Planning Staffing Requirements: Delta Synthetic Fibres - Case Study Example

Planning Staffing Requirements: Delta Synthetic Fibres To improve the quality of a product and introduce in the market is a dream come true for any business firm, especially with the quality improved as well and with the possibility to diversify. . All the five plants in different sites have to be manipulated and changed in such a way as to meet the forecast demand for both Britlene and Britlon (DELTA SYNTHETIC FIBRES). The main areas of decision that leads to efficient resource usage for new sites are capacity, process technology, supply network and Development and organization. A well planned strategy needs to be chalked out to keep the disruption to minimum. THE CAPACITY ISSUE We, at this point need to assume that the plants are at the maximum capacity and that the company has the capacity to store the products simultaneously if need be. By way of talking, we call it CRP, or capacity requirement planning (capacity requirements planning) This helps to plan in advance to meet the needs of inventory that may arise in future. The main methods of managing capacity are capacity lead strategy and capacity lag strategy (What is Capacity Requirements Planning).Managing capacity means Capacity planning and Capacity control (Capacity Management). The main issues of managing capacity will be, when to change capacity, how much capacity of the sites are to be changed and what type of a change is to be initiated. Whether new sites are to be constructed and/or if old ones are to be reconstructed. These five factors may be considered as the performance objectives in the capacity issue. If the company analyses these factors that lead to proper resource usage, it would lead to market competitiveness (Resource usage). Another factor that plays major part is to bring right materials at the right time to the right place, since the plants are to be built at different places(Advanced Capacity Planning). The forecast for the next few years is for more product than can be met by the five plants which have only a capacity of 25 million kgs per year. The forecast demand by 2012 for both britlon and britlene is 39 million kgs per year with a tendency to rise in future for britlon and just residual sales for britlene. So it is out of question that new sites are to be constructed and commissioned. But it has to be done in such a way as not to obstruct cash flow, without troubling the present market sales, without employment problems and as competing with the immediate neighbors in the field. As it is we should start by introducing a new site at Bradford and start building at the beginning of 2007. In 2007 the production of Britlene would be 3 million Kgs in excess over demand. Next year at the beginning, we start new sites at both Teesside and Dumfries. This would lead to an excess production of 5 mkgs and a total excess of 8 million Kgs of Britlene. This may seem a huge amount. But this is necessary to be done because during the capacity shift, the excess product demand in the market can be met only in this way. By 2009, The first Britlon plant of DSF would have started working. During this time, all three plants, one in each site may be shut down to be reconstructed as Britlon sites. But one of the plants may be shut down only after the production of 3 mkgs of Britlene. Say this is at Dumfries. Here, it may be noted that we need only two plants of Britlene to meet future residual demands. Both these plants should better be at Teesside, since raw material is available there. And at Bradford, the employees who will be out of employment may be retrained and absorbed at the new plant thereby saving the hassle if any. The product stored earlier at the sites could meet the forecast demand of britlene during this year. This year an excess of 2 million kilograms of Britlon and 3 million kgs of Britlene would be left at the sites. This is to be stored for future use. The forecast for 2010 is 13 mkgs of Britllene and 16 mkgs of Britlon. The two plants of Britlene at Teesside would meet this and the product left at the sites could also contribute to this demand. The Britlon quota will be met by the plants that would have started functioning by 2010, namely the ones at Teesside and Dumfries. The excess of the materials that would have to be stored would be just 1 mkg each. The next year, that is, 2011, it would be 11 mkgs of Britlene and 27 mkgs of Britlon that is the demand. The same would be met by the two plants at Teesside, for Britlene and rest of the Britlon plants at the other sites. By the year 2012, we can see that there is a prediction of a leveling off, of the two products. There would be only an excess of 1 Mkg of Britlon, which is very desirable, since the plants may at any given time produce lesser than the maximum production capacity. [Appendix 1] Changing Capacity in different locations The overall level of capacity of a site is fixed throughout as 5mkgs. This is taken as the practical capacity and not the ideal capacity (maximum capacity). This, if possible to change would make things simpler. If we could put the capacity of all three sites together, it could solve a lot of problems. When the capacity of the plant is low as 5 mkgs the difficulties are many. If all the new plants could be placed at one site, with a capacity of say, 20 mkgs, it could improve the cost of production a lot in favor of the company. But we are ready to treat this as a bottleneck and try weaving a path out of this (Bottleneck). While addressing the issue of change in capacity requirement, two things ought to be considered. One is the cost of raw material transportation. Since it is a huge factor in the determination of product cost, which is to be cost effective, the plants should be altered at other places than Teesside, since the raw materials are readily available at Teesside. The next problem, while making capacity change would be the shutdown causing unemployment problem. When you are building sites from nil you run a tough job of managing machinery and materials along with people and information to which u bear more responsibility. (Projects Management). As far as Teesside is concerned, It is better to leave it alone because the unemployment problem is severe in this area. As of now, workers or other union members do also not accept shifting work from one place to another and the State too would no longer be a party to it. So, if DSF is to shift locations there could be legal problems (Employment Rights Act). Increased workload and more staff would be on the line at all the different locations and it would need more cash flow. Planning is needed for future production and training for the staff (Planning Staffing Requirements). Criterion used Changing capacity is fast and brutal these days. It is a mater of days and weeks.. For everything there is a tool available. From a whole supply chain to the ‘smallest within the box, everything is managed by a tool (Citrin). Only a well planned, capacity management schedule can keep the customers satisfied as well as the company moving forward without obstruction to the cash flow. Delta Synthetic fibers need to get their strategy laid out well so that there is no lag in the supply as the product forecast goes. For this the main criteria adopted was that of capacity lead strategy or capacity leading strategy. The sites, three out of five, faced shut down. Also there was an unavoidable demand to build new sites in order to meet the demands for both the products, it is prudent to let product anticipate the needs of the market (Supply chain management). Another technique in the Operations research field that can be used for making the transition smoother is called Smoothing with inventory. This means while having an excess capacity period, the product may be stored to supply for and under capacity period. In our case this would mean that the Synthetic fibre that is produced may be stored in the sites so that it could be used while the production of the particular period may be low. Of course the preliminary condition is that the necessary total storage for about 8 mkgs is available with the DSF on site(Resource usage). The main dangers There are several factors that must be considered while the quiet transition to higher capacity takes place for the DSF. The main obstruction would come from block of cash flow. The forecast level of requirement is considered an accurate one. If there is a shortage in demand of the product, that could affect the sales of the product. The sudden change in the year 2009 could be hard to cope with, considering the level of cash flow needed and the uncertainty in future demand. A lead strategy is not very much advisable. It is preferable to follow the average capacity strategy as forecasts could vary and product could hold up cash (Brown.2005). The forecasts of demand are based on certain factors which may or may not occur in the future. The events that shaped the past demand may not occur as anticipated (Wright & Race, 2004). The forecast for a product usually comes as a range. This means that demand may be at the lower end one year and it may be at the higher end at the next. Also it should be noted that statistics address only forecast demands and not supply issues. This should be dealt with by supply chain managing enterprises (Supply chain management). Or It could lead to shortage as well as excess supply. Production levels too may vary due to unexpected causes. If we overuse a work site, it would lead to unanticipated overtime and loss of quality of the work (CRP). Conclusion Changing to new process and keeping old process needs a lot of tact, because recent day employment problems crop up anywhere and at anytime. An Advance Planning system (APS) may be used to smoothen the transition from 2007 to 2012. This means including software support for planning the transition (Advanced planning). The decision of increase capacity can be risky and very costly. It has to be analyzed on long term, medium-term and short-term basis(Capacity planning). With the final transition to the newest product and increase in capacity we can hope to find DSF to be in a very comfortable position as against its competitors Appendix-1 Reference: Advanced planning.(n.d). (online). Available: http://www.advanced-planning.eu/ Advanced Capacity Planning.(n.d). (online).Available: http://www.glovia.com/solutions/advanced_capacity_planning.aspx Brown.S. (2005).Strategic operations management. United Kingdom:Butterworth Heinmann. Bottleneck. (n.d). (online). Available: http://www.businessdictionary.com/definition/bottleneck.html Business Definition for: maximum capacity. (n.d). (online).Available: http://www.allbusiness.com/glossaries/maximum-capacity/4944497-1.html Capacity Management.(n.d). (online). Available: http://www.smthacker.co.uk/capacity_management.htm Capacity Planning. (n.d). (online).Available: http://www.gaebler.com/Capacity-Planning.htm Citrin. S.(n.d). Capacity Planning: A Tactical Decision with Strategic Impact.(online). Available: http://www.insight-mss.com/_whitepapers/?file=CapacityArticle020703.htm capacity requirements planning (CRP). (n.d). (online). Available: http://www.businessdictionary.com/definition/capacity-requirements-planning-CRP.html Capacity Requirements Planning (CRP). (n.d).(online). Available: http://www.exactamerica.com/alliance/capacity_requirements_planning.html DELTA SYNTHETIC FIBRES. (n.d). (online). Available: http://www.collegeresearch.us/show_essay/22196.html Extend Production: Projects Management.(n.d). (online). Available: http://www.glovia.com/html/products/modules/projects.aspx Employment Rights Act 1996. (n.d). Available: http://www.opsi.gov.uk/acts/acts1996/ukpga_19960018_en_1 Planning Staffing Requirements. (n.d). (online). Available: http://www.bnet.com/2410-13059_23-68806.html Resource usage. (n.d). (online). Available: http://road.uww.edu/road/bramorst/250768/Slack%20PowerPoints/ch05.ppt Supply chain management, ERP and capacity requirement planning. (n.d). (online). Available: http://www.erp-abbate.com/supplychain.html Wright,J.N & Race,P. (2004)The management of service operations. United Kingdom: Cengagelearning What is Capacity Requirements Planning? (n.d). (online). Available: http://it.toolbox.com/wiki/index.php/Capacity_Requirements_Planning Read More