avoid significant amount of wastage of resources. This plan would also help DSF to plan its supply chain more effectively. The production of Britlene have been limited to the Teesside which would help the company to plane its resources at production and also in the management of logistics after the production process. Question 3 What criteria have you used to make the recommendations The criteria that was followed to make the recommendations for the production process are the following: (i) Least disturbance to the prevailing business process: If the shift in the production process is at the expense of the business currently being handled by the company, it would have no advantage in terms of the long-term growth plans of the company. Thus the most important aspect considered in the whole process is to have a change over without causing any impact in the business volumes. Thus the primary step was to modify the Bradford plant and such a move would not cause any damaging effect on the overall business volume of the company. Once this plant was modified, slowly the Britlon was introduced and then the Dumfries was made to follow the similar change process. Teesside on the other hand, had competition from the other business operators for the skilled employees so strengthening the operations there for more production and hence, ensuring high volumes of trained workforce is necessary to avert any production risk. (ii) Better logistics after expansion: As the company would have to handle two different products both having different volumes of business, the supply chain plans need to be carefully made for efficient and profitable operations. Keeping Teesside plants exclusively for Britlene would help to monitor its production and also is the distribution of the products. (iii) Ensuring the reduced labor turnover. Though higher unemployment rates at all the locations would not prevent DSF from hiring skilled workers. But any loss of an existing worker would be a big blow considering the time and resource that have gone into the training process of each worker. Thus, it has been ensured that the minimum loss to the existing workforce would be caused in the process of expansion in the production facilities. This is the reason by Teesside was not considered in the expansion plans initially and also retaining the Britlene production to meet the future demand of the material. Question 4 What do you see as the main dangers facing DSF as it changes its capacity over the next five or six years. Over the next five to six years DSF plans its sales activity to be focused mostly on Britlon and only a small percentage of Britlene would be made available to support the earlier customers. In this environment significant changes also would have to be made to the production pattern of these both the materials. With reported production rate of 5 million Kg per year from each plant, they would require atleast 8 plants to satisfy the anticipated a production of nearly 40 million Kg of the materials collectively. Of this 10 million Kg would be Britlene, which cannot be assumed to have a constant demand. Thus the one of the most difficult issues that the DSF would have to face would be on the decisions they need to take on the quantum of production of Britlene as Britlon would have new emerging buyers and also, it is the market that the company would be interested to expand further. Setting of proper market information systems in this connection would be very vital for the production managers to prepare a viable production plan. Further, the logistics in the supply of these materials is another major issue. The Britlene demand would be variable and hence innovative systems using information systems would need to be in place in order to avoid waste of resources and unnecessary expenditure. In addition, managing the necessary manpower need to support its production would be another concern that DSF would have to address during this period. The issue of retaining the skilled workforce competent to address the production of both Britlene and Britlon would have to be handled judiciously to avoid the excess overhead expenditure DSF might have during this period. Hence proper implementation of management information systems and creation of knowledge based work force to support its operation would be the essential components that would ensure successful operations of DSF during the period of transition. Works Cited Beasley, J E (n.d.), Forecasting [Online] Available [13 December2008] (Beasley, n.d.) Read More