Activity Analysis Report - Production

September 5, 2012 [320LON - GLOBAL BUSINESS SIMULATION]
320LON - GLOBAL BUSINESS
SIMULATION
Activity AnalysisReport: Production
9/5/2012
Renata Ltd.
Muhammad Tanvir Hossain
Student ID: 4325352

September 5, 2012 ACTIVITY ANALYSIS REPORT: PRODUCTION
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Table of Contents
1. Introduction:....................................................................................................................... 3
2. Individual Activity: Production........................................................................................... 3
2.1 Product supply chain:..................................................................................................3
2.2 Product life cycle:.........................................................................................................5
2.3 Efficiency: ....................................................................................................................6
2.4 Kaizen process: ............................................................................................................7
3. Conclusion: .........................................................................................................................8
4. References:..........................................................................................................................9

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1. Introduction:
This activity report is a significant assessment report of Renata Ltd., written based
on the verdicts provided by me, as a production manager for the decision area in
round 5. This business productions are in the pharmaceutical industry in the major
markets in USA and Finland.
In this round five, the market condition was both positive and negative in condition of
demands compare to round four. The demand for painkillers (Rubbana) decreasing
by 10% all around the world and demand for antioxidants (AndyOx) are doing strong
and expected to rise 10% in all markets. Consequently, I have an opportunity to help
gain competitive advantages by analyzing product life cycle for both Rubbana and
AndyOx. Renata Ltd., objective is to gain 60% global market share by the end of this
round. As the objective is expand global market share by 60%, it is also my
responsibilities to know current market sales globally to calculate exact production to
maximise production capacity utilization.
The market condition for machinery prices are decreasing by 20% and raw materials
prices for Rubbana are increasing and AndyOx materials prices are declining in their
individual trends. These conditions has both negative and positive factors for me as
a production manager in a respective way, where Rubbana will increase the product
per price and AndyOx product per price will be less which has effects on profitability.
My objective is to reduce production cost 2% in this round by using allocative
efficiency, technical efficiency, cost efficiency and measuring efficiency as well as
improving production efficiency.
2. Individual Activity:Production
Production is the methods and processes which involves to transform tangible inputs
(i.e. semi finished goods, subassemblies, or raw materials) and intangible inputs (i.e.
knowledge, information, or ideas) into goods or services (Business Dictionary, 2012).
As a production manager I set production target for Rubbana and AndyOx to meet
Renata's objectives as well as my objectives to reduce production cost by 2%.
2.1 Product supply chain:
Previously, production cost and supply chain have not been the major key method in
achieving a competitive lead in pharmaceutical industries. However, these factors
carry important potential for a cost and capital optimization, which allows in an
increasing competitiveness.
To discover the potential in supply chain and production, I must follow a holistic
approach which contains of four dimensions:

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 Production strategy and supply chain
 Network organization
 Capacity utilization and
 managing the difficulty of process and products
A plan-do-reflect-review cycle around these four dimension will be cornerstone for
production and supply chain excellence. See Figure 2.1:
Plan-do-reflect-review cycle:
Source: London Deanery
My communication with my sales and finance manager clear and transparent to
ensure on time production planning and maximise the capacity utilization to increase
products margins. In this round, my capacity utilization in USA 98.0, which is same
as Finland. As this below supply chain model (figure 1.2) shows, I have to
manufacturing plant in USA and Finland and I have customer in three different
countries France, Finland and USA. I am sending my finished goods in France from
Finland as logistic cost if less Finland to France than USA to France, transportation
cost 3.10 (EUR/Units) and 5.00 (EUR/Units) respectively.

5
Figure 2.2: Product supply chain
source: World trade group.
2.2 Product life cycle:
Product life cycle first introduced by Theodore Levitt in 1965. The concepts of this
model is to analyze the maturity stage of products and industries. This model allows
managers and consultants to have and understanding the stage of a product and
provides information about expected future sales growth and what kind of strategies
need to be implemented.
Figure 2.3: Product life cycle
Source: Tom Spencer (tomspencer.com)

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According to the market analysis Rubbana(painkillers) sales in decreasing by 10%
all over the market and Rubbana as from the product life cycle is in declining stage.
My strategy is to reduce production of Rubbana compare to round four in USA and
Finland. My target production of Rubbana in Finland and USA is 111.71 (K units) and
98.46 (K units) in that order.
The demand for AndyOx(antioxidants) are still growing strong in all markets. By
product life cycle curve AndyOx still in growth stage, therefore Renata Ltd. has an
opportunity to capture growing market by producing more quality AndyOx. As a
production manager I have invested in machinery and buildings to improve total
production capacity in Finland and USA, 90 (K units) and 20 (K units) respectively.
Renata's objective is to gain 60% market share by the end of this round, for that
reason the production of AndyOx in Finland and USA is 162.5 (K units) and 165.94
(K units) correspondingly.
2.3 Efficiency:
Efficiency refers to the global relationship between all outputs and inputs in a
production process (Speelman et al., 2008). As a production manager my concern
with efficiency to gain my production objectives as well as Renata's objectives. There
are several efficiency related to production which has significant impact on resource
saving, which can be valuable effect on policy formulation and farm management
(Bravo-Ureta & Rieger, 1991).
 Technical efficiency
 Allocative efficiency
 Cost efficiency and
 Measuring efficiency
Technical efficiency is the combination of inputs with minimum uses of labour and
capital to produce a certain amount of goods. Production wages is rising in Finland
and USA than previous round. Current wages rate in Finland and USA is 49.00 (K
EUR) and 51.00 (K EUR) respectively. As a production manager I have invested in
production efficiency (k units/person) in Finland and USA to person in production to
cope with current wages rate. Graph 1.1 illustrate that:

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Graph 1.1 Production efficiency in Finland:
Source: Cesim Sim Firm
I have invested 3.72 (k units/person) and 3.12 (k units/person) in Finland for
Rubbana and AndyOx correspondingly to improve cost efficiency and technical
efficiency to save capital investment on wages and gain competitive advantages
over competitors.
2.4 Kaizen process:
Kaizen means continues improvement. In this process it has never ending efforts on
improvement engaging managers to workers. Figure 1.4 illustrate Kaizen process:
Figure 1.4 Kaizen Process:
Source: Business Coach (insbeco.com)
0
0.5
1
1.5
2
2.5
3
3.5
4
PharmateamRenata Ltd.Ecolab Pharma Ltd.
Rubbana (k
units/person)
AndyOx (k
units/person)

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I have applied Kaizen continues improvement process to avoid wasting my
resources. I have invested to improve quality control for Rubbana and AndyOx by
1600 (K EUR) and 1550 (K EUR) respectively, which allowed Renata to provide
quality products to the customers and earning satisfaction and loyalty which is
valuable for the organization. I have also invested to improve cost of investment to
achieve Renata's objective to acquire 60% global market share by the end of this
round and reduce production cost by 2%. However as an organization we have failed
to achieve our target market share. At the end of the round 5 our market share is
51.20 % for Rubbana and AndyOx but we have reduced our production cost 1.8%.
3. Conclusion:
In conclusion, I would like to say for organization production is a very important
sector. As a production manager I have to reconsider some of my decision which I
took during this round. The opening inventory I had from last round is increased
89.20 (K units) and 91.38 (K units) for Rubbana and AndyOx in that order which is
more costly for Renata Ltd.
I would recommend sales and finance manager to discuss with me for setting up
sales target for round 6 so that I do not have to hold bulk number of units in storage.
I have experience tough time with maintaining machinery as they have 25%
depreciation and at the same time building has only 5% depreciation.
Finally, I have developed few important skills during this business round which I had
lacked before, for example: the importance of efficiency. Although I have not fully
understand what is profit efficiency, revenue efficiency and economic efficiency
which I would like to improve during next round where I will be a finance manager.

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4. References:
1000 Ventures. [online] available from
<http://www.1000ventures.com/design_elements/selfmade/kaizen_culture_8element
s_6x4.jpg>
Ajibefun, I.A., & Daramola, A.G. (2003). Determinants of Technical and Allocative
Efficiency of Microenterprises: Firm-level Evidence from Nigeria. African
Development Review, 15(2-3): 353-395.
Allocative Efficiency, Agency for Healthcare Research and Quality. [online] available
from <http://www.ahrq.gov/qual/efficiency/hcemappa.htm> [2012]
Business Dictionary. [online] available from
<http://www.businessdictionary.com/definition/production.html> [2012]
Business Coach. [online] available at
<http://www.insbeco.com/1000ventures/products/bec_mc_cif.html>
Capgemini Consulting. [online] available from <http://www.capgemini-
consulting.com> [2012]
Cesim Sim Firm. [online] available at
<http://sim.cesim.com/results/se/ProductionPage/wicket:pageMapName/wicket-0>
London Deanery. [online] available from <http://www.faculty.londondeanery.ac.uk/e-
learning/assessing-educational-
needs/when/view?portal_status_message=Error%20creating%20PDF%20file>
Speelman, S., D’Haese, M., Buysse, J., & D’Haese, L. (2008). A measure for the
efficiency of water use and its determinants, a case study of small-scale irrigation
schemes in North-West Province, South Africa. Agricultural Systems, 98(1): 31-39.
Tom Spencer. [online] available from
<http://www.tomspencer.com.au/2009/01/25/product-life-cycle-model/> [25.01.2009]
World Trade Group. [online] available from <http://www.wtgnews.com/2010/08/the-
supply-chain-strain-is-changing-the-way-manufacturers-do-business/> [2012]

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