Internal processes Enhancing production Increase production capacity By 245,000 tons As per the financial as well as operational reports of 2016, the company did not manage to increase capacity in order to produce 180,000 tons; instead it only managed an annual production of 65,000 tons only. It is shy of the target by 8,000 tons annually.
The company didnt manage to acquire the latest state of art production equipment as it had planned in the 2015 target thus hampering increased annual production output increment as per the plans.
The level of unit production went down by 30% in the third quarter of 2015 due to reduced lack of capacity to handle more raw materials for production.
The production levels of granular potash declined in towards the third quarter of 2015, while in the first and second quarter production levels were fairly the same as the production of a similar period of the previous year (Wilsey et al, 2013). The management is studying a project for expanding the production of potash to increase production capacity by 180,000 tons
Raising granular potash 250,000 tons per year Despite Board of Directors approval of raising the production capacity of granular potash by 250,000 tons a year, the company was not able to meet the target due to the unavailability of resources to handle the increased capacity more so in terms of machinary and personnel.
In line with increasing production capacity to 250,000 tons a year, the board forgot to expand storage capacity in the same margin as with the case of increased production capacity, thus hampering increased production due to lack of additional storage facilities.
Therefore, the production levels of granular potash did not increase to 250,000 as per the boards 2015 diretive of increasing production capacity.
The reason for not being in a position to achieve the ordered production levels is because the firm did not implement its short term development goals that would have seen the aggregate annual output go up by 250,000 tons.
Increased production capacity will translate into increased production as well as increased profitability in an instance where production units go up, in this case the company did not realize the benefit when it failed to increase its production capacity thus ending making sales and earnings revenues and profits that are more or less similar to what it earned in the previous years.
Failure to meet its development and growth strategies translates to an abortion of the wholse process of development since capcity improvement is one of the key area tha the firm banks on in order to realize growth and development.
Failure to improve production capacity translates to non-improvement in quality as well, the firm has one of the robust dveloment plan but zero implementation as per the given results of the previous plans that were not implemented so as to give the company a upper hand in improvement quality of its products.
The company will continue to suffer from the diseconomies of scale since it operates a large portfolio of business which does not have a realizable growth strategy as per the failure to raise the capacity of production based on the board of directors directive/resolution (Wilsey et al, 2013). the Board of Directors approved raising the production capacity of granular potash by 250,000 tons per year
Financial Using natural gas Decrease electricity consumption Complete the project in December 2016 The project to have an installation of natural gas for the firm as per the plan is quite on course. Given that were in the third quarter of 2016, 80% of the project is already complete with a large portion of the remaining work based on minor details about the project.
The project will have a capacity to provide sufficient power for the company all year round thus enabling the company to reduce production costs by 30%.
The back-up system is also in place so as to ensure continuity of operations in case the system fails to perform as expected. The experts have noted that the success rate of the project in terms of efficiency once it is in place is 98% which is near perfect considering other sources of energy have the same performance levels.
Improving the capacity of the firm in order to handle the extra 180,000 tons in a year means that the firm should raise its investments funds through various options available to the firm, in so doing the firm will incur a cost of raising capital and the process itself will take time to realize. Based on the companys information the cost of raising new capital will mean that the firm will part with over 10% of the total capital raised which is huge considering the amount it needs for financing. On the same note, cutting on the cost of operations by increasing efficiency will enable the firm to realize more profit at the end of every financial year.
Arab Potash has a robust financial plan that will enable it to cut the costs of operations in the long run, more so by reducing the humongous cost of energy as it is currently constituted is considered to be high, the move is considered to be complete in 2018 thus giving the firm a chance to increase its profit as well as raise more revenues (Wilsey et al, 2013).
The project is expected to be completed in January 2017
Diesel electricity generators Saving electricity costs Rent diesel electricity generators with a capacity of 15 MW If diesel electricity generators will be fully installed and operational, it will help the firm to cut energy cost by close to 15%, mostly the reduction in generator generated electricity will be as a result of the cost of fuel. if at any given point the cost of fuel goes down, the cost of energy will also go down.
The diesel generators that are currently being used by the firm are considered not to be environmentally friendly since the firm does not have a means of reducing emission of gases that are considered poisonous to the environment. However, renting diesel generators with higher energy production capacity is not only cost effective, but also environmentally friendly since they are fitted with filters that enable them to reduce the level of emission of poisonous gases.
The inclusion of electricity generators will help the firm reduce dependence of national grid and make the operation continuous since there will be no interruptions that are often witnessed as a result of power outage that sometimes last for hours.
Additionally, 15 MW generators will provide a better option in comparison with the ones that are currently in use since they will have a capacity to produce more power while at the same time the cost of hiring is considerably very low as compared to the cost of acquiring (Wilsey et al, 2013). The Company is currently using diesel-powered electricity generators to save electricity costs.
Customer Improve client relations Establish representative offices in its main markets Customer representatives should be hired on contract basis so as to enable the company vary by either increasing or reducing the number of reps as per the level of demand in the market. By doing this, it will increase sales as well as receive customer correspondence. Establishing customer representatives offices across the main markets is a plus for the company since it will be near its customers thus being able to increase sales as well as raise the level of customer satisfaction. The primary markets need to have constant correspondence so as to enable the company to carry out effective customer research to establish the level of demand and feedback thus informing the firm on the next course of action with regards to the level of supply. Additionally, establishing reps on contractual terms will enable the company to cut the cost of marketing since it will only increase the workforce when there is an increased demand while when there is increased demand the company can hire extra sales reps thus ensuring that there is proper management of customer needs, feedback and information (Warren, 2002).
Establishment of customer representative offices across regions that the firm operates will also enable the firm to expand its current market share since loyal customers can refer their friends, family, or colleagues to the firm. In so doing, the new customers referred because of the close customer touch points, the firm will be able to capture new market thus increasing its market share.
Customer representatives will work hand in hand with sales representatives on key regions that the firm has huge market share, the partnership will enable the firm to increase sales thus leading to increased revenues as well as the profitability of the firm. Additionally, the firm can be able to capture customer information which will be key in marketing of the firms products (Wilsey et al, 2013). Impacts on the companys image thus translating to the customer satisfaction, sales, revenue, and profit for the firm. Employees will also benefit since they will be highly regarded when the image of the company is positive thus translating to job satisfaction as well.
Learning and growth Cost reduction Jump to Excellence project. Energy control expenses, increase efficiency and reduce the cost of production The firm has a lot to research on more so with regards to operations, energy, and maintenance. The three areas are critical to the companys growth and development; they hold the key to growth and expansion. The company should invest in developing clean energy perhaps a renewable energy such as solar energy so as to lower its productions costs. Additionally, the firm should invest in the development of efficient operation techniques and mechanisms so as to increase production levels while lowering production costs. Maintenance is another area that the firm should invest in, through research the best mechanisms for carrying out maintenance such that there will be low spoilage levels as well as ensuring that there are minimal injury rates to employees that arise from operations.
Operations is a key area that the firm needs to invest a lot in as far as learning and growth is concerned, it s through operations that the firm will be able to achieve efficiency thus enabling it to raise its profits as well as creating seamless operations (Niven, 2016). impacted profitability and has realized many benefits to the company and employees
Operations Maintenance Reference List
Niven, P. R. (2016). Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. Hoboken: Wiley.
Wilsey, D., Perry, G. S., Montgomery, D., & Rohm, Howard,. (2013). , The Institute way: Simplify strategic planning and management with the balanced scorecard. Balanced Scorecard Institute.
Warren, K. (2002). Competitive strategy dynamics. (Competitive Strategy Dynamics.) New York [u.a.: Wiley.
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