Report on Improvement in Quality of Nutella – Operations Management Perspective

Contents
Executive summary: 4
1. Our Product Selection and Description 4
1.1 Product description and its purpose 4
2. House of Quality (HOQ) 5
2.1 Know what the customer needs also known as voice of the costumer (VOC) 5
2.2 Identifying the Critical Requirements of the Customer (CCRs) 5
2.3 Building the Interrelationship matrix 6
2.4 How does the costumer rate the competitors 6
2.5 Relationship matrix 6
2.6 Operation objectives 6
2.7 Examine and analyze 6
3. HOQ for Nutella Product 7
4. Production or service processes 7
4.1 Type of Nutella production process 7
4.2 Nutella Production Process Flow Chart 8
4.3 Nutella Production Layout Plan 10
5. Quality Definition and Assurance 11
5.1 Quality definition 11
5.2 Methods and tools to ensure our quality definition is met 11
6. Nutella Supply Chain and Logistics 12
6.1 Nutella supply chain management strategy. 12
6.2 Supplier’s Characteristics 13
6.3 Our Distribution method 13
7. Recommendations 13
Bibliography 15

Table of Figures
Figure 1 Nutella Products 6
Figure 2 Nutella Composition 15

Executive summary:

This project is based on production enhancement, where we chose Ferrero Company a well-known brand since it’s one of the most beloved chocolate companies in the world. Ferrero has many products such as Ferrero Rocher, Kinder surprise, kinder Bueno, tic-tac, and Nutella. So for our project we decided to search further about Nutella since it’s the best brand that defines Ferrero thanks to the hazel nut blend and the chocolate look that is irresistible for Nutella lovers. We used some methods to approach this problem for instance using house of quality in order to capture the customer requirements, comparing the company with its rivals. In addition to that we found a two tool that would help the company in improving and implementing the quality measures so it can retain the trust of its customers and this will be achieved by utilizing 2 theories by quality guru Philip b Crosby. Furthermore we also tried to introduce some modifications that could help in improving the image and the production of Nutella, as it will also help in reaching various costumers as well as diversifying from the original mix to various and healthy blends.
1. Our Product Selection and Description
1.1 Product description and its purpose

Product description: we chose Nutella as our product as it was founded in 1940 by Pietro Ferrero, he was known as a baker and a founder of the Ferrero Company. One of the problems that Ferrero faced was lack of Cocoa source due to the Second World War, so eventually he chose to add hazelnut as an addition ingredient, which came from Italy in a place called piedmont and this became the main ingredients of the Nutella as we know now. Not to forget that back in the days it wasn’t known by this name, it was actually called pasta gianduja. Its main ingredients are skimmed milk, hazelnut and cocoa powder. The Ferrero group consists of 93 companies and 18 production factories with 21,500 employees.

Nutella has 6 different jar sizes (1Kg, 750g, 400g, 200g, 180gm, 30gm, 15gm) as these sizes are dependent on the consumer’s requirement if the consumer is a daily user or has a family and would like to serve it as a daily breakfast he can go for the big jars, but if the consumer wanted to have it just ones in a week then he could go for the small ones.

Nutella basically was used as a breakfast meal, but nowadays it’s being used in daily meals and snacks, such as sandwiches, cakes, fruit pizza, fruit sushi, etc. this all became possible due to the creativeness of the consumers and the smoothness of the creamy chocolate. In addition to that Nutella is considered as an icon to measure deliciousness as well as becoming a part of daily restaurant and cafeteria menus.

Figure 1 Nutella Products
2. House of Quality (HOQ)

House of quality matrix is a diagram that consist of 7 major sections that will be briefly described in this document on a later stage, it’s called house of quality because of its structure that resembles a house, its main purpose is to breakdown the customer requirements through marketing research and benchmarking information, which is later on translated into a suitable number of engineering milestones that should be met by the product design. In addition to that, house of quality is considered as the main engine that drives the quality function deployment (QFD). The quality function deployment is a procedure that’s used to transform the user demands into a design quality.
2.1 Know what the customer needs also known as voice of the costumer (VOC)

• This step should include every critical customer section, seizing the feedback and VOC input containing of customer “needs.”
• On a scale from 1 to 9 indicate the importance of each need specified by the costumer.
2.2 Identifying the Critical Requirements of the Customer (CCRs)

• CCRs is located in the top row of the house of quality
• Know the way to measure the customer requirements
• Converting the costumer’s words into either a feature or a process terms.
• figuring out the methods that will be used in order to provide
• Identify ways to deliver on customer needs.
2.3 Building the Interrelationship matrix

• Assessing the relationship between needs of the costumer also can be specified as the (what’s) and the critical requirements of the costumer also can be specified as the (how’s).
• Govern the comparative significance of every critical requirement of the costumer.
2.4 How does the costumer rate the competitors

• Identifying the competitors.
• Costumer’s perception of competitor’s ability in meeting the requirements.
• Figuring out what the competitors are doing that holds value for the company costumers.
2.5 Relationship matrix

• Comparison of customer’s critical requirements the (how’s) in order to figure out if there is a conflict, effect or no effect on each other.
2.6 Operation objectives

• Controlling the least and anticipated performance conditions for every critical costumer requirements.
2.7 Examine and analyze

• Assessing the house of quality procedure.

3. HOQ for Nutella Product

4. Production or service processes

4.1 Type of Nutella production process

The type of process used in this chocolate industry is a repetitive automated process since the same action has to repeat again and again, it helps in producing on a large scale without compromising the overall quality or the taste of the final product. The computerized machines do the checking with pin point accuracy, whereas the quality manager needs to examine the hazelnut before it’s added to the mixture, because if something is wrong with the hazelnut such as an insect or a worm then it would change the overall taste.
4.2 Nutella Production Process Flow Chart

The Cocoa Process
1. The Cocoa seeds are harvested
2. Dried under tropical sun temperature for 10 days
3. It’s then put in a sack and transported
4. Reaches chocolate factory
5. Sacks open to poor the raw cocoa into the roosting ovens, Roosting helps in transforming beans into liquid paste
6. The every last drop of butter is extracted by compressing the liquid paste
7. The extracted butter is sent for other products
8. The liquid paste emerges as discs each weighing 7 Kg
9. Discs Sent to being crushed preparing them to be added to the mixing bowl
The Hazelnut Process
1. Truck load of hazelnut is received
2. Quality check is carried out in order to check for worms or poor quality nuts
3. After quality check they are added to the machine that peels of its skin
4. Moves on to a machine that checks the nuts and lets the fine nuts pass while the bad ones are pushed away by a blast of air.
5. After roasting the hazel nuts are added to the mix of Pure Coco Powder, Vanilla, Skimmed Milk, in a huge tank.
The Jar Process
1. The recycled glass is transported to the factory to make the jars
2. The glass goes in super-hot furnaces to transform the glass to liquid
3. The hot liquid glass comes out then moves on to the molding machines where the shape the jar shape is formed.
4. After the jar is formed it moves on the next machine that make the screw thread for the plastic cap
5. The jars then move under series of flames to get rid of any leftover bubbles.
6. The jars move on a room where they are sprayed with cold jet of water
7. The jars then are sent to a room where they are kept for 2 days at 30o C
8. This is done to avoid condensation and moisture from form due to cold jar and hot chocolate.
The Final Process
1. The paste is then added to the jar
2. The jars then pass under a machine where glue is applied to the edges of jar this is done so the seal can stick to the jar to keep it fresh, then jars are screwed shut.
4.3 Nutella Production Layout Plan

This info graphic chart describe the production layout for Nutella
1. Cocoa shells are harvested from farms.
2. At the drying place farmers extract the cocoa beans from their shells and they are dried.
3. The dried cocoa packed into sacks and then transported by trucks.
4. The production factory process the cocoa powder mixes it with hazel nut fills it in a jar
5. The Nutella jars are transport it to the warehouses and stacked for delivery.
6. Transported to retailers, supermarkets and groceries.
5. Quality Definition and Assurance
5.1 Quality definition

Nutella Comes in various packaging sizes it all depends on the nature of the consumer for instance if it was meant for kids then they could buy the Nutella Choco dip with biscuits, if someone wanted to enjoy a light desert after the meal then they could go for a small sachets, but if it was meant for daily use such as breakfast meals then the big jar. The main aim as previously mentioned is to retain the existing costumers as well as gaining newer costumers. Any defect such as ruined nuts, spoiled cocoa seeds, spoiled milk, unrefined sugar, any of these factors can drastically change the final product taste and quality, as it would be sold in the market and then we will have unsatisfied costumers that might have suffered from a health injury due to defective ingredients, that would lead to them suing the company which would ruin the image of the company and eventually we will start losing customers. So in order to avoid such scenarios we have to ensure that everything we do is nothing less than perfect, that’s why we’d like to follow 2 theories the first is four absolutes of quality and the second one is the prevention process both introduced by Philip B Crosby.
5.2 Methods and tools to ensure our quality definition is met

Implementing the 4 Absolutes of Quality: this process is used in order to maintain continues improvement of company quality. They consist of 4 major points
a. Quality is conformance to requirements; it’s where the terms of running the organization, production of either a product or a service, and how to deal with the costumers everything should be agreed upon. If the management wasn’t to prevent mistakes and make sure that the management and employees do it right the right time they have to convey the message in a clear and understandable way, aid them in achieving quality conformance by being a role model, by providing them training and building a work environment that’s based on cooperation.
b. The system of quality prevention, this is where the errors should be eliminated before they occur, this is done by the management being the role models by being the first ones to adapt to such process, providing the discipline and examples this will help in making it easier for employee to follow.
c. The performance standard is zero defects, it means that even one percent of error will not be tolerated, this is where the employees should get it right the first time, and this can be done by providing employees with the required training, tools , allocating resources and giving them enough time.
d. The measurement of quality is pricing of non-conformance this tool used by the management that helps them in measuring their effectiveness as well as efficiency.
The prevention process: as Philip B Crosby sees it that it’s better to prevent the error or defect than wasting time on checking and fixing the problem. So this theory is divided into 4, thinking, planning and analyzing to see where the error could occur then take the action required to prevent it from happening. This process starts from capturing the requirement then developing the product, gathering the data, after that comparing the data with the captured requirement and finally taking the action depending on the results.

In our case we want to make sure that we Carefully check the raw materials as well as using a production process that’s both safe and innovative at the same time, helps us in avoiding the food additives genetically modified organisms or even preservatives Careful assessment of raw materials and the use of safe and innovative production processes allows us not to use additives, preservatives, or genetically modified organisms. In addition to that, we have also requested for a third party certification in order to protect our customers and employees from any health related issues that may be linked to allergens as well as gluten intolerance.
6. Nutella Supply Chain and Logistics

6.1 Nutella supply chain management strategy.

Elements in the Supply Chain may include:
• Producers: farmers
• Raw materials: cocoa beans, sugar, milk, recyclable glass or plastic, aluminum for foil Wrappers.
• Manufacturers plants: chocolate processing factories, sugar grinders and refineries and milk processors
• Distributors: storage warehouses, transportation companies
• Retailers: supermarkets, fuel stations and whole sellers.
• Service providers: market researchers, designers, advertisers, transportation service providers
• Consumers: everyone, the export market, Management of the finished product From the Factory to the Client
A unique code can be used to trace the product in the distribution warehouses and from there to the end customer (large and small retail outlets) can also be identified. Effective collaboration between the various company departments involved enables us to precisely define our safety guidelines, procedures, training and regular audits.
6.2 Supplier’s Characteristics

Our suppliers are selected based on detailed sheet that has the precise properties of the raw materials we are looking for. The sheet defines different important aspects of the raw material such as the chemical, physical; etc. the suppliers are obligated to sign for acceptance.
We regularly keep an eye on our retailers, collecting any product that hasn’t met the finest standards in terms of touch, the physical appearance and aroma, even if the product hasn’t expired yet. This usually happens in hot climate areas specifically in summer. That’s when we decide to suspend production because we care so much about the quality and the higher standard quality product we produce the more costumers we can attract. Furthermore,
The stock management always prefers the freshness of a product over its volume that’s delivered to the retailers. Because our main aim is that consumer should always be able to find fresh Nutella products on the store shelves.

6.3 Our Distribution method

• Retailers: supermarkets, fuel stations and vending machines
Retail is a method used to sell goods or services through privately own businesses or stores, from which the end user directly buys. A retailer basically buys goods or products either directly from the manufacturer or from whole sellers after that they sell the goods smaller quantities to the consumers by adding profit margin. Retailers have fixed shops such as supermarkets, department stores, groceries. Retailers are best suited for highly populated areas since retailers can be found on the streets or in shopping malls.

• Online
Online shopping feature is a cheaper option for the consumer, this is where the costumer places an order and the product will be directly shipped to them from the warehouse, which means the middle man doesn’t exists and that eliminates the middle man’s profit margin. Furthermore more, purchasing online can also provide a chance of online marketing where the costumer can be introduced to new and upcoming products. One of the biggest advantages is reaching to global marketing.

7. Recommendations
Improving the Nutella image since it was proven to be harmful to health, as it can be seen in the graph below almost 55% of Nutella consists of sugar, whereas the second biggest ingredient is the vegetable oil, after that is hazelnut. So as corrective action we’d like to improve it by:
• Reducing the amount of sugar Used this will lead to being a good solution for Diabetic people
• Increasing the amount of skimmed milk this will be a healthy solution for adults and kids where it will be a good source of Calcium but in a delicious way
• Increasing the amount of Cocoa reducing the amount of skimmed milk and reducing amount of sugar can help in making dark chocolate Nutella which is very healthy for the heart.
Building vending machines that’s only specialized in dispensing Nutella products such as Nutella Ice Cream, Nutella with dipping biscuits, Nutella sachets,

Bibliography
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March 7, 2018

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