United Biscuits Merger of Two Scottish Family Businesses Essay Example

its distributors or retailers, such as through franchising. United Biscuits should pay attention to the following: (David 2005) Giving competitive advantage to those companies that integrate forward, meaning they should provide more benefits to the distributors who are giving more business to the company.

Take advantage of stable production to increase merchandise availability by implementing forward integration. This means the company should prioritize stable production instead of volatility in order to enhance merchandise availability. Additionally, decrease reliance on distributors/retailers by distributing its own products and offering more competitive pricing. In other words, the company should directly supply its products to customers and utilize the distributors' margins to attract more customers through discounts.

Backward Integration

"It is a strategy of seeking ownership or increased control of a firm's suppliers." To achieve backward integration, the company should adopt this strategy to mitigate risks associated with unreliable and incompetent suppliers and thereby reduce potential quality issues. (David, 2005).

The company needs to maintain a rigorous quality check on its raw material providers and never compromise on the quality. It should allocate both financial resources and human resources to handle the new business and procure raw materials. Furthermore, the company should utilize its financial resources and human resources effectively to ensure a continuous supply of raw materials, uninterrupted production, and timely payment to suppliers. It should promptly acquire the necessary resources, such as machinery, buildings, or transportation, in order to meet customer demands without interruption.

Product Range A limited resources company should target affluent individuals with high-end products. However, United Biscuits, a Biscuit Company, caters to various segments of clients by offering different types of biscuits such as sweet, salty, and cocoa biscuits. They

consider the differing needs and preferences of customers in each country based on factors like age, population, and cultural groups. To provide superior customer value, they focus on either reducing prices or improving product quality. Their current product range promotes health and offers high-quality snacks for a balanced diet and healthy lifestyle. They address consumer concerns by eliminating certain ingredients and including more wholesome options like fruits and cereals. The nutritional content of their products is clearly communicated on the packaging.

Systems and Procedures No organization can function without operations.The term for converting inputs into end products for customer use is operations, and the system used for this purpose is referred to as an operations system (Kotler et al., 2008). The following text outlines four main approaches (Galloway, 1993) within this field:

Pine, B. J. II and Davis, S. (1993) Mass Customization, Harvard Business School Press.

Agile fabrication (Kidd, 1994) emphasizes the importance of an organization's ability to frequently shift between market-driven objectives based on demand.

Kidd, P. T. (1994) Agile Fabrication: Forging New Frontiers, Addison-Wesley.
The diagram below illustrates the three main components of the operations system and the systematic approach to operational management, which involves controlling the processes that transform inputs into finished goods (Shim

and Shiegal, 1999). The diagram provides a clear overview of the operation system and process for a biscuit manufacturing company. In the first stage, United Biscuits should closely monitor its Suppliers who provide inputs such as wheat, flour, sugar, fat, etc.

The company should also have appropriate facilities to store raw materials for uninterrupted production. In the second stage, the transformation process, the company must have skilled workers who can operate the equipment well and use the raw materials according to the required quantities without any waste to produce high-quality biscuits without any impact on production costs. For the final stage, which is the end product, i.e. biscuits, the company should also have facilities like warehouses to store its biscuits so that there will always be uninterrupted supply to customers. The company should also have good transportation facilities to promptly meet the demand and supply the biscuits to its customers. Most importantly, the company should have a feedback system in place so that it can not only meet the demand but also gather customer opinions on its biscuits to improve both quality and production in case of increased demand for a particular range.

Company should also consider its own policies, resources, forecasts, goals constraints and also the legal, political, social and economic conditions within which it is operating.

Total Supply Network

"A supply network perspective means placing an operation in the context of all the other operations with which it interacts, some of which are its suppliers and its customers. Materials, parts, other information, ideas and sometimes people all flow through the network of customer-supplier relationships formed by all these operations.'' (Slack et al, 2007).

The immediate supply web

consists of the providers and clients who have direct contact with an operation. The sum supply web includes all the operations that make up the web of providers and clients. The figure below shows the complete supply web of United Biscuits. On the supply side, there are second-tier providers who supply natural materials to first-tier providers, who in turn supply the materials to United Biscuits' production unit. However, it is recommended that the company should obtain supplies directly from second-tier providers to reduce both time and cost.

The company meets the demand for Biscuits from different tiers of clients. Firstly, it supplies wholesalers/distributors who then supply to secondary clients. Additionally, it supplies certain retailers directly with customized products. Throughout the supply chain from providers to clients, each link in the chain will provide feedback on orders and information to its suppliers. When retailers run out of stock, they can place orders with either the wholesaler or directly with the manufacturer.

The jobber will place orders with the manufacturer, who will then place orders with suppliers to refill their stocks. This two-way process involves goods flowing one way and information flowing the other. The company should establish direct supply to second grade suppliers to increase profits and have direct relationships with customers for positive feedback.

American educator Nicholas Murray Butler stated that businesses planned for service are likely to succeed, while those planned for profit are likely to fail. According to Kotler (2003), there are two ways to gain a service reputation: being the best or being the worst at service. Donald and Archer (2005) highlight that customer services encompass everything a business does to enhance customers' perception of

value in their products/services. Customers choose businesses where they receive good value and excellent treatment.

Objectives
To achieve a successful customer policy, it is crucial to establish appropriate objectives within a comprehensive framework that involves interacting with customers for measuring, monitoring, and controlling established processes.

The importance of good service lies in its ability to differentiate between the core product and the associated service aspects. The core product includes its technical content, features, ease of use, style, and quality. The primary service component, known as the "product environment," includes factors like product availability, ordering convenience, delivery speed, and post-sales support. These elements are vital in determining the overall demand for a product. Hence, it is crucial for customer service elements to be satisfactory regardless of how appealing a product may be. This is where logistics plays a significant role in delivering excellent customer service.

Role of Customer Service Most clients do not complain and non-complaining clients hurt your business because they believe it will not make a difference. When disgruntled clients do not complain, it becomes difficult to resolve their issues. Customers today are not only interested in the product they are being offered, but also the additional elements of service they receive. This includes recognition when entering a retail establishment, as well as assistance and refunds for defective products they have paid for (Goodman, 2009). Problems also result in lost clients, as some prefer to switch brands. Employees are not always the cause of customer dissatisfaction.

Importance of Customer Service The key to achieving competitive success lies in satisfying the customer. There are three main components of customer service: pre-transaction elements, which encompass factors that occur before the actual

transaction takes place. This includes a written customer service policy, availability of order personnel, a designated order contact point, organizational structure, ordering methods, order size restrictions, and system flexibility (Christopher, 2005).

What organizations offer and what has value to clients is a package of benefits divided into four categories (Zemke and Woods, 1998). The creation of the form benefit is the responsibility of product development.

If a client purchases United Biscuits merchandise and has questions about the benefits, they will be unsatisfied if the merchandise does not demonstrate the promised benefits. If the client feels uncertain, they will hesitate to purchase the merchandise. The company should provide clear instructions and communicate the benefits of its merchandise. Customers prefer service providers to be conveniently located, either near their place or reachable by phone. It is also important for the merchandise to be available when clients need it, as this is considered one of the best valuable offers.

United Biscuits needs to establish a reliable network of distributors and transportation services in order to meet customer demands in a timely manner. This will provide trade benefits such as guarantees, recognition, and the return of defective goods, which are valued by customers. However, United Biscuits

currently has limited opportunities for these benefits. The three main components of customer service goals are illustrated in the image above. United Biscuits should implement an inventory system that takes into account the timely purchase of necessary raw materials, proper storage of these materials, and the timely supply of materials to its production unit. Additionally, they should utilize a calculation method to adjust production based on demand. In terms of location strategy, United Biscuits should choose a production site near a high-demand area with good accessibility for both raw material suppliers and distributors/customers for the finished goods.

Company needs to ensure it has enough space in its production facilities to ensure a consistent and timely supply of raw materials. United Biscuit should have a warehouse located near its production facilities to store its finished products. The company should also have a fleet of vehicles for transporting both raw materials to the production facilities and finished goods to customers in accordance with demand. Failing to do so may result in delays in obtaining raw materials for production, interruptions in production, or late delivery of finished products to customers, leading to customer loss.

Effects of Assets in Poor Condition

Operations involve the transformation of materials and resources to produce goods. The staff involved in this process is called labor, and the facilities such as buildings, machinery, and equipment are referred to as capital. Operations are the combination of labor and capital.

United Biscuits should prioritize the maintenance of its assets, as their condition has significant consequences. The company must pay attention to the state of its buildings, as poor conditions would make it difficult to attract and retain staff. Additionally, since

the company produces biscuits, it must ensure the hygienic conditions of its buildings to prevent any health issues that could arise from consuming contaminated products. Furthermore, the company should also prioritize the maintenance of its plants and equipment, as any disruptions in production would not only reduce output but also halt supply. If the production facilities and machinery are not properly maintained, it would result in higher production costs as the company would still have to pay wages to labor, regardless of whether the facilities are functioning properly or not.

Therefore, it is essential for a company to pay attention to its workforce and machinery. Additionally, the company should also ensure proper management of its transportation system, which acts as the nerve center for the company. Without a well-functioning transportation system, a company will struggle to obtain raw materials and distribute finished goods.

Implications of Inadequate Management

"HRM is guided by a management and business-focused philosophy. It is considered a vital strategic activity driven by senior management. It is developed, owned, and executed by management as a whole to promote the interests of the organization they serve.

Strategic HRM focuses on the relationship between human resource management and strategic direction within the company. According to Armstrong (2004), the function of strategic HRM is to achieve the objectives of management through the utilization of human resources. There are four main significances of strategic HRM, as stated by Armstrong (2004):

The use of planning

• Manpower strategy and employment policy
• Matching HRM activities and policies
• Achievement of competitive advantage through the utilization of people

All planning, policies, and objectives originate from top management. Inconsistency in management will have an impact on United Biscuits. Since all decisions regarding

key goals, major policies, and resource allocation are made by top management, incorrect decisions can potentially harm the company.

United Biscuits faced several problems including non-utilization of its system and procedures, improper client service, lack of integration of breakabilities, and poor condition of assets. These issues were all a result of improper management and decision-making. If the company's management had made correct decisions and implemented proper policies, as well as created a good working atmosphere, these problems would not have occurred.

Inventory Management System ( Chase et al, 2003 )

Inventory refers to the stock of any item or resource used in an organization. An inventory management system comprises the policies and controls that monitor the inventory level and determine: ( a ) the desired level of inventory to be maintained, ( b ) when stock needs to be replenished, and ( c ) the quantity of orders to be placed.

Inventory can include various items such as worlds, fiscal, equipment, as well as natural stuffs such as end products like parts, constituents, and finished goods, and interim phases of the procedure like partly finished goods or work-in-process. In addition, a fabrication operation can hold stock lists of forces, machines, working capital, and raw materials, while also including finished goods.

The importance of inventory control lies in its ability to meet projected demand, smooth production demands, de-couple constituents of the production-distribution system, protect against stock outs, and increase cash flow and profitability.

For United Biscuits, maintaining the right level of inventory is crucial. Having too much inventory means investing more money in it, while having too little inventory can cause issues with production and disappoint

customers. The company should aim for zero inventory by sourcing direct from suppliers, reducing work-in-process using JIT techniques, and minimizing the stock of finished goods by quickly delivering them to the market.

An important concept related to inventory management is the bullwhip effect. This occurs when demand variability increases as one moves up the supply chain away from the retail customer. Even small changes in consumer demand can result in significant fluctuations in orders placed further up the supply chain.

Finally, the web can hover in really big swings as each organisation in the supply concatenation seeks to work out the job from its ain position. This phenomenon is known as the bullwhip consequence and has been observed across most industries, ensuing in increased cost and poorer service.

Causes

• Overreaction to backlogs
• Neglecting to order in an effort to cut down stock list
• No communicating up and down the supply concatenation
• No coordination up and down the supply concatenation
• Delay times for information and stuff flow

Order batching - larger orders result in more discrepancy. Order batching occurs in an attempt to cut down telling costs, to take advantage of transit economic sciences such as full truck burden economic systems, and to profit from gross revenues inducements. Promotions frequently result in forward purchasing to profit more from the lower monetary values.

Deficit gambling refers to the practice of clients ordering more than they need during a period of short supply, with the hope that the partial shipments they receive will be sufficient. This leads to inaccurate demand forecasts as each participant in the supply chain adds a certain percentage to the estimates. The result is a lack of visibility into true customer demand. Additionally, free

returns policies are not effectively tackled in countermeasures against the Bullwhip Effect. These policies often need to be prohibited or restricted.

Countermeasures to the Bullwhip Effect

• Countermeasures to order batching involve using Electronic Data Interchange (EDI) and computer aided ordering (CAO) to address high order costs.
• Countermeasures to deficit gambling can be implemented through proportional rationing strategies based on past sales to counteract partial shipments.
• Fluctuating prices can be mitigated by replacing high-low pricing with everyday low prices (EDLP).
• To address inaccuracies in demand forecasts, providing access to point of sale (POS) information can improve demand visibility.

JIT Just-in-Time manufacturing

Just-in-time is a guiding principle and not a method. Originally, it meant producing goods to precisely meet customer demand in terms of time, quality, and quantity, whether the customer is the final buyer or another process further down the production line. It now also encompasses the concept of producing with minimal waste. "Waste" encompasses time, resources, as well as materials.

Elements of JIT include:
1. Continuous improvement.
2. Attacking cardinal problems - anything that does not add value to the product.
3. Inventing systems to identify problems.
4. Striving for simplicity - simpler systems may be easier to understand, easier to manage and less likely to go wrong.
5. A product-oriented layout - produces less time spent moving materials and parts.
6. Quality control at the source - each worker is responsible for the quality of their own output.
7. Poke-yoke - 'foolproof' tools, methods, jigs etc. prevent errors.
8. Preventive maintenance, Total productive maintenance - ensuring machinery and equipment functions perfectly when it is needed, and continually improving it.

Eliminating waste. There are seven types of waste:
1. Waste from overproduction.
2. Waste of waiting time.
3.

Transportation waste.
4. Processing waste.
5. Inventory waste.
6. Waste of motion.
7. Waste from product defects.

1. Good housekeeping - workplace cleanliness and organization.
2. Set-up time reduction - increases flexibility and allows smaller batches. Ideal batch size is 1 item.
3. Multi-process handling - a multi-skilled workforce has greater productivity, flexibility, and job satisfaction.
4. Leveled / mixed production - to smooth the flow of products through the factory.

- Kanbans are simple tools used to pull merchandise and constituents through the procedure.
- Jidoka (Autonomation) is the capability of machines to use judgment independently, allowing workers to focus on more useful tasks instead of watching them work.
- Andon (problem visible radiations) are used to signal problems and initiate disciplinary action.
- Skinner (1969) proposed five performance aims - quality, dependability, speed, cost, and flexibility, which trade off with each other.
- United Biscuits should consider these aims in terms of cost of quality and the number of defects produced.
- Three types of quality costs are prevention costs, appraisal costs, and failure costs.
- Prevention costs include quality planning, supplier quality reports, and training programs.
- Appraisal costs include inspection, testing, and control of the biscuits.
- Failure costs increase due to discrepancies.

Speed refers to the company's efforts to minimize the time between order and delivery of the product. For United Biscuits, this means ensuring that biscuits are delivered to customers as quickly as possible by effectively managing the supply chain and increasing production speed.

Dependability is another performance objective, which involves delivering goods to customers as promised and within the agreed timeframe.

The TMC utilizes focused operations strategies to simplify and streamline processes by using simple and small yet robust and flexible machines.

By reorganizing the

layout and flow to increase simplicity, TMC has improved production velocity. According to statistics, in the late 1980s, TMC's productivity per worker was significantly higher than that of US or European plants. The third performance objective is reliability, which means delivering products or services on time as promised to customers. TMC has implemented a 'Just-in-time' (JIT) production system with a team of multi skilled workers and 'kanban control' to ensure timely delivery. Improving efficiency and quality is not only the concern of managers and technical experts, but also of all employees.

So, TMC provides a reliability advantage to its customers through this process. Adapting to a changing environment leads to adjustments in the company's products and services and the way it conducts business. This objective is referred to as 'flexibility'. According to Peters (1998), it is necessary for organizations to embrace change and establish adaptable and responsive structures to handle the ever-changing business environment. In the case of TMC, this involves the ability to align its manufacturing resources in order to introduce new models.

The analysis of Toyota's coursework shows that the company has been able to achieve a high level of flexibility by producing small batches of different models without sacrificing productivity or quality. Throughout the years, Toyota has offered its customers a range of options to choose from. One of the main objectives in operations, especially in price competition, is to minimize costs. Lower prices are universally attractive to customers and can be achieved by producing goods at lower costs. To achieve cost efficiency, Toyota strives to influence the cost of goods and services. For the future, Toyota plans to shift the production of multipurpose

vehicles and pick-up trucks to various countries worldwide.

Argentina and South Africa also contribute to the cost public presentation of TMC. Additionally, TMC has achieved high quality vehicles at reasonable prices through successful performance in other public performance objectives.