D’s Bakery
Company Case Study

A. Systems Documentation

1. Product/Service Design D’s bakery is a small establishment that sells few variations of breads. D’s bakery offers breads which are mostly known to the Ilonggo like the teren-teren, pan de coco, famous hot pandesal, and more. According to one of the sales ladies, they make and sell more or less 10 kinds of bread every day. The breads from D’s bakery are being sold at a cheap price. The price of their bread starts at Php 2. The breads are made with ingredients that can be easily found in the market. Although the owner won’t give the detailed list of ingredients, they say that everything included in the bread are just like any ordinary bread like wheat flour, yeast, and something they put on filled breads. 2. Capacity Plan
Capacity needs include equipment, space, and employee skills. For the production of bread, since they are just a small bakery, they only have 2 bakers working with two (2) large ovens for the production of breads. It is located at their baking house at LaPaz, Iloilo City. At their bakeshop, they have assigned two salesladies to manage and sell the breads. They also have two person in-charge in checking the breads before they are put to the crates and delivered to the bakery.
D’s bakery has the capacity to produce 75-100 pieces for each type of bread they have everyday. But with their pandesal, they produce 200-300 pieces a day. The number breads being produced is based on the capacity of the bakery to store the bread that is only good enough to consume the space. The bakery is only established with 60 square meters floor area, two shelves with four layers to display their products.
They have also considered the consumers preferences in producing the bread. Except for the hot pandesal, the number for each type of bread as well as the variety they produce is inconsistent. Sometimes when they think that there is a surplus for that certain type of bread, they will produce less than what they usually bake or just don’t sell it.

3. Process Description
For the process of producing the breads, it undergoes a step by step process done by the bakers. They need to be precise with the measurements of the ingredients to make sure the breads will come out as what they are supposed to be. Using few equipment with mixing the products, bakers then manually cut the bread into designed sizes and put the bread in the oven. After the breads made in the bread factory, they will be delivered to the bakeshop for selling. The number of breads being produced and delivered to the shop everyday is based on the capacity plan of the bakery.

4. Facility Layout
D’s bakery doesn’t engaged in highly automated machines for the production of the breads. According to the owner of the bakery, they still stick to the manual method of making the bread because their bakeshop is still small. The work that their bakers can do is enough for them to be able to sell their desired number of breads for each day. Also, in this way, they can reduced the cost of electricity caused by machines and instead allocate their resources to the bakers and persons in-charge in the bakery.
For the transportation of their products from the baking house to the bakeshop, they have one small multicab delivery van with a family member as the driver.

5. Design of Work System For the job design, when the owner of D’s bakery assigned workers to do particular task in the business, only little requirement were asked. Labor requirements include, low education and skill requirements, minimum responsibilities and little mental effort needed. For the management of the store, low wage cost and a little orientation for everyday activities. The bakers hired were not any trained nor refined cooks. The owner have provided them with some training to know what things should be done. Workers don’t exchange task. They only work to where they were assigned. With regards to the work methods, the working condition in the bakeshop tends to be very hot since it is only equipped with only one electric fan. The bakery is more like an open shop so there are noises coming from surroundings given that it is near the main road. The shop haven’t been also painted for years resulting to be dark to look. The bakery operated from 8am to 6pm every day. In that case, workers also report at those span of time.

6. Location Plan D’s bakery has only one shop and it is located outside of the Jaro big market. It stood alongside with the passenger jeepney and vans’ parking area. Beside the bakery are small sari-sari stores. The baking house where the breads are produced are located at Lapaz, probably 4 kms. distance from the bakeshop. 7. Quality Management In order for them to ensure that they sell the right quality of bread, they have assigned two workers who check every bread after they are baked. And then those workers put it into designated bread crates. If all the breads were not sold for a day, they still sell it for the next day but the breads’ limit has only a maximum of 3 days. After 3 days if those breads were still not sold, they would go to waste because they are not fresh anymore.

B. Analysis of Documented Systems

Based on the information I have gathered, the analysis about D’s bakery are as follows:
1) In terms of the product design, D’s bakeshop merely uses the method of standardization. This means that their products were designed in way that most of the components are standardized and easily available in the market. Since in making a bread, the ingredients needed are available in any nearby market.
The types of bread that they sell are very common that can be also found in almost all the bakeshops. They lack uniqueness with their products which should be one of the most important features for every shop to be known to other people.
D’s bakeshop have used a method of standardization in designing their product. Having goods that are readily available in the market is a good way to minimize costs. In this way, they can also maintain the inventory of their goods since a bakeshop needs to make and sell new and fresh breads every day. Standardization may be great for a company creating products that there are not many things you can do to make them unique and keep the price down.

2) As for the capacity plan of D’s bakery, they engage in a method of Following Capacity. This means that they wait for the demand to increase before expanding capabilities. The overall objective of strategic capacity planning is to reach an optimal level where production capabilities meet demand. They only produce same number of breads every day, not even keeping track if which breads are being sold with a larger number and which one in lesser number.
D’s bakery my sometimes incur excess capacity which arises when actual production is less than what is achievable or optimal for a firm. This often means that the demand in the market for the product is below what the firm could potentially supply to the market. Excess capacity is inefficient and will cause manufacturers to incur extra costs or lose market share. 3) In the case of process production and facility layout, D’s bakery doesn’t engage in automation. Although automation can help fasten the production of goods, the manual production of bread helps the bakery maintain the quality of their bread. I could say that it is convenient for them since they are only a small and single retail shop, they don’t need to invest into highly automated machine. The method that they possess is enough to maintain the number of breads that they need to sell for each day. 4) Job design is one of the most important factors in a business. From what I have gathered, D’s bakery lack specialization in the job design area. Specialization relates with different work that concentrates on some aspect of a product or service. Similarly, it emphasizes the ability to concentrate one's efforts on a type of work and thereby becoming proficient in it. The bakeshop’s method is that some workers who are not capable of handling jobs with greater scopes prefer low-level jobs that have limited requirements and responsibility. Like in the case of their bakers, they were not professional bakers from the moment they were hired. They were trained to know the specific task of a baker. And this is another cost incurred on the part of the owner. Specialization in important to help designate people with the right background in that specific scope of the business. For the motion study, I was not able to look at the design of work system they have in the baking house. So the analysis under here is merely what I was able to observed and asked in the bakeshop. A lot of unnecessary human motions may be involved given the type of working conditions they have at the bakery. Unnecessary motions might develop because the place is not well ventilated. It is located near the highway where noise and pollution is everywhere. The work methods of the bakery had a lots of flaws. There needs to be an improvement especially with the arrangement of the shelves in the workplace. The shelves were placed at the side most part of the floor, and there is a lot of space available inside of the bakery which is only being consumed by two sales ladies. They though that in this way, the customers would easily see the bakery. But there’s one step needed to take to the bakery and there is just a narrow space in between it. So it might probably cause some little tripping accident with the customers especially if it rush hours. Also, the bakeshop doesn’t have any little space for customers who might want to eat their orders there even though they still have enough space to arrange for it. The bakeshop has a good operating hour considering they operate from 8am to 6pm. In this way, they can maximize their profit although I don’t have the idea how they compensate their workers. Working more than 8hrs a day may cause fatigue to their salesperson which would affect their service. 5) The location of D’s bakery is outside the Jaro big public market. It must have been a good decision for them given that there are no other bakeries around it. Also, there are two terminal areas for passenger jeepney and van. In this way, they would be able to capture a lot of customers. Since bread is a food that can be eaten anytime, they can have any possible customers at any time. Beside the bakery are small sari-sari stores, this means that there is less competition in terms of the similarity of the products each of them offers. Transportation costs sometimes play an important role in location decisions. In the case of D’s bakery, their baking house is only located 4kms. From their shop plus they have their own multicab. They are able to minimize transportation cost for their goods and most especially save time and effort in delivering the products. 6) Basic quality is the requirements placed on a product that do not lead to customer satisfaction when present, but can lead to dissatisfaction if absent. They say that they have assigned two workers to check the quality of their products before they are delivered to the bakery. But one big concerns is that if all the breads were not sold for that certain day, they will still sell those the next day. Selling breads that are not freshly baked for that certain day reduces the quality of their product. At the bakery, they don’t make any final checks for the quality of the bread anymore. Especially nowadays that the weather is hot, these might affect greatly the taste and texture of the bread. They easily get damaged. If they are not sold freshly baked then consumers’ preferences might change. C. Recommendations for Systems Improvement

The business may need to improve from time to time in order to sustain the customers’ wants and needs. Consumers’ preference with bread differs from time to time. I would recommend for D’s bakery that they should try to produce with new bread. A product that would be unique to them. They should not just stick to what is common to all the bakery because it won’t drive customers to them.
The most important concept of capacity planning is to find a medium between long term supply and capabilities of an organization and the predicted level of long term demand. They have to plan for actual changes in capacity, changes in consumer wants and demand, technology and even the environment. When evaluating alternatives in capacity planning, they have to consider qualitative and quantitative aspects of the business. These aspects involve economic factors, public opinions, personal preferences of managers.
In order to avoid product surplus or shortage, the owner/manager of the bakery should keep in record of the bread bought every day. In this way, they can produce a more specific number of number of bread everyday that is just enough of what buyers usually bought. They could also limit or perhaps omit those breads the consumers seldom buy and maximize the capacity of bread they can make for those that buyers often buy. Through this, they could maximize profit and minimize cost.
As with the workers, they may engage in specialization. The advantages of specialized assembly line workers are high productivity and relatively low unit costs. Specialization describes jobs that have a very narrow scope. The amount of knowledge, or training required of a specialist, and the complexity of the work, suggest that such individuals choose such work because they are fully interrogated in the work flow of the product or service. Take for example in the case of the bakers, if they hire bakers that really specialize in baking, that person could create a new recipe that could help in the production of the bakery. Also, higher quality of bread will be produced. Salespersons that really fond of selling the product may indulge more customers to come back. Lastly, they could create an environment that fosters customers' returning to patronize the bakeshop. Make the storefront cozy and attractive so customers want to spend time there instead of buying goods and leaving the store. Create ambiance and warm décor by setting up tables. Check out competitors' pricing and products to ensure you are offering fair prices and competitive items, so that customers will continue to come back to your establishment instead of that of a competitor.

Here is a sketch of a recommended design of the bakery. Since from my observation there is enough space which was not maximize inside, I would suggest this kind of setting. They could move the shelves a little more inside so pollution, heat and noise won’t affect them much. They may also add one or two small tables at the side for customers who may want to eat in the place. Also it may prevent the accident that may cause by the stair in entering the bakery. The bread can be arranged according to their variety from plain to the ones with fillings or maybe according to the sizes. Putting a label and price on each type of bread may help the consumers identify what they want easily. :)

MGT 187
Operations Management
First Take Home Long Exam

Submitted by:

TRIXIA LOIS L. JARDELEZA
BS Management III
April 6, 2015

Submitted to:

Prof. Manuel P. Ocampo