Importance of Operations Management for a Recycling Centre Corporation

This assignment explores the importance of operations management for a Recycling Centre Corporation and covers topics such as capacity analysis, break-even calculations, customer mapping, operations analysis, strategic direction, and management decisions.

Operations
Management

Table of Contents
Table of Contents.............................................................................................................................2
INTRODUCTION...........................................................................................................................1
CAPACITY ANALYSIS AND BREAK-EVEN CALCULATIONS.............................................1
CUSTOMER MAPPING.................................................................................................................3
OPERATIONS ANALYSIS............................................................................................................6
STRATEGIC DIRECTION.............................................................................................................7
MANAGEMENT DECISIONS.......................................................................................................9
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................12

INTRODUCTION
Operations management can be defined as the process of formulating strategies for the
purpose of managing future operational activities so that the business goals could be achieved
successfully. All the managers in the companies are responsible to make sure that they are able
to control, evaluate, monitor and assess the progress of business as it is required to assure success
of all the projects. While planning to make sure that the plans that are formulated for betterment
of entity will be able to result positively or negatively it is essential to pay attention towards the
concept of operations management (Babich and Hilary, 2020). It can help to analyse the key
factors that should be focused to attain success and ignore failure for the project. In other words,
it could be defined as the administration of such practices that can help to create highest level of
efficiency for the organisation. Main aim of this report is to understand the importance of it for
an entity which is planning to grow its business. This assignment is based upon the case of a
Recycling Centre Corporation. This project covers various topics such as capacity analysis and
calculation of break-even for the organisation, customer mapping for inbound and outbound
clients, operations analysis etc. Apart from this, Ansoff matrix for the purpose of identifying best
strategic directions along with management decisions is also covered in this assignment.
CAPACITY ANALYSIS AND BREAK-EVEN CALCULATIONS
Capacity of heavy-duty spreader in tons per week:
Capacity for one hour will be = 70 tons
Working time for one day is = 11 hours
Working days per week = 5 days
Capacity for one week = Capacity for one hour * total hours in a days * days in one week
= 70 * 11 * 5
= 3850
The capacity of the asset for one week will be 350 ton per week.
The annual production costs of the heavy-duty spreader:
Fixed production cost = 16 per ton
Variable costs:
Employee wages and fright costs = 27per ton
Material cost = 260 per ton
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Capacity for on year = Capacity for one week * total weeks in the year
= 3850 * 52
= 200200
The calculation of production cost is as follows:
Particulars Amount
Fixed cost (200200 * 16) 3203200
Variable costs:
Employee wages and fright costs (200200 *
27)
5405400
Material cost (200200 * 260) 52052000
Total production cost 57780600
The annual profit and loss from the asset:
Total cost = 57780600
Selling price = 370 per ton
Total selling price = Total annual capacity * selling price
= 200200 * 370
= 74074000
Profit or loss = Total sales – total cost
= 74074000 – 57780600
= 16293400 (Profit)
Total profit from the asset will be 16293400 hence it will be profitable for the enterprise.
Calculation of BEP
Formula = Fixed cost / PV ratio
= 3203200 / 22.43%
= 14280874
The BEP sales for the entity will be 14280874.
PV ratio = Contribution / sales * 100
= 370 – (260 + 27) / 370 * 100
= 83 / 370 * 100
= 22.43%
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CUSTOMER MAPPING
Customer mapping can be defined as the steps that are followed by a customer while
engaging in the activities of the enterprise. It is very important for all the enterprises to make
sure that they are able to analyse the main requirements of all the customers and then fulfil all of
the with required resources (Bromiley and Rau, 2016). For this purpose, customer mapping is
conducted for all the clients and it helps to analyse the main elements that are focused by clients
while buying a product or service. Recycling Centre Corporation is one of the largest entities
which are working on waste management and trying to make different useful products with the
help of various types of waste items. In order to make sure that all the requirements of customers
are met it is very important for the enterprise to segregate all the clients of it in two parts which
are inbound and outbound. All of them are separated as follows:
Inbound customers: These are the clients who call the company with a service request
or enquiry. Such customers directly interact with the company without any mediator. There are
various types of such clients for Recycling Centre Corporation. Description of all of them along
with their requirements and the resources which will be required by the enterprise to meet the
requirements. Following description can help to understand the main clients and their
requirements from the enterprise:
 Municipalities: It is a local area with its own government or a governmental body of a
specific area. It could be a customer for RCC as it can sell its products to the
governmental bodies so that they can work upon improvement of infrastructure. The
main requirement of this client is quality and cost. All the items which will be bought by
municipality will be purchased in bulk so cost will be the main focus of it (Choi, Wallace
and Wang, 2018). As the government wok for public so good quality is another
requirement which will be required to be fulfilled RCC. In order to meet the
requirements, it will be very important for the organisation to make sure that it is having
sufficient resources. Some of the main resources that will be required to fulfil all of them
are raw material, effective pricing policies etc.
 Large construction companies: All the entities that are involved in construction
activities are also the inbound customers for RCC because all of them can buy the
recycled products of it for the buildings that are constructed by them. All the large
entities could be contacted by Recycling Centre Corporation is required to identify the
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large companies which are involved in construction activities and contact them. It will
help it to enhance its sales and revenues for future if it will be able to sale them the items
that are manufactured by it. The major requirements of such clients are quality, time,
dependability etc. All the construction companies are working for different customers and
it is very important for them to make good relations with all of the for this purpose, they
want that they should use good quality products that are dependable for long run. It will
result in very low possibility of complaints of the clients (Dai and Tayur, 2019). Apart
from this, one of the main requirements of construction companies is time. As such
entities are having various projects so it is essential for them to get all the products on
time so that they can complete one project and focus on the another one. The main
resources that are required to fulfil the requirements of such customers are technology, on
time delivery, skilled work force etc. If latest technology will be used to manufacture
goods then it will result in higher dependability, skilled workforce is required to make
good quality products and on time delivery is required to meet the deadlines of delivery.
If all these resources will be acquired by RCC then it will be very easy for it to meet the
requirements of all the customers according to their specifications.
 Small scrap traders: All the small scrap traders are also the inbound customers for RCC
because all of them could be used to buy the scrap which will be used to make the
recycled products by the entity. The requirements of them are cost if they will be paid
higher by Recycling Centre Corporation then as compared to the others then they will
sale all their scrap to them. It will help the organisation to make sure that it meets
expectations of all its customers. The main resource which is required by RCC to meet
the requirement of this client is funding. In order to retain them for long run it will be
very important for the organisation to offer them good price for their material so that all
the operations could be carried out successfully (Gibson and Parkman, 2018).
 Manufactures: There are various types of manufacturers such as foundries, wire and
cable, utilities, telecom companies etc. All of them are also inbound customers for RCC
as it can sale its products to them so that they can make their final products and sale it in
the market to end users. One of the main manufacturers which would be focused by RCC
is utilities manufacturer. All the recycled products could be sold by it to such producers
and they can use it to make their final item to sale in the market. The main requirements
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of such customers will be flexibility, cost and dependability (Gölzer and Fritzsche, 2017).
In order to fulfil the requirements, it will be very important for the organisation to acquire
some specific resources such as funding, latest technology etc.
Outbound customers: These are such clients who are contacted with the help of a
mediator which is an agent who interact with the customer on behalf of the company. One of the
outbound clients for Recycling Centre Corporation is metal manufacturer. The entity can contact
such customers to sale the recycled products that are made by it. It will help to enhance revenues,
sales and profits for business execution and attain growth for business. Some of the main
requirements of them are quality, cost, dependability etc. In order to meet all of them, it will be
very important for the entity to acquire some specific resources. These are skilled labour,
monetary resources, latest technology etc. If all of them will be focused by the organisation then
it will be very easy to meet all the requirements of all the customers (Heizer, 2016). A map for
all the customers whether they are inbound or outbound is as follows with their requirements and
the resources that are required to fulfil them:
Customers Requirements Resources
Inbound customers:
Municipalities Good quality
Lower cost
Good material
Effective pricing
Large construction companies Higher dependability
Good quality
On time delivery
Latest technology
Skilled workforce
Proper management
Small scrap dealers Lower cost Effective prices
Manufacturers High dependability
Flexibility
Lower cost
Innovative technology
Monetary resources
Outbound customers:
Metal manufacturers Good quality
Dependability
Low cost
Skilled labour
Funding
Advanced technology
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OPERATIONS ANALYSIS
Operational analysis can be defined as a method which is used for the purpose of
examining the current performance of the organisation and the operations that are performed by
it. It is also focused with the assessment of utilisation of investments and measurements of
performance of the business. There are various elements that are focused by it are cost, schedule
and parameters for performance. While formulating objectives for future all these components
are focused so that success and growth for business in future could be assured. In most of the
companies such as RCC it is used for the purpose of analysing issues, finding solution for them
and formulating effective decisions for future. There are various types of problems that are faced
by Recycling Centre Corporation. Some of the specific issues are listed below which are required
to be resolved by it:
Difficulty in capacity planning: It is one of the main issues which are faced by RCC as
the management is not able to plan the capacity properly because of weak estimation skills. Due
to this problem the organisation is not able to fulfil requirements of its clients and meet the long-
term goals. It is very important for it, to deal wit this problem so that all the products could be
recycled at full capacity and the future goals and objectives could be met (Hitt, Xu and Carnes,
2016).
The issue of quality management: It is also a problem which is faced by RCC because
of its weak management of quality. The staff members working in it are not able to check the
quality properly and it results in lack of good quality items that are sold to the clients. It is also
resulting in poor market image of the entity which is affecting profitability and productivity of
enterprise. Due to this, issue the requirements of customers could not be fulfilled and it affects
the number of loyal clients. This problem is required to be dealt properly so that the possibility of
lack of engagement of customers could be ignored.
Plant maintenance: The top-level executives of RCC are facing the issue of plant
maintenance as they are not able to pay attention towards it. Due to this, the quality of all the
items that are manufactured by the enterprise is decreasing and affecting the profits as well as
revenues. It is very important for the entity to resolve this problem so that the entity can maintain
its market position and retain all its clients (Ivanov, Tsipoulanidis and Schönberger, 2017). In
order to deal with it, the management can make schedule for the maintenance of plant and make
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effective policies so that the staff members can also get engaged in the procedure of resolution of
this issue.
Performance measures: For all the organisations it is very important to make sure that
performance is measured in regular basis. For this purpose, different types of performance
measures are used. These are KPI, benchmarking etc. and by using them the companies can
analyse that they are able to meet the long-term objectives or not. One of the problems that are
faced by RCC is related to performance measures and to deal with it, the managers can use
different types of them so that actual progress of business could be monitored.
Logistics: RCC is not able to manage its logistic related operations properly which is
leaving negative impact upon its operations and supply chain. Due to this, the products could not
be delivered to the clients on time which also affects the market image of the entity. It is very
important for Recycling Centre Corporation to deal with this issue properly. For this purpose, it
can make policies for effective management of logistic operations. It will be beneficial for
execution of all the operational activities in systematic manner (Lee, 2018).
All the above described issues are faced by RCC and it is essential or it to deal with all of
them properly. For the purpose of responding them in systematic manner it will be essential for
management to formulate effective strategies for each one of them. One of them main issues
which should be focused first and analysed in detail is plant maintenance. It requires proper
attention because it directly leaves impact upon whole business. If the plant will not be
maintained systematically then it will be very difficult to meet requirements of clients. In order
to make sure that plant is maintained properly it is vital for the managers to analyse that they
have formulated effective strategies or not. For this purpose, different alternative ways to deal
with the issue are required to be identified so that one of them could be selected and
implemented to get positive outcomes. If this problem will not be resolved by RCC then it will
be very difficult to sustain in the market as it will create hurdles for running business smoothly.
If the mangers will formulate effective decisions such as timely repair and maintenance of plant
then it will be easier to respond the issue in systematic manner (Lee and Tang, 2018).
STRATEGIC DIRECTION
Strategic direction can be defined as the option which is selected by the organisation to
attain growth for future. While planning to select on strategic direction it is very important or all
the entities to make sure that different alternatives are selected by them. RCC is also looking for
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possible options for it so that it can grow its business and enhance sales and profits. One of the
best models which could be used for this purpose is Ansoff Matrix. There are four different types
of strategies that could be adopted by the organisation for the purpose of selecting one of the best
strategic direction. Description of all of them is as follows:
Market penetration: According to this strategy an organisation can try to maximise its
sales in the existing market with the help of its existing products that are offered to the clients. It
can help to increase number of customers in the current market which is being captured by the
entity. While planning to attain growth this option could be focused by Recycling Centre
Corporation. The organisation can try to enhance sales of its existing offerings in its existing
market. If it will be adopted by RCC then it can help to enhance the number of clients from the
local market. One of the key benefits of it is no cost of market research and marketing because
the entity is already aware of the requirements of clients and their nature of buying (Olsen and
Tomlin, 2020).
Product development: When this option is selected by an organisation for the purpose
of attaining growth then a new product is introduced in existing market for the clients with the
objective of higher profits. If it will be selected by RCC then the management can lunch a new
recycled item in the market which will help to attract more and more new clients and attain
growth for business. The cost of market research will also be very low if this option will be
selected by RCC because it will be having information about preferences of clients in advance.
Market development: Under this option of Ansoff Matrix the entity can launch its
existing product in a new market for the purpose of expanding the business. With the help of it,
market share could be enhanced. While planning to attain growth it could be selected by RCC
because the managers can introduce its existing products in a new location. It will be beneficial
for the organisation to capture a larger market area and attain growth. If this strategy will be
adopted by the entity then the management will have to spend monetary resource of market
research of the new market. With the help of it, information regarding taste and preferences of all
the targeted audience could be gathered and decisions regarding launching the products could eb
taken (Qi and Shen, 2019).
Diversification: It is the last strategic direction which is available to RCC which is
mainly focused with introduction of a new product in a new market. The risk associated with it is
very high as it is not possible to estimate that the new clients will adopt the product or not. If it
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will be selected by the organisation then it will be very important or it to make sure that it is able
to spend funding on different activities such as market research and production. The level of risk
with this option is very high so it is essential for the organisation to make sure that it is ready to
take risks and deal with all of the properly (Reid and Sanders, 2019).
There are various options available for RCC in order to select the strategic direction. The
best suitable option for it will be the product development which will help it to launch a new
recycled item in its existing market share. While adopting this option Recycling Centre
Corporation the enterprise can use the food waste to make biogas which can help to produce
electricity for light bulbs. According to Marie Louise who is the newly hired communications
manager, 1kg of food waste could be used to make bio gas which can produce electricity for a 1
light bulb (Thomé, Scavarda and Scavarda, 2016). This idea could be introduced by the
organisation in the market which will help it to enhance its sales and increase the number of
customers from the local market. If it will be selected by the enterprise then no additional cost of
market research will take place as the managers will having detailed information of preferences
of customers. This product development option will help RCC to attain higher profits and attract
new customers to achieve sustainability for business.
MANAGEMENT DECISIONS
There are various types of managerial actions will be required to be taken by the
managers of Recycling Centre Corporation for the betterment of business. All of them could be
understood with the help of following discussion:
 The managers are required to take control over logistic activities so that the supply chain
could be managed systematically and business could be carried out in systematic manner.
 One of the main managerial decisions will be managing the quality because it is required
to meet organisational objectives such as higher customer engagement and profits.
 The managers are also required to take actions regarding plant maintenance as it is
required to meet expectation of all the customers.
 While planning to focus upon the strategy of product development it will be essential for
the managers to make sure that they are making efforts for introducing the new product
properly. It will help to attract more and more customers from the existing market.
 The managers will also be responsible to take action regarding assessment of
requirements of customers so that resources to fulfil them could be acquired. For this
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purpose, proper analysis or mapping for clients could be conducted as it will facilitate the
decision making of product delivery.
 The managers should take action for measuring performance of business on regular basis.
For this purpose, different types of performance measures could be used. These are
benchmarking, KPI etc. With the help of KPI success and failure of business decisions
could be measured which can facilitate the analysis of that the strategy should be
implemented or not. Benchmarking could be used to compare the policies of business
with the competitors so that it could be determined that the company will be able to
sustain in the market or not (Van Aken, Chandrasekaran and Halman, 2016).
The managers of RCC should pay attention towards all the above described managerial
actions because with the help of all of them they will be able to find solution for all the issues of
business. Apart from this, these actions are also required to be taken for the purpose of
implementing the strategy of product development properly because the managers are required to
make sure that they should not make any type of mistake while selecting strategic direction.
CONCLUSION
From the above project report it has been concluded that, operations management is the
process of problem identification and decision formulation for the same. It is very important for
all the companies to make sure that they are paying attention towards it as it is very important to
attain success for future. One of the key elements which are required to be focused by all the
entities is capacity management because with the help of it BEP could be analysed and then all
the expenses could be recovered. In order to attain success, it is very important for all the
companies to make sure that they are able to analyse the units that are required to be sold for the
purpose of meeting the BEP. Apart from this, analysis of cost, profit and loss is also required to
be made as it can help to assess that business will grow or not in future. Customer mapping is
also a key element which should be focused by all the companies as it can help to analyse
requirements of clients and resources that are required to meet them. Some of the inbound and
outbound customers for a recycling company are scrap dealers, manufacturers, municipality,
large construction companies etc. Some of the key requirements of all of them are cost, quality,
flexibility, dependability etc. There are various types of problems which could be identified with
the help of operational analysis. These are plant maintenance, logistics, performance measure,
quality management, capacity planning etc. All of them are required to be resolved with proper
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analysis of business. While selecting strategic direction Ansoff Matrix could be used. There are
four different strategies of it which are market penetration, development, product development
and diversification. Apart from this, managers of all the companies are also required to take
managerial actions for management of business.
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REFERENCES
Books and Journals:
Babich, V. and Hilary, G., 2020. OM Forum—Distributed Ledgers and Operations: What
Operations Management Researchers Should Know About Blockchain
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view. Journal of Operations Management. 41. pp.95-106.
Choi, T. M., Wallace, S. W. and Wang, Y., 2018. Big data analytics in operations
management. Production and Operations Management. 27(10). pp.1868-1883.
Dai, T. and Tayur, S., 2019. Healthcare operations management: A snapshot of emerging
research. Manufacturing & Service Operations Management.
Gibson, P. and Parkman, R., 2018. Cruise operations management: Hospitality perspectives.
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Gölzer, P. and Fritzsche, A., 2017. Data-driven operations management: organisational
implications of the digital transformation in industrial practice. Production Planning &
Control. 28(16). pp.1332-1343.
Heizer, J., 2016. Operations management, 11/e. Pearson Education India.
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Ivanov, D., Tsipoulanidis, A. and Schönberger, J., 2017. Global supply chain and operations
management. A decision-oriented introduction to the creation of value, 2.
Lee, C. K. H., 2018. A review of applications of genetic algorithms in operations
management. Engineering Applications of Artificial Intelligence, 76, pp.1-12.
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innovations: New operations management research opportunities. Management Science.
64(3). pp.983-996.
Olsen, T. L. and Tomlin, B., 2020. Industry 4.0: opportunities and challenges for operations
management. Manufacturing & Service Operations Management. 22(1). pp.113-122.
Qi, W. and Shen, Z. J. M., 2019. A smart‐city scope of operations management. Production and
Operations Management. 28(2). pp.393-406.
Reid, R. D. and Sanders, N. R., 2019. Operations management: an integrated approach. John
Wiley & Sons.
Thomé, A. M. T., Scavarda, L. F. and Scavarda, A. J., 2016. Conducting systematic literature
review in operations management. Production Planning & Control. 27(5). pp.408-420.
Van Aken, J., Chandrasekaran, A. and Halman, J., 2016. Conducting and publishing design
science research: Inaugural essay of the design science department of the Journal of
Operations Management. Journal of Operations Management. 47. pp.1-8.
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