Operations Management practices of Al-Ain Dairy
Date of Submission:
Table of Contents
1. INTRODUCTION TO THE STUDY 4
Brief background of the company and the industry: 4
General layout of the company background: 4
Company’s position in the market: 5
2. STRATEGY OF THE COMPANY 6
3 main strategies: 6
Core competence 7
Strategies followed by the firm 7
3. FORECASTING 8
Different forecasting approaches 8
Qualitative and quantitative forecasting 9
Time horizons of the forecast 9
4. CAPACITY PLANNING 10
Firm managing its capacity 10
Short term and long term capacity planning 11
Potential alternative and managing capacity 12
5. PROCESS SELECTION AND FACILITY LAYOUT 13
Process layout: 13
Process Design 14
6. PRODUCT AND SERVICE DESIGN 15
Product design: 15
Al-Ain managing product design 15
Legal ethical and sustainability and effects of its considerations 16
7. LOCATION 17
Location of Al-Ain dairy: 17
Factors considered for Location and strategy 18
8. QUALITY MANAGEMENT 19
Dimensions and management of quality 19
Costs associated with quality 19
Quality control tools: 20
9. CONCLUSIONS 21
1. INTRODUCTION TO THE STUDY
Brief background of the company and the industry:
Al-Ain dairy was established in 1981 with about 200 cattle. In 1985, it raised to 500 cattle and became the second biggest farm in UAE. with the advancement in technology and tremendous boost in the techniques that are available for the dairy industry, Al-Ain dairy stands at here cattle farms with over 3000 cows of high breed cows and a camel farm that has more than 200 dairy animals. It received the “Hazard analysis and critical control point (HACCP) certification” and ISO 22000 certificate. Different elements that are present in the industry would be researched and discussed through the following sections provided in the report.
General layout of the company background:
Company’s position in the market:
Al-Ain dairy is a local company of UAE and is one of the largest milk and milk products producing companies in UAE. On the basis of market share, it has also been confirmed that Al-Ain is the largest company in UAE on the basis of its market share (Yousef, 2010).
2. STRATEGY OF THE COMPANY
The mission of the Al-Ain company is based on providing high quality farm and dairy products to the people in UAE. the mission and vision are provided as follows:
“To maintain a tradition of excellence in customer service, to lead the dairy and poultry industry with innovation and to offer consumers a wide variety of high quality safe products at affordable prices” (AL AIN FARMS, 2016)
“Our vision is to be recognized as the preferred choice of dairy and poultry products of households in the Emirates”
3 main strategies:
• Customer focused strategy
• Core business strategy
• Strategy for exploring growth opportunities (Liabotis, 2007).
Core competence can be referred to as the main and significant resources in terms of products and services that are developed in a company that provides them with a nice for themselves in the global market (Liabotis, 2007).
Strategies followed by the firm
The company aims at achieving organizational goals through excellent products and services for the customers across the UAE market. This strategy has been fulfilled through several innovations in the UAE dairy industry like the development of rich cream ice-cream from the camel milk, developing Zero calories products for customized market, large varieties of juices to encourage the people for developing healthy eating habits and life style.
Forecasting can be termed as estimating and projecting the future on the basis of the past data and current information or evaluation of the market conditions. Forecasting is very significant for developing any new product or service or to identify the need to modify few features in products and services (Balakrishnan, 2011).
There are different approaches towards forecasting and they are mentioned in the following diagram:
Different forecasting approaches
Qualitative and quantitative forecasting
Qualitative forecasting are related to the elements or factors which determine the customer behavior in terms of the descriptive information obtained from them, developing the feedback from and developing the estimated sales and other quality requirements on the basis of that. Al-Ain dairy has been a challenger to the Almarai in UAE. They have been constantly providing new qualitative measures for developing a niche for itself in the dairy industry of UAE.
Quantitative forecasting is used for the elements and factors where the past trends in the market can be obtained through statistics. The main function of this forecasting is that it is based on an empirical data evaluation that has been taken into consideration for developing new strategies and products by the Al-Ain dairy in UAE (Balakrishnan, 2011).
Time horizons of the forecast
Time horizons refers to the different time period that are set while developing a product or a service in the company. It involves developing the market in such a way that it directly affects the market and on the basis of it, there are different strategies and policies developed and implemented. There are three main types of time horizons and they are:
Short range forecasts:
It is between the time periods of 3 months to 1 year. In most of the cases it is up to 3 months. For the Al-Ain dairy developing a completely new product can be forecasted and checked on short range forecasts to obtain the sustainability of the processes.
Medium range forecasts:
It is for forecasting the products that take time to be adopted in the market. It is generally between 3 months to 2 years for a product or service developed by the company. Al-Ain dairy would include farm products in these range.
Long range forecasts:
It is for forecasting the products or service on a long term basis for establishing growth in the specific industry. It involves new product planning facility location and research and development across the entire structure of the company. It is generally for 3 years and up to 5 years in certain cases (Murphy, O’Mahony, Shalloo, French, & Upton, 2014).
4. CAPACITY PLANNING
Capacity planning refers to the concept of deriving the capacity in terms of production that has to be developed in an organization in order to accustom the requirements of the people and meet the increasing demands of the customers.
Firm managing its capacity
Capacity planning is a sequential process that consists of the following steps:
• Demand forecasting
• Computing the rated capacity
• Developing the needed capacity
• Deriving alternative plans
• Developing capacity plans
• Selecting the best capacity plan (Bilgen & Celebi, 2013)
It has been shown in the figure below:
Short term and long term capacity planning
Short terms capacity planning of the company depends on the market share that it currently occupies and on the basis of that the new products and services are developed through ensuring highly efficient production system over a period of time. In the Al-Ain dairy, the products that may not generate immediate success in the market but has the potential to develop a niche for itself in the future are utilized for the same.
Long term capacity planning of the company depends on the development technologies of products and services that are to be inspected, evaluated and analyzed on long term basis. It helps in ensuring high efficiency and stable increase in the productivity of the products that are produced by the company.
Potential alternative and managing capacity
Al-Ain dairy has not only limited its reach in the dairy industry, but it has also entered the health and fitness segment of the production industry in UAE. For this, there are several long life juices, zero calories products and extremely healthy milk products developed from extremely low fat camel milk has been developed.it is one of the first of its kind to develop ice cream from the camel milk that would be rich in cream (ALAINDAIRY, 2015).
5. PROCESS SELECTION AND FACILITY LAYOUT
(Van den Berg, Lyndgaard, Sorensen, & Engelsen, 2013).
The main element of the process design and layout serves to be the development of milk. The process starts with obtaining milk from cows and camels and carrying various processes over it. It involves developing new strategies and technological innovations in the manufacturing of these products and series to sustain in the dairy industry of UAE.
Al-Ain dairy is using a very flexible and innovative design across its processes. It provides the customers with a healthy as well as tasty solution to the food related problems. It provides high quality products to the customers that are relished all over UAE. The process layout that has been adopted in Al-Ain dairy is based on the functions that are carried out in it. Thus, it can be stated that the functional innovations are at the core of the process design developed and implemented in the Al-Ain dairy and farm (Van den Berg, Lyndgaard, Sorensen, & Engelsen, 2013).
6. PRODUCT AND SERVICE DESIGN
The design of the products and services that are offered in Al-Ain is carried out by following the process that has been provided below:
Al-Ain managing product design
The product design in Al-Ain tends to be focusing on the technological development and innovations for improving the production of milk from the same number of resources. This is done by providing better living conditions and feed to the cows and camels as well as using hybrid technology to increase the production of milk from them (Jacob, 2012).
Legal ethical and sustainability and effects of its considerations
There are several legal, ethical and sustainability issues that are to be handled by the companies in UAE while being involved in the manufacturing field. Milk is consumed at high level on daily basis. Hence, it can be stated that it has a direct effect on the health of the consumers, that is, the citizens of UAE, in this case. Hence, there is a special care to be taken to ensure that the various processes involved in developing the products and services through the dairy industry are carried out abiding the rules and regulations set by the government. There are several norms mentioned under the UAE Federal law No. 7 pertaining to the legal considerations that have to be made in the manufacturing industries across UAE (TarbucK & Lester, 2009).
The production of milk should be carried out in legally permitted environment and under legally certified conditions. A proper living and healthy condition along with a self-sufficient technology has to be developed for ensuring that the legal norms and regulations are accomplished through its framework.
The ethics code is very strictly followed and observed in the dairy industry in UAE. On the basis of it, there are several ethical norms that are pertaining to the development of products and services through the dairy industry. It involves considering the ethics related to the handling of manpower and technology in terms of manufacturing operations.
There is a special consideration of the sustainability in the development of several technologies and operations for the AL-Ain dairy industry.
Location of Al-Ain dairy:
The location of the Al-Ain dairy is in the middle of an extremely hot zone as shown in the figure above, where the temperature is quite high during all the seasons of the year. However, this condition prevails across the whole of UAE. So, it is not an avoidable factor. But, the technology and infrastructure that is available to the Al-Ain dairy farm with having ADNOC service station near it as well as the ADNOC vehicle inspection center makes it surrounded by sufficient resources (Yousef, 2010).
Factors considered for Location and strategy
There are several factors that have been considered for selecting the location of a dairy plant or farm in UAE. These factors have been mentioned below:
The temperature is constantly maintained in the air-conditioned habitat provided to the animals that are kept for producing milk and other farm related products. Thus, the location is handled accordingly by developing strategies for ensuring high quality of production and standards have been maintained through the entire process. They have been developing innovative products like the “Slim Zero“ product that includes products which do not have any calories, that is, they are zero in calories. (Yousef, 2010).
8. QUALITY MANAGEMENT
Dimensions and management of quality
There are several dimensions which are accustomed across the production carried by the Al-Ain dairy across the UAE. It involves the performance, features, reliability, safety, quality, aesthetics, serviceability, perceived quality and health standards. There is a huge investment made by the Al-Ain dairy in the production of milk and development of farms in order to improve the availability of resources and increase the production at the same time. This is very important for developing the dimensions of quality management that are pertaining to the high standards of quality that have been set in the company (Scott, 2013).
Costs associated with quality
There are several costs that are associated with the quality that a company provides in its products and services. Few of the costs that are related to the dairy industry in UAE has been provided below:
• Failure cost:
• Cost of ensuring high safety:
• Cost of scrapping
• Cost of reworking
• Cost of the wastes
All the above mentioned costs have been handled and managed by the Al-Ain company through technological innovations and advancements in the manufacturing processes that has led them to be a leader in terms of innovation in the dairy industry of UAE (Scott, 2013). They have aimed at developing high quantity of production with the same number of resources through critically evaluating the costs that are associated with the quality and increasing the productivity across different operations carried in the company (Yousef, 2010).
Quality control tools:
There are many steps taken in the Al Ain Company for the production of different products and services. The quality tools that are available to them are mentioned below (Munoz, 2013):
Thus, it can be observed that Al-Ain tends to be the leader in the UAE’s dairy industry in terms of the market share that has been discussed in the above sections. This involves development of many innovative products and services in the dairy industry like the development of a rich cream ice cream developed from low fat camel milk. It also includes developing a new range of products that include Slim Zero range. They have been constantly thriving for encouraging diversification through its team that would provide them with a cross-cultural exposure within the organization. There are high quality and low calorie product developed to encourage healthy food among the people in UAE. They have also been developing healthy juices for the same purpose through its farms.
There is a huge scope of improvement that has been identified by the Al-Ain Company themselves. They have been constantly thriving to provide high quality product to the customers. There are many options available to the production and quality development section in the Al-Ain company that has the potential that is not explored to the maximum. The strategies of the company have been discussed and on the basis of that the forecasting that is done in it has been obtained. The capacity planning for different operations have been obtained along with the development of a process selection and product design process. The selection of processes has to be made on the basis of the feasibility of the operations and its capacity to generate revenues for the company in the dairy industry of UAE.
The location of the company has been evaluated and at the same time, the quality management tools used for incorporating high standards of quality in its products, services and operations has been discussed. thus, it can be observed that there is a bright future for the Al-Ain dairy in UAE if it continues to develop innovative and useful products for the people in UAE.
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