Comprehensive Operations Management Analysis Report: Magnum Ice Cream

This report provides an in-depth analysis of the operations management of Magnum Ice Cream. It begins with an executive summary, followed by a detailed examination of the company profile, including its founding, products, and parent organizations. The report then delves into key operational areas, such as research and development, highlighting Magnum's approach to innovation and flavor development, including its use of semiotic and qualitative analysis. The report then explores Total Quality Management (TQM), detailing how Magnum applies TQM principles to ensure product quality, customer satisfaction, and employee training. Furthermore, the analysis encompasses supply chain management, outlining the flow of raw materials, processing, packaging, distribution, and customer interaction. Finally, the report concludes with an examination of inventory management practices, including the use of Just-in-Time (JIT) and Materials Requirement Planning (MRP) methods. The report emphasizes the importance of effective operational strategies for Magnum's success.

Operations Management
Contents

Executive Summary.........................................................................................................................2
SECTION B – OPERATIONAL MANAGEMENT.......................................................................3
COMPANY PROFILE................................................................................................................4
RESEARCH AND DEVELOPMENT.........................................................................................5
TOTAL QUALITY MANAGEMENT........................................................................................6
SUPPLY CHAIN MANAGEMENT...........................................................................................7
INVENTORY MANAGEMENT................................................................................................9
CONCLUSION..............................................................................................................................10
References......................................................................................................................................10
Executive Summary

Operations management plays a very important role for managing the operations of an
organization. Every organization wans to earn good profits and get a good customer base, and for
achieving the same, there should be efficient and effective operations. In this report, there is a
description of different parts of operation management of Magnum Ice cream like Research and
development, supply chain management and total quality management. All these functions are
very important for the organization to get proper customer satisfaction and to create a good brand
image.
SECTION B – OPERATIONAL MANAGEMENT

Operations management plays a very important role for an organization as it helps in designing
and controlling business operations that results in increase in efficiency as well as profitability
improvement (Reid and Sanders, 2015). The four major parts of operations management for the
ice cream company- Magnum is elaborated below-
COMPANY PROFILE
Founded: Belgium, Denmark
Year: 1992
Products: Ice-cream
Parent organizations: Unilever (brand owner)
Magnum is a very known ice cream brand that is sell under Heart brand line of products in many
countries. It is owned by Nestle. In 1992, there were only a few flavors like Magnum Almond,
White and double chocolate then in 2002 it started selling frozen yoghurt. Now it sells a wide
range of ice cream products and Magnum brand is basically sold in New Zealand and Australia.
In Greece Magnum brand is owned by Nestle so Unilever ice cream use the name Magic for this
(Harvey, Heineke and Lewis, 2016).

RESEARCH AND DEVELOPMENT
Research refers to a process that helps in gaining new knowledge and understanding about ay
matter. It includes original and planned investigation. There are two kinds of research- Pure
Research and applied research. Pure research consists of no specific use in mind and generally it
is conducted by professors that are involved in professional research in universities. Their motive
behind the research is to only gain a clear and better understanding of concepts and it does not
contribute directly in increasing profitability of the organization. Applied research is directly
related to the revenues as there are different innovations that can be sold to the customers so that
organization can earn good revenues out of it. It also provides convenience to the society by
fulfilling their needs.
Development refers to the application of knowledge or findings to a plan for creating or
developing substantially improved devices, processes, products and systems (Berman, Krass and
Mahdi Tajbakhsh, 2011).
The research and development center of Magnum is situated in Belgium and the name of
laboratory is Ola Laboratory in cooperation with CALLEBAUT which is a Belgium chocolate
producer. It uses both kinds of research as there is a very straightforward concept to get the best
ingredients from the world so that it can make the finest ice creams. Magnum uses honey bees
for the pollination of fruits and nuts, so it is one of the major concerns of the organization to save
honey bees.
This organization always try to fulfill customer needs by providing them innovative and tasty ice
creams. It has amazing research and development practices to know about the new flavors for
attracting the bigger market segment. Magnum uses semiotic analysis as a practice to find new
opportunities for the gift segment of products. It is a good example of applied research. The main
motive of this research is to make profits and the research is divided into two parts semiotic
analysis and qualitative analysis. This organization comes under one of the best ice cream
providers as it caters customers to make them happy and satisfied. It has invested a high amount

on research and development because they always try to provide something new and different to
the customers.
TOTAL QUALITY MANAGEMENT
Total quality management is a process that help an organization in improving the productivity,
effectiveness and quality of the process and the products. There are many features of TQN like
involvement if employees, and role of suppliers in continuous improvement (Rosen, 2017). TQM
contains the work total because it focuses in all departments like accounting, marketing, finance
and sales. There are some principles of TQM and the way Magnum applies it-
1. Strategically based- Organizations use strategies for creating improvement in
performance and they create strategic plans for the same and then implement them in an
effective manner. There is an executive that has the responsibility for all quality and
regulatory works (Amador, Hartel and Rankin, 2017).

2. Focus on customers- Customers are very important for the success of every organization
and it does not matter what efforts they apply to maintain standards, provide training to
the employees and upgrade all their machines. Only customers have the power to
evaluate the products of the company. Magnum values its customer’s a lot and consider
their feedback in a very serious way. They also focus a lot on the advertisement and
packaging to attract customers. Paul Polman believes that customer’s deserves good
quality products that can satisfy their needs.
3. Care for quality- Quality is very important for satisfying the customers so it is necessary
for an organization to maintain and improve the quality of its products. A good quality
ice cream should have high amount of cream in it, so Paul Polman make sure that there
should be an adequate freezing process that create smooth and creamy ice cream.
Magnum also uses real flavors instead of artificial essence and it makes their ice cream of
best quality.
4. Training to employees- In order to maintain work employees are provided technical and
non- technical trainings so that they can able to maintain the quality. Magnum educate its
employees regarding TQM so that they can perform effectively. It provides formal
training and on the job trainings that are flexible in nature. There is a specified tool for
training and development that helps in reducing the cost (Tachizawa and Wong, 2015).

SUPPLY CHAIN MANAGEMENT
Supply chain management is a process that contains all the participants involved in the supply of
the product and activities related to the same. Such activities are planning, controlling and
execution of the product flow starting from the manufacturer till the end user. It should be cost
effective and all the activities are important because there is a very high competition in the
market and every company wants to make the goods available to the customers as soon as
possible in reasonable prices. Supply chain consists of material handling, inventory management,
transportation, management and distribution strategy (Sanders, 2018).
The full process of supply chain of Magnum is below-
Step 1: Raw Material- Magnum uses the raw material or the ingredients of top quality like it
acquires Vanilla from Madagascar were the top quality of vanilla is available.
Step 2: Processing- The main processing plant of Magnum is in Belgium. They have a factory
where there is a very low operating cost. The also have a proper waste management system so
that it doesn’t provide harm to the environment.
Step 3: Packaging- Packaging plays an important role as it helps in attracting the customers.
Magnum is so concerned about their packaging and always tries to maintain it (Heizer, Render
and Munson, 2016).
Step 4: Distribution- When packaging is done then the products of Magnum are sent to the
distributors. Then it sent to the retailers like Walmart and Kroger. A specific manufacturer is
called as Corregated manufacturer who makes the ice cream containers and the same is
responsible for labelling. The pattern is as follow-
The three major distribution channels are:
 Magnum cafes
Manufacturer Wholesaler Retailer Consumer

 Retail distribution channel
 Grocery and convenience stores
Step 5: Customers
The end user of the products are the customers who receives the product after overall process.
Magnum is one of the biggest ice cream providers because it has a very strong supply chain that
helps in providing the fresh products to the customers in a very short period for indulging their
taste buds.
INVENTORY MANAGEMENT
Inventory management is a process of managing the overall inventory in a cost-effective way. It
includes the storage, carrying cost and ordering inventory. An organization tries to keep the
optimum level of inventory of a specific product. An important function of this concept is to
maintain the record of all the products whether they are old or new. It tracks the goods by
knowing the serial numbers, dates, quantity and cost of the goods. There are two main techniques
used for inventory management –
1. Just in time (JIT) – This method states that a company receives the items according to
the plans or whenever they need it instead of maintaining a stock level. In this method

there is a very strong communication with the suppliers and retailers so that
customer’s order can be delivered on time (May, Atkinson and Ferrer, 2017).
2. Materials requirement planning (MRP)- In this method a forecast is done to know the
actual requirement of the material. This method ensures the right inventory level at
right time at right cost (Conficoni et al., 2017).
It is important for Magnum to maintain an adequate and right level of inventory because if there
is very much stock, the cash will be blocked. Companies can easily find out the correct amount
of stock that needs to be maintained and it is known as Economic order quantity (EOQ).
Magnum needs to produce a good volume of ice creams because of the high demand in its
multiple stores. They must store their ice cream at a particular maintained temperature.

CONCLUSION
This report is all about the operational management techniques used by the ice cream company
Magnum. They try to maintain their operations effective so that they can easily improve
organization’s performance. They also used lean manufacturing system to make it all worth.
Magnum tries to introduce different variants of its ice cream to attract more customers in the
market.

References
Amador, J., Hartel, R. and Rankin, S. (2017). The Effects of Fat Structures and Ice Cream Mix
Viscosity on Physical and Sensory Properties of Ice Cream. Journal of Food Science, 82(8),
pp.1851-1860.
Berman, O., Krass, D. and Mahdi Tajbakhsh, M. (2011). On the Benefits of Risk Pooling in
Inventory Management. Production and Operations Management, 20(1), pp.57-71.
Conficoni, D., Alberghini, L., Bissacco, E., Ferioli, M. and Giaccone, V. (2017). Heavy Metal
Presence in Two Different Types of Ice Cream: Artisanal Ice Cream (Italian Gelato) and
Industrial Ice Cream. Journal of Food Protection, 80(3), pp.443-446.
Harvey, J., Heineke, J. and Lewis, M. (2016). Editorial for Journal of Operations Management
special issue on “Professional Service Operations Management (PSOM)”. Journal of Operations
Management, 42-43(1), pp.4-8.
Heizer, J., Render, B. and Munson, C. (2016). Operations Management. Pearson Australia Pty
Ltd.
May, B., Atkinson, M. and Ferrer, G. (2017). Applying inventory classification to a large
inventory management system. Journal of Operations and Supply Chain Management, 10(1),
p.68.
Reid, R. and Sanders, N. (2015). Operations Management. New York: Wiley.
Rosen, M. (2017). The Future of Sustainable Development: Welcome to the European Journal of
Sustainable Development Research. European Journal of Sustainable Development Research,
1(1).
Sanders, N. (2018). Supply Chain Management. New York: Wiley.