Case Scenario
The Boomer Bangs projects presented to the Strategic Planning Committee were accepted for production. Roll out by the company is scheduled for January of 2019. The first product scheduled for production is a pill that helps reduce blood sugar levels. Market studies predict that this pill likely will be the most successful of the three products, which is why it is the first product Biotech has selected for roll out.
Upper management decided that Louis Monte of the Los Lunas, New Mexico Branch Production Team would lead this project. The plan is for Louis to serve, as a model for organizing that will be copied by the rest of the branches so that roll out can be concurrent. Louis knows that his production floor is set up exactly like the rest of the plants. Louis has put some thought into the fact that the new pill production will require additional production lines requiring changes to the existing set up. Louis believes space could be a problem. Louis estimates he will need 200 sq. ft. for the additional line set up. In addition, he will need two conveyor belts. Louis knows that relocation of some of the machinery or line set up is needed because the production of pills has to be protected from direct sunlight and stored at low temperatures.
Louis has concluded that there is a need for additional personnel – one pharmaceutically trained pill machine operator for the day shift and two operators for the night shift. Trained line workers cost $3 more per hour than untrained line-workers. Louis also knows that these new workers will need supervising. He may have to restructure the floor staff.
Louis is expecting a shipment from Madras, India of the primary pill ingredients bitt goud, spreading hogweed, Chinaberry (mostly found in India) and burra gokhru. Lately, sourcing of the Chinaberry has been a little difficult for Louis. He suspects the cost of production will increase the estimated R&D cost by $0.075 per pill. Additional labor costs and costs of the rare Indian ingredients places the overall production cost of one bottle of 60- pills at $5.65, which includes packaging.
Louis acknowledges that there are issues with the current organization structure that is problematic for production and is considering making a proposal for the plants to centralize rather than the current decentralized structure.
Biotech is known for telling workers that it wants to keep people in the Biotech family. The company encourages employees to get additional training and pays for college tuition for those who want to advance their career opportunities within the company.
During the course of production, older line staffers became aware that the pharmaceutically trained line workers made $3.00 more per hour than they did. The workers were unhappy as they felt that it was unfair that Biotech hired from outside rather than provide training to existing workers who would want to take over the jobs and earn a higher salary. An obvious concern began to surface among the workers. Several workers questioned whether Biotech was being truthful with them and wondered whether the Company wanted workers to advance in the company. The morale of plant workers began to suffer.
One floor supervisor told Louis that one of his workers refused to help develop a new process that would increase the speed of moving the pallets on the new floor scheme. He said, “Why should I help Biotech make more money if I don’t get any of the money?” Louis knows that this concern must be addressed, and morale needs improved. Louis also knows that only HR in headquarters can make decisions regarding benefits so he cannot offer pay raises. Louis wondered what he could do to motivate workers and build trust in the production department.
The chart below displays the results of the first year’s production of the new pill, Boomer 1. The table consists of data supplied by the production department managers of the Biotech branches making the pill. The data was collected for controlling production output. Vice President of Production, Atticus Finch will use the data to identify areas of improvement, change, or to provide kudos for the success of the processes used by the production departments in the production of Boomer 1.
The chart describes the standard goal (identified as standard) set by the department and the results of each branch. A comparison of the standard to the results allows the reader to form conclusions about the success or failure of the Production Department to meet the goals envisioned by the company. It also allows the reader to recognize patterns from the data so conclusions can be drawn as to the relationship between elements (e.g., cost expended vs time expended; those who spent more time had a higher cost).
| Specification | Standard | Wittlich | Detroit | Los Lunas | Sao Paulo | Melbourne |
| Cost per 60 pill bottle | 5.65 | 4.97 | 5.87 | 5.65 | 5.52 | 4.59 |
| Time | 7.36 | 6.89 | 7.46 | 7.31 | 7.32 | 7.7 |
| Quality Control problem ratio (per 500 bottles) | 1 | 1.75 | 2 | 3.5 | 4.75 | 1.52 |
| Shipping problem/damage (per 10,000 bottles) | 1 | 1.51 | 0.222 | 1.133 | 1.178 | 1.149 |
| total number of bottles produced per year | 450,000 | 600000 | 500,000 | 650,000 | 401,000 | 750,000 |
Introduction
The case is intended to conduct a comprehensive analysis of the Biotech Life and Health Products Company. The analysis is to be conducted on several scenarios of the company. The case revolves around the company Biotech Health and Life Products, Inc which is the manufacturer of personal care products, vitamin supplements, protein and fitness products, food supplements, and Nutraceuticals. Each of the case scenarios presents an individual episode of the POLC framework that stands for the Planning, Leading, Organizing, and Controlling. Even though the assessed problems are majorly given from the top management, the evaluation and individual suggestion include the concepts morale, responsibility and professional ethics for the whole company and for the human resources and operations. The report is structured around the three vital parts of the POLC initiating with the management function of the organization.
Organizing:
Analysis of Scenarios:
The project of Boomer Bangs has been approved by the Strategic Planning Committee, and the new products are expected to be launched on the market in January 2019. The team, lead position of the project is designated to Luis Montego of the Branch Production Team. The model accepted by Luis Montego will be accepted as the standard model for the whole company. It is also suitable as the layout and setup of the Production branch is similar to that of all other branches. Some modifications, however, need consideration, including the additional space for the production line and new conveyor belts and relocation of the facility. Other than the extra equipment, it has been realized that Luis would need additional human resources which would also cost more than the currently employed staff. It would cause some structural changes as well. The ingredients which are needed for the production of the new product are also not easily obtainable which results in an increment of the cost of $0.075 per pill. It shows that this model will cause an increment in the additional labor cost, consequently increasing the production cost to a total of $5.57 for 60 capsules per bottle.
Advantages of a centralized organizational structure
The advantage of centralization is that all decisions are made at the top level. This system benefits by providing the same standard across the whole company. It enables the following of similar protocol across all departments. It ensures that the same quality of the product is manufactured from all departments.
Disadvantages of a centralized organizational structure
For Luis, the centralized structure offers some disadvantages as well. The production of the new pill does not follow the same production protocol as the existing ones. The production systems currently employed do not support the production of the new pill. Not all the supplies are available from one supplier as well. More space is also needed for the conveyor belts. The hiring of new skills is also required. However, with a centralized structure, Luis does not hold the authority to decide on these problems.
Advantages of a decentralized organizational structure
Through a decentralized structure, the decisions are delegated to the lower positions while the main decisions are made at the top level. The daily operations are delegated to the lower positions. This structure benefits from relieving the upper management by delegating the daily routine decisions to the lower management. The empowering of the manager Luis for the production line is also done through decentralization.
Disadvantages of a decentralized organizational structure
The disadvantage of this structure is that the organization depends on the decision making the power of its lower management for its daily performance. Furthermore, even with the delegation of power, not all decisions can be made by lower managers. It has become a problem for Luis as he cannot decide on investment in infrastructure by himself.
Role of Luis Montego:
It has been established that the new product line will need additional staffing and equipment to start it. The operations supervisor and the general management role are specifically related to the organizing of the shifts in the practice of production, implementation of the changes and incorporation of the new routines in the existing process routine as seamlessly as possible. The crafting of the plan is the responsibility of the manager for the inclusion of the improvements in the new process along with the assurance of the implementation of such program with success (Ullah, Khondoker, & Fahim, 2014).
The first task is to look at the six critical areas of organizing procedure encouraging discussions for the new and existing project production plan. As per the case, the following important challenges are to be handled by the manager.
- Assurance of the compliance with current processes and production standards, including the lead times and deadlines.
- The new price of the products should consider the incorporation of the cost of procurement and operations of the new rare ingredients as used by the company.
- Newer staff should be provided with training for machine operation for both night and day shifts.
- The project manager should make sure that the team makes use of the available space at its maximum by the restructuring of the line for better and more efficient production.
- The supply of the new ingredients is found to be costly; this should be resolved by finding better prices.
- All the workers should be aware of the power, authority hierarchy and mindful of taking orders from their superior.
The next task is to identify the areas which need more attention. Staffing has been identified as one of the main areas of attention as the leadership would be needed to identify the supervisor and team lead of the production floor. Leadership would be needed in the new line of products as it cannot be successful without the leading of the leader. The leader would make sure that the management is conveyed with the needed important instructions and consequently to the employees as well. The new hiring for qualified pill machine operators is required in addition to the higher cost of these trained line workers by $3 per hour. It will surely affect the financial plan of the company. It is a fact that the high costs and rare supply of the ingredients would become a problem in the process. The staffing if not done efficiently can also become a problem as well (Hill & Jones, 2007).
The other areas do not pose the same level of threat as the staffing of the company. The additional equipment needed would need an extra 200 square feet of space. More space for inventory would also be needed, which can be handled in the presence of a warehouse.
Leading:
Morale Problem:
The first task in this section would be to identify the reason for the moral problem. As per the scenario of the company, there has been a problem regarding the morale of the employees in the production line because older employees are aware of the pay difference with the new hiring. It can also be a factor in the declining of the production of Biotech. There can be two reasons because of which this problem is arising. Healthy and effective relationships depend on trust (Schaefer, 2018). With the discovery of higher pay for new hiring, older employees may have developed a lack of trust in the employer. It can be seen as unfair and manipulative. Other than this, the lack of respect for the management can be a factor as well. It will come out as a lack of trust in the current employees of the new production line.
Motivation:
Luis can make use of external and internal ways of motivation to build up the morale of its existing employees. Even though most of the time the salary is enough to make the employees content, this is not acceptable in this case. The management needs to listen to, understand and respond to the feelings and concerns of its employees. Small celebrations, making the recognition of the efforts of employees go a long way. Luis can use small steps like using encouragement letters, giving credit where it is required, offering meaningful small rewards, and utilizing every opportunity for appreciation. The most important thing is to clarify to the employees about the decision of new hiring with higher pay (Schaefer, 2018).
Impact of Centralized Organization on Motivation
One of the factors which can hinder the Luis efforts in building up the morale of its employees can be the centralized organizational structure of the company. The lack of trust and connection between the upper and lower management can become a barrier in the motivation building of the employees. With more authority in the hands of the top management and little connection with the lower management, lack of trust and motivation is encouraged.
Controlling
Results of Data
The results for the production of the new product showed that Wittlich is doing well regarding the time, costs and damage ratio. Detroit, on the other hand, is taking the longest to produce with higher cost and a higher ratio of problems in quality control. Los Lunas is giving an average performance with some issues, and Sao Paulo is doing very good with control on time and cost, however the quality control is the worst and Melbourne is termed as the best performer.
Corrective Action
Corrective actions are needed to ensure improvement. The volume, time and cost of production are important. The quality of the products and processes is also crucial because it is important for the customers. It is also one of the areas in which the company is not doing so well. The company should look for improvement in the shipping damages and quality control processes. After this, the company can go on to look for implantation of the changes in the internal processes.
Potential Concerns
As per the notes of the meetings, and also from the careful examination of the results of the products, it has been found that there are some potential concerns regarding the long-term future of the company. The lack of space, moral issues, and quality control were the issues identified for immediate consideration. With the addition of the 200 square feet, the storage efficiency and production will also improve.
The issue with quality control in the two branches is also important. The limited space of the production area contributes to it. The new products are for this reason kept at a lower temperature. The relationship of the employees with the upper management is also not encouraging; it needs to be improved as well. Planning the project should be invested in more time to make it more efficient. The quality control system should be improved by providing more space for storage and production line. The cooling system should be improved as well.
References:
Hill, C., & Jones, G. (2007). Strategic Management: An Integrated Approach. Cengage Learning.
Schaefer, J. (2018, February 25). The root causes of low employee morale. Retrieved from American Management Association: http://www.amanet.org/training/articles/the-root-causes-of-low-employee-morale.aspx
Ullah, H., Khondoker, J. A., & Fahim, S. T. (2014). Role of Accounting Information in Strategic Decision Making in Manufacturing Industries in Bangladesh. Global Journal of Management and Business Research, 14(1), 9-24.
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