MGT 314-Project-1 - operational management PDF

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Project Name: OrganiskinMGT314 (Group 2) Sadia Wasima 1612819630 (Leader) Samiul Alam Sakin 1430242030 Mahmudul Alam 1731456630 Mehreen Ahmed 1330352030 Begum Jannatul Mubassira 1721281030 Submitted to: Mofassel Hossain (MOF)Submission Date: 20. 09. 2020AcknowledgementThis project has been an excell...

Description

Project Name: Organiskin MGT314.03 (Group 2) 1. 2. 3. 4. 5.

Sadia Wasima 1612819630 (Leader) Samiul Alam Sakin 1430242030 Mahmudul Alam 1731456630 Mehreen Ahmed 1330352030 Begum Jannatul Mubassira 1721281030

Submitted to: Mofassel Hossain (MOF) Submission Date: 20. 09. 2020

Acknowledgement This project has been an excellent learning opportunity for all of us. We are very grateful to our instructor Md. Mofassel Hossain for imparting us the course contents and lessons with such dedication, excellence and care and giving us the opportunity to implement our learning outcomes in this project. We would also like to thank him for giving us extra time so that we could show him our problems regarding the project. We have selected a Facewash for doing our project. It was not easy to work with this product because it’s a product designed by us. But our honorable faculty made the work easier for us by being clear and giving us clear instruction about what and how we should do the project work. Thanks for his incredible support for all of us. Finally, thanks to our group members for working sincerely and as a team. They all were very co-operative and sincere about preparing the report. They were excellent in their work.

Executive Summery Organiskin is a handmade facewash which is processed by the organic raw materials. Our product claims that it will help to remove the dirt and oil from the skin and also helps to reduce dark spots. Our mission is to provide the best quality products at a affordable price range. Our vision is to fulfil the maximum customer satisfaction with our products and to reach out as the highest-ranking brand in the market. In this report, we have showed an overall overview of how our products conducts strategic analysis, forecasts demand, how we manage our inventory, supply chain and also how we will be maintaining our customer service and the quality of our products.

Organiskin Introduction Overview of the businessBasically, facewash is a liquid based soap and it washes our face deeply. It helps to remove make-up, dead skin cells, oil, dirt, and other types of pollutants from the skin. As facewash is famous among the teenager and youngster, they are very conscious about their skin that’s why we came up with a new product which name is ‘Organiskin’. Organiskin is contains of these ingredients     

Castile soap Vitamin E capsule Rose water Jojoba oil Aloe Vera gel Tea tree essential oil (for oily skin type) / Lavender oil (for dry skin type)

MissionOur mission is to sell the organic products in the best possible rate. We will try to produce our product as a best natural product in the market. We promise that we will provide 100 percent organic ingredients.

VisionOur vision is to fulfil maximum customer satisfaction with our products and to reach out as the highest-ranking brand in the market. We will prove our ability so that people should buy our products.

STRATEGIES AND COMPETETIVENESS At the beginning of production, we identify the customer need as there are already some famous organic facewash in the online market and some other chemical facewash existed. But as a manufacturer of OrganiSkin, we try to give our customer organic facewash which is also made from organic raw materials and it makes our products unique and that’s how we try to follow up

our strategies in the market. We believe that in an organic product everything needs to be processed in the organic way. Here is our cost leadership strategy, we buy our raw materials from very trustworthy supplier and make it in a very hygienic way. Since we are completely new in this business, we are offering low cost price to our customer. We keep our product price in medium range so that our customer will buy it easily. We are ready to make a compromise with our profits making but we will not make any compromise with our product and service quality. We will always make sure that our customer gets the best online services from our team. However, OrganiSkin is an online based product we make sure that our customer will get a good service quality from us. We have created a team who will work for answering all the queries from our customer. And if there any problems or complain has come off, our team will response to the customer as soon as possible. OrganiSKin has ensured the quality of the facewash to its customer. And this is one kind of great advantages to compete against with our competitors. Another competitive advantages for OrganiSkin is the fastest delivery

Objectives and Scopes of Work Our product Organiskin is fulfilling the economic, social, human or individual, organic, micro level and multiple objectives to justify its existence. Our objectives are to earn profitability by working under rules and regulations by following ethical practices, to achieve growth by increasing profit, revenue, capacity etc., make an stable organization which can easily handle changing in dynamics of markets, provide efficiency in capacity and quality control within working environment and have the capability of survival with a vision of long term existence.

MethodologyAs the recent pandemic occurred Covid 19 we couldn’t do our survey outside but we did our survey within our relatives and friends. Female and young people attended into our survey. We asked them through a survey questions about which varieties they want and most of them responded that they want to disregard ‘Oily and dry’ skin.

LimitationsOur plan was to set up a booth at North South University as there are many female students and faculties in NSU, so we could easily collect the customer feedback about our product. Also due to pandemic situation we are unable to conduct field survey. Even we can’t do the sample test.

Operational plan

STRATEGIES AND COMPETETIVENESS Organiskin is a handmade facewash and it provides high quality materials which is suitable for all skin type. Organiskin has made from raw aloe-vera gel, rose water, jojoba oil, vitamin E capsul etc. Organiskin is suitable for dry and oily skin type as its raw material is pure and organic. And in a competitive business environment like skin care product, there are so many online business company which sells organic facewash with a rich price. Here Organiskin has claimed that this facewash will help to brighten up the skin and will also help to remove the dark spot as it is used rose water which helps to clear the skin as well as help to remove the spot. Nowadays, both male and female are concerned about their skin and they are willing to pay a good amount of money on regular skin care routine. And Orgniskin has fragmented summer, fall, winter, and spring with the goal that our items are applicable during the time to our clients. At the beginning of production, we identify the customer need as there are already some famous organic facewash in the online market and some other chemical facewash existed. But as a manufacturer of OrganiSkin, we try to give our customer organic facewash which is also made from organic raw materials and it makes our products unique and that’s how we try to follow up our strategies in the market. We collect our rose water from a very reliable source who provides us organic rose water. And our Facewash lebel is designed by CANVAS. We believe that in an organic product everything needs to be processed in the organic way. Here is our cost leadership strategy, we buy our raw materials from very trustworthy supplier and make it in a very hygienic way. Since we are completely new in this business, we are offering low cost price to our customer. We keep our product price in medium range so that our customer will buy it easily. We are ready to make a compromise with our profits making but we will not make any compromise with our product and service quality. We will always make sure that our customer get the best online services from our team. However, OrganiSkin is an online based product we make sure that our customer will get a good service quality from us. We have created a team who will work for answering all the queries from our customer. And if there any problems or complain has come off, our team will response to the customer as soon as possible. OrganiSkin is a teenage friendly facewash because we use all organic materials on it and process it in a very hygienic way so that teenagers can easily use it. Even in this pandemic, we are taking extra care and cautions for making our products. Our customer can use our product without tension free. Our customers are always welcome to ask us about any skin care quires, share the skin issues, our team will always help them and give them free advices. OrganiSkin compete against some homemade facewash which already have gained some popularity from the market. But in the market of Bangladesh, there are high chances of getting the original products. Fake and extra chemical based skin care products can harm our skin. OrganiSKin has ensured the quality of the facewash to its customer. And this is one kind of great advantages to compete against with our competitors. We have chosen our family members, friends and cousins for

testing the facewash. Since we have got some positive review from our customers whom we gave some sample to use it. They are satisfied with our products and they are willing to purchase more in future. Another competitive advantages for OrganiSkin is the fastest delivery. We are very concerned about our lead time as we will run our business through online platform, we have to deliver our products by courier service. In this pandemic, people are doing online shopping more as now it is more convenient for them. We will provide fastest delivery service at Dhaka. After placing the order successfully we will take 2-3 working days to deliver the product at our customer doorstep. And we will deliver our products all over Bangladesh with very short lead time. But as a manufacturer of OrganiSkin facewash, we will ensure our products quality and will always try to maintain a good communications with our customer.

Demand Forecasting: Market forecasting of demand is necessary for determining how much capacity or supply will be needed to meet demand. Forecasting never gives the actual idea but a manufacturer company or business get an idea of how much they should produce predicting the market demand in future. Forecasts are the basis for budgeting, capacity planning, sales, production, inventory, personnel, purchase and more. Forecasts play an important role in the planning process because they enable executives to anticipate the future so they can play accordingly. The production of Organiskin is based on market demand. As it is a new business, we are planning a fairly short term forecast for a month. We have planned a capacity of 60 units and we are predicting to sell 50 units in a month. That means we are using almost 90% of our capacity. As we are selling organic facewash for all skin types, we are assuming our demand will increase in approximately 3 months and we are planning to increase our supply 10% in every 3 months to match the future demand. We are also going to plan the long range forecast after 2 months. Our forecast is also cost-effective as our selling price is 300 Taka for each 100ml. bottle, where the bottle price is 50 Taka and 250 Taka is for other ingredients. We will be receiving very small amount of profit in the beginning of our business. As we are targeting for a niche market, our targeted customers can easily afford our products to purchase in every month. So we have also

weighed our cost-accuracy based on this. If the demand of our product increases, we are also planning to produce 250ml along with 100ml. As our product is 100% organic and it has variations, it will match the demands in all seasons. Our product is based on time series forecast, as we will include products following trends and seasonality by applying naive and Delphi methods; and judgmental forecast, as we also take some surveys from our family and friends about our product so that we can give the best output to our customers and maintain the quality. So we will be aware of the fact that our forecast should be timely, accurate, reliable, simple to understand, have meaningful units and also everything in writing.

Strategic Capacity Planning Our Main product is a Face wash named Organiskin, which we are marketing as an all-natural face wash that avoids chemicals and other harmful ingredients. As such, we have seen to it that our product is completely homemade with the best of care. Our goal with this product is to be able to produce 60 of these per month and as such, we will have a weekly based production system. Since our demand isn’t very high, we don’t need to tax ourselves to create a lot of products and have a huge inventory stocked up, as the product might deteriorate over time. We will re-evaluate the need for an increase in the number we output and see how we can improve in the production. We have calculated the necessary ingredients that are needed for the production for a month, along with the fixed cost related to the product. We are a small plant. Therefore, will have to face diseconomies of scale, however we believe we will be able to break even and profit. For the Production we have determined that we would require the following ingredients with a calculation of price per unit – 

Castille Soap – 50Tk per unit



Vitamin E – 24.2Tk per unit



Tea Tree – 10Tk per unit



Rose Water – 30Tk per unit



Aloe Vera Gel – 8.33Tk per unit



Jojoba Oil – 27.5Tk per unit



Plastic Bottle – 50Tk per unit

This puts our total Variable cost for each unit of Organiskin to be at 200.03. The total Fixed cost for the Product will come at 3172 after including depreciation for a fixed asset used for production, advertising and Labor Cost.

We have decided on a retail price for 300Tk per unit and as such, our Breakeven point for quantity comes at FC = 3172tk, Retail price = 300tk, Variable Cost = 200.03

Breakeven Quantity =

= = 31.73 = 32 Units Breakeven Price = 32*300 = 9600Tk We need to sell at least 32 Units worth 9600Tk to make a profit on our products. We are projecting a demand of 50 units per month for the first few months, which will net us around 5400tk profit per month. Over time we expect our demands to increase and as such our capacity has to be increased as well. We are assuming that for the first few months our Capacity will be as follows –



Design Capacity = 70 Units per Month



Effective Capacity = 65 Units Per Month



Actual Output = 60 Units Per month

Efficiency

=

=

* 100

= 92.31 %

Utilization

=

=

* 100

= 85.71 % This will put our efficiency at 92.30 percent and out Utilization at 85.71 percent. As a new company we have much to improve when it comes to the utilization of our resources to maximize the number of units that can be produced and stored. Over time we will improves those number to match the design capacity and have a higher utilization and Efficiency for our production. This way we will keep a surplus of inventory stocked up and grow the production in accordance with the growth in demand.

PROCESS SELECTION AND FACILITIES LAYOUTS For process selection and facility layouts we have followed a well-defined and simple process so that we can easily produce our product at home. Orgniskin is a small business and we have no outside manpower for processing our production. Firstly we select raw materials for our selected facewash then we divide the work among our members. Two members who manages production related work and after the production, we send the products for the packaging and lebeling. After completing all the procedure we can send our products to the finished goods. In the beginning we

will make 50 bottles of facewash. Since we are new to this business, we have no idea about order requirements.

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Our production work will be processed from our home. As we have no employee and special equipment for processing the facewash, we use our normal home instruments. Our two group mates who are the most efficient and have a good a knowledge on making the facewash they are handling the matter. Each person can process 25 bottles of facewash in two hours and our desired output is 50 bottles of facewash per day. Before starting the process, we strictly maintain the hygiene rules. In the primary step, we mix all the raw materials into a jar and boil it for 5 to 10 minutes. After boiling the mixture we work on cooling it for 1 hour. We use hand mixture for mixing and set it in the normal temperature. And then we pour the mixture on the bottle and start packaging it. This process is more likely time and cost efficient for us.

Quality Management and Inspection Plan Our products require 1 hour making in a batch of 5. To meet with the demands of our customers which we are estimating to be 50 units per month, we have decided that we will break our production into two cycles. Each cycle will account for half of the production capacity. This way we will be able to keep a closer eye on the products and assure that the quality is up to per. Our inspection plan will have three stages where first we will do a quality check and an inspection of the raw materials that we are buying from the stores. We will buy raw materials for 2 weeks of

production. After the inspection of the raw materials we will start with the production which involves putting all the raw materials in a container and whisking them electrically before storing them in a refrigerator for delivery. To create 5 units, it would require us 1 hour of production. During production we will have another inspection check to make sure everything is accounted for properly and the mixture is going as intended. After the production ends, we will have another inspection that will ensure that the finished product is at a quality that is expected from our company and is what we are looking to deliver to our customers. This quality management ensures that there are three stages of inspection where one is done at the start of production when raw materials is purchased; the second one is done in the middle to ensure that the mixture is as it should be and lastly at the end when we are doing the covering process of putting it in the plastic bottle for storage. We will have 1 sample from every batch of 5 which we will test on ourselves to check further if the product is in its best state. We shall compare that 1 sample with our previous batches to maintain an equal level of quality standard for our products.

INVENTORY MANAGEMENT Organiskin is an online based product and we conduct our business performances from our home. We have made an estimation for our inventory management. We are basically making our products by using organic raw materials and other chemicals. And organic materials should not be stored for a longer period of time. So, we will purchase the raw materials 5 to 10% more than our estimation. At the beginning, we will produce 50 bottles of facewash and we will restock the slot when around 40% facewash will be sold. As Organiskin is going to launch in the market for the very first time, the quantity of the products and other raw materials are very low. For our business, we try to keep our inventory management easier and more cost-effective since Excel is easy to operate and widely useable for tracking inventory. These inventory data is very useful because it keeps notifying us which raw materials we will have to reorder, how frequently we restore raw materials and start new production. There are some inventory Management software which is specially designed for managing inventory. These system will help us streamline the inventory tracking...