Title

Operations Management

Company Introduction

American Premium Water Systems Pvt Ltd is a well-known medium scale company who
provides best purified water bottles island wide. The company provides a range of water
bottles to corporate and normal customers and has been able to maintain the name as the
best brand in purified water which provides clean and sparkling water. It uses the modern
state-of-the-art technology for packaging and disposal methods and is dedicated to provide
pure and hygiene water to its customers.

American Premium provides water bottles ranging from 375ml, 500ml, 1L, 1.5L, 5L, and 7L
with refillable 5-galloner for the dispenser and distributes purified water island wide via the
distributors who operates from Jaffna, Vavuniya, Mannar, Trincomalee, Batticaloa, and
Chilaw. Company currently serves leading corporates such as Brandix, Browns Group,
Central Bank of Sri Lanka, Ceylon Tobacco, DFCC, Dialog-Axiata, Hayleys, HNB, John
Keells, Stassens Group, and Unilever.

The manufacturing plant and laboratories of the company are located at Hanwella, a
renowned place for fine quality water drains. Therefore, it has been able to provide best
hygiene water to the customers.

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Operations Management

The Problem

Today, with the vast developing trend of the economy, human lifestyle has become
complicated. In such environment, providing water for consumption is a challenge since it
directly connects with the human lives. Therefore efficient, effective and quality conscious
manufacturing process is required. Accordingly, the obstacles which hinder the production
process need to be identified and analysed. According to that, a main problem is recognized
and analysed further.
American Premium mostly follows a unique method of production since it mainly concerns
on the estimated quantities. A combination of batch and continuous processing method is
used for the manufacturing process. Based on the type of customer and respective sizes of the
bottles, the batches are determined and two separate production machinery are used. Normal
bottles, 5-galloner for filters and glass bottles are produced through these production
methods.
The companys production is mainly based on an estimated quantity and orders from the
corporate and normal customers are not considered. As a result of that, in some situations,
company faced excess demand where the produced quantity could not be met. In this
scenario, previous month production is considered for current month production and the same
quantity is produced. As a result of the production shortage, some corporate customers were
switched to another competitive brands. So it is realized that this production problem has
created extensive losses for the company. And also it can be a demotivating factor for the
employees which in turn results in employee turnover.
Further it is observed that the current machinery do not have the capability of producing an
excess demand. This was proved during the drought and flooding situations where the
demand could not be catered accurately. In both situations, mineral water is essential and
therefore, the company should have back up plans for such circumstances. However, in a
situation like breakdown of one machine would bring heavy losses for the company since
back up machinery / plans are not implemented.
Since the production is based on the estimated quantities, inventories are not kept as storage.
Therefore, in any circumstance supplying instant orders such as call on delivery, is
difficult.

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Operations Management

http://www.nestle-waters.com/creating-shared-value/environmental-
performance/manufacturing

Literature Review

As illustrated in the above chapter, it is observed that the manufacturing process entails some
defects which hinder the success of operations. Therefore, a comprehensive analysis
regarding the issue is required.

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Operations Management

http://www.thestudentroom.co.uk/showthread.php?t=392048

http://www.tutor2u.net/business/reference/production-batch-production-method

https://www.graphicproducts.com/articles/batch-production/

http://www.itrelease.com/2012/12/what-are-advantages-and-disadvantages-of-batch-
processing-systems/

http://smallbusiness.chron.com/advantages-disadvantages-mass-batch-job-order-
manufacturing-systems-21513.html

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Operations Management

Solution
Deeming into the above analysis, a solution for the problem identified can be further
evaluated. The main problem identified by the analysis is directly related with the production
process of the company. Therefore, a significant production policy would be appropriate in
order to overcome the identified problem.
Root cause of use of the hybrid production process is identified as lack of process
management and control knowledge and technical capability used by the management.
Though the company uses a stocks management system, it was only used for reporting
purposes. Hence the process management requires major policy change in the premises in-
order to maintain a proper level of production.
Initially the production process of 5-gallooner, normal plastic and glass bottles needs to be
separated to maintain the continuity of 5-gallooners which are considered as the main product
due to its necessity for corporate sector. Therefore allocation of one water bottling machine
from existing two for 5-gallooners is a must factor to maintain a proper production level
which is most crucial segment of their customer base.
Similarly existing daily stock quota measuring method needs to be removed by introducing a
new method which addresses the following criteria.
Priority must be given to the corporate requirements
Majority of customers (nearly 80%) from American Premium customer base
represents the corporate sector while others are from retail stores. Therefore fulfilment
of their requirement is essential to maintain positive attitudes towards the company.
Estimation must be made by reviewing monthly usage of individual customer
(corporate)
Current method of estimating daily production done only by considering the previous
customers records as a whole set. Hence stock shortages, delivery delays and missed
deliveries have become common sight from both manufacturing and distribution
levels. The optimal solution to address this issue is to analyze monthly usage records
of individual customer by their order category and make the estimations for daily
production.
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Operations Management

Excess percentage needs to be manufactured

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Operations Management

Conclusion

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Operations Management

References