Operations Management: Strategic Decisions in Royal Navy Case Study

This report analyzes a case study on The Royal Navy, a company that designs and manufactures parts and equipment for warships. It identifies operational, strategic, and financial challenges faced by the RN, including issues related to outsourcing, quality standards, and production delays. The report explores the strategic decisions an operations manager should make regarding manufacturing processes, facility location, technology adoption, and workforce management. It examines the implications of the RN achieving a maximum fleet size of 1000 vessels, suggests improvements in information flow, and provides recommendations on production planning and meeting demand variations. The analysis includes an evaluation of the initial manufacturing design, the impact of mechanization, and the resulting cost savings. This report provides a comprehensive overview of the challenges and potential solutions within the context of the Royal Navy's operations.

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Introduction
This assessment identifies the issues that are relevant for strategic decision making by
operations manager in a manufacturing company. This report analyzes the case study
on The Royal Navy which is a company that designs and manufactures parts and
equipment required to assemble war ships. The Royal Navy manufactured its
equipment and parts at their Royal Dockyard while at the same time depending on the
services of various vendors. The vendors were contracted to supply specialized items
and equipment that the company found uneconomical to produce by itself. The
dependence on these vendor results to operational problems for RN since at time they
may delay in supplying the required items and equipment and hence affecting other
production related activities in the organization (Ruhanita, 2011). Ships may end up
delaying before they return to duty. The outsourcing of the vendors also results to
issues on quality standards and the workers of RN may be forced to put more work on
them and hence resulting to extra cost of labor and loss of productivity.
This report therefore identifies the operational, strategic and financial challenges
faced by RN and identifies ways in which these problems could be solved. The report
begins with identification of the major strategic decisions the operational manager
should take when choosing appropriate manufacturing processes. The most significant
of these considerations are indicated. The issue of interference by management
through ordering that Goodrich employees as few workers as possible is
discussed.The management should have let the operational manager make decisions
on staffing depending on analysis carried out. The paper also analyzes the initial
manufacturing design using the data provided. The implications of RN achieving a
maximum fleet size of 1000 vessels are identified and explained in this paper based
on the statistics available to RN at the time. Suggestions on improving information

flow in the Royal Dockyard through improving design and application of modern
technology are made in the report (Thukaram, 2013). In addition to these, the paper
also contains recommendation on improving production plan and how to meet the
various types of demand it RN is faced with.
Q1.
Operations managers play a very critical role in management of production in a
company. The operations manager is charged with the responsibility of minimizing
production costs in an organization by designing production systems that are very
efficient. Operations manager is also expected to draw production plans and schedules
for factory workers so as to ensure that an organization keeps up with the level of
demand. This also ensures that all the production related activities run smoothly
without delay or interference. At the RN, the operations manager is expected to make
major strategic decisions which affect the production and the general performance of
RN. One of the strategic decisions is on the products to be manufactured at the Royal
Dockyard. The operations manager should estimate and analyze the cost of producing
each products needed by RN. After determining this, the operations manager can then
analyze and compare the cost of manufacturing the products and the cost of
outsourcing the same (Krznaric, 2007). This information helps the operations manager
to make a decision on which products to manufacture in their factory and which ones
to outsource from other suppliers and hence maximizing efficiency in the
organization.
The operations manager at RN also needs to make strategic decisions related to
processes. Processes are very crucial especially in production since most of the
activities are related. The failure in one or some of the process may lead to collapse of

the all the activities and operations within the organization. The operations manager
needs to decide on the processes that should be followed in order to successfully
complete specific tasks in an organization. The processes chosen have to be the most
economical in terms of time and even cost. Strategic processes helps to ensure that the
company optimizes production while employing as little labor as possible. Division of
labor and allocating of tasks is very important in a manufacturing company since the
activities of the organization depend on processes which are interrelated and therefore
every single process is crucial in determining the final output.
Apart from the strategic decisions on products and processes, the operations manager
also has a huge responsibility of making decisions on the manufacturing facilities of
the organization. One of the issues identified as being at the center of the problems
faced by RN is on the manufacturing facilities. Manufacturing facilities in this case
involves plant the building factory, machine and equipment. The operations manager
of NR makes strategic decisions on the location of manufacturing plant and factories
within the organization or any other location as deemed appropriate (Puddefoot,
2010). The operations manager considers factors such as availability of raw materials,
production processes involved and their arrangement as well as the bulkiness of the
materials. In the case of RN for example, bulky items required in manufacturing and
repairing ship should be located closest to the sea. The operations manager also makes
decisions on the new technological equipment and machinery required. He/she
recommends to the management new technology that would contribute to increased
efficiency in manufacturing. The other important strategic decision made by the
operations manager is on the capacity of the manufacturing plants and factory. The
operations manager makes an analysis and determines the need to increase the
production capacity of the factory depending on demand. The operations manager has

to ensure that the demand is not temporary since expansion of capacity involves huge
costs and therefore it should be ensured that the new capacity does not end up being
underutilized. The operations manager also makes decisions on the employee
numbers and the distribution of the same in the factory. This happens by identifying
the areas that are key in the manufacturing processes and allocating more and highly
experienced staff (Carl & James, 2018). The decision to cut on factory staff or to
increase the factory employees also majorly depends on the operations manager of
RN.
Q2.
(a)
The recommendation by the board of RN to Goodrich who is the operations and
factory manager is interference by the management. This interference is justified
because of the various reasons highlighted in the case as being the motivation behind
the recommended change. As discussed in the case study, RN was having problems in
meeting the supply and therefore it ended up depending on external suppliers to
supply some of the materials needed in building and repair of ships (Garrison,
Noreen& Brewer, 2012). The dependence on external vendors brought further
challenges to RN since most of the vendors supplied materials that were of poor
quality and which wear out easily. There were also challenges in delivering the
materials on time and hence leading to delays in repair of ships. This eventually ended
up inconveniencing the soldiers and hence having grave effects on the navy. In order
to meet the supply and fulfill the demand for ships, Brunel shows it is appropriate to
mechanize the production process. Mechanization of production at the Royal
Dockyard meant that production of parts required for building and repair ships would

be faster. The recommendation and interference by the management is also justified
because, RN was experiencing a challenge of getting skilled and semi-skilled labor.
By mechanizing production, Brunel helped the Royal Navy to solve this problem
since the demand for skilled and semi-skilled labor was replaced by use of technology
in production. The number of skilled employees required to work at the RN`s
manufacturing plant should reduce by more than half as a result of mechanization of
the production system of Royal Navy. In addition to this, the interference by the
management is justified since it helped to solve the problem that the organization
faced regarding quality of materials supplied by the vendors. Royal Navy was now
able to manufacture its own materials and hence assuring maximum quality output.
As a result of the intervention, the costs of outsourcing such as communication and
transportation costs were reduced and hence leading to increased efficiency at the
Royal Navy factory.
(2b)
The initial design of one man per machine was not effective before mechanization of
production. This is because; a lot of labor was required since most of the activities at
the facility were manual. It therefore means that be allocating every machine to a
single person, there would be under utilization of labor (Collier & Agyei- Ampomah,
2008. There are instance where there was delay in supply of raw materials. In such
instances, the employees stayed idle since the initial design was not flexible enough to
reallocate labor between the available machines. The original design of one man per
machine also resulted to overwork by factory workers who were allocated sections
that were forever busy. Given that in the original design every person was operate one
machine irrespective of the level of demand or activity in the factory, it seems that
workers were idle most of the time they were expected to be at the factory working.

The new system of allocating staff depending on demand brought many changes in
the operations of Royal Navy. From the information provided, we can calculate the
total production for the year 1808 as follows:
1808(Annual production) = 48.29+43.94+52.32+31.06+155.36=330.97 Units
From the above calculation, the average production per person throughout the year
can be determined by dividing the total production by the four men.
Therefore:
330.97/4=82.74Units per man
The average production for every machine per year is therefore determined as
follows:
330.97/18= 18.39 units per year
During this period, it means that by allocating one man per machine, the capacity of
the machines would have been underutilized. This is because, the small machines
would only be used for 92 days per year, the medium machine, 127 days and the large
machine 186 days. This therefore means that the small machine will have been
utilized by 238 days per year, the medium machine will be underutilized by 203 days
and the large machine will be underutilized by 92 days per year. Although the factory
was not expected to be fully utilized at present, it was expected that the utilization
would keep increasing to accommodate future demand. If the staff is distributed
depending on demand, the machines will be fully utilized throughout the 330 days
with only four men operating the 18 machines. In the previous one man per machine
system, 18 men would be required to operate the 18 machines and the production does
not increase at all (Jones& McCaughey, 2008). Given that each man earns 24 shillings

per week and there are 52 weeks every year, it therefore means that RN would have
spent the following on labor:
52×24= 1,248 shillings
When this is converted to pence based on the exchange rates at the time;
1,248÷20= 62.4pence
The Royal Navy would have spent 62.4 pence per year as an expense on labor.
By adopting the system of allocating labor depending on demand, RN was able to
save the following.
4×52=208 shillings
208/20=10.4 pence
Hence; 62.4-10.4= 52 pence
By allocating labor depending on demand, Royal Navy is able to save 52 pence per
year which is a very significant amount.
(2c)
With Royal Navy attaining its maximum ship capacity of 1000 ships between 1808
and 1809, there is expected to be economic, social and technical challenges that are
going to arise. The attainment of maximum capacity means that production at he mill
will have to be cut by more than one third. This is because, production was mainly for
building new ships and hence very few ships will be built per year (Drury, 2012). The

number of ships being built depends on the number of ships destroyed at war. The war
is expected to end and a period of peace of between 10 to 20 years expected means
that the Royal Navy will have to lay off more than half of its employees. This is
because; the demand for labor will go down drastically since most of the machines
will not be operating due to sharp decline in demand. The laying off of workers will
result to social problems such as low standards of living. Unemployment will also be
high. The employees retained will also be underutilized since they will only work
depending on ships destroyed and once the war comes to an end they will have no
work to do at all (Collis, 2016). The royal Navy will have incurred costs in paying
idle labor. Some machines may also breakdown during the period of peace and hence
resulting to costs of repair.
(2d)
To determine whether the factory should continue operating or not, it is important to
carry out an analysis of the economic benefits and costs of the project throughout the
lifetime of the project. By doing this, it is possible to identify at which point the
project will become economically unviable due to costs being higher than the benefits
of the project (Jones & Mccaffery, 2008). . At this point, it is advisable to close the
factory since it will have come to the end of its useful life. In order to determine
whether the Royal Navy factory should be closed or not, the economic benefit of the
factory during the initial years should be calculated first. The costs of running and
maintaining the factory during this initial period should also be calculated and the two
should be compared to determine which is higher. The costs and benefits of the
factory from between 1808 and 1965 should be calculated separately. This is because
there is significant change in production processes and technology which is used
throughout the remaining life of the project. Therefore, the economic benefit of the

factory each year is estimated by estimating the production of the factory each year
(Khan & Jain, 2010). Production rate of the factory per year depends on presence or
absence of war and the demand of ships during this war period. During the years
when there was war were like the first and the second world war, the production
capacity of the factory increased due to increase in demand (Mowen, 2017).
Therefore, in order to analyze and determine the point at which the factory should be
it is important that the production rate for each year is estimated separately. The cost
incurred each year in running and maintaining the project is also estimated and the
totals for both are determined. The ratio of benefit to cost is determined by dividing
the benefits to cost. During the year which the ratio is closest to one, this is the period
which the factory should be closed or should have been closed.
(Q3)
Information flow for machine operator need to be improved since the workers in this
department are using a lot of their time moving from office to office and carrying
bulky materials from the store to the factory. These results to them losing a substantial
amount of income since they are paid based on production. The production orders
should be delivered to the employees by the factory supervisors at the workplaces
instead of the employees going to collect them. This will reduce waste of time and
hence improving productivity. Alternatively, if it were during the modern
technological era, the production orders would be sent to the workers electronically
through the use of emails or social media platforms and hence reducing movement
within the organization. The semi-finished goods store should be relocated to a more
strategic place where carrying of the materials is less tiring and less time consuming.
The store should be located on the ground floor of the building. A room for storing
bulky raw materials should be situated within the factory so as to make it easy for the

workers to obtain the raw materials easily.
(Q5)
Production planning is very important in manufacturing. This is because; it helps
organizations to maximize productivity. Effective planning is complex and it involves
a variety of aspects such as materials, processes and people. Production planning
involves ensuring that all the materials and human resources required for production
are available all the time. It also ensures that unexpected demand is met and hence a
company does not have or depend on orders so as to produce.
Royal Navy can improve its production planning by identifying all the materials
needed in production. The raw materials used in production by Royal Navy include,
exotic wood (Lignum vitae), oak tree and brass ‘coak’. Once these are identified,
plans can be made to procure raw materials needed on time and hence ensure that
production is not affected by absence or delay in supply of raw materials. Planning
of production will enable to operations manager to plan processes from the
beginning of the processes until the end. All the steps to be followed in the
production process are determined and hence planning is made easier. Factory
workers can then be distributed to operate various machines within the factory
depending on the labor requirements. Proper production planning will help Royal
Navy to optimize use of equipment and optimize capacity of the industry to meet the
demand. Inventory control should also be improved at Royal Navy so as to improve
production planning. Finally, production planning for Royal Navy should be
improved by making individual employee work schedules and planning future work
activities before orders arrive. This is achieved by forecasting future demand.
Conclusion

The paper analyzes the major strategic decisions that operations manager are required
to make in an organization. The case study on Royal Navy manufacturing plant is
evaluated and analyzed. The factory manufactures parts used in building and repair of
war ships. The production processes at the factory are evaluated together with the
management of labor and a product at the factory.The objective of this assessment is
to identify the major manufacturing accounting issues at Royal Navy. The
management of processes and production is also analyzed to determine the level of
efficiency at the factory. After 1803, the factory was mechanized and the capacity was
increased. The effect of this increase in capacity and mechanization on production is
also evaluated in this paper. Mechanization helped to reduce costs by approximately
50 pence per year. The management of facilities at the factory is also not impressive
since it results to wastage of a lot of time since moving around the factory. The report
suggests that the work-in-process store should be located to a more strategic location
and technology should be used for communication within the company. Methods of
improving production management include identification of required raw materials,
designing time schedules for all employees and forecasting future demand so as
manufacturing can be completed on time.

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