Kowloon-Canton_Railway

[pic] BACHELOR OF LOGISTICS & SUPPLY CHAIN MANAGEMENT BLSCM 09/02 Subject: International Strategic Supply Management Title: Group Assignment Lecturer: Albert Phua Center: SIMM Name: Chen Shi Jia Desmond Tan Denise Tan Sandhi Rizal Sumardjan Stephanie Ong Pie Sen Wee Shan Zen Submission Date: 28 December 2009 Table of Content Case 1 1. Introduction 1 2. Key Factors for Kowloon-Canton Railway Corporation success 1 3. Did Re-engineering help' 2 3.1 Leadership 3 3.2 Customer Focus 3 3.3 Involvement of Employee 3 3.4 Process approach 4 3.5 Factual approach to Decision Making 4 4. Would KCRC succeeded in re-inventing themselves without re-engineering' 4 5. Conclusion 6 6. References 7 Case 2 1. Introduction 1 2. Nabisco’s Business Strategies 1 2.1 Nabisco’s SWOT Analysis 2 2.1.1 Strengths 2 2.1.2 Weakness 4 2.1.3 Opportunities 4 2.1.4 Threat 5 2.2 Porter’s Competitive Forces 6 3. Implementation and control 7 4. Conclusion 7 5. References 8 1. Introduction The KCRC (Kowloon-Canton Railway Corp) was established in 1982 after the government decided to corporatize its railway department. KCRC owned and operates a network of heavy rail, light rail and feeder bus services within Hong Kong with annual ridership of 544 millions. KCRC was originally known as KCR (Kowloon –Canton Railway) and began operation in 1910 to provide a rail link between Kowloon in Hong Kong to Guangzhou in China. It began operations on a single-track system with steam powered train cars that ply routes between Hong Kong and China. It has evolved to operating a network of rail line within Hong Kong with links to China on a modern fleet of electric powered train cars running on a dual track system (KCRC, nd) i. In this assignment we shall analyze the key success factors that enable KCRC to achieve world-class status and how reengineering play a part in KCRC success. 2. Key Factors for Kowloon-Canton Railway Corporation success The Kowloon-Canton Railway Corporation (KCRC) operating in Hong Kong providing the railway service between Hong Kong and Mainland China is well known for its quality transport services. Even they already is met the world class standard, they keep pursuing to meet higher expectation with this that had made KCRC to become the world leader in railway service, everyday more than 1,300,000 passengers benefit from KCRC's operations. (Entera System summary Knowloon-Canton railway corporation Hong Kong n.d.)ii The three key elements that made KCRC into today leader as a provider of quality are leadership, customer focus and Empowerment. Critical to the success of in any business is having the right person to address the right problem at the right time. KCRC first step to success is by identify their core value and mission which serves as a basis to drive the company toward their goal. To achieve consistent good customer service, KCRC understand that every employee must have the right mind set and knowledge for their job. TQM ( Total Quality Program) is launched and that help the employees to increase their effectiveness by getting all their involvement in analysis and problem solving whereby only with the understanding of the problem, appreciation and ownership of the recommended strategy will help the company to expand the initial set of ideas that in turn will improve the company overall performance. With the training given, all the employees are up to the job thus KCRC trust their employees on decision making. Empowerments are given to their employees at their level so quick decision can be made in time. Every single employee plays important roles in KCRC, with the leadership provide by the top management which provides a direction to lead all the employee together working as a team to achieve the total effectiveness result. KCRC chairman had personally been involved in analyzing past, current and future market trends to chairing the quality council which drives everyone in the company to be involved in the process of TQM program. KCRC Satisfying the customer by knowing the customer needs and expectation through focused on a group of their regular passages to gather their feedback and with the customer assistance tracking system and customer satisfaction index further help KCRC to capture their customer feedback with this help KCRC to identify area of potential value for improvement. KCRC monitor their customer satisfaction by constantly measure the performance against service guarantee. The constant measurements encourage continually improvement on customer satisfaction 3. Did Reengineering Help' Kowloon Canton Railway Corporation’s infrastructure and building department has undergone efforts to focus on the satisfaction of its internal customers as part of efforts in continuing quality enhancement and as a systematic way to boost quality awareness within the KCRC (Tam and Hui 1996)iii. Managing Director Kevin Hyde implemented the company’s TQM (Total Quality Management) program, focusing on satisfaction on customers, using it as a strategy to re-engineering the system in Kowloon Canton Railway Corporation in order to be recognized as a provider of quality. In the implemented TQM effort, all members of the organization are involved in improving the processes and services agreeing to the statement of Vision, Mission and Core Values in KCRC. We will use the key principles of TQM to discuss why it is a success to KCRC. 3.1 Leadership Hyde’s personal participation in the process gave him the opportunity to analyze and plan for the current and future markets of all KCRC’s businesses. With the commitment of the management, all employees will understand and be motivated towards KCRC’s goals and objectives, to achieved customer satisfaction. Most of the on going activities can be evaluated and aligned. Decisions making for implementation of process are made in a unified way. Communications between levels KCRC will have clarity as miscommunications are minimized in the management structure. 3.2 Customer Focus KCRC as the first creator in the industry, put together a focused group of passengers that the company constantly communicates with regularly, have greatly increase effectiveness to enhance customer satisfaction. By doing so, the company has a clearer vision on researching and understanding customers’ needs and expectations, constantly reviewing customer opinion and ensuring the company’s objective are linked to customer needs. Great amounts of data are also collected from customer assistance tracking system and customer satisfaction index. This measures customers’ satisfaction and allow the company to act on the results quickly. 3.3 Involvement of employee Employees at all levels are the essences of the company and their full involvement enables their abilities to be used for the company’s benefits. Training are provided to employees in quality education, safety issues and environmental protection. By applying empowerment of the employees, they will understand the importance of their contributions and role for KCRC, information are disseminated quickly, constraints and problem faced by each functions are easily identified. Quick decisions can be made by the employees at their level, accepting ownership of problems and responsibilities for solving them. Employees discussing problems and issue, have made them work closer together as a team, as they are the people who perform the work day in and out are in the best position to solve particular problems on the ground. 3.4 Process Approach KCRC maintains its quality process in order to achieve more efficient. The company have structured the TQM approach to achieve its objectives in the most effective and efficient way. Employee’s involvements help to analysis and evaluate the consequences and impacts of activities on customers and suppliers. The active approach towards TQM was the key activity necessary to obtain a desired result of the company. 3.5 Factual approach to Decision making Effective decisions are based on the analysis of data and information. Hyde set up evaluating systems like Customer Opinion Tracking System, Customer Assistance tracking system and customer satisfaction index, have help increased the ability to demonstrate the effectiveness of past decision through reference to factual records. This benefits the company to review, challenge and change opinions and decisions. 4. Would KCRC succeeded in re-inventing themselves without re-engineering' Reengineering is the rethinking and redesign of business processes to achieve dramatic improvements in the area of cost, quality, speed, and service (Davenport & Short 1990.)iv KCRC would not have succeeded in reinventing themselves to be that of, “A provider of service” without reengineering. As the corporation on a whole would requires changes that would not have being made possible had reengineering had not taken place to indentify and address those issues. (Davenport et al., 1994)v defines reengineering as "the critical analysis and radical redesign of existing business processes to achieve breakthrough improvements in performance measures." KCRC understand the need to change the corporation vision to one that can be recognized as a provider of quality. To be able to achieve that vision KCRC had to review all their business processes and to identify areas that need to be changed. This process would affect all the personnel in the corporation and the changes are often radical and would change the way of how things works. One of the challenges that KCRC faced is in changing the mindset of its people as they are only concern about running the trains and stations and not about carrying of passengers. This in turn resulted in a very inconsistent level of service to the passengers who are their main source of revenue. With the reengineering process in place the management is able to recognize this fact and redesign the process and improves the training by getting the involvement of the staffs to improve on the overall customer services levels. This would not be achieved should KCRC not partake in reengineering as it would be difficult to identify the root cause of the problem much less to implement a solution. Another challenge that KCRC faced was to be profitable over the long term as the Hong Kong government had required that KCRC achieve a 12 to 15 % return on assets. KCRC had not only managed to meet this requirement but is also able to bring down the carrying cost per passenger and in turn able to provide the passengers with fare reductions. This is all the result of a successful reengineering process that changes the way of how a corporation think and works all the ways from the top management down to the operators. To simply think of reinventing a business without making radical changes to the current business processes is not possible. As most business processes are in use for a period of time faced with the buy in from staff that are already familiar with the processes. Shortcoming and inefficiencies are often overlooked as the people are already familiar with the process and any changes would disrupt their workflow or in some cases other department work processes. People in general dislike changes; this is where reengineering is required. To review all the business processes that an organization has at the same time. And redesign and integrate functions to improve efficiencies, and reduce cost and duplication of work processes in order to fully reinvent a business to put it in a competitive position against its competitors in the marketplace. 5. Conclusion It can be concluded that KCRC is able to achieve world class status by clearly indentifying the weakness and strength that exists within the corporation and the threats and opportunities that it faced externally. To meet with the new challenges and requirements KCRC came up with a total quality management program that revamped the ways that the organization is being operated through the reengineering of business processes that involved all the people in the organization from top management all the way down to the frontline staffs. The end result is KCRC is able to meet and exceed all its planned targets with a return that far exceed its targets with surplus. Commuters’ satisfaction level had also increase by more than 5 % to exceed the industry standard of 70%. Job satisfaction levels for employees are also gaining to reach the targeted level of 80%. All this would not be possible had KCRC not embarked on a plan to reengineer its business processes. 6. References i KCRC Corporate Website, nd. http://www.kcrc.com/en/about/history.html(Accessed 25 Dec 09) ii Entera System summary Knowloon-Canton railway corporation Hong Kong.n.d. http://www.ecubesystems.com/marketing/Kowloon-CantonRailwayCaseStudy.pdf (Accessed December 23, 2009). iii Tam, C.M., and Moses Y. T. Hui. 1996. Total quality management in a public transport organization in Hong Kong. International Journal of Project Management 14, 5: 311–315 iv Davenport, T.H. & Short, J.E. (1990). "The New Industrial Engineering: Information Technology and Business Process Redesign," Sloan Management Review, pp. 11-27 v Davenport, T.H. (1994). "Reengineering: Business Change of Mythic Proportions'" MIS Quarterly, pp. 121-127 1. Introductions Nabisco (originally known as National Biscuit Company) is an American brand of cookies and snacks. Headquartered in East Hanover, New Jersey, the company is a subsidiary of Illinois-based Kraft Foods. Nabisco's plant in Chicago, a 1.8 million-square-foot production facility at 7300 S. Kedzie Avenue, is the largest bakery in the world, employing more than 1,500 workers and turning out some 320 million pounds of snack foods annually (Wikipedia, 2009)i. In this case study we will be discussing on how Nabisco progresses by implementing Strategic Management Process (SMP) to their company. 2. Nabisco’s Business Strategies Nabisco business strategy had been always focusing on customer driven to serve customers efficiently and build sales, profits and returns. It always believe that good managing of the supply chain will improve customer service, fill orders faster and more accurately and with this efficiency able to keep costs in line. Hence, Nabisco believe consumers and suppliers want to do business with them. The top management believes that their people had some empowerment to the job done. This makes more sense of belonging to company and responsibility to their individual job activities which provide fast cycle product adaptation and all round customer service. For example, Nabisco concentrate on full range of value-adding applications that links to live where data are fully updated in the systems and able to check inventories status quickly to response to consumer and supplier needs. Nabisco helps consumer or suppliers to improve their inventories by integrating Nabisco supply chain system to give them incentive selling more of their product. To customers, these are dollars and cents count. For example, Nabisco had identify that one of the product are not performing well enough in the proofing cycle to meet the standards of baking, hence, integrate problem solving (SPC) and statistical quality control (SQC) and had identify 17.94% dough moisture was the culprit. Thus, operations and baker start to identify and tackle the issues and now the product are consistently achieved. 2.1 Nabisco’s SWOT Analysis Nabisco manufacturer all kind of products from dairy, biscuits and canned food etc, they share the common corporate goal. They are first, fast and fresh. Only strategy to meet the goal which has to reverse the supply chain from consumer needs and wants then the ability of manufacturing the products to meet consumer demands. Hence, SWOT analysis is needed to think out of the box from consumer and management prospective. |Strengths |Weakness | |- Rapid Introduction of new products. |- Constant improvement of inventories. | |- Strong performance: Distribution, Technology in food and |- Inventories control. | |system, people, organization. | | |- Vast improvements international markets. | | |Opportunities |Threat | |- Creativity and productivity of products. |- Strong world class competitors like Kraft and Nestle. | |- Information Technology. |- Price fluctuation of raw materials. | Table 1. Nabisco SWOT analysis 2.1.1 Strengths - Rapid Introduction of new products Constant react and reacting fast to the market demand. Nowadays, people are talking about ecology and health conscious of well being and society. Nabisco’s introduced whole string of family low fat cookies and biscuits. Nabisco foresee the market demand is lacking of this product and most importantly that the key players had not produced any of this low fat products. - Strong Performances Distribution had always been their top of mind issue for Nabisco. This issue is always the main concern whether the assets which are the products are able to move fast to manufacturers and consumers. This concerns all parties’ dollars and cents. There are two main ways: • Defensive mode is satisfied customer orders, on time deliveries, complete deliveries, accurate invoicing and damage control. Efficiency of tackling and blocking issues • Offensive mode is to give consumers something that are not available on market – manufacturer can helps and improve their inventories of sale like Vendor Management Strategy which allow the vendor of the product to keep track inventories, maintain counter presentation etc Nabisco foresee the low fat industry to be on trend. To be the pioneer of this health conscious market, thus, Nabisco invested in Biscuit Company to enable them to produce strings of low fat products that you can find in store. Biscuit companies are armed with break through records of food technology that brings Nabisco to another level above the competitors. Nabisco always believe that information technology is indispensable when your businesses grow. Good management of supply chain that is efficient and effective to consumers’ responses. Hence, important work in supply chain management is to understand where we stand so that we can figure the next move. Every movement is critical and losses have to be minimal. Nabisco is one of the few food companies that do both direct delivery to store and delivery to warehouse distribution. This gives the company a better leverage with retailers because it puts the company in a position to experience the real factor of business improvement and stay directly in touch with its retailers and consumers. Working in an effective and efficient environment with recognize work commitment, the company will definitely grow in sales of return. With all those advanced technology implemented need onsite training and extra incentive when sales are roaring to give recognition to the staff. Thus, staffs are needed to give creative ideas and opinions which allow the company to improve in all areas. - Vast improvements international markets Nabisco had grown in the 80s till now which had earned fair bit of market share in terms of any food products you name it. Sometimes, this ponders me why is Nabisco so successful in their strategy management processes. Their successful strategies are implementation the Four Fs – fast, focused, flexible and fun within the management. Due to Four Fs, it makes a better working environment for the people which create a focus on the consumer needs. This internal alignment enable the people to work towards the common goals and excel which gives speed and ability to do the do things right in the first time to outshine competitors and exceed consumers expectations. 2.1.2 Weakness - Constant improvement of inventories. Information technology is inevitable to the company businesses work flow, unfortunately, few of the players willingly to take information technology to the heart felt organization. Managers understand the flow of information and execute when issues arise. Example, Specialty Production has improved their case fill rate from 98.5 percent to 99.2 percent. However, the industry best rate is at 99.5 percent which mean Nabisco has a goal to set. - Inventories control. Nabisco produce all range of products at many locations. Their inventories consists of raw materials, packaging and finished goods. Past years, company had cut down 20 percent inventories level, but still room for improvements. The most challenging part is to cut down inventories and to keep up customer services at world class levels. 2.1.3 Opportunities - Creativity and productivity of products. In the early context, we are mentioning that Nabisco invested in Biscuit Company that produce low fat cookies and biscuits. They had seized this opportunity that health conscious Americans with obesity record top few in the world. This had allowed Nabisco to move forward and higher level in the food industry that create ripple of threat to the competitors in the market. Their investment brings good returns and image that consumers will consider when they are purchasing biscuits or cookies. Because of their creativity and productivity of goods which serves consumer a better variety of food in the market. Since, they are customer driven; Nabisco will always be focusing on first, fast and fresh implementation to give back the fullest support as much as possible to consumers. Another good example, BullsEye had reign the market beef sauces very comfortably and due to this comfort, Nabisco saw an opportunity to produce a better beef sauce which knock out BullsEye totally. - Information Technology. In this new information age, everything has to be fast moving pace to catch with others. Hence, Nabisco foresee this information technology needs to be implemented to give a better efficiency to sales person and also to consumer demand. Going on live gives accurate data that transmitting across efficiently and effectively no matter where you are. For example, Nabisco created a new order management system in the Biscuit division where sales person are to enter orders and merchandise information into their hand-held computers which can be download by phone over night. 2.1.4 Threat - Strong world class competitors like Kraft and Nestle. Competitors are everywhere in the industry and bound to have. Understand that main concern of threat of competitors to Nabisco like Kraft and Nestle which has a common market share definitely have a few products to counter each other new launch of products. This is fair competition. However, once price wars begin or promotion set in. Company will suffer dilemma to follow the trend or wait and see strategy which normally sales profit will be affected at the end of the day. - Price fluctuation of raw materials. As the maker of the products, raw materials will have to be source every parts of the world. The raw materials are subject to a few factors like seasonal of crops, crops size, cattle size, import and export requirements and weather conditions. All this factors will affect the fluctuation of raw materials can adversely impact the company profit margin. 2.2 Porter’s Competitive Forces Porter Competitive Forces allow us to think out of the box to foresee issues rise in short and long term basis. This Porter Competitive Forces combines with SWOT analysis works hand in to analyze better vision for the company as well consumers and suppliers. Porter Competitive forces consists of potential entrants, bargaining power of buyers and sellers, threat of substitutes and extent of competitive rivalry. Although Porter Competitive Forces are an analyzing the short and long terms plans for the company. Nabisco said: “business can plan until you drop, but your forecast is never going to be 100 percent accurate, therefore, you need to react and react fast”. Thus, acquisitions with Kraft Inc recently, this does not stop Nabisco from expanding because they are always re-known in this food industry of cookies and industry. We shall further discuss how this porter’s competitive forces enable Nabisco to move forward. |Potential Entrants |Bargaining Power of Buyers & Suppliers | |- Booming of SME cookies and biscuits marker i.e. Sara Lee, |- Nabisco buying power will be higher than suppliers in terms | |Famous Amos, Nestle |of volume, shipping and material cost | |- Product Differentiation |- There are alternative sources of supplies | |Threat of Substitutes |Extent of Competitive Rivalry | |- Too much variety of cookies and biscuits launch that confused|- Nabisco acquisitions to Kraft | |consumers i.e. wheat crackers low fat and butter wheat crackers|- Over flood of cookies and biscuit markers in the market | |- Potential Competitors with more range of products i.e. Famous|- High fixed costs (Capital and Storage) | |Amos provide in package form instead of going to buy freshly | | |bake | | Table 2. Nabisco Porter’s Analysis Porter’s analysis gives a better forecasting in the near future. Although, it may not come needy currently, however, we need to analyze the situations and understand it. Confucius student had once asked this question: “name one thing that must be done to accomplish great things”. Confucius replied was: “getting the definition right – using the right words. When words are improperly applied, issues are misunderstood.” Supply chain need to be meticulously in most aspects because wrong mistakes may lead disaster and lost of profits incurred and consumers’ doubt on the company capabilities. 3. Implementation and control Based on the SWOT analysis done, Nabisco did implement their improvements into their organizations by implementing tighter inventory controls, doing e-commerce that improves their sales and improving productions by introducing better control and introduce more new products that create new demand from the consumers as part of their creativity program. With their new and improved changes implemented, customer enjoys better services and response from Nabisco. Not only that, Nabisco also helps better managed customer inventory by their ease to retrieve the inventory level as parts of the IT improvements and their offensive distribution model that they implemented. Parts of the improvement made are also come from their tight control of their supply chain management that does both direct supply and from their distributors. 4. Conclusion Nabisco shown and proves that using Strategic Management Process brings benefits and growth to their organizations. They managed to out growth their competitors and raises to be one of the biggest, fastest and most variety biscuit suppliers. Not only their changes help their company, Nabisco also help to improve and progress with their customers via the direct and DC supply model. This is one of the key importances that help them to emerge and survived the fierce competitions. All in all, their strength in supply chain improvements helps the company to emerge from the battle with their competitors. 5. References i Wikipedia, Nabisco, 7 December 2009. http://en.wikipedia.org/wiki/Nabisco (accessed on 25 December 2009). Business website n.d. (Accessed on 16 Dec 2009) Google Books Strategic Management: Total quality and Global Competition n.d. (Accessed on 18 Dec 2009) Hall. J.R, 1996. Inbound Logistics: Top Dogs View of Supply Chain Management, June 1996, pp 22-30 [pic]