Question: Introduction This Research is based on operations strategy for decision-making in an organization. The Organisation chosen was Desnoes & Geddes Limited, which trades as Red
Introduction This Research is based on operations strategy for decision-making in an organization. The Organisation chosen was Desnoes & Geddes Limited, which trades as Red Stripe Jamaica. This Company was established in 1918 by Eugene Peter Desnoes and Thomas Hargreaves Geddes, who both decided to have a Joint venture. In 2015 Amsterdam-based multinational Heineken NV became the majority shareholder of the red stripe. The company currently produces Beers, spirits, and non-alcoholic beverages. According to (Desnoes and Geddes Limited - Company Profile, Information, Business Description, History, Background Information on Desnoes and Geddes Limited, n.d.)Desnoes & Geddes continued to grow and offered 8 percent of its shares to the public in 1970 and before the pandemic sales and returns on capital increased. However, based on data released by its parent company Heineken International, the Jamaican brewery seems set instead to large reductions in future cash flows from its brands and the lower plant utilization (Red Stripe writes down $25b of assets due to covid, 2020). In this research, information will be discovered on Production, Quality, the processes used, whether the locations are near suppliers or buyers, the layout whether it work cell or assembly line, Inventory, Human resources, Supply chain, ETC; upon analyzing recommendations will be made as it relates to operations strategies.
Production In 2017 Red Stripe Ltd was awarded the Governor-General awards after returning its US-based manufacturing to Jamaica. In this great achievement, Red Stripe did the best out of two other competitors Wsynco and PA Benjamin. According to (Red Stripe Named Manufacturer of the Year, 2017) to be declared Manufacturer of the Year, the applicant goes through a rigorous quantitative and qualitative selection process that analyses and explores the company's productivity, quality standards and certification, export operations, training and development of personnel, contribution to community development and environmental preservation, as well as achievements in research and development and continued innovation. The government of Jamaica signed off on a 25-year lease on over 610 acres of land located in St Catherine that is used by Red Stripe to cultivate Cassava, which contributed greatly to the production of Red stripe and they also utilize local raw material will be used on other products such as dragon, malta, and Guinness. Red Stripe Ltd has identified and adopted a sustainable agricultural strategy Project Grow to increase the use of locally sourced raw materials, specifically cassava in its brewed products by up to 40 percent by 2020 (Bennett, 2017).
Quality As it relates to quality, for more than 59 years Red Stripe Ltd has been providing quality products. A review done by (Eddings, 2021) states that Red Stripe is not the only beer brewed on the island of Jamaica, but it's just the best-known. The ingredients used are Pilsen Malt, Hops, Cassava Starch, and Water. Red Stripe head of marketing Nomonde Donsa, did an interview with Jamaica Observer on April 22, 2020, in celebration of Red Stripe beer winning a silver medal for the quality of beer; he said that It's a testament of our commitment to delivering first-class quality to our consumers. At Red Stripe, we stand up for quality, and is officially recognized by an accredited international body of experts means that our beer, born from this little island, is up to par with global standards, (Jamaica Observer Limited, n.d.).
Process The Red Stripe Productivity management (TPM) Jerome McGregor, was interviewed by loop who states that digital technology has been the key element to the companys success (Scott, 2020). In further research, one of the reasons the company could easily incorporate covid protocols was that they had already implemented processes on how to gain a dynamic operational work-frame. All employees located at Spanish Town Road are trained to use the App called One2improvement on their smart devices, it helps workers optimize the production process. Also, it resolves maintenance inefficiencies, and generating a database for more informed decision-making became hallmarks of the companys strategy (Scott, 2020).
Location Red Stripe is a Multi-million dollar commercial brewery company that is located at 214 Spanish Town Road Kingston 11, Jamaica. Red Stripe is originally brewed and bottled in Kingston by Desnoes and Geddes Limited(D&G), it is also brewed in the Netherlands by Heineken.
Reasons for this location:
- Utilities- Firstly, when looking at commercial spaces we must immediately determine the sizes of the water, sewer, electric, and gas supply coming into the unit. Breweries need a lot of all of these utilities and it can be very expensive to upgrade. Its important to know these facts about space before submitting an offer.
- Accessibility- In addition to all of the equipment that will be delivered during installation, breweries usually receive frequent deliveries of raw materials. If an offloading dock isnt available, or a drive-in door or forklift what will suffice? If the building has a shared loading dock, confirm actual usage among the current tenants and if there are any restrictions to the hours it can be used.
- Zoning- Breweries are only allowed in industrially-zoned districts, because of the noise and smoking, and other pollution that may affect surrounding businesses.
- Logistics (Close proximity to supplier and customer)- It offers ease of access to local and international suppliers of raw material costing less to source raw material such as bottles, cassava which is necessary to operate the brewing. This location is ideal as it is smack in the heart of the citys commercial center.
- Safety and security- Finding a safe location are important in operating a plant as Red strip, especially due to its valuable, high-quality inventory that is at high risk for theft and damage by fire.
Layout
Red Stripe uses an Assembly line layout to package its beer. This is primarily an automated process; the bottles are loaded into a machine that transfers them to a conveyor belt line. The bottles are filled, sealed, packed, and transported by this system.
Red Stripe officially launched its new Production Line 8 at the facility at its Spanish Town Road plant. Production Line 8 will enable Red Stripe to brew 1 million bottles each day, which breaks down to approximately 40,000 bottles per hour or 26,000 cases of beer per day. The increase is expected to boost the sale of Red Stripe on the overseas market. The new line also offers Red Stripe flexibility in labeling and packaging, with modern technology in the brewing industry (Loop News, 2017).
Human Resource
Red stripe lives up to the mantle a company where worker actions are directly in line with business goals, employees feel respected and appreciated for their hard work, and where their contributions are acknowledged and rewarded. This explanation rightly describes the work environment that they have created for their employees at Red Stripe. They believe that creating an environment where they feel inspired, motivated and the company is committed to their growth, development, and well-being is one of the most important ways in which they can prove that they truly value their staff. The Human Resource Department over the year in the review focused on engaging, inspiring, and developing their staff by ensuring that they possess the motivation, know-how, and skills required to deliver Red Stripes strategic priorities. The team at Red Stripe is so committed that they keep an annual employee conference at the Iberostar Resort and Spa in Montego Bay in October. This conference gives the staff the opportunity to be in a change of environment while giving the leadership team space to relax and expand their thinking as it pretends to the improvement of the company's strategic priorities.
Workers want to be part of an organization that helps them to develop skills so they can excel in their jobs on a daily basis and progress up the career ladder, so Red Stripe Ltd proceeds to demonstrate its promise to train and develop by ensuring that every worker has a personal development plan. This is done through formal classroom training sessions, e-leanings via the Diageo Academy (their global learning and development resource portal), and the job. They also provided a number of their employees with development opportunities through the Diageo Future Leaders Programme and Secondments. The Future Leaders program is a global initiative designed to fast-track the development of individuals with senior management potential. (Desnoes and Geddes limited annual report 2015)
Supply chain
The raw materials that are used by Red Stripe Ltd are sourced from multiple suppliers both locally and internationally. Malted Barley is the primary material used in the production of beer and is currently imported from multiple countries such as England, The United States of America, and France.
In 2015 the company implemented the use of cassava starch as a substitute for barley in the production of beer. The Company partnered with the Jamaican Government to acquire over 250 acres of land to be used in the cultivation of Cassava. Locally produced cassava starch is now a key ingredient in the brew of Red Stripe Beer, as the company moves to reduce imported raw material for its production. Consumers will soon be able to get their hands on this new mix, as the brewing company produced the first batch of beer using this local ingredient on June 18, 2015. This followed the official commissioning into service of the brewerys cassava starch factory, located at its Spanish Town Road headquarters in St. Andrew. (Jamaica Observer, 2015)
Another material used by Red Stripe is aluminum, this is supplied locally and is used to manufacture aluminum cans needed for the canning of the beer. This type of product is primarily exported to international markets such as The United States and European countries.
The company provides its own supply of water as the factory is situated directly on a major water table in St Catherine. Devon Francis the brewing manager of red stripe stated in an interview done in 2010 that the factory has approximately 12 wells located on-site that supply all the companies water needs. The use of local materials drastically reduced the importation cost for the company which in turn reduced the companys cost of production.
Inventory
The company Red Stripe inventory system involves the storage of both goods from international and local suppliers, which is recorded both manually and technologically. Manually as it relates to regular checks being done to ensure that goods are available if a commodity runs out and technologically with matching the results of what is actually onsite with what is on the companys system. This is basically done to manage the reserve stocks just in case of any discrepancies such as delay in shipment which is happening a lot now due to the pandemic, Production equipment failure, or shortage in stock at distribution centers. Red Stripe uses the stock-keeping system (SKU) to manage the material which is basically a list of all the company products with each product assigned a unique code in their computer system to keep track of the volume of the various products within the company. According to an article published by the Jamaica Observer Red stripe try to achieve its production objective during Covid- 19 by:
- Implement a weekly management cycle for inventory to reduce storage costs for raw materials and demurrage.
- Constantly communicate with suppliers to ensure constancy and consistency in supply so as to keep pace with demand.
Red stripe is basically a company that works off forecasting so they tend to look at the previous years and use that to know what they should have in storage (keep in hand) as it pretends to raw material and finished goods.
Scheduling
The production schedule of Red Stripe is dependent on a variety of factors such as customer demand for example in Jamaica production is increased around Christmas or for the summer holidays where demand for the beverage is at its highest. Production is also affected by governmental decisions. For instance, in 2021 when the Jamaican government implemented the consecutive no movement days, this caused a fluctuation in production. The no-movement days started each Saturday evening and ended on Wednesday at 5 am, eliminating commercial activities on Sunday, Monday, and Tuesday of each week. (Loop News, 2021)
It is also affected by the availability of bottles used for packaging. Sean Wallace the Head of Commercial Operations at the company explained that the companys operations are driven by a circular model where recyclable bottles are recycled for resale to the trade. A shortage of bottles will result in production plans having to readjust which creates delays in restocking and sale of products to customers.
Maintenance
The management and maintenance of Red Stripe equipment and vehicles are contracted out to an American company named AMECO. This company is responsible for scheduled maintenance and repair of all fleet units and also provides AMECO-owned forklifts, beverage delivery trucks, and other vehicles to be used by Red Stripe. In getting the contract from Red Stripe, AMECOs first agenda was to upgrade and replace the undependable existing forklifts the company had before, with new AMECO-owned units. AMECO has also modernized the beverage delivery vehicles with new trucks that could carry more beverage units and have locking and product security features that were not available with the pallet body carriers previously used by Red Stripe. In 2016 Red Stripe invested $3.5 billion, according to its 2016 annual report, to maintain the existing production line and acquire new equipment and bottles as well as the development of the cassava plant mill at its Spanish Town-based operations. (The Jamaica Gleaner 2017)
Recommendations in respect of the operation strategy Note that the recommendations must be congruent with the findings of the internal and external evaluations.
you are required to evaluate the current Operations Strategy for decision-making in the organization
The Evaluation should be restricted to: An Abstract
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