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Homework answers / question archive / OPMT 2298 – Business Process Improvement Our fictional case study company, Flour Power Organics, sells organic, artisan flour and baking supplies online
OPMT 2298 – Business Process Improvement Our fictional case study company, Flour Power Organics, sells organic, artisan flour and baking supplies online. Delivering quality baking foods & supplies at a good value is the mission of the
small warehouse owned by Nina & Pisha. They started the online venture in Jan 2019. Despite
increase in sales over the last 12 months, the expenses incurred over the year have resulted in
negative EBIT (earnings before income taxes) for the first year. Critical to the quality and
variety of the products they supply it is essential they manage their operations at the lowest
cost possible. Fortunately, as part of their business plan they developed few key performance
measures and have been collecting data from day one of their business.
The Problem
To ensure the right product is delivered at the right time to the right customer is the primary
focus of a distribution business. May sound simple but there are several underlying processes
that occur to meet the above mentioned objective. During the annual budget assessment Nina
& Pisha identified a few areas where the cost exceeded than expected. They believe in data
driven decisions, however since they are occupied performing several roles to keep the
business running they have not been able to dive into the data to analyze trends that will help
them improve their business.
Opportunity
Your team has been selected to perform a ‘Business Process Improvement’ exercise using the
data spreadsheet (provided separately). Financial assessment
**Einancial assessment noted in attachment
Annual sales $ 312,725.78
Annual product cost $ 215,672.95
Profit Pn ety esi]
| ssCiEXpenses
Salaries (x 2) $ 85,258.00
Product written off $ 13,240.25
Equipment $ 6823.00
Supplies $ = 2,925.11
Total expenses $ 108,246.36
Net profit (EBIT) $ (11,193.53)
Financial assessment noted in tachment igre 2
ake) 1 $ 97,052.83
Product written off $ 13,240.25
Equipment $ 6,823.00
Supplies $. 2,925.11
OPMT 2298 - Business Process le a
Improvement
Case Study: Flour Power Organics .
Notes:
- Layout
o Flour power warehouse has standard racking with six
shelves on each rack to store product
o There are 4 racks in total, one racking each placed
against the wall and 2 in the middle with their backs
against each other.
- Receiving & Put away
o Flour power receives delivery from the manufacturers
5 times a week (deliveries are dropped off all day
long)
o Product is placed on shelves as it is received 1.e. same
packaging
o Some products are received in bulk quantities
(packages of 6 or 12), however at the time of delivery
the bulk packages are cut open to ship single units
o Nina & Pisha do not have formal training and
procedures in place on receiving and put away of
products. The tasks listed in process steps are often
performed in parallel
- Other
o 87% of the products have a shelf life of 3 months
o In order to maximize on the volume discounts, certain
products from manufacturers are purchased in large
quantities which are stored in the small storage room.
o They are often repackaging products prior to shipment
(i.e. not able to resell as is)
o Inventory & orders are tracked manually on a
spreadsheet
o Provide deliveries to customers on a daily basis.