I. Introduction

History

Gracepoint Enterprises was founded by Luvimin and Salvacion Belaro, a couple who had migrated from Bicol to Manila, along with their four children, Louie, Arlene, Leonisa, and Arlete. Mr. Belaro had to work as a carpenter while Mrs. Belaro sold fish in Balintawak Market. As a sideline, they made sweets like molido (candy made from sweet potato) with only 20 Php starting capital.They sold their homemade sweets first to their neighbours, to relatives, then they started accepting orders. Their homemade sweets became famous and known. But it was really a case of serendipity that gave birth to the product now is sought after by the masses. Mr. Belaro accidentally made a chocolate mixture instead of the original order of regular pastillas. He intended to throw it away and make the original order but since he was running out of time, he presented it anyway. It was served to the customer and instead of being reprimanded, he received positive feedback from the customer. Thus the birth of L*A*L*A chocolate candy, derived from the initials of their four children. They continued the production until it grew through the years. They decided to make it into an official business. They registered the name to the Bureau of Trademarks by 1982.The business grew and the profits soared as a lot more people got to know the product. As their enterprise grew, they changed the name into Gracepoint Enterprises, saying that it was through the grace of the Lord, Father Almighty that they had the business even with a mere 20 Php capital and few resources.

Four Functional Areas

Human ResourcesThrough an initial interview conducted at the site, the researcher has noted that they do not have any Human Resources Department, as was confirmed by the manager as well. All of the 130 empowered employees (in the main plant) are directly hired and overall, managed by the general manager.

Marketing and FinanceThe Marketing and the Finance Department, according to the general manager, are tightly knit together because they have only one shared staff.The Marketing Departments primary job at the moment was to develop a brand new packaging design for each of their product lines, and for now, they have no plans on expending on any advertisement tactics. This is due to their concern for prices. By expending money on television, radio, or newspaper advertisements, it would dictate more costs to be accounted for, therefore, making them increase the price of their products. The Finance Department manages all of the production cost of the products; from the cost of the ingredients they acquire from their different suppliers, to the transportation cost of deliveries they make to various clients and distributors everywhere, and to the salaries and wages of the workers of the company. These finances however must be brought first to the general managers attention, studied thoroughly and verified before it is approved and anything is processed.

OperationsThe Operations Department carries the most weight since Gracepoint Enterprises is a manufacturing company. The general manager pays a lot of attention to it. The mandates were to make sure that each machine that touches the sweets are sanitized regularly per batch, as well as the surroundings and the plant itself. The employees, who have been working in Gracepoint Enterprises for a long time, were especially trained and observed so they know every step in the process, from preparation of the ingredients (making sure that every ingredient is not spoiled, measuring the right amount, etc.,), to mixing the ingredients into a batter, cooking the batter, molding it to its standardized design of a bar with crossing lines all over, packaging into its outershell (plastic) and casing (box). They also arrange these cases by pallet for easier manual inventory counting.

4Ps

ProductTheir primary product and all-time bestseller is the L*A*L*A Chocolate Bar and L*A*L*A Ube Bar, both of which are available in singles pack of 35 grams each with 12 slices. As their products spread in the commerce, they started to develop a minis pack of 84 grams, with 24 pieces (one slice per piece) per pack. Theyve also introduced new flavours which are: Strawberry, Milky Vanilla, Mocha Vanilla and Rice Crispy. However, all these flavours are currently available only by the minis pack. The general manager said that if it picks up, they might introduce the singles pack of these flavours. They also introduced a new line much like the L*A*L*A Chocolate Bar, the Tsokulit Milk Chocolate, available only through the minis pack of 231 grams, with 24 pieces per pack. In comparison, Tsokulit Milk Chocolate is larger than the original L*A*L*A Chocolate Bar, but the ingredients are different.

PriceA case of the L*A*L*A Chocolate singles pack is worth 540 Php, 3.75 Php per pack, whereas a case of the L*A*L*A minis pack is worth 420 Php, 21 Php per pack. In a local sari-sari store, a L*A*L*A Chocolate Bar can be bought up to 6 Php per bar, and the mini packs are retailed with 1 Php apiece. These prices, as assured by the general manager, are at the minimum that they can give.

PlaceThey acquired a 6000 sq. meter land in Tuktukan, Guiguinto, Bulacan where they set up a modernized plant facility, run by 130 empowered employees, that can produce up to 20 tons of chocolate a month. Aside from their main facility in Bulacan, their products were also acquired by food peddlers who became major distribution points in Cavite, Laguna, Nueva Ecija, Isabela, Naga, Bohol, Cebu and Manila. Their products are also made available in local supermarkets such as Puregold and SM Hypermarket, and as well as in retail outlets and sari-sari stores all over the Philippines.

PromotionGracepoint Enterprises take pride of the fact that they do not use any means of advertising, be it television, radio or newspaper ads. This is due to the aforementioned situation where if they were to advertise, they would incur higher costs that would be passed onto the product. Gracepoint Enterprises believe in the power of word-of-mouth as they have always done in the past years, and they are confident that their products are truly sought after by the masses.

Other Information

Mission

To produce quality chocolate candies and other food products deliciously designed for the satisfaction of the delicate taste of all ages, at a very reasonable and competitive price of local and global consumers.

Vision

To be one of the top food manufacturing companies with a complete and modernized production facility in accordance with the international standard organization.

Company Policy

Honesty, Commitment, and Teamwork

Key Elements

Quality Product, Organized Production Team, Excellent Service, and Superior Technology.

Company Motto

Christ is the owner of this business; He is the unseen manager of every department, the silent partner in all transactions.

Statement of the Problem (General)

Gracepoint Enterprises has managed to stay on top of the market for locally produced chocolates with only one main plant, which is located in Bulacan, and only distribution points provided by merchandisers and peddlers of their different product lines. The said plant has the production capacity of 20 tons of sweets a month. If they were to expand their operations by setting up a new production plant in a new, strategic, location, would it benefit the overall well-being of the company, generally speaking in terms of cost, revenue and profit?

Statement of the Problems (Specific)

Since the food industry is said to be a stable industry throughout the year, how frequently and in what manner do they forecast the demand of the market? Is their forecast accurate enough?Gracepoint Enterprises started with only the L*A*L*A Chocolate Bar and the L*A*L*A Chocolate Bar as their product lines. How did they determine that they should add a mini pack to their product lines? How did they come up with the idea to add a variety of flavours?Processing the sweets requires a lot of processes as was aforementioned. How does Gracepoint Enterprises layout each process accordingly to save cost and promote efficiency during production?Given their 130 employees, how does Gracepoint Enterprises manage them so there would be fewer, if no turnovers? What controls do they also use to measure their employees productivity?Having only one production facility located in Bulacan, and distributions centers located in different location, what would be an efficient strategy, in terms of location, to garner a greater share of the market?Having been in food industry for more than three decades, the rich quality of their products has truly been enjoyed by the masses. Can this acclaimed quality, that is even presented and printed in the packaging of their products be further improved? If so, how would they improve it?Given the production capacity of 20 tons a month, is this norm achieved every month or were there fluctuations in production? If so, what are the probable causes of these fluctuations in production?Since they are in the intermediary part of the supply chain, how do they manage to maintain a smooth flow of communication and visibility with their suppliers and peddlers, and furthermore, customers?In the food business, most of the inputs are perishable in nature and therefore, efficient inventory management is essential. How do they know what quantity to order of a products specific ingredient and when to order it to continue smooth operations?Since they have the most market share for locally produced chocolates at 70%, as they have so boldly stated, what aggregate planning strategy do they make use of to make sure that they continue to provide a sufficient quantity of each of their products in circulation and in the market?Since Gracepoint Enterprises is manufacturing company that produces different product lines, they need multiple ingredients as well. Do they make use of a Material Requirements Planning system?Gracepoint Enterprises engages in a repetitive routine process in the production, what are their considerations and thoughts regarding a Just-In-Time Inventory method, given its advantages and disadvantages?

Statement of Objectives

Overall, the researcher aims to know, using concepts learned through the Operations Management course, and through this Operations Analysis, if the addition of a production plant would prove to be an efficient strategy to increase production and subsequently increase sales. Furthermore, the researcher aims to deeply scrutinize every aspect of operations within Gracepoint Enterprises, according to the text provided, to fully grasp the concepts that have been taught regarding the course.

Significance of the Study

This analysis is significant to the three parties involved. First to the researcher, who shall know more about Gracepoint Enterprises, who has been one of her familys suppliers in the merchandising business for more than a decade. Second, to the professor who will be able to see a company, which, hopefully, has never been subject to an operations analysis by his previous students. Lastly, to Gracepoint Enterprises who through this Operations Analysis, might be able to see for themselves their company, reflected in an unbiased perspective.

Scope and Limitation

The operations analysis conducted in Gracepoint Enterprises was solely focused on the operations that involve the direct production of the products. No sensitive information or financial statements which are deemed confidential by the general manager are to be shown released to the public. The analysis encompasses the information about the site, the management and the products as expressed by the manager and as observed by the researcher upon site visit and interview

II. Review of Relevant Concepts in Operations Management and Conceptual Framework of the Paper

Review of Relevant Concepts

Capacity the upper limit or ceiling on the load that an operating unit can handle. Forecast a statement about the future value of a variable of interest. Productivity a measure of the effective use of resources, usually expressed as the ratio of output to input. Supply Chain a sequence of activities and organizations involved in producing and delivering a good or service. Input materials to be transformed as output. (Ingredients, capital, machine and labor) Output the end product of inputs through transformation. System set of interrelated parts that must work together. Strategy relates to the plans that determine how an organization pursues its goals. Distinctive Competencies the special attributes or abilities that give an organization a competitive edge. Quality-based Strategy strategy that focuses on quality in all phases of an organization. Research and Development organized efforts to increase scientific knowledge or product innovation. Process Selection refers to deciding on the way production of goods or services will be organized. Project a nonrepetitive set of activities directed toward a unique goal within a limited time frame. Product lay-out layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow. Production Line standardized layout arranged according to a fixed sequence of production tasks. Flow Process Chart chart used to examine overall sequence of an operation by focusing on movements of the operator or flow of material. Quality the ability of a product or service to consistently meet or exceed customer expectations. Flowchart a diagram of the steps in a process. Logistics the movement of materials, services, cash and information through a supply chain. Inventory a stock or store of goods. Holding Cost cost to carry an item in inventory for a length of time, usually a year. Quantity Discounts price reductions for large orders. Reorder Point When the quantity on hand of an item drops to this amount, the item is reordered. Aggregate Planning Intermediate-range capacity planning, usually covering 2 to 12 months. Master Production Schedule this schedule indicates the quantity and timing of planned completed production. Material Resource Planning is a planning and scheduling technique used for batch production of assembled items. Just-In-Time a highly coordinated processing system in which goods move through the system, and services performed, just as they are needed. Maintenance all activities that maintain facilities and equipment in good working order so that a system can perform as intended. Scheduling establishing the timing of the use of equipment, facilities, and human activities in an organization. Job Time time needed for setup and processing of a job. Makespan total time needed to complete a group of jobs from the beginning of the first job to the completion of the last job.

Conceptual Framework

This Operations Analysis paper aims to tackle all about Gracepoint Enterprises operations division as a manufacturing company. The researcher looked up manufacturing companies that might be available for an analysis and came up with three, but in the end, chose Gracepoint Enterprises, the famous makers of the L*A*L*A Chocolate Bar, since the researcher has connections with the management. The researcher first tried with a walk-in approach to the management and surprisingly, they approved immediately. During the initial visit, the researcher was given the company profile that will be needed to make the initial proposal, then a tour around the production plant itself. The researcher has taken down notes for future references and taken pictures as well of the machinery and the staff as they work.For the first part of the Presentation and Analysis, the researcher aims to know how the company forecasts the demand of the market and make operating and production decisions. For the second part, the researcher seeks to understand the processes behind the design of their product as well as how it is essential for customer satisfaction. Since Gracepoint Enterprises is a manufacturing company, they need to determine the capacity they can hold and produce in order to provide efficiently for the demand of the market. And in the aforementioned production, producing a certain product line will involve several processes. The researcher will determine if the process layout and facility of Gracepoint Enterprises manufacturing company is critical and efficient in making the end products, and as an additional, briefly discussing the machines involved in the process of production. Here, we also take into account, the human aspect of the firm, the owner, the employees and their job within the company. The researcher will also determine if the worker is working productively to meet the requirement needed for an efficient production plan. Lastly, the researcher aims to know if their location of the production plant in Tuktukan, Bulacan in strategic since it is the only production plant that they have. For the third part, the researcher moves on to the product itself, tackling the concept of the products quality and the measures that they do to ensure that the is preserved in their product.The fourth part focuses on the supply chain of Gracepoint Enterprises, from the suppliers of the ingredients used to make the products, to them, as they process them into sweets, to distributors, peddlers and retails stores, and finally, to the end consumers who buy the product.The fifth part pinpoints the importance of inventory management of their stocks and aggregate planning for intermediate-term plans of production. The researcher also wants to determine the companys thoughts and considerations about Material Requirements Planning and Just-In-Time inventory method. In this part, the researcher studies about scheduling processes and certain jobs to make sure that production is efficient.

III. Methodology

Instead of presenting a formal letter of request, the researcher has opted for walk-in interview with Gracepoint Enterprises, as recommended by the father of the researcher. After the initial walk-in inquiry for permission, and a thorough explanation of the topic and procedure to be done, Gracepoint Enterprises had agreed to have an operations analysis done for their manufacturing company.The researcher has conducted four site visits to Gracepoint Enterprises and was able to gather data through the following methods:Interviews were conducted with the general manager, the staff, the workers, especially those in the production area and on one occasion, one of their clients Alex and Connie Mendoza Food Peddlers.Observations were also conducted during the site visits of the manufacturing plant, of its layout and design, and the machinery, taking down important notes.Internet research was also conducted for additional information.

IV. Presentation and Analysis

Part 1

Forecasting

According to the General Manager of Gracepoint Enterprises, the food industry is quite a very easy subject when it comes to forecasting because We, as Filipinos, like to eat. Food is the only thing that never falls out of trend. (translated). They only base their forecast on their last production quantity. Except on Halloween, Christmas, and New Year Season where, as the general manager said, they produce extra to capture the rising demand for chocolates as giveaways to childrenFrom the interview conducted with the general manager, the researcher has deduced that they use a type of nave forecast that is applicable only to a series with seasonal variations over a period of time. A nave forecast proves to be advantageous it is very easy to prepare, with no actual cost. It makes a lot of sense because their company focuses on a cost-minimization strategy to keep the costs accounted for their products low and therefore, the selling price is low as well, making it affordable to the masses.

Part 2

Product and Service Design

Mr. and Mrs. Belaro started with only the L*A*L*A Chocolate Bar as their primary product, wrapping the then, homemade sweet, with only colorful cellophanes. After they gained a lot of profit, acquired land, setup their now modernized manufacturing plant and generated a lot more profit, they made a special packaging for their chocolate, a 2.5 x 4 plastic designed in red and yellow, promoting their All Natural pride, with no preservatives, low fat and no artificial coloring.

Moving from colorful cellophanes to a more standard packaging for their sweets was a good strategy for them, aside from assuring the customers of a clean and safe product, it gives the customers and idea of the products company identity by placing its name on the packaging.

Aside from the L*A*L*A Chocolate Bar, they decided to add a smaller version of the product by adding a L*A*L*A Choco Mini to their product lines. It is a pack of 24 slices, 5.9 x 8.2.

By adding the aforementioned minis pack, they gained a larger share of the market, particularly, those people in the retail/sari-sari stores sector, thus, gaining larger profits, and a foothold on a lot more customers and clients.They decided to bring in as well new flavors into the product lines. They introduced Ube, Mocha Loca, Milky Vanilla, Strawberry, as well as a larger version of the chocolate bar, the Tsokulit Milk Chocolate.

Having only one flavor of sweet every time a customer buys a particular brand will eventually make him/her tired of it. It is important to have a variety of a product to make sure that you still have the customers loyalty in terms of taste.

Strategic Capacity Planning for Products and Services

The general manager has explicitly stated that the manufacturing plant has the production capacity of 20 tons of sweets a month in their production facility.

The researcher thinks this estimate is due to the fact that they use the nave type of forecasting that they base their next production on a stable figure and varies it only as the season calls for it.

Process Selection and Facility Layout

The facility layout is organized according to the process of making the sweets. Starting with the preparation of the ingredients where the workers layout all the ingredients measured to follow the recipe. Next is mixing the ingredients to create the batter and cooking it. The mixture now is partitioned accordingly to a set of specifications per product then molded to its standardized design of a bar with crossing lines all over. After making sure they had cooled off, they are packaged with the aforementioned packaging and manually counted before going into cases.

The researcher has determined that their process is a repetitive type because it involves high volumes of standardized goods, which is another cost-minimizing strategy that they are after. The layout of facilities is based on the product layout, which is sequential and used for repetitive processes. The researcher approves of this because with this layout, the time of transfer of products from one workstation to another will be shortened, making the whole production process much more efficient with less of no slack time.

Design of Work Systems

All 130 employees in the main plant have been dubbed by the general manager as empowered because these employees, they have know for quite a long time. They are confident about their workers output so they entrust the whole operations nitty-gritty to them.

The researcher is concerned with how the general manager casually used the term empowered, for that would mean that the workers are free to make any changes in the work process, which is certainly a big no-no in this type of business.

The employees salaries are based on the number of hours they have worked in a day. And as for incentives, the employees are given bonuses as deemed appropriate by the general manager.The time-based system of giving salaries and wages is most common practice in organizations like Gracepoint Enterprises where there is a fixed price for their labor per hour at which the employees work on a specified minimum number of hours. The individual-based incentive plan seems fair enough to be used, where the employees receive bonuses for when they are due.

Location Planning and Analysis

Mr. and Mrs Belaro decided to setup a manufacturing facility once they had enough money from selling the sweets and they have seen that the demand for their chocolates was increasing. They acquired a 6000 sq. meter of land in Tuktukan, Bulacan and there, they built their manufacturing plant.

The researcher has been to the facility countless times before the analysis and noted that the facility itself was a bit ways far from the McArthur Highway, making the land cheaper compared to those along the main road. The researcher also views Bulacan as a strategic place, because it is only minutes away from Manila, and they have access northwards.

Part 3

Management of Quality & Quality Control

The quality of their chocolates is something that Gracepoint Enterprises boasts of. They claim that theyre products are All Natural with no preservatives, no artificial colouring, and low fat. Inspection is done per process per batch to make sure that nothing goes wrong. Since they are in the food business, management of quality is crucial. Everything must be sanitized regularly, the ingredients measured correctly and the process followed explicitly for the end product to be acceptable. There had been a number of cases when they had used an incorrect measure of ingredients and the mixture did not turn out the way it should be so they cancelled it out of the molding process and moved the whole batch back to the cooking process to make corrective measures. Once everything was verified, it was sent back to the molding process.

The researcher acknowledges them especially in the fact that even if their target is cost-minimization, they never fail or neglect in inspecting every process of the making of the sweets. The researcher also appraises the way they handled the situation regarding incorrect measurement of ingredients. With that, they had zero wastages and therefore lower costs.

Part 4

Supply Chain Management

The current suppliers of Gracepoint Enterprises have been their suppliers since the company have decided to expand operations. They have been availing quantity discounts from their suppliers because they buy in large quantities. Aside from these quantity discounts, they have also availed a form of loyalty discount, driving the prices or raw ingredients even lower. The general manager also stated that they are one of the major factors why their chocolates are low priced. Gracepoint Enterprises as was stated before, serves as an intermediary part of the supply chain. As for their suppliers, it is good that they have visibility and good communication between them. Gracepoint Enterprises benefit from the discounts and the suppliers benefit from the assurance of a continuing client, and therefore, continuing business.

From the other end of the supply chain, the customers can also give feedbacks through contact numbers and email addresses printed on the packaging. This is to make sure that their products are satisfactory and within their standards.

Since its the customers whom the generate income from, it is only right to make sure that they are satisfied with the product you deal. By giving them a voice through feedbacks, a company may also have room for improving the quality of their product, thus, generating more costumers and subsequently, profit.

Part 5

Inventory Management Gracepoint Enterprises replenishes their inventory for raw materials at the start of each month before their actual production takes place. Before the month ends and the inventory is depleted, a new order is placed to the suppliers. They also ensure that they have a safety stock in case of an unexpected rise in demand not predicted in their forecast. They make use of a periodic system in terms of inventory counting.

For the researcher, the management of their inventory is quite a simple approach than one would have imagined for a manufacturing company. Maybe this is due to the fact that they use nave forecasting techniques, using the same quantity each month/period when they are in production. It is good that they decided to incorporate the idea of producing a safety stock for sudden, unexpected rise in demand. Using, however, a periodic system in inventory counting, concerns the researcher. They may have the physical count of the end products; however, it is more prone to employee theft.

V. Summary, Conclusion and Recommendation

Summary

To summarize all the data that has been collected and presented in the analysis, Gracepoint Enterprises Uses the nave forecasting techniques with seasonal variations to determine the next production quantity. Decided to innovate their packaging from colourful cellophanes to modern plastic packages with the company name on the label as a way to make their product and company known to the masses, giving them a competitive advantage against other producers of local chocolates. Added new product lines from the original single product to ensure that their customers do not get tired from their products from lack of variation. Plans capacity according to their forecast. Produces their products in a repetitive manner, since they are involved in the production of high-volume goods, incurring lower costs. Arranged the layout of the facility, that is, its machinery according to the process of making the end product, shortening the slack time concerned with transporting the product from one process to another. Does not quite understand the true meaning of empowerment with employees. Provides salaries to their employees on an hourly basis, based on a fixed rate. Provides incentives to their employees as deemed appropriate by the general manager. Located their facility in Bulacan strategically to be close enough to Manila and the rest to the north. Inspects every equipment, process, and the product on a regular basis to make sure that the quality of the product is at its finest and customer satisfaction is always forefront. Makes sure there is good communication and visibility between both ends of the supply chain, the suppliers and the customers. Manages inventory through a periodic system. Keeps a safety stock in case of fluctuations of demand.

Conclusion

From all the data gathered for the conducted operations analysis of Gracepoint Enterprise, compared with the concepts taught in the Operations Management course, the researcher was able to draw the following conclusions and learning: Forecasting proves to be a very valuable tool when it comes to determining the production quantity. The packaging of a product affects a customers will to buy a certain product. So it is important to take the packaging into account whenever they decide on promoting a product to the general public. The packaging of a product can give a manufacturing company a competitive advantage when used in the correct way. There should always be a variety to products offered so as not to lose customer loyalty in terms of taste and preferences. Capacity planning is important strategically to ascertain the means to meet future demands and satisfy said demand, leading to satisfying customers and clients. It is important to consider how the process type of a job to see what should be done to determine output and minimize cost. When setting up a facility in a manufacturing plant, one must consider the process of how the product is manufactured to make the arrangements as optimal as possible to lessen production time, which leads to lesser machine operating time and costs. Employees or Human Resources are an essential factor in the production business, furthermore, in any other business. So a company has to make sure that the employees have a high rate of job satisfaction so as to not experience attrition. Location is a very important decision pivot. It should be considered when a company wants to locate near resources if they want to lessen the cost of acquiring or in a populated area if they want to acquire customers. Inspection must be regularly done in every aspect and in every level if a company wants to ensure the quality of their products and the customer satisfaction when they buy their products. Visibility and good communication are important when coordinating across the supply chain because in transacting business, it is a must to know who you are transacting with to clarify problems as they arise. When producing, it is a must-consider option to produce a safety stock so that if demand suddenly rises, the company can cope with it and garner the extra sales.

Recommendation

From all the data and information gathered, presented and cultivated through this operations analysis, the researcher has formulated the following recommendations: The researcher would like to recommend the implementation of a performance-based incentive system to better motivate the workers, increasing their productivity, and hopefully, the production rate. The researcher would like to recommend setting up a Human Resource Department within the company to lessen the workload of the general manager as well as to have a central focus on the employees as stated in the recommendation above. The researcher would like to recommend the use of any kind of advertising method, since its benefits will be accounted for in the long run. Ultimately, the researcher would recommend Gracepoint Enterprises to setup a new manufacturing plant in another strategic location to increase their capacity and make their products more circulated in the market.

Bibliography

Stevenson, Chuong. Operations Management. 2nd ed.McGraw-Hill.

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