i. Executive Summary
This case study proposes overall objectives of Holly Farm operations, and analyzes how to achieve those objectives in details. Symptoms and natures of operational problems are identified, in order to suit the remedy to the case. Solutions of two end-of-case questions are addressed, and the thought process is demonstrated thoroughly. Five options aiming at improving the operation are also provided at the end of the case study.
ii. Overall Objectives of the Operation:
Since Holly Farm was founded by Charles and Gillian Giles, there were several operational problems within the management during the business running process. The objectives of Holly Farm operations are to maximally increase the profitability by making use of current resources including human resources and material resources, as well as balance demand and control capacity.
iii. Symptom of the Problem
1. Time spending on promotion activities was reduced. After three years’ operation, Gillian was unable to give so much time to do the promotional activities.
2. The number of people visiting maintained in the level of 15,000 per year, and there was no increase since then.
3. Visitor number fluctuated during the day time, and there was a visitors’ queuing problem on weekends. The farm opened at 11.00am, but most visitors would arrive later than 12.30pm, so very limited visitors were in the farm during that time period. However, between 4.00pm and 7.00pm, 4 out of 5 visitors would gather in the same place to watch milking, visit farm shop and purchase produce. Moreover, for milking watching on Saturdays and Sundays, visitors would queue before 4.00pm, but this activity could not start before 4.00pm.
4. There was a strong seasonality on the farm business. Only during April to October, the farm was open to the public, and within each week of this period, mid-week demand was too low, and Friday to Monday was high.
5. There were not enough workers for new designed activities. Gillian considered tying up with schools for educational visits, but she did not want to use farm guide staff on extra weekends and Charles needed them three day s a week to do farming work. However, most farm workers were glad to do that.
6. The production of the ice cream was 350 liters per day maximum, and there was only one flavor was made on any day.
7. There was no separate record kept of ice cream sales to the paying farm visitors and those to the farm shop only.
iv. Natures of the Problem
1. Symptom 1 is the problem of marketing. The nature of this might be not enough market research and survey to figure out the most effective promotional activities.
2. Symptom 2 is the problem of decreased number of visitors, and there are several natures for it. First, not adequate or effective promotional activities might be one of them, since optimizing promotions could best meet customers’ needs and stop the trend of visitors decrease (Chandon, Wansink, & Laurent, 2000). Second, the accessibility and capacity of the farm might be another one, because the farm could only be open on Friday to Monday, which limited visitor number.
3. Symptom 3 and Symptom 4 are both about seasonality and fluctuation problem. One nature is seasonality and fluctuation itself, because other period of time throughout the day or the year was not suitable for the farm to either open to public, or conduct milking activities. Another nature is the capacity and accessibility of the farm.
4. Symptom 5 is the problem of human resources. The nature for it might be not enough workers to perform new designed activities, because of lack of human resources in the farm.
5. Symptom 6 is about ice cream production and low sales. First nature for it is the capacity of ice cream equipment was limited. Second nature for it might be the once a week deliveries of ice cream was not enough for selling ice cream. The last nature could be not effective marketing to promote on ice cream to the public.
6. Symptom 7 is about sales problem. The nature of it might be inappropriate accounting system.
v. Response to Questions
If Gillian intends to increase the total number of farm visitors by 50% in 2008, the vital capacity constraints for Holly Farm are the low demand in mid-week periods from Tuesday to Thursday and high demand during Friday to Monday within these businesses. In order to manage those limitations of capacity, Gillian is expected to promote and encourage coach company guests with the providing of discounts on the admission charges, and is also supposed to make more efforts to attract more families in cars and school students for educational purpose. That could stimulate low demand in the period of mid-week and limit high demand between Friday and Monday, resulting in smooth demand in the operation (Slack, Chambers & Johnston, 2010).
In addition, Gillian needs to change the work schedule and augment the number of productive hours for the employees so as to alter capacity, which is a potential technique to react to the fluctuating demands (Slack, Chambers & Johnston, 2010). For instance, when more visitors are coming and extra demand is happening, Gillian could use their farm staffs who are interested in working extra hours after doing their normal work to earn more money for their lives, which is a potential method of idle time for adjusting capacity (Slack, Chambers & Johnston, 2010). The existing farm staffs are more familiar with the conditions of the farm and the farm work, which could reduce the costs of error mistakes that could be happened in new employees.
Moreover, part-time workers could be employed during peak demand periods. Furthermore, mixed plans could be employed for Gillian, which include managing demand plan and chasing demand plan (Slack, Chambers & Johnston, 2010). Discounts could be offered during the periods of low demand to encourage customers’ expenditure on visiting Holly Farm (manage demand plan) and capacity could be adjusted through the applying of chase demand plan to avoid the wasteful of extra staff, satisfy customer demand and restrict the inventory of finished goods (Slack, Chambers & Johnston, 2010).
If Gillian proposes to increase the amount of ice cream flavors from four to ten, there are several aspects that need to be considered, because variability in supply and capacity will lessen the ability of an operation to produce its inputs (Slack, Chambers & Johnston, 2010). In a short, that will “reduce its effective capacity” (Slack, Chambers & Johnston, 2010, p.325). To begin with, if the number of flavors will be increased by ten, the working time of ten flavors will be increased as only one flavor made on one day, which will augment throughput times and decrease the effective utilization of capacity (Slack, Chambers & Johnston, 2010). As a result, Gillian needs to take into account the problems that result from increasing working time. After that, when the amount of flavors increased, the queues will be accumulated on account of the longer throughput times (Slack, Chambers & Johnston, 2010).
Therefore, Gillian needs to plan and manage the waiting line of customers and retailers in terms of more working hours will be consumed for the ten flavors. Followed that, the inventory will also be influenced due to the increased variability (Slack, Chambers & Johnston, 2010), so Gillian should to enlarge its inventory level of ice cream (there is only 7,000 liters for its inventory). Lastly, more staff will be recruited for the ice cream factory, since the recent three employees’ productivity and efficiency would be decreased with the increasing working hours and duties. Consequently, Gillian should reset the base level of capacity higher to accommodate its increased number of flavors.
1. Gillian could consider hiring extra staff who can handle the promotional activities, because she did not have much time to do it. According to Almira (2011), the company could build a positive image to the public through effective promotions. It could be concluded that the promotional activities could not be restricted to giving lectures to local schools and local organizations, and it should expend on more advertisements on magazines, newspapers and TV programs.
In addition, Lawrence (1993) claimed that accurate market research and financial analysis are strong in presenting information to marketers and sellers. From this statement, she also could authorize a market-research company which is able to provide a comprehensive version of the Holly Farm’s performance, including financial data, ratio and SWOT analysis, to collect useful information. After that, through these professional surveys, the most effective promotional activities could be figured out, and there would be a more accurate business forecast for improving Holly Farm’s capacity of product and economic benefit.
2. The essential solution of decreasing number of visitors is that increasing customers’ satisfaction. Outstanding reputation could be an intangible advertisement for potential consumers, via word-of-mouth promotion of current consumers. Schwaiger and Cannon (2005) found that value of reputation demonstrates the firms’ capacity to get more future profits through decreasing transaction costs with their stakeholders. Therefore, Gillian could be suggested to do more training for their managers and service staff, which could improve their comprehensive skills and abilities to guarantee that they could do their best to meet the demands of visitors.
In addition, the flexible operation strategies could remedy the emergencies and meet the diverse needs of consumers. Although managing the flexible and specific product could cause the problem of costs, offering the flexible product to meet the specific demands of customers can improve profits significantly (Gallego & Phillips, 2004). For instance, on the one hand, during the busy days, the explanatory tape could be cancelled for customers who were not interested in it, which could save time. On the other hand, Holly Farm could promote a new time schedule of each 15 minutes from 4:30 pm to 7:00 pm, which could provide a suitable option for visitors and it also avoid crowded situations, and the waiting time could used to play explanatory tape.
Besides that, the various marketing should cooperate with flexible operation which could bring a refreshed image for current consumers, even potential ones, thereby attracting more visitors to come to Holly Farm. In order to meet different demands of diverse customers, various activities packages should be launched during the peak and off-peak seasons. For example, the package could include the maize maze, milking watching, and making DIY ice cream.
3. Concerning human resource management, a strategic operation system is required (Onyango & Okech, 2008). The appropriate staff plan and control capacity should be one of the criteria to function the entire business (Chang, 2011). In terms of the lack of human resource management of Charles and Gillian’s Holly Farm, there could be two major recommendations in order to improve. Firstly, enough skilled employees in each area of different businesses are necessary (Varpilah, Safer, Frenkel, Baba, Massaquoi, & Barrow, 2011).
For example, different employees are responsible for doing advertising, and several focus on communicating with sponsorship. In this case, every employee would spare no effort to contribute their values to take responsibility for their business. Secondly, in order to control the costs of hiring staff to tie up with educational visits, casual or part-time employees could be better (Heneman & Milanowski, 2011). Therefore, the money that is saved could be used into other programs such as providing more facilities about educational concept.
4. In the overall operations, the inter-functional accounting management should be playing an important role (Inglis, 2008). The explicit and detailed financial documents are necessary for the organization to conclude the output of different sectors (Jorgensen & Messner, 2010). As there was no separate record between the outcomes of people visiting the farm and people only buying ice cream in special entry, there could be several recommendations to improve such condition. First of all, it would be the best that different records are done for different entries (Jorissen & Otley, 2010). As long as the special entry leading to ice cream shop only is confirmed, there would be two major financial records for the entries, the whole farm visiting and shop buying. According to the statistics, the farm can formulate different promotions and strategies to enhance the profitability.
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