Assignment # 2

Subject: Production & Operation Management

Submitted By:

H.M. Shakir Abdullah

(27-M.COM-5A)

Submitted To:

Prof. Frooq Qaisar sb

Food Security: The Challenge

A food-secure world is one where all people have access to safe, nutritious and affordable food
that provides the foundation for active and healthy lives. Food security affects more than human
health and welfare it also contributes to economic and political stability.
Obstacles to food security
Many interrelated factors contribute to the complexity of food insecurity around the world today.
These obstacles include production shortfalls; supply disruptions; food waste; government
policies that prevent trade and negatively affect farmers; growth in nonfood use of crops; the
impact of agriculture on the environment; growing resistance to the use of agricultural
technology; and price volatility.

The Challenge (A CASE STUDY)

Nidar AS is a major Norwegian chocolate producer with a 39,000 production plant and 15,000 of
warehousing. Their factory has eight production lines which can produce a wide range of sweets.
Over many years, Nidar has invested heavily to make their production processes more efficient,
with a continual focus on improving efficiency, quality and health, safety & environmental
performance. Despite the investment in their production processes, the company began
experiencing a quality problem in one of their product lines, forcing them to regularly scrap
batches. From a business Nidar turned to multivariate analysis to get a deeper understanding and
measure their gut feel of which process variables - and the relationships between them
determined product quality. Perspective, this resulted in important waste, downtime, energy use
and re-work costs. While Nidar had long experience using The Unscrambler software for
analyzing sensory data in product development, the application of multivariate analysis methods
in process control was new to the company. However, when the quality issue arose, it was
apparent that to fully understand the complex variables at play, multivariate methods and Design
of Experiments (DoE) strategies were required.

The solution
To resolve the quality issue, Nidar implemented the following 3-step process:
1. Analyzed historical data with multivariate models
A number of batches, both with and without quality problems, were selected and the process data
from each was analyzed with multivariate regression methods and Principal Component Analysis
using The Unscrambler software. The results of this analysis gave Nidar valuable insights,
enabling them to develop more informed suggestion as to the cause of the quality issue.

2. Applied Experimental Design in full scale production

Secondly, the team at Nidar realized that designed experiments were necessary to fully
understand the issues and isolate specific problems. This began by investigating the various steps
As no conclusions could be made without variations in the data to compare, they had to stretch
the process settings in different directions, occasionally allowing some batches to be scrapped in
order to find the operational envelope where the process was stable even when subjected to
changes. The next phase was to implement experimental plans for important variables across the
entire production chain. This analysis revealed that the process of making the chocolate could not
be viewed as an isolated event. For example, the speed at which the process was running was
important for the production volume, thus this variable could be regarded both as a critical
process variable as well as a response variable in terms of efficiency. Furthermore, the process
settings when filling and cooling the product had interactions with the storage conditions such as
temperature, time and moisture.
3. Implemented changes in the process settings
Based on the conclusions from the above steps, Nidar implemented changes in the process
settings, allowing them to bring production back in line and consistently produce a high quality
product which was robust towards changes in the raw material and other factors which may vary
without the ability to control them.
The result
The manufacturing of chocolate is a complex process which involves measurements of the raw
materials, characterizing the intermediate product, understanding the key process parameters
influencing final product quality and correct storage of the product. Multivariate data analysis
used in combination with Design of Experiments enabled the product quality department at
Nidar to get a better understanding and view of the whole process which was used to resolve a
difficult quality problem. From a business perspective, this enabled the company to save $1M
per year on one production line alone. Importantly, the conclusions and knowledge gained from
this process were transferred to other production lines and gave valuable insights across the
business.
Food Safety Regulations
The Food Safety Modernization Act, signed into law in January 2011, was designed to strengthen
rules to prevent food contamination that causes foodborne illness in roughly 48 million people
every year, killing nearly 3,000, according to the FDA. The law requires food manufacturers to
implement stricter disease prevention processes and equipment in all their production, increases
inspection authority and gives the FDA mandatory food recall authority over all food products.

Consumer Demand
Whenever consumer tastes and preferences shift, food manufactures must respond to the
demand. The food industry must change formulas in their products to achieve a healthier
product.
Competitive Races
The big winners in the food manufacturing industry are those who develop and produce the latest
products and get them on the store shelves first and fastest. In addition to reinventing the actual
food, packaging presents challenges for manufacturers aiming to trim costs and increase revenue.
To capture significant market share, food manufacturers need to be able to create new products in
the earliest stages of consumer trends and do it in the most inexpensive manner possible.
Distribution Difficulties
To grow, food manufacturers must develop and maintain effective distribution channels to satisfy
the requirements of large retailers who purchase food in massive quantities. Food producers who
step up to meet the demand for locally produced foods often face challenges meeting the
distribution demands of those retailers. Instead of just pulling up a truck to the local grocery to
deliver homegrown vegetables, for example, food producers must find ways to deliver fresh food
to a multitude of retailers if they want to penetrate the vital markets held by chains. Small food
manufacturers face lost revenue by avoiding the retail grocery route or paying third-party
distributors to get their food delivered, cutting into profits either way
Customer Satisfaction
Overall customer satisfaction provides businesses with repeat customers and positive word-ofmouth advertising. Managing a food business, much like any business, requires a thorough and
proactive approach to enhancing the customer experience.
Food Essentials
Dealing with food requires careful attention to safety and cleanliness. Workers should wash
hands frequently, and countertops and other food surfaces need to be washed down on a regular
basis, ideally after each use. . Move food into storage as soon as possible. Keep food rotated
properly to limit waste, and keep track of expiration dates. Store raw and precooked food at
appropriate temperatures, and serve food at the appropriate temperatures.
Suppliers and Staf
Keep an eye on prices at several wholesalers. If you are knowledgeable about local alternatives,
your supplier may offer reduced pricing to keep you as a customer, increasing your profit margin.

A good supplier relationship is essential to the smooth operation of a food business, so approach
price negotiations with tact and respect.
Challenges
The food industry is an extremely competitive industry where manufacturers are competing to
develop similar alternative products for consumers. Companies also feel dual pressure from both
consumers and competitors, which may make manufacturers, lower their prices. While
competition alone is a challenge in this industry, the following are a few other forces that present
challenges.
Technology
In order to remain relevant, manufacturers have to be able to sample, test and launch new
products that accommodate consumer trends and taste preferences. Technology and processes
should be equipped to adapt to automate processing, baking, canning, freezing or packaging
while producing healthy products.
Seasonal Crops & Government Regulations
Since the majority of crops and foods are seasonal, cash flow is too. Manufacturers should
determine the appropriate harvesting schedule specific to their crop requirements and hire
parallel to that schedule. For example, seafood, fruit and vegetable processing depends on
seasonal and temporary work. Dairy and produce manufacturers may tend to rely on manual and
temporary labor, while other food processing manufacturers are more efficient with automated
processing.
Egg Shortages
Most food manufacturers depend on quality ingredients and seasonal change. For example, in
2015, the avian influenza outbreak caused the price of liquid eggs to more than double in a one
month period. This interrupted daily operations and caused manufacturers' and consumers' costs
to spike. The outbreak caused the price of liquid eggs to more than double in a one month period.
Egg shortages and price spikes affect egg by-products too, including:

Bread

Pasta

Ice cream

Cookies

Mayonnaise

The food industry faces many competitive challenges from food contamination and recalls to
international trade restrictions and difficult working conditions. However, there are plenty of
opportunities that this industry offers as well

Production
It is crucial to produce food products that conform to quality standards. Excellent service, an
inviting atmosphere, and clean surroundings cannot overcome the negative effects or improper or
ineffective production procedures. Quality is a constant concern. Mangers must define quality
standards for each product. Then they must supervise and evaluate to ensure that standards are
met. Personnel must be trained to follow standard procedures. Quality standards must be
incorporated into production activities through standard recipes, purchases specifications, and
proper tools and equipment.

FOOD PRODUCTION PRINCIPLES

We cook or otherwise prepare food for several reasons:

To develop, enhance or alter flavor.

To improve digestibility.

To destroy harmful organisms.

CONTROL DURING FOOD PRODUCTION

The primary concerns of managers during food productions are:

To make quality ingredients available for food & beverage production.

To ensure that quality requirements are met.

Some control activities to preserve quality and maximize food production efficiency
include the following:

Require that all standard cost control tools (standard recipes, standard portions sizes,
etc.) be used.

Make sure that weighting and measuring tools are

available and always used.

Ensure that only the amount of food actually needed

for production issued.

Train personnel to constantly comply with required

food production procedures.

Minimize wasted food.

Monitor and control employee eating/drinking practices.

Make sure that items taken out storage but not used are put back in secured storage areas.

Inspect and approve items to be discarded because they spoiled in storage or werent
properly prepared.

Maintain production records; use them for revising quantities of items to be produce in
the future.

Analyze sales and production records to determine how much income each menu item is
generating.

Study and resolve production bottleneck.

Study systems for managing equipment, layout and design, and energy usage. Implement
procedures to reduce costs without lowering quality standards.

Make sure that labor-saving convenience foods or equipment items reduce labor costs.

Recruit, train, and schedule personnel who are genuinely concerned about preparing and
offering high-quality products that meet the properly standards.

SANITATION AND SAFETY IN FOOD & BEVERAGE OPERATION

Sanitation and safety are two topics some food and beverage managers ignore at their
considerations of operations. The cost in human suffering, and the monetary cost to the
operation, can also be great if a guest or a worker is injured on your property because unsafe
conditions. Sanitation must be addressed at every stage of the food handling process. Serious

illness and even death can be caused by the failure to follow simple, basic, food sanitation
procedures. Safety concerns are just as vital. Food & beverage managers have a personal,
professional, and legal responsibility to provide safe conditions for employees and guests.
OPERATION MANAGEMENT ROLE IN SANITATION AND SAFETY PROGRAMS
The development of sanitation and safety programs really begins with a commitment from
management. Managers have the ultimate responsibility for developing, implementing, and
monitoring the propertys sanitation and safety efforts. The role of managers includes:

Incorporating sanitation and safety practices into operating procedures..

Training employees in sanitary and safe work procedures.

Conducting sanitation and safety inspections.

When necessary completing accident reports, assisting investigations, and doing

whatever is necessary to ensure that problems are quickly corrected.

When necessary assisting in treatment and seeking medical assistance for injured
employees or guests.

Reporting needed repairs or maintenance, changes in work procedures, or other

conditions that are potential problems.

Conducting sanitation and safety meetings.

Urging the active participation of all staff members in solving sanitation and safety
problems.

THE PLANNING OPERATION PROCESS

Planning facilitys construction or remodeling should focus on the following goals:

Management negotiates the best price possible for contracted labor, building materials,
furniture, fixtures, and equipment.

The remodeled facility appeals to guests and employees.

There is a maximum return on investment.

The facility provides safe working space for employees and public access space to guests.

Design and layout take sanitation issues into account.

Facility design makes employees supervision and other management activities easy.

Importance of Strategic Operation Management

To the shape the Future of business

Effective strategic idea

Mangers and employer are innovative and creative

Its decentralized the Management

Its helps to increase the productivity

To Makes discipline

To make control

To makes forward s thinking

Strategic Quality Control

Nestle Company believes that, customers are the life of their business. They like to connect with
the future customer through providing quality products

Skilled employee involvement for production and quality control

High quality materials for production

Up to date technology for quality control

Effective methods and newly developed strategies

Factors affecting the strategic operations Issues of Nestle Company

Language

Culture

Politics

Economic

Governmental interference

Labor

Market research

Advertising

Money

Financing

Transportations

Control

Labor relations

Strategic operations Alternatives of Nestle Company

Nestle Company follows the Multi-domestic strategies. This Company produces their products
independently in different countries. All countries product are not same. They produce their
products by following different strategy for different countries, based on the internal and external
environment of the country.

Example of Using New Operation Strategies

The Nestle Company using E-Commerce System for sells their products. So now any one can
orders their products by use of internet.

Developing International Operation Strategies

Strategy Formulation
In strategies formulation, Nestle Company establishes its goals and strategic plan that will lead to
the achievement of their mission goals.
Strategy Implementation
Nestle Company develops the tactics and policy for achieving the formulated international
strategies to obtain its mission and objectives.

PEST Analysis of Nestle Company

These analyses can help to make sure operation will continue successfully.

Political Factors

Tax policy

Employment laws

Environmental regulations

Trade restrictions and tariffs

Political stability

Economic Factors

Economic growth

Interest rates

Exchange rates

Inflation rate

Social Factors

Health consciousness

Population growth rate

Age distribution

Career attitudes

Emphasis on safety

Technological Factors

R&D activity

Automation

Technology incentives

Rate of technological change

Gain over Customer Satisfaction

After completion of PEST analysis as context The Nestle Company implementing their
operations strategies based on different market situation as well as customers response. This
company will set up their tactical goals for being a strong position in the global market place.
Depending on those issue factors The Nestle Company is develop a Control Framework for their
overall controlling of management for gaining over their customers by providing core
satisfaction.