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Question:

Discuss about  the Operations Mangement ?
 
 

Answer :

Introducation

The ARKAN Company is a public joint stock company located in the Abu Dhabi. The company began its operations in 2005. Arkan Company registered as ADX: ARKAN is owned by the government of Abu Dhabi and is specialized in the manufacture of construction and building products. 51% of the company’s shares are owned by the SENAAT, which is the Abu Dhabi’s government entity with the responsibility of promoting sustainable industrial operations. The remaining, 49% of shares, are owned by the United Arab Emirate nations. The company’s stocks are traded in the Abu Dhabi’s stock exchange market (Arkan Company, 2017).

Arkan is a major player in the Gulf Countries’ building and construction industry dealing with a diversified range of products. Such products include cement, Slags, building blocks, pavers, Dry mortal, Anabeeb pipes, Arkan bags and Clinker among others (Arkan Company, 2017).

The Arkan Company’s operation is based on the Greenfield development and strategic partnership with other manufacturers. The company’s objective is focused on growing and expanding its market base globally and within the Gulf countries. Through its Corporate Social Responsibility (CSR) initiative, the company is committed to promoting the local economies by partnering with the locals. This has been achieved by offering employment opportunities. Likewise, the company is engaged in training the people of UAE nations on the importance of environment-friendly operations (Arkan Company, 2017).

The company’s success and competitive advantage in the industry are as a result of solid leadership, benchmarking and diversified portfolio. With its leading in the position, Arkan is the customers and investors choice in the market. Arkan takes a swift response to the industrial changes by aligning its products and services with the customer needs. Lastly, the company’s success is based on high standards of business ethics (Arkan Company, 2017).

Strategy of the Company

Arkan’s Vision

“To be the leading building materials company in the UAE and GCC”

The company has achieved part of its vision. Arkan is leading in the production and sales of construction and building materials in the UAE and GCC market. It is a company of choice; most of the customers love to associate with the Arkan brand and products (Heracleous, 2003).

Arkan’s Mission

“To develop profitable building materials operations that create value for the shareholders, community and customers, based on social responsibility and human resources capability”

 

Illustration:

Arkan has made several milestones in its quest to fulfill its vision. It has a large consumer base in the UAE and GCC. It responds swiftly to the market needs to satisfy its customers. This way the company has managed to expand its revenue base and create value for its investors. Lastly, the company is engaged in CSR with the aim to promote the lifestyle and economic improvement for the locals. Arkan provides them with employments opportunities. Conversely, the company does facilitate training of the people on the environment-friendly operations through conferences, training programs, and sponsored events (Miles, 2003).

Clearly, Arkan Company focuses on differentiation and response strategies for its operations. First, the company uses Arkan bags to bag its products. This has created the uniqueness of its products from those produced by the competitors. Branding and packaging are differentiation strategy used by many companies. Second, the company has invested in a swift response strategy in handling changes in the market. Arkan acts by the consumer needs and behavior (Heracleous, 2003).

Lastly, the productivity in the four segments of Arkan Company is based on the market demands. The demand for clinkers is 4million tons per annum and 5.7million tons per annum. Likes the company has to produce approximately 240,000 blocks and pavers per day. The demand for this essential products sets the productivity level. Each production demand has a set target which they strive to meet as a way of keeping at par with the customer needs (Miles, 2003). 

Forecasting

The Arkan Company uses several forecasting approaches to estimate its future operations as well as the performance of the industry. The Company uses qualitative methods, Time series methods, and explanatory methods.

Under the qualitative methods, the company uses the Delphi and visionary techniques to make future forecasting. By assembling experts, sales executives and team, consultants and supervisors, the company comes up with a forecast plan overcome the frequent changes in the industry (Makridakis, 1997).

Time series methods are applicable when the projection is based on the past performance of the products. By analyzing the past performance trend of the company’s products, the management develops a linear performance trend that is used to determine the future performance. The industrial survey is used at the Arkan Company to examine the operations different stakeholders like consumers, competitors, suppliers and creditors. The findings are then used to anticipate the future performance of the company (Steven C. Wheelwright, 2007). Lastly, regression analysis is used when relating to items such as sales and consumers’’ incomes in projecting the future sales.

Lastly, the explanatory methods are used to determine how the performance of one variable would affect another variable. For example, the company conducted the causal-effect analysis on increasing environment activism and how it would affect its sales in the future (Makridakis, 1997).

Time Horizon

Range

Horizon

Application areas

Forecasting Methods

Long

Above 5 years

·   Organization planning

·   Product planning

·   Capacity planning

 

·   Market information

·   Economic trend

·   Demographic

·   Technology

Intermediate

1-2 years

·   Production Plan

·   Staffing plan

·   Regression

·   Time Series

 

Short

Less than One year

·   Job Scheduling

·   Purchasing

·   Graphical Methods

·   Trend exploration

·   Exponential smoothing

Capacity Planning

At the Arkan Company, capacity planning comprises of the activities named below;

  1. Examining the existing capacity.
  2. Anticipating capacity needs.
  3. Establishing other ways of modifying capacity.
  4. Evaluating economic, technological, and financial capacity alternatives.
  5. Choose the most suitable capacity planning alternative.

The company uses three steps to planning its capacity

First, the company determines the work to be done and the workers to execute them. This is achieved through;

  • Defining the workloads
  • Determining the work unit
  • Identifying the service level under each workload.

Second, the management then analysis the current capacity at the organization. Current capacity is determined by;

  • Comparing service levels and company objectives.
  • Measure general resources usage
  • Measure resource consumption via workload
  • Establish elements of capacity response time

Last, the management plans the future capacity using forecasts. In planning for the future capacity, the following situations should be considered.

  1. Establishing the future production requirements
  2. Planning the future system configurations

In a situation where both the capacity and demand are an imbalance, the company takes both short term and long term measures (Patnaik, 2015). Short-term measures include; a) decreasing or increasing the workforce and producing more products during the lean period to be sold during the high demand period. Long-term measures are; a) expanding the current capacity or creating new ones if there is a shortage. And, selling or closing the excess capacity is in excess. The company can also relocate excess capacity to other investments.

 

Process Selection and Facility Layout

Cement is a major product by the Arkan Company. The section highlights the cement production process by the company. The process of the producing cement involves two steps. The first step involves feeding the raw materials into the kiln system. The output from this process is clinker which comprises of aluminates, ferrites of calcium and silicates (Arkan Company, 2017).

The clinker process begins when the raw materials such as chalk, marl, limestone, iron ore, clay, shale, and sand are quarried. The raw materials are then crushed, grounded and mixed to get a smooth blend which is then stored. Handling of raw materials is done using both dry and wet processes. The choice of either to use dry process or wet process is based on the type of raw material, the technology, and the production cost. The final step under the clinker step is through the cooling phase (Wisner, 2008).

The second phase involves grounding of the clinker adding other minerals with anhydrite or gypsum.  The minerals added to the clinker are limestone, silica fume, fly ash, blast or natural pozzolanas. The composition of the components varies depending on the type of the cement to be produced.

Diagram: Cement process.

Note that the whole production process must follow the design presented below which, by the way, is a continuous process. The company has to meet the consumers demand as prescribed under the capacity planning.

The company has a strategic layout which ensures;

  • Effective utilization of equipment, people, and space
  • Improved flow of materials, people and information
  • Safe working environment and enhanced employee motivation
  • Improved client interaction

Product and Service Design

Product design refers to creating a product that will appeal to the customers and make them buy. Arkan’s cement has been designed to meet the following characteristics;

  1. Appearance
  2. Materials
  3. Quality
  4. Cost
  5. Dimensions
  6. Performance standards
  7. Tolerance

The company has done sufficient research on the kind of product that would appeal to the customers based on the feasibility study. The company’s cement meets the functionality, manufacturing, maintainability and reliability aspects in the industry (Ulrich, 2003).

However, it should be noted that cement is a common product in the market. It lacks differentiations hence a high competition level in the industry. The product is similar in quantity, cost, materials used and performance. The only difference between the Arkan cement and other substitute cement is the packaging bag. I can say that the Arkan did a good research and designed a product that many stakeholders love to associate with. The Arkan cement enjoys a large market share in the Gulf countries (Wisner, 2008).

To keep its customers’ appeal high, the company should ensure that;

  1. Focus on improving quality, cost and performance of the product
  2. Improve or maintain market share for its cement product which is at its maturity stage.
  3. Have a small but steady improvement of the product
  4. Keep up to date with the customers’ perception of its products to ensure that quality is maintained every time.
  5. Ensure that the production process has been standardized.
 

Location

The Arkan Company is located in the Abu Dhabi City in the United Arab Emirates (UAE). Abu Dhabi is the second busiest and populated city in the UAE after Dubai.

While many factors were considered when choosing the current location of the company, the main factors included;

  1. Nearness to the customer- This is considered as important factors when choosing the location. Abu Dhabi in a centralized location which makes its easier to access other markets within the UAE. Considering the economy was slowly shifting from depending on oil and fuel to industrialization and real estate sectors, there was a ready market for the product in Abu Dhabi (Arkan Company, 2017).
  2. Availability of raw material- The Company is located in the mining field to ease transport expenses. Abu Dhabi is known to be rich in limestone, chalk, and blast which are the main components in the manufacturing of cement and other products.
  3. Adequate infrastructures- Abu Dhabi is well connected regarding transportation, water supplies, and communication facilities. Some of the means of transport available in the region are seaports, good roads, airports and railway. This makes it easier to connect with other cities.

The choice of the location for Arkan was the best one considering the company’s growth since it started its operation.  With the ever-growing UAE’s industrialization and construction industry, Arkan has successfully dominated the market with its products which are applying to the customers and investors.

Location Factor Rating Table

 

 

Score

Weighted Score

Factor

Weight

Dubai

Abu Dhabi

Sharjah

Dubai

Abu Dhabi

Sharjah

Labour

Attitude

0.3

80

65

90

24

19.5

27

Raw material availability

0.2

100

91

75

20

18.2

15

Adequate infrastructures

0.3

60

95

72

18

28.5

21.6

Nearness to the customer

 

0.2

75

80

80

15

20

20

Sum

1

 

 

 

77

86.2

83.6

 

Abu Dhabi had the highest score of 86.2 and was therefore chosen.

Quality Management

 The Arkan Company has invested a lot of time and resources in the management of its product quality. The management, employees, supervisors and customers’ opinion are incorporated in the continuous improvement of product quality. The major quality determinant factors by the management are;

  1. Quality of product design- The company basis the design of the product on factors such as production capabilities, customer wants, cost, safety, liability and other considerations. Through these factors, the final product has always represented the quality that were initially intended by the designer (George, 2004).
  2. Conformance- Ensuring that the final product conforms to the intended design is important in maintaining the quality. The management have ensured that there is effective equipment, continuous employee training, required skills and that the employees are fully motivated. The products are monitored to assess the product conformance. With a huge difference, corrective action is taken (Madu, 2008).
  3. Ease of use is another determinant of quality used by the company. The company provides instruction to the customers on how to use its products. This is to ensure that product functions safely and properly as intended. The instruction includes the direction of unpacking its products as well (George, 2004).
  4. The last determinant of quality is the reliability of the products. Here the question to be answered is whether or not the product performance is consistency.

The company has put in place adequate measures to ensure that the quality of its products has been maintained. However, the process does not include inspection and taking corrective action. Therefore, the management should use the Total Quality Management (TQM) flow chart in its quality management (Jain, 2001).

 

Conclusion

The Arkan Company is the market leader in the UAE building and manufacturing industry.  Arkan deals in a diversified range of products. The Arkan Company’s operation is based on the Greenfield development and strategic partnership with other manufacturers. The company’s objective is focused on growing and expanding its market base globally and Corporate Social Responsibility (CSR) initiatives

The company’s success and competitive advantage in the industry are as a result of solid leadership, benchmarking and diversified portfolio. With its leading in the position, Arkan is the customers and investors choice in the market. Arkan responds to the industrial changes by aligning its products and services with the consumer needs. Therefore, Arkan’s strategies focus on differentiation and response strategies for its operations. These are the factors that have kept the company growing and expanding.

Recommendations

I have to recommendations for the company;

First, although the company engages in CSR little has been done on environment sustainability. It should be understood that consumers today are environmentally conscious. They like to associate with a company whose activities are environmentally friendly. Therefore, Arkan Company should implement environment management programs within the mining fields. The programs should comprise of preventive measures against environmental hazards that might arise from its operations.

Second, the company should invest in the modern technology that would ensure efficiency its production, transportation, and logistics operations. Having advanced technology ensures high quality of products, standardized production process and reduced cost of operations.

 

References

Allspaw, J. (2008). The Art of Capacity Planning: Scaling Web Resources. Washington, DC: O'Reilly Media.

Arkan Company. (2017, 3 16). Arkan Company. Retrieved from About Us : https://arkan.ae/en/about-us/

George, M. L. (2004). The Lean Six Sigma Pocket Toolbook: A Quick Reference Guide to 100 Tools for Improving Quality and Speed . United Kingdom: McGraw-Hill Education.

Hanke, J. E. (2009). Business Forecasting. Upper Saddle River, NJ: Pearson Prentice-Hall .

Heracleous, L. (2003). Strategy and Organization: Realizing Strategic Management . Chicago: Cambridge University Press.

Jain, J. P. (2001). Quality Control and Total Quality Management. London: Tata McGraw-Hill Education.

Madu, C. (2008). Handbook of Total Quality Management. New York: Springer.

Makridakis, S. G. (1997). Forecasting: Methods and Applications. New York: Wiley.

Manas, J. (2014). he Resource Management and Capacity Planning . New York: McGraw-Hill Education.

Miles, R. E. (2003). Organizational Strategy, Structure, and Process. Starnford: Stanford Business Books.

Patnaik, S. (2015). Operations Management. United Kingdom: Lulu.com.

Steven C. Wheelwright. (2007). Forecasting methods for management. New York: Wiley.

Ulrich, K. T. (2003). Product Design and Development. New Delhi: McGraw-Hill Education.

Wisner, J. D. (2008). Process Management: Creating Value Along the Supply Chain. Mason, OH: Thomson South-Western .

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