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Operations Management of cadbury

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  • Global market forces are driving the continualEvolution of the food and beverage industry.Consolidation, changing consumer preferences andIncreasing government regulations are dramaticallyImpacting manufacturing and business strategy. InThis fiercely competitive marketplace, you must offerA greater variety of products to meet consumerDemand. At the same time, you must consistentlyAnd cost-effectively produce high quality products.To be successful, you need to focus on three key
  • Cadbury1

    1. 1. Cadbury Schweppes PLC<br />Presented By:<br />KulwantDhillon<br />Micheal Elias<br />Junfeng Ma<br />RamandeepSran<br />
    2. 2. Contents<br />Introduction<br />Operations Strategy of Cadbury<br />Using Operations to Compete <br />Recent Trends in Operations Management & Cadbury<br />Process Strategy & Process Analysis<br />Human Resource Management of Cadbury<br />Capacity Planning & Constraint Management<br />Lean Systems by Cadbury<br />Supply Chain Design & Integration <br />Resource Planning & Scheduling<br />Location Planning<br />Summary<br />References<br />
    3. 3. Introduction<br />
    4. 4. Origin of Cadbury <br />Cadbury is the brain child of John Cadbury <br />Starting in form of grocery business in Birmingham in 1824<br />In 1853, Cadbury became the confectioner to the British Crown.<br />In 1860, Richard and George took command and expand it further.<br />Today Cadbury operate Globally <br />John Cadbury <br />
    5. 5. Cadbury Schweppes PLC: Overview <br />Cadbury Schweppes PLC is a British confectionary company<br />Headquarters in Uxbridge, England.<br />The oldest and largest family-run businesses in the world<br />In 1969, it merged with Schweppes Limited<br />Third leading producer of soft drinks and fourth leading confectionery manufacturer in the World.<br />
    6. 6. How large Cadbury Schweppes PLC ?<br />Around 65,000 Employees<br />35,000 direct and indirect Suppliers<br />Direct operation over 60 Countries<br />
    7. 7. The Industry in which the Company Operates<br />The Food and Beverage Industry: <br />Fiercely Competitive Marketplace<br />Global market forces<br />Consolidation<br />Changing consumer preferences<br />Increasing government regulations<br />
    8. 8. Product and Major Brands <br />Three kinds of confectionery: Chocolate (55%), Gum(14%) and Candy(31%)<br />13 focused Brands<br />12 focus markets<br />7 focus customers<br />India<br />USA<br />South Africa<br />China<br />Brazil<br />Japan<br />Mexico<br />UK<br />Turkey<br />France<br />Russia<br />Australia<br />
    9. 9. Operations Strategy of Cadbury<br />
    10. 10. Operations Strategy<br />Mission: Financial Scorecard, judiciously reinforced by our Priorities, Commitments and Culture.<br />Vision: to be the World’s biggest and best Confectionery Company<br />Core Values: Performance, Quality, Respect, Integrity and Responsibility<br />
    11. 11. Global Strategy + Mission Supportive<br />Growth: Profitable Growth in Emerging market (India, China, Russia)<br />Cost & Efficiency: Managing brands on a global basis, Outsourcing low value added processes and Reconfiguring Manufacturing Network.<br />Disciplined Investment: In 2007, Partnership with Barry Callebaut (the world’s largest Cocoa processing Company)<br />Superior Returns: Strong Dividend Growth, an Efficient Balance Sheet, consistent improvements in ROIC<br />
    12. 12. Using Operations to Compete<br />
    13. 13. Cadbury’s Market Position and Competitive Environment <br />Participates in the Global Competitive Marketplace <br />
    14. 14. Targeted Customers & How they are targeted?<br /><br />
    15. 15. Core Processes to delivery the Final Product<br />Internal and External Customers<br />Outputs<br />Inputs<br />Processes and Operations<br />Delicious <br />Chocolate, Gum and Candy <br />And Beverages<br /><ul><li>Cacao varieties
    16. 16. Processing
    17. 17. Blending
    18. 18. Cinching
    19. 19. Tempering
    20. 20. Storage
    21. 21. Milk
    22. 22. Cocoa
    23. 23. Palm Oil
    24. 24. Other Grocery Products</li></ul>Information on Performance<br />Source: Krajewski, Ritzman, & Malthora, 2010<br />
    25. 25. Recent Trends in Operations Management and Cadbury<br />
    26. 26. Going Green…………..<br />“Purple Goes Green” is the part of Cadbury’s Strategic Mission and Vision ( Objective: reduce 50 % Carbon Emissions & 10 % reduction in Packaging by 2020).<br />Link with Singapore’s Sustainable Manufacturing Centre (SMC).<br />Co-operation with United Nation Development Program (UNDP) and Government of Ghana, the Company promised to invest $ 87 million over next decade to support high-quality sustainable cocoa production<br />Bournville (The birth place of Cadbury Company), is still the Greenest areas of Birmingham.<br />
    27. 27. Other Recent Trends…… <br /> Productivity improvements: <br />Replacing Air Compressors, Chilling system machines at Manufacturing and Packaging lines.<br />Technological Changes: <br />Ringwood, Victoria Plant Identifies many opportunities for making innovation and technologies that will reduce the waste from the Chocolate.<br /> Diversity in the Workplace:<br /> “Diversity & Inclusiveness” is the punch line on its website for creating a welcome Workplace for everyone.<br />
    28. 28. Process Strategy & Process Analysis<br />
    29. 29. Flow Chart of Process Analysis at Cadbury<br />Production processes<br />Packaging<br />Product launch<br />Production<br />Modifications<br />Consumer trials<br />Research & Design<br />Ingredients & recipes<br />Tasting<br />
    30. 30. Awards won by Cadbury for its Performance & Quality<br />Cadbury Schweppes plc was awarded Business in the Community's Jubilee Award<br />GOLD award for the "Best Insights and Strategic Thinking"<br />Brammer Energy & Environmental Improvement Award , 2009<br />Cadbury's Gorilla Among D&AD Winners, 2008<br />
    31. 31. Human Resources Management of Cadbury<br />
    32. 32. Human Rights & Ethical Trading Policy (HRET) of Cadbury<br /> Core labor rights and dignity at work:<br />Respect the rights of employees to join legally recognized labor unions.<br />Children are employed only under circumstances which protect them from physical risk and do not disrupt their education.<br />Not tolerate any form of harassment in the workplace.<br /> Health and safety in the Workplace:<br />Healthy and safe work environment for each employee.<br /> Fair remuneration:<br />Working hours and remuneration are reasonable and comparable to those offered by similar companies<br />
    33. 33. Continue………<br />Diversity and respect for differences:<br />Manage diversity to create competitive advantage<br />Opportunity for development:<br />Opportunities of personal and career development regardless of their gender, age, marital status, sexual orientation, disability, race, religion or national origin.<br />
    34. 34. Non-traditional Training for Employees<br />Chemistry, Science, Food/nutrition, or Chemical Engineering Degree holders are regular coached by managers.<br />Managing an annual sensory screening program to develop product knowledge and understanding of the Confectionery Categories.<br />Analytical Laboratories (Microscopy, DNA and Protein and Investigative Analysis) provide training the Employees<br />Newsletters, the Group website and about 250 local websites also help employees to know what is going on within the business at local, regional and Group levels.<br />
    35. 35. Capacity Planning & Constraint Management<br />
    36. 36. Constraints Analysis in Cadbury<br />External Constraints<br />Market Extent (Bad)<br />Ability of a producer to gain access to appropriate resources (Good)<br />
    37. 37. Constraints Analysis in Cadbury<br />Internal Constraints<br />The existing scale and capacity of buildings and machinery used in the production process(Good)<br />The skills and training of the labor force(Bad)<br />The availability and flexibility of the labor force(Bad)<br />Access to an abundant supply of parts and raw materials(Good)<br />Time(Good)<br />Finance(Good)<br />
    38. 38. Constraints Management in Cadbury<br />Extent Market<br />Many competitors:<br />Thorntons<br />Lindt & Spruengli<br />Nestlé S.A.<br />FerreroSpA<br />Hershey Company<br />Wrigley<br />
    39. 39. Constraints Management in Cadbury<br />Recent Possible Activities for Extent Market<br />Market Penetration <br />Try to achieve growth using existing products in there current market segment, to try and increase its market share.<br />Product Development<br />Targets a new product at there current market segment.<br />Market Development<br />Seeks growth by targeting there existing products at a new market.<br />Diversification<br />Tries to diversify into new businesses by producing new products to aim at a new market.<br />
    40. 40. Constraints Management in Cadbury<br />Labor Force<br /> ‘How can we engage our new hires early so they understand what’s great about Cadbury and feel part of our global organization?’<br />
    41. 41. Constraints Management in Cadbury<br />Some Key drivers for labor<br />Improve the quality of new hire training by delivering a clear, consistent message.<br />Delivery a solution that is easy to use and maintain locally.<br />Provide the ability to link to other resources such as the intranet for more information on policies and processes.<br />Develop the training in an engaging format.<br />Include a mechanism for tracking completion of the learning activity.<br />Introduce all new hires to the performance management process (part of People Processes).<br />Introduce newly hired and newly promoted managers to their role in people processes such as performance management and development planning at Cadbury.<br />
    42. 42. Capacity Planning in Cadbury<br />Three broad classes of Capacity Planning<br />Lead strategy<br />It is adding capacity in anticipation of an increase in demand. It is an aggressive strategy with the goal of luring customers away from the company's competitors. It often results in excess inventory, which is costly and often wasteful.<br />Lag strategy <br />It refers to adding capacity only after the organization is running at full capacity or beyond due to increase in demand. This is a more conservative strategy. It decreases the risk of waste, but it may result in the loss of possible customers.<br />Match strategy<br />It is adding capacity in small amounts in response to changing demand in the market. This is a more moderate strategy.<br />
    43. 43. Capacity Planning in Cadbury<br />Cadbury Way<br /> Lead strategy <br />Match strategy<br />
    44. 44. Inventory in Cadbury<br />Service Level Optimizer 99+ <br />
    45. 45. Lean Systems by Cadbury<br />
    46. 46. Just in time benefits for Cadbury<br />Reduce costs<br />By using JIT product line, the inventory cost of Cadbury reduced from $670,000 to $200,000<br />Improve the productivity<br />Because of reducing stock holding, Cadbury was able to cut the assembly time by over 95%<br />Improve the competitive advantage<br />JIT creates a more flexible business that has better communication with customers and suppliers, and can react more quickly to market demands, which bring more competitive advantages for Cadbury<br />Improve job satisfaction<br />JIT demands active participation in the production process from employees. It increases their skills, gives them greater responsibility and fosters an interest in the performance of the whole company<br />
    47. 47. Supply Chain Design & Integration <br />Resource Planning & Scheduling <br />
    48. 48. Cadbury Supply Chain<br />Raw Material from Farming<br />Manufacturing and Packaging<br />Sales and Distribution<br />Customer<br />Wholesale &<br />Third Party Stores<br />70 % Ghana<br />Cadbury Manufacturing Plants<br />Cadbury Owned Stores<br />30 % Other Locations <br />
    49. 49. Depending on Ghana for Supply<br />Cadbury emphasizes responsibility both ethically and environmentally. In their relationship with Ghana farmers they promote fair wages and support the country’s economy.<br />Pros: Ghana is known for having the best quality bean available. Having a good relationship with the farmers ensures access to the best ingredients.<br />Cons: Farmers in Ghana have recently had trouble with their crops and have delivered lower outputs. This results in a smaller supply for the company who is limited by their main ingredient. This has effected Cadbury financially and may continue to be a problem under Kraft.<br />
    50. 50. Cadbury Customers<br />
    51. 51. Cadbury Customers<br />End Customer<br />Needs Product to Be Available<br />Needs Product to be Safe<br />Wholesale and Retail <br />Reliable Supply Chain<br />Dependable Inventory Restocking<br />
    52. 52. ERP SAP Integration<br />Kraft has had great success with SAP systems to handle ERP. Recently, in 2008, they upgraded to SAP ERP 6.0. Using the SAP system they were able to reduce their operational costs and see profitable results. <br />Cadbury tried to implement SAP in 2007 resulting in reduced operations performance over two years and cited as one of the reasons they had to layoff employees.<br />Kraft is now planning to integrate Cadbury into their ERP system and add even more SAP applications.<br />
    53. 53. Location Planning <br />
    54. 54. Location<br />Traditionally Focus area of Location : Near Canal links, Rail & main Roads<br />Kraft has similar motives and also does the same for their office buildings. They locate them near public transport and save on items such as parking facilities and security.<br />
    55. 55. Location<br />Cadbury is a British company and bases many of its operations in Britain. This area has some of the highest wage rates.<br />Now that Kraft has bought the company, they are strategically looking to phase out many operations in Britain for cheaper areas of labor such as Eastern Europe and overseas countries.<br />
    56. 56. Summary<br /><ul><li>It is a fascinating story of Industrial and Social Development.
    57. 57. The story of a small family business growing up, and to become an International World Leader.
    58. 58. A story of Technical Invention and secret recipes, marketing savvy and the creation of great Brands.
    59. 59. A story of people who are passionate, principled, pioneering and just love confectionery.</li></li></ul><li>References<br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br /><br />
    60. 60. Questions…???????<br />Thanks<br />