Assignment 3 Part 1
Operation, Technology, and Management Plan
BUS 599: Strategic Management
The Main Aspects of Operations
EspressoLink lays great emphasis on the operational plan as it guides the development and management of processes and procedures on inventory control, storage, shipping, and customer services. The success of the company depends on the efficiency of the campaign plans. Consequently, there has been a great effort to institute efficient and effective processes and procedures to guide operations at EspressoLink. Since the business is a start-up, it will use a just in-time inventory system. The approach aims to limit storage and material holding costs. EspressoLink will have several suppliers of raw materials to prevent cases of shortage and lost production associated with using only one vendor.
Cost and Time Efficiencies
EspressoLink has various measures to reduce its operational costs while increasing time efficiency. At the onset, the firm will only employ experienced staff who can work fast with a minimal waste. Additionally, it will not hold more than 1,000 units at any given time. Additionally, management will not take any pay for the first six months of work ensuring that the firm has sufficient financial resources to fund its operations. The primary goal will be to operate the business in the most cost-efficient way possible by applying sound economic principles. The company will make use of drop ship services to reduce overheads and boost efficiency. Moreover, it will aggressively negotiate its contracts and credit facilities. Finally, it will ensure that all processes and procedures are green. For instance, all communication will be done through to limit paper and printing costs.
Various factors help create several competitive advantages for the firm. At the onset, the application of the just in-time inventory system helps create a competitive edge over other consumers since they get fresh products at all times. The small size of the business makes it agile and flexible. Consequently, the firm can alter its operations at any time depending on the level of the demand in the market. Additionally, the small team creates great chemistry, which enhances productivity, efficiency, and innovation at the firm. Moreover, the company has minimal bureaucracy being a startup which advances the effectiveness of the decision-making process. Besides, the small size limits operational costs allowing the company to offer its products at the most competitive price.
Problems Addressed and Overcome
The distributor and outward suppliers will cater for shipping costs for the finished goods. When customers make bulk purchases, they will only pay 30% of the charges. EspressoLink will only hire experienced staff at the cost of $13 per hour. Even though they are expensive, they help limit waste while increasing the quantity produced. The processed drinks that are ready for sale will be held at the company store, which can hold about 100,000 units. The annual rent paid for the building is $5,000. EspressoLink will conduct market research every six months to appraise market trends and determine the products that are most demanded by consumers.
Technological Plan Preparation
One the biggest and most significant investment the business will make is the implementation of an efficient ERP (Enterprise Resource Planning) system, which is expected to make the business sharper and faster than its competitors. The system will link the business to its suppliers, clients, employees, and distributors. It will ensure transparency, productivity, and decision-making. It will make sure that all departments have access to real-time data and information needed in their operation. The ERP will be set up before the business commences its operations to guarantee that it is tried and tested before the process and procedures in the firm become complicated. Various factors will be considered the selection of the ERP. It will be scalable, cloud-based, and integrated and allow for automatic updates.
EspressoLink owns a few pieces of hardware. At the onset, it holds two beverage mixers that can mix up to 200 gallons valued at $28,500. The Beverage Filling Machine, which is imported from Italy, is integrated with a rinsing, filling, and capping three capabilities in one Monobloc machine. The equipment is fitted with a constant temperature controlling system. As a result, it can be used to fill both hot and cold espresso coffee into 16 oz. bottles. The machine has some of the best technology in the market. The table below (Table 1) shows some of the equipment the company owns.
EspressoLink recognizes the fact that one of the main cost drivers for a manufacturing firm is the labor costs. Consequently, the company has invested in technology to reduce its expenses on operation through the automation of its processes. Moreover, the machine will help reduce waste, which is common in human production.
The application of quality technology will boost the firm’s productivity and efficiency. The machines are not only faster but also more accurate when compared to human labor. The management at EspressoLink is well aware that people are slow and occasionally fail to deliver on their tasks. The integration of the latest technology in the production line simplifies work, leads to consistency, and avails higher quality results than people. Even though the technology has high acquisition costs, it will help the company save a lot of financial, time, and personnel resource in the long-term.
Equipment Owned by Espresso
|Equipment||Quantity||Value for one||Total Value|
|200 gallon Beverage Mixers||2||28,500.00||57,000.00|
|Bottling Machinery (Helps in filling and capping)||2||9,600.00||19,200.00|
|Vehicles (Used panel vans)||4||10,000.00||40,000.00|
|Computers (Apple Macintosh)||3||1,200.00||3,600.00|
Equipment and a Monthly Charge
The founders acknowledge the importance of effective communication in the success of the firm. The most significant telecommunication facility the company needs is stable internet access as it connects the business with its suppliers, distributors, and consumers. It will be the basis for every communication in the business. The company aims to reduce the use of paper-based communication. As a result, it will need an efficient email service. All communication exchanged between the enterprise and its stakeholders will be done through email. For instance, it will be used to place orders with suppliers, receive orders from clients, and manage the distribution of the firm’s products. When the business starts, it will use Gmail, which will be customized to meet its needs. Management prefers Gmail because it offers the most reliable and secure email service.
Moreover, the business will need an efficient telephone service. In spite of technological development, which has resulted in the growth of social media and instant messaging services, a significant segment of clients still use telephones to make inquiries on various issues such as products on offer, working hours, delivery services, and the location of the business. As a result, the company will need a reliable and quality phone service. The firm will work with a provider offering digital voice, also known as VoIP services. It will also use a hosted PBX to serve its communication needs.
Finally, the other significant communication the company needs are website hosting and offsite data back-up. The company needs to have its website running 24 hours a day, seven days a week to ensure that clients access its services at all times. Additionally, the website should be hosted in a secure environment to prevent data loss due to hacking. What is more, the company expects to generate a significant part of its income through the website. Consequently, it will partner with a leading crowd computing firm to host its online platform. Besides, the cloud computing organization will provide an offsite data backup to protect and secure the company’s information.
The business recognizes the importance of having an efficient team. The founders are aware of the fact that the most significant step towards success is the institution of an effective team. At the onset, the firm has two passionate and energetic partners, who are willing to do all it takes to ensure that it enjoys success in the future. The company has several technical and non-technical requirements. For instance, it needs someone to handle production and quality control, drive sales as well manage its finances and administration. The two most important functions of the firm are quality control, marketing, and finance. The company will hire individuals with experience in various capacities to limit its operational cost. For instance, the person dealing with finance will also handle administrating. The one dealing with production will also manage quality control.
The finance and administration officer will work with the founders to forecast the needs of the market. They will offer reasonable assurance showing where the company should go. The firm will be very efficient only hiring for the critical positions. Consequently, functions such as information technology and security will be left vacant.
Management Plan Preparation
Key Management and Employees
The management team at the company will consist of five employees. At the onset, I will act as the president and chief executive officer. Melinda Cates, who developed the original idea behind the company, will serve as the master mixer and quality control. Ian Glass, who has worked as the plant production foreman at Pepsi but retired recently after having been working at the company for 35 years, will be in charge of the production line. Mary Cates, who is Melinda’s sister, will also be involved in the management of the company.
Board Members and Advisors
The firm appreciates the critical role played by the board of directors and advisors, especially because the business is new. They are expected to offer guidance in the establishment and growth of the firm. They will be instituted and used in a way to ensure that they have a positive impact on the business. At the onset, the firm will have four boards from various spheres of life. 50% of the board will consist of independent directors to ensure that the company has the right skills, interests, and expertise offering guidance. The board and advisors will have the freedom to oppose and contradict management. Finally, all recommendations by the advisors and the board will be implemented promptly. The advisors will act as mentors to the firm’s management.
Management Structure and Style
The firm will have a simple structure, which will be instituted at the formation of the business. It will detail the duties and roles of each position in the company. Besides, it will have specific job descriptions for all positions. The structure is important as it establishes the different function needed by the organization and the nature of skills that should be hired. Management is well aware of the fact the presence of an effective organizational and corporate structure makes the firm more attractive to investors as a clearly defined structure is a significant marker for serious investors.
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