MGT2320 Capstone Assignment: Cupcake Manufacturing Operation Report

This report outlines the operational management strategies for a new cupcake manufacturing business. It details the supply chain structure, emphasizing timely raw material delivery, efficient processing, and reliable customer delivery. The report discusses the importance of a reliable supply chain and the selection of suppliers, including raw material sourcing. It also covers the production process, packaging, and warehouse management, with a focus on process layout and lean manufacturing. The report highlights the business location in Burnaby, Vancouver, and its suitability. Furthermore, it explores the application of Total Quality Management (TQM) tools, specifically checklists and control charts, to ensure product quality, minimize defects, and enhance customer satisfaction. The report also includes a cause-and-effect diagram to identify potential issues. The report is a capstone assignment for MGT2320, focusing on a comprehensive approach to operational management within the context of a cupcake manufacturing business.

Running head: OPERATION MANAGEMENT 1
Operation Management
Student’s Name
Institution Affiliation

OPERATION MANAGEMENT 2
Supply Chain Structure
Cupcakes are prepared in a manner that one cake serves one person. The supply chain
structure should facilitate delivery of raw materials on a timely basis, processing of Cupcakes in
time and making delivery to the customers before the agreed timelines. Time will be an essential
in designing of the supply chain structure of the business. The management will endeavor to
ensure that the supply chain is smooths to ensure that products are delivered to the customers on
a timely basis. One of the main values that the business would use to sell itself is reliability in
delivery of orders within the agreed timelines.
Harvey, Heineke & Lewis (2016) notes that a reliable supply chain process is one of the
main concerns that companies that supplies consumer goods should prioritize to develop to
remain competitive and to win the trust of customers. Jonsson (2000) states that having
deliveries made on time can make a difference between a company winning new customers or
losing the existing ones. As a result, when setting up the manufacturing business, stringent
measures will be put in place to ensure that the supply chain will be the cornerstone of the
business.
In order for a supply chain to be reliable, the management should get the intervening
processes such as delivery of raw materials, production efficient and delivery of products to the
customers in the right way (Liu, Han & Zhou, 2014). Our supply chain model will, therefore,
emphasize on the three major processes.
Supply of raw materials
Processing and packaging
Supply to customers

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Supply of raw materials.
The raw materials required by the business includes wheat flour, sugar, baking powder,
eggs, and milk. Our strategy in contracting of suppliers will be based on the capacity of provide
the required raw materials on a timely basis. The company will identify at least 3 suppliers who
can supply each raw material to ensure that productions are not delayed due to shortage in supply
from one supplier. Eggs supply will be outsourced from Egg Farmers of Canada and the wheat
flour will be outsourced from Dover flour, Arva Flour Mills Limited and Parrheim Foods.
The ordering process will entail raising of purchases vouchers that are authorized by operations
manager who will be the head of the entire supply chain process. Once the products are
delivered, the store manager verifies that the right quantities are received and generates a goods
received note, which he shares with the finance department for the suppliers to be paid.
Processing of products and packaging
The production process will be overseen by a supervision and operations manager.
Production will be based on orders placed by the customers. The costing manager will ensure
that the bill of materials is mixed in the right proportions to ensure that the quality of the
products produced are in-line with the business’s quality standards. Production efficiency will be
enhanced by ensuring that the labor hours, machine hours and floor space utilization are
optimized.
Raw material will be transferred from the store to the factory on first-in-first-out (FIFO) to
mitigate losses that may occur as a result of poor handling of inventory. The costing manager,
the supervisor and the store managers will sign a requisition form that will authorize the transfer
of goods from the store to the factory for production purposes.

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Once the goods are processed, they will be packaged using materials that are branded
with the name of our business. This will be inline with our marketing strategy to create
awareness to customers of the existence of our cupcakes. Packaged goods will then be
transferred to the warehouse. Delivery to the customers will be authorized by the warehouse
manager. Loading of Cupcakes on the trucks will be based on the information described in the
customers’ purchase order. A confirmation will be made by contacting the customer via the
phone to establish that the purchase is authentic and it reflects in the customer’s database. Upon
the verification of the customers location, the truck will leave the premises and a photograph and
the weight will be taken at the weighing bridge located at the weighing bridge. The driver will
sign the departure book to acknowledge that specific goods were shipped from the company to a
specific customer on a given date.
Location
The company will be located at Burnaby in Vancouver. The location was deemed suitable
as the it is well connected with the market and has infrastructures that are required by the
business to run effectively. In particular Vancouver has adequate water supply, reliable transport
network, security and the rental space is affordable. According to a research carries out by Bać,
(2014), Vancouver is suitable for running business as the local authorities supports businesses and
the duration between an application of a trading license and approval is highly minimized as
application, payments and approvals happens online. The map of the location is as shown.

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Layout Strategy
A hybrid layout where both the processes and products are considered is appropriate for
our business. Process layout will be applied in production as the company will be processing
different flavors of Cupcakes. Harvey, Heineke & Lewis(2016) notes that a process layout is utilized
when the production process uses a similar model when making products and resource sharing is
eminent. In addition, our process will adopt the use of lean-manufacturing approach where
resources will be utilized to increase efficiency in production.
The store section will be separate from the manufacturing process. This will ensure that
the raw materials like eggs are preserved by not exposing then to high temperatures. Further
having the raw material sections in a separate location from the production site ensures that the
controls that the management puts in place to promote accountability are observed by staffs.
Processing of Cupcakes take place in the factory. The factory will be a few meters from
the store to ease transfer of raw materials from the store to the production site. In the factory, the
orders will be recorded by the supervisor for accountability purpose. As a result, a separate office
containing a computer configured to initiate orders will be placed in the factories. Orders will
only be initiated after they are accepted into the system.

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Once an order is completed, packaging takes place in a separate section in the factory. In
the packaging section, a store where packaging materials are kept is monitored by a store
controller. Movement of packaging materials is recorded and re-ordering happens after re-order
levels are reached. The packaging team packages products based on their flavors and seals them
ready for transferring to the warehouse. Packaging machines supplements human labor and
enhances efficiency in the packaging process.
The warehouse will be located adjacent to packaging section to ease the movement of
packaged goods from the packaging area to the warehouse. Each item will be placed in different
sections within the warehouse. This helps in minimizing confusion when picking products when
loading them into the trucks.
Other departments such as human resource and accounts will be located in a separate
building from the store and the factory. Therefore, in total, the business will have 4 buildings.
One for storing raw materials, production and packaging, warehousing and one for non-
manufacturing operations.
The layout strategy as described above fits the business in that the nature of activities
taking place in each building varies and the management considers this separation appropriate to
ensure that the controls that has been put in place are not overridden by the staffs. In addition, the
layout ensures that there is accountability as movements of raw materials and finished goods is
closely monitored.
TQM Tools
The two Total Quality Management (TQM) tools that we shall use in the business are a
check list and a control chart. According to Liu, Han & Zhou (2014), the main objective of having
TQM tools ensure that the products being processed are of high quality, minimizing defects,

OPERATION MANAGEMENT 7
enhancing customer satisfaction, cost reduction and boosting the morale of the employees. Liu,
Han & Zhou (2014) observes that when TQM are used in production, the products quality are
maintained and the company can identify variations in tastes that may could be accessioned by
improper combination of ingredients. Harvey, Heineke & Lewis (2016) notes that getting a superior
brand is not an easy task. However, with dedication and commitment and adopting modern
quality assessment techniques, it is possible to produce high quality products consistently
(Jonsson, 2000).
When applying control charts and check-lists, our team will test the quality of Cupcakes
by sampling on a regular basis. A sample will be selected randomly after the production is
completed and various quality tests conducted to determine whether the ratio of ingredients used
is inline with the company’s standard bill of materials as stipulated in the company’s ingredients
list. The actual components of a finished product will be compared against the BOM and in the
event that the variance identified is considered to be material, the actual cause of the variance
will be investigated. Quality control charts are considered appropriate in that it is easier to
interpret the results from the analysis as one will only be required to compare the actual with the
standard components. Control charts use diagrams, and as a result, they are intuitive and
attractive to the user. An example of a control chart is as shown below.
A B C D

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Suppose that color A is returned when Cupcakes have too much sugar, color B is returned when
all the combinations are as per the bill of materials (BOM), color C represents too much water
and color D represents more than one ingredient mixed in the wrong proportion. With this
control in place, then a sample tested from the production can be used to tell whether the
production team is following the laid down procedures when processing orders.
Check-lists are effective in that they incorporate they ensures that errors are minimized during
production. The ingredients required to make a product are listed down and the person carrying
out the process can execute the it with ease.
Below is an example of a check list that we shall use in our business
Steps Check list for making Cupcakes
A Input 50 units of flour
B use 2 large eggs
C put 100 units of sugar
D put 200 units of butter
E put 5 units of Vanilla
Cause and Effect Diagram
Causes of Undercooked Cookies
Poor mixing of
ingredients
Poor timing of the
production process
Wrong
temperatur
e
Machine
breakdown
Causes Causes Causes Causes
1. New staff 1. New staff
1. New
staff 1. Age
2.Misintepretation of
check list
2. Misinterpretations of
check list
2. Misinterpretations of
check list
2. malfunction due
to late repairs
3.Reading on the
wrong menu
3. Reading on the wrong
menu
3.Reading on the wrong
menu 3overuse

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From the chart above, undercooked cookies could result from machine breakdown or
human errors. When the production machine breaks down when the processing is on progress,
there mixture may fail to mix as required after the functionality of the machine is reinstated. This
would result to undercooked cookies. Human errors are known to be a major course of poor
quality. These errors may arise when a new staff fails to read the checklist appropriately leading
to errors arising in mixing of ingredients and poor setting of temperatures required to process
specific product.

OPERATION MANAGEMENT 10
References
Bać, A. (2014). Sustainable development of the city on the example of Vancouver. Ecological
Questions, 19, 83. doi: 10.12775/eq.2014.009
Harvey, J., Heineke, J., & Lewis, M. (2016). Editorial for Journal of Operations Management
special issue on “Professional Service Operations Management (PSOM)”. Journal Of
Operations Management, 42-43(1), 4-8. doi: 10.1016/j.jom.2016.03.005
Jonsson, P. (2000). Towards an holistic understanding of disruptions in Operations
Management. Journal Of Operations Management, 18(6), 701-718. doi: 10.1016/s0272-
6963(00)00040-1
Liu, T., Han, D., & Zhou, H. (2014). Capital Efficiency and Eco-Efficiency of Enterprise
Operation. Advanced Materials Research, 1073-1076, 2709-2713. doi:
10.4028/www.scientific.net/amr.1073-1076.2709