Philippine Christian University

Graduate School in Business Management

1648 Taft Avenue, cor. Pedro Gil Street, Malate Manila

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MASTER IN BUSINESS ADMINISTRATION

Production Operations Management

Case Study Analysis: Stainless Products Philippines

Submitted by:

NORMAND P. LACAP
ARCHIELITO S. ESTRADA
BERLIN O. PADILLA
GERALD SAGUM

Submitted to

Prof. Elzeber O. Murallos

Overview

Stainless Products Philippines (SPP) is a small size manufacturing firm with a wide
assortment of resistance-welded wire products. Of the company’s annual business of
Php10,000,000, approximately fifty percent (50%) is accounted for by racks for holding dishes
and glassware in commercial dishwashing machines, forty percent (40%) by point of purchase
advertising display stands and ten percent (10%) by miscellaneous special orders for many
different purposes.

Recently, the management has received much advice regarding adoption of more specific
management methods particularly, the need for an effective system of production control. So
far, nothing had been done for three (3) reasons: first, there is reluctant to add to the overhead;
second, the foreman has expressed considerable doubts to the value of such methods (he states
that “I`m working as hard as is humanly possible and can`t bother to fool around with any more
details.”); and third, the management feels that the company is so small that the present
informal basis may actually be the most efficient way to operate. Expansion has been
contemplated for some time, but there is some doubt whether the present organization could be
expanded without complete reorganization. Mr. Cruz is uncertain whether a change is
imperative!

Time Context : Current Time

View Point: Mr. Cruz, as stated in the case serves as the owner of the company and responsible
on most of the management functions with the aid of his secretary. On the other hand, the
company’s salaried foreman who has complete supervision of the workforce and handles most of
the production operations (routing, scheduling, dispatching and inspection of the order).We can
say that both Mr. Cruz and the foremen are the authorized people to implement any plan of
actions that they deem effective and gives positive impact to the company

Problem : To be able to maximize company’s production based on market demand and

capabilities of company; so as to establish the stability of the company and ensure its viability in
production industry.
Objective:

Must:
To have a clear management process in its operation that will work through the current
challenges of the company in its production process, delivery deadlines, employee overhead,
quality assurance of products, customer satisfaction and future expansions.

Wants:
To have a good production cycle that will accommodate all customers demand and
satisfaction that will lead to company’s stability.

Areas of consideration:

STRENGTH:
 SPP has experienced and skilled foreman.
 SPP is profitable company (earning Php 10,000,000.00 annually).
 Willingness of the owner to convert the some of the production to continuous
from batch system.

WEAKNESS:
 Production know-how is vested only in one person.
 No internal control both in production and sales.
 There is no delegation of work.
 Lack of records keeping.
 Inability to assume the additional overhead expenses.
 Lack of skilled personnel. Other than the foreman, all other personnel is ranked
semi-skilled or if there’s any talented personnel they were unable to identify.
 Unable to handle large orders request because organization and plant simply
could not handle them.
 Orders are side tracked (especially the disk rack) and delivery promises are not
met and steady customers become displeased.
 The foreman is an “old-school” man who is doubt of change.
 The management feels that the company is so small that the present informal basis
may actually be the most efficient way to operate.
 Mr. Cruz is uncertain whether a change is imperative.

OPPORTUNITY:
 Company Expansion
 Some of the employees can be promoted to advance production process and
maximize their skills
 Ability to maximize production output.
THREATS:
 Competitors who have management control will be able to cater the products with
customer satisfaction.
 Unsatisfied customers may move to other competitors.

ALTERNATIVE COURSE OF ACTION

ACA # 1 Formulate ordering and production process for the company to follow and integrate
internal control to its process to accommodate information needed in management analysis as
basis to company growth.

Advantages
 Ability to track transaction process.
 Can be use as basis in internal control and references to enhance company
operation.
 Can be used to formulate better process in company transaction.
 This will avoid company’s backlog and will enhance deliverables.
 This will identify company capacity and limitation that will helps a lot in
decision making.

Disadvantages
 They may need to hire an experts or consultant to start the process.
 Tedious of recording transaction and may require additional manpower to
do the recording and analysis of the records.
 New protocol, new process that may lead employee dissatisfaction.
 Needs extra hours/manpower for the consolidation of data from one
module to other modules.
 May result to redundant recording process.
 May result to re-engineering of forms and official documents based on
agreed process and formulation.

ACA # 2 Procure an electronic ordering and production system

Advantages
 Ability to track transaction process.
 Can be use as basis in internal control and references to enhance company
operation.
 Can be used to formulate better process in company transaction.
 This will avoid company’s backlog and will enhance deliverables.
 This will identify company capacity and limitation that will helps a lot in
decision making.
 Availability of reports is on-hand.
 Transaction are inter-related to other process.
  Delegation, approval and tracking of transaction is easy.
 Consolidation of data is easy since it is saved in the database.

Disadvantages
 They may need to hire an experts or consultant to start the process.
 New protocol, new process that may lead to employee’s
dissatisfaction.
 Needs to align business process based on automation requirements.
 The company operation may be dependent to computer process.
 Additional cost for the procurement of the system.

ACA# 3Hire additional skilled manpower who has the capacity to formulate company
requirements on ordering, production and internal control needed.

Advantages

 This will expedite production process.

 Can give better idea and resolution on company process.
 Better know-how process to the employees.

Disadvantages

 Additional Cost.
 The company may experience experimental process.
 Effectiveness of implementation procedure may depend on everyone
cooperation.
RECOMMENDATION:

The group recommends the alternative Courses Action number 2.

Detailed Action Plan

Activities Person Responsible Mile Stone Budget

Search for the System

Procurement 2 mos
Requirements

Procurement and
Presentation and Demo 1 mo 5,000.00
Provider
Installation of the system,
Data Gathering, Data-
System Provider 2 mos 70,000.00
buildup and Infra
deployment

Training and actual Users and System

3 mos 650,000.00
Implementation Provider
PLAN OF ACTIONS:

ACTIVITY PERSON-IN-CHARGE DURATION

Meeting with Business Process Re Mr. Cruz 7 days

Engineering Team & discuss the current
situation, existing business process, current
challenges of the company
Meeting with the BPR team and check the Mr. Cruz/Foreman 1 day
proposed business process
Planning & Assessment Mr. Cruz/Foreman 7 days
Planning & Implementation of New Mr.Cruz/Foreman/ 6 months
Business Process Operation Employees