Case Analysis: Achifa Snack Foods - Iloka Benneth Chiemelie, Mozie Charles

1.0 INTRODUCTION

Since its establishment in 1976, Achiffa™ Snack Food has ripped success in the fast-food restaurant industry with their quality products and services. This has also gained them reputations from both business and customer segments are they are viewed as reliable and outstanding company.

However, recent years have seen an increase in numerous problems such as incompetence within the chain management, operation and decision management and customer services. These issues are giving rise to set backs in business operations and distribution system, which is resulting in reduced trust from both customers and business as the company is being viewed as unreliable.

It is essential that the company understands its weakness and figure out a way to transform these weaknesses into opportunity, and it is the main purpose of this report paper. The objective is to analyse the operations and management system of Achiffa ™ and understand the reason for these issues in order to better devise a solution to the issues faced by the company.

This report is basically divided into three sections; in line with understand the issues and providing necessary solutions to the issues. The first section includes an application of appropriate models in analysing the current system and operations management. Through these analyses, the business issues were also highlighted and thus helped in development of the next objective which is finding solution to the issues. Therefore, the second sections contain recommendations on appropriate ways to resolve these business issues and proceeding with a conclusion on the report. The final sections contain necessary support documents in the form of bibliography and appendixes.

2.0 ANALYSIS OF THE CURRENT SYSTEM AND OPERATIONS MANAGEMENT

Since the retirement of Gary Sr. in the late 1990’s, Gary Jr. took over the business running alongside other 4 board of directors: Tom Graham; Jolene Carter; Vijay Shah and Karen Achiffa. Tom Graham was in charge of operations, with the management of the factory and development of technology in the factory put under his control. The marketing and sales manager in charge of bringing in new customers and maintaining business contracts is Jolene Carter. Vijah Shah is the director of the supply chain and responsible for product distributions; procurement and IT. Karen Achiffas who happens to be Gary Sr.’s daughter is Human Resource director.

2.1 ACHIFFA™’S INPUT-PROCESS-OUTPUT FRAMEWORK

Figure (1): Achiffa™’s Input-Process-Output analyses for making French fries

The figure (1) above, illustrated the activities undertaking into processing the imputed potatoes to an outputted French fries.

2.1.1 Storage of potatoes – the company ensures that storage of potatoes is at the minimum in order to achieve best tastes as a result or freshness. But, this is difficult during between November to March of each year, as there are no fresh potatoes available during this period. In order to maintain the freshness, the company has a new facility that is capable of slowing down the decomposition process.

2.1.2 Cleaning - the potatoes are passed through rollers to be cleaned by high-pressure water jets as they spin in revolving cages. The cleaning device is maintained every hour.

2.1.3 Sorting – once cleaned, the potatoes are sorted based on their sizes, so that different potatoes can be used for making different products.

2.1.4 Peeling – the potatoes are peeled by spraying them with high-pressure water after being heated for 10 seconds, with the waste used in process animal feed and unpeeled ones sent back to washing.

2.1.5 Inspection – the quality of the potatoes are checked by the company’s employees.

2.1.6 Chopping – Achiffa™ used a hydrolic system to cut the potatoes into fries by running them against cutting blades.

2.1.7 Inspection - after the cutting, the chips are passed through a high camera dictator to spot any discoloration or incorrect size.

2.1.8 Blanching - Chips are then processed on a conveyor into a large vat of hot water for 7-12 minutes at 320C and then cold water to remove excess sugar

Once they are blanched, the chips are den fried, drained and frozen before being packaged according to weights and sizes. Finished products are stored in the warehouse before being transported for distribution to the customers.

2.2 ACHIFFA™’S DECISION-MAKING HIERARCHY AND ROLES OF DEPARTMENTS

The management system is structured in such a way that each departmental manager is responsible for operations within his department, and has full decision making power within their department. However, the entire departmental managers have to report for to the CEO. The hierarchy system within the department is as described below:

2.2.1 Operations department – Tom Granham is the operations director, and has been with the company since 1977, with Kevin Smith; Chen Lim and Ivan Clairmont under his supervision. But, Tom has been absent for the past few years as a result of illness. This has led some problems in the team. Kevin Smith is always looking for problems and consumes lots of time and effort on projects. On a positive side, he is a perfectionist and excellent in quality and conformity with the recipes and customer requirements. Chen Lim on the other hand is efficient, organized and result oriented. Thus, their difference in quality results in many conflicts between the two shift managers, but Tom manages to keep them under smooth control when at work.

However, due to Tom’s absence from work, tension is being sparked at the factory and Kevin and Chen are not talking with each other. It is an incident that was highlighted as impossibility if Tom was at work. Kevin is frustrated with Chen because he doesn’t clean the machine and he suspects he is packaging different products in different bags. Chen on the other hand argued that he has to care for the customers and he doesn’t like Kevin stopping the production line for no reason.

Ivan on the other hand is worried about the production line design, which he argues that it is not carefully set up for frequent changes. Both Kevin and Chen also agree with this. Ivan argued that the company should go back to the traditional frying method as the current equipment is not made for constant change of blades, and the baking production line is a rushed design.

2.2.2 Supply chain – the company purchases its potatoes from different source, either directly from the source’s farm of warehouse. Achiffa purchases only two varieties of potatoes which are the Idaho and Russet varieties. Due to the seasonality in production, the company depends heavily on storage to ensure all year round sale.

2.2.3 Warehousing – the two main warehouses (raw potatoes and frozen potatoes) are under the care of Bryan Forburt, who reports to the supply chain director Vijah Shah. He has the responsibility of maintaining the potato storage area to ensure that it is dark, well ventilated and within the temperature range. He also ensures that these potatoes are delivered to the production department carefully, and that the potatoes are put through the first in – first out rotationally method that is used to increase freshness.

While the potato area is under his full control, the frozen goods area is a big problem to Bryan. The problems are the limited space at the frozen area, and the marketing department are giving him different forecast every week. Bryan also complained of unorganized system in the production line, as the factory is giving him 8 different products from one shift, thus making the storage difficult. Furthermore, he hinted on Tom’s absence as the reason behind the unorganized system within the department.

2.2.4 Technology and IT – Gary Sr. hired Ivan Clairmont to source the equipment for two production lines  and a further line in 1995. The new harsh brown area was developed in 2005 and later expanded further for the Achiffa line. This is the section that Ivan suggests should be improved. He complained that the oven are far longer than needed and thus resulting in waste of electricity as they don’t need to run all shift, but offing the oven will require another heat up and this will halt the whole process.

The company also lacks a larger-scale IT system. Patrick Sullivan explained that such lower-scale system is because the company purchase few things. Patrick installed Sage Finance and HR and Payroll system for producing company accounts and payroll. Tom adopts this software to review what the database suggest and adjust certain areas based on his knowledge. Patrick requested that such database be designed for Bryan Forburt, but Bryan objected. He preferred creating his own spread sheets for stock control and warehouse management. He will the details information from the spread sheets to Jayne Puttock to key into the sage and create invoice and pay suppliers.

However, Bryan also admitted that he would need a help with such handlings. The marketing and sales department adopt a contact system for their customer relationship management and forecasting based on figure from previous years and customer orders. They generate new forecast every Friday and distribute it to other departments.

2.2.5 Customers – the company’s most profitable and largest customer segment include fast-food restaurant chains. The company initially started working with Granters and maintain good relationship with them since the opening of Achiffa™ in 1977. They also have two major contracts with Kellys, but the contract is difficult to maintain because Kellys have a strong bargaining power and constantly apply measures to reduce Achiffa™’s prices.  They also sale their branded products in grocery store chains across the US. However, these customers are difficult to manage because they are driven by price.

2.3 THE 4V’S TYPOLOGY OF ACHIFFA

Figure (3): 4V’s typology of process at Achiffa

The figure (3) above depicts the level of commitment needed in each of Achiffa’s processing unite. There is a high volume of production, as a result of high demand and these results in repetitive activities. This high demand and production also gives rives to variety in the production system with different departments handling different sections. There is no much variation in the demand, except for unexpected seasonal increase, and the production process is not visible to the clients and market.

3.0 PROBLEM DEFINITION

3.1 SOFT SYSTEMS METHODOLOGY

The problem will be identified by adopting the 7 stages of Soft System Methodology as discussed below.

3.1.1 ENTERING THE PROBLEM SITUATION

From the case study, the whole problem being faced by Achiffa started after Gary Sr. retired, and also was contributed by the illness of Tom. Prior to the two events, both Tom and Gary Sr. were very committed and put in all possible effort to make sure that the company was running smoothly. Other employees such as Bryan highlighted this issue, when he said that the production line is unorganized and he can’t wait for Tom to return and put everything in order.

3.1.2 EXPRESSING THE PROBLEM SITUATION

3.1.2.1 Operations and management – there was a big problem between Chen Lim and Ivan Clairmont. They both don’t talk with each other, with Ivan claiming that Chen is not hygienic, and keeps the machine dirty. He also said that there is a possibility of mistaken packaging. On the other hand, Chen claimed that Ivan is not responsible and stops operation without any good reason. This tension crates a great deal of delay and inconsistency in the operation department. It has also been extended to the warehousing department were Bryan Forburst is being supplied with 8 different products for storage instead of the normal 1 product per storage section.

3.1.2.2 Supply – the problem faced in the supply is shortage of fresh potatoes. Because the Idaho and Russet potatoes are seasonal, while Achiffa™ objective is to serve processed fresh potatoes. Thus, this is a big obstacle towards maintaining the quality and freshness of their products throughout the year.

3.1.2.3 Warehousing – in the warehousing areas, they face problems of limited space in the frozen section, and also differing forecast. On the other hand, the production line is supplying 8 different products instead of the usual one product per storage.

3.1.2.4 Technology and IT – the management and operation is still using lower-scale IT system and this negatively influence the business predictability of different departments.

3.1.2.5 Customers – the only accounted issue with customers is that they are easily influenced by price, thus, for Achiffa™ to remain competitive in the market, the company must maintain a competitive pricing strategy and it will eventually influence their revenue negative and in worst cases lead to lose.

3.1.2.6 Root definitions of relevant systems – the root of the whole problem can be defined from the management system. The problem between Chen Lim and Ivan Clairmont has resulted in numerous issues in the organisation. The production line is responsible for possible misplaced packaging (Ivan claimed Chen might be packaging Idaho potatoes as Russet and vice versa), it has also resulted in stoppage of operations (Chen said Ivan stops operations for no reason), it is also the reason behind over crowded frozen storage area (Bryan said that the production line was supplying 8 different products for storage instead of the original one product per storage).

3.1.3 CONCEPTUAL MODELS OF HUMAN ACTIVITY SYSTEMS

Figure (4): Achiffa™”s conceptual model of human activity

From the figure (4) above, it can be illustrated how human mismanagements have affected the output in terms of quality, warehousing and sales. Tom Graham’s absence can be viewed as the root of all the problems.

3.1.4 COMPARING THE MODELS WITH THE REAL WORLD

In comparison with real life human resource management, incompetency in organisational management system can lead to low productivity (De Saa´ Pe´rez and Garcı´a Falco´n, 2004). This is because humans are not easily controllable, and their personal emotions can affect their productivity and also that of their fellow workforce (Kidwell and Fish, 2007). Thus, inconsistency within the management and operations systems is expected to influence an organisation in a negative way.

4.0 SYSTEMS AND OPERATIONS MANAGEMENT RECOMMENDATIONS

4.1 QUALITY MANAGEMENT AND BUSINESS OPERATIONS IMPROVEMENT

Both shift managers are having problems between each other and it is affecting the overall performance of the company with over production leading to over storage in the already limited space at the frozen area, and reported cases of possible improper management of the products.

The company is using outdated IT system and it is not sufficient enough for all the departments, with the warehouse department highlighting that it would need a help soon. Upgrading the IT system with latest and sound software will increase efficiency within the company.

Thus, it is important that a new management team be put in to replace Ivan and Chen, as their personal misunderstanding will eventually increase loses. The company will need to investigate the allegation levelled on Chen, to see if he is packaging different potatoes in different packages. This is an important issue because if the customer eventually discover, it will be a big blow to the company’s image. Quality is an essential aspect of any organization and Achiffa™ should at all times ensure that the qualities of their products are consistent. Finally, the company should upgrade their IT system to ensure that it is more reliable and consistent within all the systems.

4.2 IMPLEMENTATION OF RECOMMENDATIONS

The CEO can be said to be lacking with the qualities and skills need in his position. The case study didn’t mention any aspect of business undertaking that he has overseen since the retirement of his father. However, this issue will be a test of his capability, and Garry Achiffa Jr. is the person responsible for implementing such a move to replace the operations managers. This is because; Tom is currently not around due to illness and all the departments are supposed to be reporting to the CEO.

Therefore, Gary should step-up like his father and take full control of all the mismanagement issues, as well as ensuring that their products are of great quality. This is because, if the company is make loses, his family will pay the utmost price and his father will not be happy to see the company in a negative form.

BIBLIOGRAPHY

De Saa´ Pe´rez, P. and Garcı´a Falco´n, J.M. (2004), “The influence of human resource management in savings bank performance”, Service Industries Journal, Vol. 24 No. 2, pp. 51-66.

Kidwell, R.E. and Fish, A.J. (2007), “High- performance human resource practices in Australian family businesses: preliminary evidence from the wine industry”, International Entrepreneurship and Management Journal, Vol. 3 No. 1, pp. 1-14.