University of Lincoln Assessment Framework

Coursework Assessment Briefing 2022-2023

Subject to change, External Examiner approval pending.

Module Code & Title: EGR9048 – Process Operations & Innovation
Contribution to Final Module Mark (module weighting): 20%
Coursework Title: Initial Report
Coursework Issue Date: 2023-02-02
Coursework Submission Date & Time: 2023-02-27 23:59 GMT
Coursework Feedback Date: Within 15 working days from the submission deadline.
Description of Assessment Task and Purpose: Consider the Theramed Limited Case Study provided on Blackboard. You have been engaged by Theramed Limited in the role of Operations Management Consultant. This Case Study provides the background and detail information required for you to produce a report, detailing how a business improvement project progresses through the phases of the DMAIC process (Define, Measure, Analyse, Improve, Control). In your initial report you should cover the Define phases and address the following questions: What appears to be wrong? What evidence do you have for making these statements? What information are you lacking and what impact could this have on your conclusions? What conclusions have you drawn? What course(s) of action do you recommend to the management team? The Initial report needs understanding of the scenario, plan, and some basic literature review. The purpose of these assessments is to judge your knowledge of the subject matter, your ability to apply the key principles learned and use the appropriate tools and techniques to make and modify reasoned value judgements based on the scenario, and to give concise conclusions and recommendations as applicable; verbosity will not be rewarded. Write concisely. Ensure you have read this entire document thoroughly and paid particular attention to the expected format and marking criteria.
Learning Outcomes Assessed: Understand the strategic and tactical role of process improvement within an organisational framework. Describe different approaches to improvement and compare their effectiveness for different industry sectors. Identify and apply best practices in delivering improvement projects. Describe the key stages of improvement projects from the perspectives of cost, benefit and stakeholder challenge. Design, implement and evaluate organisational improvement strategies at tactical and strategic levels. Identify and apply advanced quantitative and qualitative tools to diagnose and resolve operational performance problems.
Knowledge & Skills Assessed: This assessment will result in the development and acquisition of knowledge, skills, and behaviours that are key outcomes of the module. Subject Specific Knowledge, Skills and Understanding: Organisational improvement, team skills, project management, stakeholder management, qualitative and quantitative methods, case analysis, characterising process performance, literature searching, and referencing. Professional Skills: critical thinking, problem solving, report planning, time management, working under pressure, written communication, report writing, and professional ICT skills. Emotional Intelligence: independence and personal responsibility, self-awareness, self-management, motivation, resilience, and self-confidence.
Assessment Submission Instructions: This submission is: ☒ individual work. ☐ group work. Submit your assignment by uploading a single file in either Microsoft Word (.docx) or Adobe PDF (.pdf) format using the Turnitin link on the Blackboard module site. You can view the Similarity Report in advance of the submission deadline and have unlimited opportunities to submit your work prior to the deadline. To view the Similarity Report, click on the submission link and then click on the similarity score. Regardless of how many submissions you make, the version of your work last uploaded at the submission deadline is the version that will be marked. All work should be submitted by the deadline stated above. Late submissions incur a lateness penalty, detailed below. The method of submission described above should be used in the first instance however, in cases of technical issues please email your assessment to: [email protected] by the above deadline. Please include the module code and coursework title in the email subject. All work will be subject to plagiarism and academic integrity checks. In submitting your assessment, you are claiming that it is your own original work; if standard checks suggest otherwise, Academic Offences Regulations will be applied.
Format for Assessment: A word-processed document in either Microsoft Word (.docx) or Adobe PDF (.pdf) format. Your report should include a cover page with your report title, author name, student number, university logo and address, and date of submission. You should also include contents, list of figures, list of tables, and references. Your text body should be 12pt, justified, and 1.5 line spacing with normal margins of 2.54 cm around. The length of your report should be no more than 5 pages from the introduction to the end of the references. Headings should be numbered in a technical report style, for example, “3 Methodology” and “3.1 Experimental Setup”. Figures and tables should be labelled and captioned and referred to within the text (preferably prior, but always close to where they appear in the report). All figures should be clear, high quality and suitably sized. If they include text, it should be easily readable when printed. Figures should also be clear if viewed in black and white. If a figure is not your own work, a citation should be provided accrediting the source. All references should be given in the IEEE referencing style. Ensure you cite all your sources and include as much information about your source in the references to ensure it is easily identifiable. You are advised to use an automatic referencing tool to assist you.
Marking Criteria for Assessment: Marks are awarded according to the weightings below.
Description	Weighting
Question 1	15%
Question 2	15%
Question 3	20%
Question 4	15%
Question 5	20%
Quality of report and deliverables	15%
Late Submission: The penalty of a late submission will be a reduction of 10 marks for each whole or partial day late, excluding weekends. For example, where an assignment warranting a mark of 58% is submitted one day late, then a mark of 48% will be recorded. Please note that all work is assessed according to the University of Lincoln Management of Assessment Policy and that marks awarded are provisional on Examination Board decisions (which take place at the end of the academic year).

Marking Rubric:
Criteria Grade Boundary	<40%	40% to 49%	50% to 59%	60% to 69%	70%+
Questions 1 – 5 (85%):	Breadth and depth of knowledge/understanding is inadequate with errors/inaccuracies in key subject aspects. Information conveyed is generic or superficial. Narrative is mostly descriptive with little explanation, analysis or justification. Conclusions are weak and do not demonstrate sufficient understanding.	Breadth and depth of knowledge/understanding is sufficient, addressing most key subject aspects, although some errors/inaccuracies remain. Information conveyed shows some specifics. Narrative remains quite descriptive but with some explanation, analysis or justification. Conclusions demonstrate sufficient understanding.	Breadth and depth of knowledge/understanding is reasonable, addressing all key subject aspects, evidence of wider reading&/study is limited, only minor errors/inaccuracies remain. Information conveyed is specific and with some context. Narrative shows reasonable explanation, analysis or justification. Conclusions demonstrate reasonable understanding with most requirements of the work fulfilled.	Breadth and depth of knowledge/understanding is good, evidencing wider reading&/study, only minor errors/inaccuracies remain. Information conveyed is specific and used in context. Narrative shows good explanation, analysis or justification. Conclusions are valid and demonstrate all requirements of the work are fulfilled.	Excellent to exceptional breadth and depth of knowledge/understanding in all areas, some beyond expectation at this level of study, evidence of extensive reading&/study. Information conveyed is specific, precise and used in context. Narrative shows excellent explanation, analysis or justification, and evaluation is evident, with suggestions to advance work and direct arguments. Conclusions are thoughtful and insightful.
Quality of report and deliverables (15%):	Presentation is insufficient detracting from the work with little reliable support for the reader. Figures and tables may be lacking, poorly placed or difficult to see or understand with errors in captioning. Written communication is difficult to understand or follow with message being ambiguous or vague. Spelling or grammatical errors are widespread and detract from the message. Referenced material may be lacking, unreliable or difficult to identify, or citations may be insufficient.	Sufficient presentation and style with supporting section containing few errors. Figures and tables are used when needed with straight forward captioning. Written communication is sufficient, being understandable but perhaps awkward, verbose, or vague with spelling or grammatical errors not impacting the message. A limited selection of core referenced material supports some statements and all used material with sources identifiable, but some formatting errors are present or minor information is missing.	Good presentation and style, reader is well supported. Figures and tables are good quality and well captioned. Written communication is reasonable, message is clear and precise, but errors / inaccuracies remain and spelling or grammatical errors are infrequent. Referenced material is cited to support most statements and any material directly used, with most sources being reliable, easily identified and formatting largely correct.	Excellent presentation and style, providing the reader ample resources and support. Figures and tables are excellent exhibiting some advanced features and are well captioned and labelled. Written communication is good with clear and precise message, showing some advanced grammatical structures and vocabulary with few to no errors. Referenced material is ample and incorporated into the narrative with all sources being recent, reliable, and easily identified but formatting contains some minor errors.	Outstanding presentation and style, providing the reader first-rate reader resources and support. Figures and tables are considered and exhibit advanced and complex features. Written communication is excellent to outstanding using complex grammatical structures, advanced punctuation and sophisticated vocabulary. Referenced material is carefully considered, exhibiting a wide-range and depth of reading without omissions. Sources are recent, leading and easily identified.

Feedback Format: Feedback will be provided via Turnitin in the form of comments and improvements noted on the transcript along with the marks as per the criteria above. A verbal one-to-one with the tutor is available upon request.

Additional Information for Completion of Assessment: You are advised to refer to the course material and your in-class notes and use the recommended module reading list (available on the Blackboard module site). You are expected to find, study, and learn additional and new information from reputable sources.

Assessment Support Information: If you have any questions, email your tutor in sufficient time before the submission deadline. Email: m[email protected]

Important Information on Academic Offences: The University of Lincoln Regulations define academic offences as follows: Collusion: A student colludes when they submit work for assessment done in collaboration with another person as entirely their own work or collaborates with another student to complete work which is submitted as that other student’s work. Collusion does not apply in the case of the submission of group projects, or assessments that are intended to be produced collaboratively. Plagiarism: Plagiarism is the passing off of another person’s thoughts, ideas, writings, or images as one’s own. A student commits plagiarism when they incorporate in their own work unacknowledged portions of another person’s material or attempts to pass off such work as original through its inclusion. Poor scholarly practice may justify trivial instances of failure to acknowledge source material. Self-plagiarism: Self-plagiarism is the re-submission in whole or in part, without proper acknowledgement, of any work by the student for which credit has already been claimed as part of the same or another award. Misleading material: Inclusion of data which has been invented or obtained by unfair means. This includes passing off of data from previous studies as if conducted by the student or by offering incentives to another person to provide material or otherwise to assist in producing work for assessment. Cheating: Any irregular behaviour during live assessments such as the unauthorised possession of notes; the copying of another candidate’s work; the use of programmable calculators and other equipment when this has been forbidden; the unauthorised obtaining of examination papers. Cheating also covers the use of any form of communication between students during live assessments in order to gain an unfair advantage. Contract Cheating: The outsourcing of assessment work, in whole or in part, to any third party, whether a commercial provider, current or former student, or acquaintance or family member. Misconduct in Research: The fabrication or falsification of data; misrepresentation of data and/or interests and or involvement, or the failure to follow accepted procedures or to exercise due care in carrying out responsibilities for avoiding unreasonable risk or harm to research subjects or participants or the environment. This would also include improper handling of privileged or private information on individuals collected during the research. These are serious offences and, if found guilty, you will receive one of the following penalties: Take no further action. The transgression remains on your record. Warn the student against any future academic offence but impose no other penalty. Record a mark of zero for the piece of assessed work or examination only. Record a mark of zero for every assessment item within the module. Record a mark of zero for every assessment item within all modules taken during the semester. For undergraduate and postgraduate taught students, to reduce by a single class the final award to be conferred at the conclusion of the programme. Record a mark of zero for every assessment item within all modules during the academic level. For further information, see www.plagiarism.org.

Theramed Limited: A business improvement case study

Case Objectives and Instructions

This case document contains background and detail information that you will need to complete the improvement case study and should be read in conjunction with your briefing notes and questions.

There is no absolute right or wrong answer but there are a number of courses of action that could be considered to be appropriate given the circumstances. What is more important is that your critical analysis and the reasoning behind your decisions are sound.

The objectives of this case study are;

To develop critical reasoning and analysis skills as applied to business improvement activity by detailed exploration of a realistic, multi faceted case study.

To conduct analysis of qualitative and quantitative data contained within the case.

The company described in the case study is fictional however the issues encountered are common across industry. The case is intended to demonstrate how improvement concepts can be applied to a range of business situations rather than to identify specific pharmaceutical industry practice.

This case document contains a number of pieces of evidence which may include;

Organisational diagrams

Financial statements

Operating statements

Physical layouts

Interviews with key management, shop floor workers and administration staff

Audit results and reports

Customer interview statements

Data reports

Not all of the case material may be directly related to the case questions – you should aim to filter the material in the case to ensure that you focus on the key elements of the material.

You should assume the role of am Operations Management Consultant engaged by the management team of “Theramed Ltd” and you should prepare your responses to the questions accordingly.

Background

Formed in 1996 Theramed Limited focuses efforts on drug research, development, and manufacture for the relatively common mental condition Attention Deficit Hyperactivity Disorder (ADHD). The company manufactures and distributes from a single site in Surrey, UK. Research is carried out on site and also at a nearby University Hospital. The company was formed through a partnership agreement by leading ADHD researcher, Dr Alex Liefman, of the Queens Medical Centre, Nottingham, and the then contract medicines manufacturer, Therapeutic Products Limited. Theramed supply a novel, pleasantly flavoured, liquid drug supplied in 50ml, 100ml and 150ml bottles. It is comparatively 25% more expensive than alternative treatments. The drug is easy to administer to children, being taken like a cough medicine; however, it is only a reliable treatment for around 50% of diagnosed cases. Theramed supplies approximately 20% of the medicines used to treat the disorder.

Attention Deficit Hyperactivity Disorder (ADHD)

ADHD is also known as hyperkinetic disorder (the official term in the UK) and attention deficit disorder (ADD). All of these names are used to describe the problems of children who are unable to concentrate and are overactive. ADHD may affect up to one in 20 school-age children and is at least four times more common in boys than girls. Children are usually diagnosed around age 7 with symptoms continuing through adolescence and into adulthood. Diagnosis in adulthood is rare. As yet the cause of ADHD is unknown and there are many suggested causes. Some research suggests that ADHD is caused by genetic differences in brain function as a result of dopamine levels. Some research also shows that differences in metabolism, lack of omega-3 fatty acids and protein deficiencies also have an impact on incidence of ADHD. Other research links ADHD to exposure to cigarettes, alcohol or drugs while in the womb as well as linking it to pre-school television viewing and stressful home environments. After diagnosis treatment plans typically include several components including stimulants such as Methylphenidate, Amphetamines, and dextroamphetamines. In the last few years, particularly in light of media reporting of medicine side effects in children, more emphasis has been placed on nonmedicinal therapies such as;

improved diet (reduction of caffeine, food additives etc),

managed home behaviour,

managed school environment,

Psychological and behavioural therapies.

The Market

Medicines in the UK are prescribed on the basis of clinical need and the patient has little real choice of drug regime. The market is dominated by powerful manufacturers who are able to influence the opinions and prescribing habits of General Practitioners directly. The market is also influenced by patients whose needs change often, usually in response to media coverage of certain conditions, treatments or side effects. Over the last few years the focus has been to move away from control of the disorder through drug control to treatment based on a range of non-medical behavioural and psychological therapies. This move has been largely due to a lack of reliable drug treatments coupled with media coverage of the lack of effectiveness of existing drugs, the potential side effects of those drugs and the success being achieved with patients following a managed nonmedical treatment regime. Unless a completely reliable drug is found it is likely that overall levels of control of the disorder by drug therapy will fall by approximately 50%.

Current Business Financial Position

Theramed Limited is listed on the London stock exchange (LON: TMED). Following a stable few years the share price has declined steadily over the last 3 years and is now around half of its level 3 years ago. In a sound market their operating margins stand at 3%, less than half that of the competition and there is real concern about future business viability. There is a belief that even with a reduction in the overall level of drugs prescribed for the condition the business is viable due to the novel manner in which the Theramed drug works. It is believed that it can increase market share, although of a much smaller market. A number of long term, ethical, institutional investors are seeking change and recently forced a change in a number of board members. The investors believe that to be viable short term operating profit needs to be around 6% on sales within 6 months growing to 10% within 12 months. Last month a new Managing Director was recruited with responsibility for restructuring the business and returning it to healthy profit and able to reposition itself in a restructured market.

Manufacturing Process

The manufacturing operations process is relatively simple; it is very similar to manufacture of a simple ibuprofen product and, including support services, consists of the following departments.

Goods receiving

Laboratory

Preparation

Formulation

Filling & Finishing

Packaging

Warehouse & Distribution

In goods receiving all raw materials, including packaging and labeling products, are received according to a schedule and are processed for inbound quality checking by the laboratory according to the quality inspection requirements. In addition to manufacturing, a small R&D facility is based on site as well as having access to and personnel within a small University Teaching Hospital nearby. Theramed rely on the laboratory for consistent high quality and regulatory compliance, it is the heart of the control system and the carries out goods in inspection, process audit sampling and finished goods sampling. In Preparation the raw materials are weighed and dispensed prior to formulation. The formulation department is the traditional core of the operations and the area which has historically received most management attention. The finishing department carries out final batch samples and quality checks prior to filling, sealing and capping the finished product bottles in 50ml, 100ml and 150ml volumes. The packaging department is responsible for final packaging into the individual product cardboard sleeves depending on size; they also insert the correct patient advisory leaflet into the package depending on factors such as language, geographic region etc. Finished product is packaged into a bulk cardboard “liner” which is then shrink-wrapped. When the product was introduced some years ago the 50ml and 100ml bottles were distributed in a security sealed plastic vacuum formed package, these markets are reluctant to change and a small volume is still packaged in this way.

Organisation

Theramed is a relatively small organisation with around 250 employees, managers and directors. The senior management team is relatively new and mostly recruited from within the industry, the previous Managing Director had a policy of recruiting “safe pairs of hands”. The organisation is traditional with functional Directors reporting to the Managing Director, each of who have organised their departments along traditional lines. In Manufacturing Operations most of the middle management and supervisory staff have been with the organisation for a long time, many have in excess of 10 years service having started life with the organisation when it was Therapeutic Products Limited. Considering manufacturing, and in particular formulation, the heart of the business the previous Managing Director had a policy that middle management and supervisory positions for these crucial roles were recruited from within the business.

Shop floor staff in manufacturing have generally long service although the business manages peaks and troughs in demand by recruiting temporary labour through a local agency. Each department has a notional headcount as shown on the attached organisational diagram and summarised by department below;

Finance = 11

Human Resources = 3

Manufacturing Operations = 161

Sales & Marketing = 18

Technical = 28

Materials = 5

Human Resources

Employees work a variety of shift patterns and hours. The factory works 24 hours a day, 7 days a week, 360 days a year.

Manager grade and above are generally salaried and work a contracted 40 hour week from Monday to Friday, 9am to 5pm, overtime is not paid for these groups. All others are hourly paid and work a shift pattern that has them work a three shift pattern for 3 days on 4 off one week followed by 4 days on 3 off the following week.

Production workers work an average of 42 hours a week inclusive of some overtime; this is paid at x1.5 for the first 10 hours per week and x2 for any hours above that.

Peaks and troughs in demand are made up by recruiting and laying off temporary staff from local agencies – temporary staff rarely stay more than 2 or 3 weeks.

Working conditions are typical for a pharmaceutical plant, the management takes great care to ensure cleanliness and the Preparation, Formulation and Fill & Finish areas are air conditioned, well lit and relatively quiet.

The leadership team are pleased that they have been able to reduce the incidence of work related injury in 2008 to 4.2 cases per 100 full time equivalent employees, this is down from and average of 6.7 in 2006 – 2007.

Management and staff grades receive paid sick leave, senior staff receive 25 days a year paid holiday. More junior staff and all shop floor workers receive 20 days paid holiday and are not eligible for paid sick leave until they have completed 10 years service. There is a formal bonus scheme however this has not paid out for several years, it is rumoured that some staff members have received informal bonuses and the practice of paying hourly paid workers for overtime that has not actually been worked is common in order to achieve flexibility.

Directors participate in a profit sharing bonus scheme.

Senior management actively discourages union membership although some of the shop floor workers are members of a variety of unions, some staff are members of the Management, Scientific and Financial Union (MSF).

Average Annual Salaries for Theramed Employees 2008 (Based on corporate salary bandings and inclusive of overtime payments, excludes bonus payments or one-off benefits)
Medical Scientists	£55092
Chemists	£38147
Managers of production and operating workers	£56160
First Line Supervisors of production and operating workers	£44928
Maintenance and repair workers (general)	£34128
Chemical technicians	£32248
Chemical equipment operators	£26249
Inspectors, testers, sorters, samplers and weighers	£23712
Mixing and blending machine setters, operators and tenders	£19718
Packaging and filling machine operators and tenders	£16376

Departmental Reports & Leadership Comments

Brian Adams (Managing Director)

Brian has been with Theramed for around 8 weeks having replaced the previous Managing Director at the insistence of a number of large investors. He has a background in pharmaceutical operations.

He reports his key challenges as;

Delivering a step change in the performance of the business

Improving cohesion in the senior management team

Improving performance of the Supply Chain

Improving overall business Morale

Influencing patient usage

Stiff competition facing similar challenges

High active ingredient costs

Large institutional investors looking for rapid business improvement

“The senior leadership is generally hands off” says Brian, “most of the Directors haven’t been to the shop floor in the last 3 months, if not longer”.

Brian has serious doubts about the manufacturing operations capability and ability to implement the changes required, “everything I ask for [improvement activity] seems to disappear into a black hole, and nothing ever seems to get done”.

Brian also remarks that, “our managers run the business on a day to day basis, in the ways that they are used to, there seems to be no real understanding of business goals and an ability to work towards them”. When talking about customer focus Brian added, “Apart from our sales group, our leadership has no real contact with customers or end users unless they are forced into it”.

Brian has worked with consultants in the past but has little hands on experience of process improvement through Lean Sigma techniques. He knows he needs to support a change programme but has little real understanding of the depth and breadth of that scope.

Dr. Steve Hogarth (R&D Director, Director of Quality)

Steve has a PhD in Medical Science and joined Theramed around 5 years ago from his post with the local University research department specifically at the request of the then Managing Director to bolster the scientific credentials of the business.

Steve is one of the highest qualified members of the senior team but lacks real experience in managing people, budgets and delivering business goals, having an almost purely academic career, as a protégé of Dr Liefman it was often suggested he would eventually become head of R&D.

Initially Steve joined as a senior R&D scientist with the specific challenge of developing the next generation of products. He was rapidly promoted after Dr Liefman left the business to pursue other opportunities.

While Steve has the title of Director his salary grading remains at the top of the Medical Scientist grade.

Steve has felt for a number of years that he has not had sufficient resources to deliver on his challenges. On top of this, Steve was handed responsibility for the Quality role on a temporary basis after the last Quality Director left the business. This was nearly 3 years ago.

Steve is responsible for the following measures;

Yield Loss Rate

Waste product

Supplier quality

Rework and reprocessing

Customer defects

“In one incident”, he recounts, “controls for two of the digital scales in the preparation area were positioned above each other in between the two scales making it hard to distinguish which display was for which scale, when the product was subsequently dispensed it meant that the wrong quantity of ingredients went into batches causing two entire batches to be defective”. Despite this, he says, “it took months to get the controls moved; the operations people just didn’t seem see it as a problem”.

In another incident “filled product, recovered from dose checks and improperly sealed bottles, was dumped into a holding tank, and once in the tank, was pumped back to the main product holding tank. It was mixed with the product in the holding tank, refiltered and filled again during the course of the filling operations. No one knew it was happening until it was done, it was a fait accompli. I don’t think FDA or any other regulatory agency would find this to be an acceptable practice”.

Steve’s department is responsible for generating Standard Operating Procedures but, “I don’t see the point. Operations don’t use them unless there is an audit coming and some of the temporary staff aren’t around long enough to even read some of them. We always catch the problems but never get the root cause solved”.

Steve has a development of one of their existing drugs ready, an encapsulated form of one of their liquid products that should help them retain business but has not sought patient or prescriber feedback. Manufacturing Operations are reluctant to staff a pilot plant as they see this as additional workload for no return.

Amy Wadge (Human Resources)

Amy was promoted from HR officer, a post she had held for over 8 years, 2 years ago.

Amy finds herself managing wage issues, disputes, absences and “welfare” issues. As a result of this she insists that all salary and wage increases are sanctioned by her, a number of the managers have promised their reports increases which Amy has vetoed causing friction between her and other managers.

“People receive their salaries and wages in recognition of their contribution”, she says, “what else do they need”?

Amy also manages organisational communications, “we tell our people what the business is trying to achieve and what they are expected to do in their jobs”. She knows that departmental managers should set and contribute targets more but doesn’t know how to engage her colleagues in the task. Internal communications are largely unplanned and the “underground” rumour machine thrives.

She makes sure that the business follows all the legal requirements and also has responsibility for Health & Safety regulations.

Amy also looks after training, “we take people on with the aim that they can do the job, they are made aware if their performance is not satisfactory”.

Pete Gabriel (Materials Supply)

As well as managing purchased materials Pete also has responsibility for the warehouse and distribution. The measures for which he is responsible are;

Supplier performance (on time)

Value of finished goods stock

Value of raw material stock

Raw materials price

“Most of our relationships with suppliers are driven based on price, or because we find it difficult to resource supply” he says. “I try hard to make sure production isn’t affected by late suppliers and work to keep costs down, sometimes quality could be improved but it doesn’t seem to cause too many problems”.

Other members of staff have doubts over whether Pete really has influence over the areas he controls or whether manufacturing operations has effectively “annexed” this part of the business.

A specific issue has been identified in the distribution centre, many customers report dissatisfaction with the way the distribution centre operates.

The distribution centre operates a “round the clock” service which is supported by an outsourced contact centre. Four teams receive inbound product orders for one or more of the 3 main product volumes from various global regions.

The data shows the customer satisfaction with the order process on a 1 to 100 scale where 100 is good, this is reported online by the customer via an automated feedback process. The management expect a minimum 65 rating and think they have a problem.

The call handling agent records on their screens whether they think the customer was satisfied with the call as a yes/no result.

A sample data set has been obtained which shows a number of calls received and the associated call length (seconds), order team, product volume, region, whether the call was placed on hold, dead air time (seconds), day, shift, and whether a supervisor was on duty. Some customers have individual contracts which set the price and delivery expectations for a set period of time while others make spot buys and have no guaranteed price or delivery.

The data is in “Theramed Case Data.xlsx”.

The management team have asked you specifically to analyse this data and provide them a way forward

Bill Bragg (Manufacturing Operations Director)

Bill has been with the business “for ever” having been one of the first employees back when Therapeutic Products Limited was formed, he has been in his current role for over 2 years having been promoted up through Supervisor and Production manager roles. While he has a wealth of experience his academic credentials are lacking. He ha sometimes been described as “hard bitten”. As he believes Manufacturing Operations is the core of the business he remains disaffected as he was not considered for the Managing Director role.

Bill is responsible for the following KPI’s;

Production schedule adherence

Set up and changeover time

Volume achievement

Direct operator hours

Late or partial deliveries

Unplanned downtime

Factory utilization

“Success in this role”, he says, “is all down to keeping batch sizes high. Push material through and keep going at all costs. I have real problems some times with quality from the prep teams which Steve just can’t seem to get to grips with and frankly raw material on time delivery is appalling to the point where I have to maintain temporary labour in order to flex up and down to cover missed deliveries.”

Bill designed “The Theramed Way”, a standard operating model, of which he is very proud.

He has often complained that he has labour inflexibility, “I can’t move people about because they aren’t allowed to work on different equipment without being cross trained and signed off by quality, I frequently bring this up with Amy but we have yet to crack the problem”

Bill has changed the factory layout and manufacturing structure little during his time stressing stability and “why change a winning formula”.

The factory is laid out traditionally and is shown in the attached layout sketch. The equipment is a mixture of new and old machinery as well as manual processes, some of which have not advanced since they were installed. Some of the older equipment is difficult to source parts for; one machine type has the factory services manager sourcing spares from eBay.

Goods receiving, Warehousing and dispatch are at one end of the factory adjacent to the main office areas to maximize utilization of staffing in these areas.

Preparation is next to the warehouse and comprises of a number of large automatic batch weighing equipment where active and inactive materials are batched up in preparation for formulation.

The Formulation department consists of a number of automatic mixing equipment complete with temperature, speed and ingredient addition monitoring systems. In common with the Preparation department the general practice is to run as large batch sizes as possible to maximize utilization and keep busy. Running large batches also allows time for the equipment to be cleaned between batches. As they have aged they have also become increasingly unreliable and long breakdowns are not uncommon. The Formulation managers work hard to keep the Fill & Finish team busy.

Fill & Finish comprises of 2 automated and 1 semi automated filling lines all fitted with a range of monitoring equipment. The packaging area has several semi automated carton erectors and stuffers although ad hoc manual packing is not uncommon.

During the initial fact finding visit manual processes were seen in operation in Preparation, Formulation, Fill & Finish and Packaging areas.

The laboratory is situated at the far end of the factory as that was the only location where fumes could be extracted when the equipment was installed although the fume cupboards have been used very rarely in the last 2 years following complaints from the then Managing Director about fumes in his office.

There is also a spacious reception area which was recently refurbished, laid with a marble floor and decorated with specially commissioned art. The area is 3 storeys’s and has offices on the 2nd and 3rd floor for the directors and managers, other than manufacturing who have their offices by goods receiving, as well as other professional staff. Parking is available outside the main office block although this is restricted for senior office staff and visitors only; all other employees must use the parking facilities at the rear of the factory.

Bottle Manufacture

A small industrial unit is located about 5 miles away from Theramed which manufactures the product bottles in an aseptic facility. The management team believe that there may be issues in the bottle production which are constraining the ability of the business to respond to customer demand.

Bottle are produced in many configurations, once produced they are sent to the main Theramed production site (the bottle site’s customer).

Because Theramed makes a wide variety of bottle configurations and customer requirements vary significantly across regions and within regions, current lead time for supply to the active ingredient site is more than 10 days. The management team believed that to resolve some of the customer issues they must be able to reduce the lead time to 1 day.

Bottle Process Data Follows:

Main Site (customer) Requirements

20,000 units per month

Average order size is 500

20 pieces per shipping module (a tray of bottles)

Two daily shipments (one per shift)

Units are ordered and expected next day

Work Time

20 days per month

Two shift operation in all departments

Eight hours per shift, with overtime if needed

Two 15 – minute breaks

Unpaid lunch

Production Control Information

Receives main site 10 day, 10 week, 10 month forecasts and enters them into MRP.

Receives daily order from main site

Order released via MRP once a week to Raw Materials and Outside Supply Company

Generates MRP-based weekly production requirements based on customer orders, inventory levels, downtime, and scrap

Issues weekly build schedule to cap, bottle, security seal, and final assembly 1 and 2 processes (final assy 1 is an aseptic cleaning process and final assembly 2 is matching cap, bottle and security seal and packing them)

Issues daily shipping schedule to shipping department

Production Process;

Theramed’s processes for this configuration involve a moulded cap, moulded bottle, and security seal are produced on feeder lines and stored at final assembly 1. Final assembly 1 uses a cap, bottle and security seal to build a bottle assembly, then aseptically cleans the assembly before delivering to Final assembly 2. Final 2 matches the specific bottle, cap and seal. The finished units are then stored in the finished goods warehouse and shipped to the main site on a daily basis.

The plastic raw material for the moulders are transported from AB Raw Materials to the receiving warehouse once a week. The material is then transported from the receiving warehouse to the moulders on a daily basis.

Final assembly materials such as cardboard tray and shrinkwrap are supplied on a daily basis from Outside Supply company.

A rework area exists after Final 2 to rework and reclean bottle assemblies that do not pass a final inspection.

Process Steps

Cap Injection Moulder

Automated 1000 Ton press with automatic material feed

One operator unloads machine

Cycle time: 48 seconds

Changeover time: 8 hours (good to good)

Machine reliability: 95%

Observed inventory: 5 days of completed caps

Bottle Injection Molder

Automated 500 Ton press with automatic material feed

One operator unloads machine

Cycle time: 40 seconds

Changeover time: 4 hours

Machine reliability: 95%

Observed inventory: 2 days of completed fans

Security Seal

Automated process with load and unload as part of cycle time

One operator loads and unloads machine

Cycle time: Operator = 5 seconds, Machine = 30 seconds

Changeover time: 10 minutes for fixture change

Machine reliability: 70%

Observed inventory: 3 days of completed motors

Final Assembly One

Manual process with 2 operators

Cycle time: 60 seconds

Changeover time: 5 minutes for fixture

Reliability: 100%

Observed inventory: ½ days of sub-assembly

Final Assembly Two

Manual process with 2 operators

Cycle time: 30 seconds

Changeover time: 5 minutes for fixture

Reliability: 100%

Rework 20%

Observed inventory: 2 days finished goods inventory

Rework Area

One part time operator

Shipping

Staging area for van transport to main site

Exhibit 1 – Selected Operational Performance Graphs

Exhibit 2 – Theramed Share Price vs. Main Competition

Exhibit 3 – Extracts from Audited Accounts

Exhibit 4 – Theramed Organisation May 2009

Exhibit 5 – Factory Layout (R&D and Bottle production offsite not included) Sketch – Illustrative, not to scale.

Exhibit 6 – The “Theramed Way”