OPERATIONS MANAGEMENT

PROGRESS REPORTPROJECT ON MALTA SOAP, ISLAMABADMBA 2k13 (A)

Submitted toMr. Kamran Khalid

Submitted byMehjabeen MalikMarvi AshokMarvi SohailZainab NasimSaad Kazim

MALTA COMPANY PVT LTD

Company DescriptionMALTA soap factory is a renowned company engaged in the manufacture of laundry soaps and toilet soaps, based in Islamabad (Pakistan), the company has been consistently delivering quality products for a significantly long time. It has been catering to ever growing demands of local market. Company utilizes state of the art equipment for manufacturing of various types of products. The company is presently manufacturing four brands of laundry and toilet soaps.

About The ProductSoap is the traditional washing compound made from oil fats and caustic alkali. Soap is surfactant used in conjunction with water for washing and cleaning that historically comes in solid bars. Soap is an item of daily necessity as cleaning agent. It is mass consumer item in both rural and urban areas. Soap may be divided into toilet soap and washing soap. Laundry soap is a oil based soap and used widely for washing clothes as well as for bathing in rural area in many countries. The demand of this soap is very high in many countries.

Toilet soap is basically the kind that is used by consumers at home for personal care and hygiene, specifically for use on skin.

Market PotentialKeeping in view the demand potential and a number of established brand, as well as local manufacturer in the market, there is still shortfall in the existing market. The market for washing soap is encouraging even in remote areas People are now willing to use washing soap as they are recognizing importance of cleaning. A number of soap making unit may come up to meet the shortage in the regional market.In the toilet soap market, new product innovation such as liquid soap, soap-free synthetic detergents and no-wash soap have taken an increasing share of the market from traditional soap bars. However still there are large companies manufacturing soap including toilet and washing soap

InterviewWe interviewed Sheikh Waseem, of Malta Soap. Ltd. We were briefed about the companys main product line and the entire process through which the product is produced. After looking at the entire process of soap formation, we came to the conclusion that the companys production process is process focus where the product (soap) is being produced via a continuous process.

SOAP MAKING PROCESS AT MALTA SOAP1) Acquisition of raw materials2) Saponification process (cooking in kettles)3) Washing 4) Drainage (settling)5) Soaking process (color addition)6) Drying7) Compression and finishing8) Cutting9) Stamping and packagingThe process is initially started with acquisition of raw materials. The raw material used for soap making at MALTA Soap is Palm oil (Malaysian palm oil) Fatty acid Caustic sodaThe palm oil basically is supplied or comes in two forms i.e. 1) Bulk (huge tanks)2) In used drums The oil that comes in drums is melted through tanks which are of 4000 kg (each batch). The measurements are marked on these tanks and the amount of oil required is taken up through pipes accordingly. The oil is provided steams through nozzles and is transferred to kettles.

From here, the saponification process is started. This process takes place in kettles; the soap kettle consists of steam coils. Oil/ fats are fed by pump from storage tank and the process is started. Palm oil, caustic soda and water are basically used in composition of soap in a certain ratio. The required quantity of caustic Lye (water) of certain required concentration is added during the process. Solution is then heated (boiled) by using these steam boiler/kettles. At MALTA soap, there is one big and three small kettles. The huge kettle has the capacity of 50 tones whereas the remaining three have 35-40 tones capacity.

In these kettles, the solution or ingredients are reacted and is cooked and mixed simultaneously for 8-10 hours. This is known as the cooking. 2-3 hours rest is given after the cooking of solution/ingredients. After this, the washing process starts; the soap solution is washed for 4 hours. In case further processing is needed, the solution is taken back to soap kettles where is further processes and cooked approximately 2-3 times.

The drainage process (settling) starts after the soap solution is washed. It takes 36-48 hours for soap mixture to settle down. At this stage, the impurities are drained, soap rises and lye is left at the bottom.

After 36-48 hours are completed, the mixture is brought through pipes to the crutcher (soaking process) where colors and perfumes are added. Here, soap and silicate is mixed. Moreover, first level of testing is carried out at this stage to ensure the brand specifications are being met. The moisture is further removed to avoid breakage of soap. This process takes 10-15 minutes.

From crutcher, the soap moves to the drying machine where showering and polishing takes place. Here, the liquid state is converted to solid state as the soap is being dried. After this, the soap is then fed to the soap plodder machine which is used for compression and better finishing of soap. From here the final output of soap in bar form is produced. Long bars of soap are produced through shaping plate and the shapes of these bars are adjusted in accordance with brand specifications.

The cutting process follows the plodder machine, where the soaps are further cut into smaller pieces on the cutting table. Manual work is involved here.

After the cutting process the 2nd level testing is performed where the weight is checked to be within the Lower and Upper Specification Limits. This also signifies the process to be under control. Moreover, if any soap is wasted here so it goes back to the compression stage.

The bars of soap are stored in racks and from here the workers are involved in oiling, stamping and packaging of soap. Soap that is formed is packed into its labeled brand packaging and is further stored into the warehouse till completion of the order for subsequent delivery to the market.

Soap kettles consist of steam coils; saponification process takes place here. Solution or ingredients are reacted and mixed/cooked. The cooking process takes 8-10 hoursMelted oil from tanksCooking process in Soap kettlesRaw materials (Palm oil/fats/caustic soda etc)

Washing processAfter weight is checked, soap is packaged and labeled according to various brands

Further processing with soap

Impurities are drained; soap rises and lye left at bottomMolten soap flows through pipes to a tank where color is added in crutcher and quality is testedWashing process takes 4 hours and 36 hours required for settlement of mixtureLiquid to solid stateStamping and packaging processRecycling wasteCutting processLong bars of soapsCompression and finishing of soapSoaking process; color mixing and testingShowering and polishing through drying machineSettling of mixture; Soap mixture is allowed to settle downSolid bars are cut according to desired size on a cutting table manually.Soap plodder machine is used here for compression and better finishing. From here soap in long bars are produced through shaping plateLarge solid bars cut by slabber Cutting processPackaging YES NO YESNOTIME FUNCTION MAPPING

CustomerOrder ProductReceived Product

SalesProcess Order

Raw Material (packaging)Wait

PlantStampingPloddingSaponification

PackagingPackaging

Warehouse

wait

Transportmove

1 day 4 days

1 day

6 days

a. The time required to manufacture an order can vary with the quantity to be delivered, however for the standardization the order size selected is of 50 tons. All the calculations are based upon this assumption.2) Customer: Customer place the order the time given to the customer is 6-7 days. The time can vary depending upon the size and quantity of order.3) Sales: Sales department then process the order and makes the schedule for the order. It also ascertains what all kind of raw materials are required.4) Raw Material: The raw materials required can be classified into two main categories. a. Manufacturing: The Company maintains inventory of manufacturing raw materials for 60 days. So as soon as the order is received the production department can start the production ( provided there are no orders already lined up). b. Packaging: the company doesnot maintain an inventory for packing materials and purchase the raw material according to requirement depending upon order size and quantity. Lead time for packing material is 4 day. 5) Plant: The plant starts its working and requires 4 days to finish the order. The soap made is then moved to the packing department where the packing material is also made available. 6) Packaging: Packing material and finished products both are made available in the packing department where the soap is packed into its brand packaging. 7) Warehouse: Production of the complete order requires time. The company has to maintain finished goods inventory till the complete order is manufactured and packed.8) Transport: Once the order is complete the company thendelivers it to the desired customer. The delivery is scheduled on the same day or the next day.

CAUSE-AND-EFFECT DIAGRAMMaterial Manpower

Independence awareness Inadequate trainingInadequate supply resources (natural gas and electricity)

Human errorLate arrival of imported raw materials

Health of workers

Improper working conditionsUnclear prioritization of shipmentCustomer specification defined late in processLate deliveryInspectionsQuality checksPoor safety procedurepolicyMaintenance policySOP'sImproper maintenance Setup timeMachine failure Limited capital for purchasing/expansion Limited capacity Low skilled laborWorkload and FatigueAbsenteeism and turnoverQuality of materialsDefective materialsPower interruptionSupplier dependenceMachine Method

Cause and effect (Fish bone diagram) for MALTA SoapIn order to show the causes of a specific event (late delivery to the customer) at MALTA Soap and to indicate the best potential areas for further exploration and analysis we have utilized the following tool i.e. Ishikawa diagram. Material Inadequate supply resources (natural gas and electricity) Late arrival of imported raw materials Quality of materials Supplier dependence Defective materials Power interruption

Manpower Independence awareness Inadequate training Human error Health of workers Low skilled labor Absenteeism and turnover Workload and Fatigue

Machine Limited capacity Limited capital for purchasing/expansion Setup time Machine failure Improper maintenance

Method Improper working conditions SOP's Maintenance policy Poor safety procedure Inspections Customer specification defined late in process Unclear prioritization of shipment Quality checks

CAPACITY PLANNING

Expected demand New capacity DEMAND

1 2 3 TIME (PERIODS)

The type of strategy used at Malta soap factory is leading because they have usually excessive capacity as compared to expected demand. The monthly demand is 100 tons where as the capacity maintained by the company is 50 tons more than the monthly demand, which makes 150 tons. They fulfill the orders within 7-10 days by running the plant continuously and for the rest of the month capacity remains unused just to save the cost of electricity and gas.It is cleared from the figure that they acquire capacity to stay ahead of demand with new capacity being acquired at the start of first time period. This capacity handles increased demand until the start of second time period. Then at the beginning of second month, new capacity of 100 ton is again acquired which allows the soap factory to stay ahead of demand until the start of next month. This means that capacity is acquired incrementally i.e. at the beginning of first month and at then at the start of second month.According to their operations manager, excess capacity gives them flexibility due to which they do more setups. Their production runs have shortened. So they include enough capacity in one period to maintain expected demand for multiple periods.Design Capacity, Effective Capacity, Utilization and EfficiencyMalta Soap and Chemical Factory has a design capacity of 84 tons calculated as follows:Hourly production: 1.5 tonsNo. of employees: 22No. of shift(s): 1Hours in one shift: 8Design Capacity = 1.5 tons/hour*8 hours per shift*1 shift*7 days = 84 tons/weekThis is basically what the factory would ideally produce if there were no constraints and everything was to go smoothly but in reality, this isnt possibleemployees slack, power goes out, time lags are there and occasional mistakes are inevitable. These constraints coupled with industry policies and limitations, the utilization of the factory is only 30% therefore actual output is around 42 tons;i.eUtilization= Actual Output/Design Capacity0.30=Actual Output/84Actual Output=0.30*84 Actual Output= 24 tons weekly Monthly =100The factory operates at an efficiency of 85% as per the acquired information which means that its actual output is not far from the effective capacity. We couldnt attain a particular figure for the effective capacity but it can be calculated by the information available to us:Efficiency = Actual Output/Effective Capacity0.85 = 24/ Effective capacity Effective Capacity = 28 tonsThis is the production the firm expects to have over the course of a week.Process Capability IndexFor every firm it is of extreme importance to deliver products right on specification. To ensure the capability of the process firms set a tolerance limit within which if the specifications were to vary, they would be rendered acceptable. Malta soap and chemicals factory has two main design considerations: the size of the bars of soap and the amount of caustic soda in the soap(Caustic soda increases the abrasiveness of soap; which enhances its cleaning power; and can be potentially harmful to the skin if added in excess). The design specifications for the size and volume are + 0.01 and for caustic soda are + 0.05. According to the interviewee about 90% of the outputs are within specification(process yield=90%) which means a Cpk of less than 1.00 which is the least a process should have to be called capable. For a process yield of 90%, the corresponding sigma level is 2.8 or a Cpk value of 0.93.How is the factory process focused?The factory is organized around specific activities which have been outlined in the process flowchart. The factory is divided into units whereby every unit is responsible for different processes or is devoted to it. Similarly, the supervision is also broken down across different units performing different jobs and duties which enhance the facilitys flexibility. The production is characterized as being low volume but high in variety because it manufactures multiple brands of soap. Each process is designed to perform varying activities. Another reason for terming the factory as process focused is that its utilization is as low as 30% which is a trait attributable to process focused facilities.BOTTLENECK IDENTIFICATION:A bottleneck (or constraint) in a production process means the machinery that requires the longest time in operations of the final product for certain demand. For Malta soap we tried to identify their capacity as compared to their demand, though their plants total capacity or design efficiency supports their demand but in doing so they need to work through certain equipment that has the lower effective capacity in the whole system and it limits the systems output. Here the phenomena such as increase of inventory before a bottleneck is prevalent because the machineries behind the bottleneck produce more in terms of quantity but due to bottleneck lesser amount can be moved to next process.Malta soap has equipment called Kettles which has the capacity of producing 50 ton at a time and that whole material has to go through the next process where it would move to crutcher for the purpose of adding silicate and perfumes. And that crutcher is considered to be a bottleneck because it has only the capacity of 1 Ton(100 kg)at a time that put constraint on the whole process, the owner believes that if they could add a bigger crutcher (2000 kg) or another with the same size they can increase their productivity. Because due to this machine huge piles of cooked material lay behind it, waiting for their turn and occupying the space, as until this doesnt finish up the whole 50 ton of first lot they cannot put material into that for next order. Re-order point:In inventory management Malta soap has two different categories for inventories to order, first is the Palm oil that they have with them mostly about 70% for their work and when they have to reorder they do it 1 month before it ends. While on the other side Empty cartons are the other inventory which they order 4 days before the finished goods are complete and needs to be packaged. So this shows that they do not rely on the last day at which inventory ends and they reorder it but rather they focus on having atleast 60 days backup inventory before they ask for new order.