PROJECT On Operations Management

Operations on CAF 70

BRAVO
Section A Aashit Prakhar (14003) Anand Iyer (14012) Hemanshi Dawar (14025) Roshan Agarwal (14052) Pritam Kumar (14046) Prachi Jain (14042)

ACKNOWLEDGEMENT

This project is done as a semester project, as a part of course titled Production and Operation Managment. We are really thankful to our course Professor, Prof. Jyoti Prakash Rath, International School of Business & Media, Pune for his invaluable guidance and assistance, without which the accomplishment of the task would have never been possible.

TABLE OF CONTENTS

S.No. 1. 2. 3.

Contents Statement of Purpose Methodology Introduction

Inception

4.

Design and Layout

Importance of layout Advantages of Process Layout in CAFE70 Equipments in CAFE70

5. 6. 7. 8.

Functioning and Working Process Flow Gantt Chart Competitive Strategy Mission and Goals Distinctive Competency SWOT Analysis Strategy Formulation Capacity Capacity Planning Process Straddling Key Indicators Location Suggestions

9.

10. 11. 12.

STATEMENT OF PURPOSE

Operations management puts light on the entire working of any business be it a restaurant, factory, plant, etc. In this case, by understanding the operations of caf 70, we get a clear picture of every aspect of CAF 70. Right from the inception of Caf 70, the idea behind it, the various challenges that had to be faced by the inceptors, the various costs involved, various changes it went through, its growth expansion and also its future aspects. Operations management also gives us various methods to measure and increase productivity which we could suggest to the owners of Caf 70.

METHODOLOGY

The approach taken up by us to go about the project was to personally meet up the owner and talk to him and ask him everything about Caf 70. We met him personally and spent a few hours talking about everything that has made Caf 70 what it is today. We also made a detailed observation and collected information about Caf 70s dimensions, location in the campus, the utensils and crockery available, raw materials, the no. of cooks and helpers, the way the food is cooked, the hygiene factors, the way the food is served, the entire functioning of caf 70, its layout, etc. Through this project we wish to portray the entire picture of Caf 70 in a simple and an unambiguous way so that any layman going through the same can get the complete picture of the its operations.

INTRODUCTION

INCEPTION

As a product of PRASPAR Firm, Caf 70 was started by Prashant Raj and Parul Singh in the year 2009 together. The idea hit Mr. PrashantRajs mind during his graduation. Mr. Prashant, while doing his Engineering from SRGI (SurendraRai Group of Institues,UP), experienced inaccessibility to different kinds of cuisines during his colleges days since his college was located in an area quit far from the city with no restaurants around. He came up with a thought of starting a small restaurant and shared this thought with his friend Parul who was doing her Bachelors in pharmacy from the same college. Both of them decided to implement the idea and thus incepted CAF 70.They concentrate on maintaining a 70:30 cost:profit ratio and they have 70cuisines in their menu and so the name Caf 70. Initially, Mr. Raj has to compile a list of items he would include in his menu for the Caf that he was about to come up with. For that, he went from various restaurants to restaurants with Parul,talking to chefs of various restaurants, collecting all possible information he could about different cuisines. Unlike many other colleges, SRGI was very impressed with Mr. Rajs idea when he shared it with them and since he was a student there, they decided to help him in all possible ways. The college took care and made all the arrangements right from a place to all the utensils and the initial few costs and never asked for a share in the earnings that Mr. Raj made, which is something he would never forget, he says. However, the very first Caf 70 that was started in SRGI, UP, served only sandwiches, shakes and Chinese because of various resources. The business started smooth and they made a pretty good profit in the very first month itself. Soon, they were well settled and started expanding with respect of the items, place and earnings. In the year 2010, Ms. Parul Singh was in ISB&M, Nande, Pune for her MBA.Parul and Prashant thought of starting one over here as well since this they saw the same problem with students, that they faced back in their graduation and so they came up with Caf 70 in ISB&M in the year JULY 2010 and since then has been doing well. Cafe 70 was started with an idea to make variety of cuisines available to students, of the colleges which are located in the outskirts and do not have many options to avail
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different cuisines. Since Mr. Raj knew the deprivation of the kind of fast and junk food students love and being one of them, he knew that he would do good if he came up with something that he had in mind.

DESIGN AND LAYOUT

Design: It is a plan of drawing produced to show the look and function of workings of a
building or any object before its built or made.

Layout: It is the configuration of departments, work place, and equipment, with

particular emphasis on movement of work (customers or materials) through the system.

IMPORTANCE OF LAYOUT:
It helps us understand the resources and equipments available and using it optimally Requires substantial investments of money and effort Involves long-term commitments Has significant impact on cost and efficiency of short-term operations It helps us determine the bottle-neck of our process Depicts the storage of the inventory and machines Prevents hazards and maintains safety measures

In CAF 70they follow the process layout system in which a floor plan is designed in order to improve efficiency by arranging equipment according to its function. In this process layout the work stations and the machineries are arranged according to the convenience and demand of the customers.

ADVANTAGES OF PROCESS LAYOUT INCAFE70:

Can handle a variety of processing requirements Less vulnerable to equipment failures Equipment used is less costly Space and labor are utilized efficiently Facilitates communication and interactions between the workers and supervisors Provide visual control of activities by the owner as well as the consumers that facilitates transparency

EQUIPMENTS INCAF 70
The first set of equipments and utensils used was provided by the college where they opened up their first branch i.e. SRGI in UP. These are the set of equipments that are presently being used by CAF 701. 2 gas cylinders 2. 1 spare gas cylinders 3. 3 stoves 4. Deep freezer(ice cream) 5. Toaster 6. 2 mixer grinder 7. 4 frying pans 8. 3 big cooking woks 9. Set of spatulas 10. Set of tongs 11. Set of knives 12. Coffee maker 13. Graters 14. Beaters 15. Set of spoons and forks 16. Set of plates and bowls
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17. Disposable cups and glasses 18. Billing machine 19. 2 Exhaust fans 20. Set of Tissue paper Usage of these equipments and utensils adds up to their utilities and performance. The dirty dishes are kept in a separate bin and the utensils are washed on a regular basis in order to maintain its hygiene standards and also to cater the demands of the customers.

LAYOUT DIAGRAM

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FUNCTIONING & WORKING

The functioning and working of Caf 70 is pretty similar to most of the canteens colleges often have.They have to take decisions taking into account various factors since it is located in the outskirts of Pune. They have their own ways of ordering and storing the groceries and other raw materialsand use them according to their requirement. The various raw materials are purchased and stored in their store house in susgaon which is quit close to the college. They often buy the groceries on monthly basis and store them there and use them according to their daily needs. Various perishables like milk, bread, etc are purchased on daily basis and are used accordingly. There are 5 people working there comprising of 1 head cook, assistant 3 cooks and a helper and one can often find the owner sitting at the cash counter. They are open to take orders from 9 am in the morning right after they are done with cleaning. The entire functioning of Caf 70 is organized and the work and orders are processed quit quickly. The 3 assistant cooks are in charge of different sets of cuisines and the head cook inspects all of them. The process begins when the person who wishes to have something gives the order at the billing counter where to bills are given to the customer in return of the money paid for what he wishes to have, one of which he is supposed to hand over to the head cook who instructs the respective assistant cook to prepare the order. Once prepared, the helper places the order on the eating platform and shouts the order and the concerned person comes, shows the other copy of the bill and collects his order. The above is the basic way of Caf 70s functioning. Apart from this, they also provide food to someplace within the campus incase very necessary. The washing of utensils and other cleaning work is done meanwhile by the helper or one of the assistant cooks. The Caf closes at 9.30 pm at night before which the place is organized, cleaned and sorted and preparations for the next, if required, are done.

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PROCESS FLOW

Customer's order

Processed order is served

Paying the money

processing of the order

order from the cashier to workers

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Gantt Chart
It is a visual aid to plan and monitor individual activities in a process. So using the Gantt chart we would be explaining the various tasks involved in the preparation of schezwan rice in caf 70.

GANTT CHART for preparing fried rice in caf70

Time (in seconds)

7 sec

12 sec

16 sec

60 sec

90 sec

270 sec

290 sec

300 sec

Order placing payment Payment Order distribution Getting ingredients Adding ingredients cooking Cooking plating Plating serving Serving

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COMPETITIVE STRATEGY

Every organization that enters any kind of market faces competition and how effectively it meets the needs and wants of customers relative to others that offer similar goods or services defines the competitive quotient of that organization. Caf 70 aims at being a canteen chain that provides different cuisines in the colleges that are situated in outskirts of the city where students have limited or less food options at reasonable prices. Marketing influences competitiveness in several ways. Caf 70 has done that too: Identifying the customer need: The basic need identified is that students have studying in colleges that are located in secluded areas of the city. The idea is to match that need of deprivation of students of limited food options by providing different cuisines as food options in their daily life. Pricing: The target market of the caf is students, so the prices of the food items are reasonable yet not very low since they have an advantage as the demand is relatively inelastic. Advertising & Promotion: Being in a college where there are not many options available, they have not spent any money on promoting themselves as they believe their offerings are unique enough for the students compared to other available options. It can be said that existence itself has worked as word of mouth of promotion.

MISSION & GOALS

Mission: To provide different food options to students with limited options due to secluded location of their college Goals: To be a successful college food chain and earn profit

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DISTINCTIVE COMPETENCY
The special attributes that give an organization a competitive edge. The effective organizations develop strategies based on the customer needs as well as what are the competitors doing. Caf 70 has a unique selling idea of providing food options that are easily available in the college campus for students having different tastes and preferences at affordable prices.

SWOT ANALYSIS
Strength and weaknesses are the internal factors and opportunities and threats are external factors affecting the business:

Strengths Understanding of the student needs, being an alumni Variety of food items Healthy item - Milk Reasonable pricing Low cost Proximity for the students centrally located

Weakness

Hygiene issues No credit system No seating arrangement Non-availability of all menu items Improper food packaging

Opportunity

Threats

To expand as there is an established brand name Main course items Open at late night hours Bakery items for Birthdays on preorder Offer 1 new dish as Todays Special

Tapri quick and readily available options Mess Main course items Outside Suger& Spice, Burger Point Etc

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STRATEGY FORMULATION
Strategy formulation is critical to the success of any business. Formulation of strategy involves the business to know their distinctive competencies and do environmental scanning. Manufacturing strategy involves two characteristics: Order qualifier: Characteristics that the customers perceive as minimum standards of acceptability to be considered as a potential to be purchased. They are not sufficient to get the potential customer. Good quality food, hygienic, quantitative and reasonable price Order qualifier. Order winner: Characteristics that make the offerings differ from that of the competitors to initiate purchase by the customers. Delivery speed, moderate delivery reliability and variety of food items compared to the competitors. Environmental Scanning It is considering of events and trends that present threats and opportunities for the business. Proper assessment of the market is necessary before making an offering to the target customers because various factors in the environment hold a position to affect the business in positive as well as negative ways. The environmental scanning is performed to formulate strategies manufacturing or operations or technology or overall strategy. Doing environmental scanning has the benefit of competitive edge. Factors maybe internal or external: Economic Conditions: These include the general health and direction of the economy. Factors like inflation and deflation affect the costing and pricing of the product as well as the buying behavior of the consumers. Legal Conditions: Laws, government rules and regulations, trade restrictions, minimum wage law all these factors are to be followed while entering the market i.e. the college.

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Technology: The rate at which innovations can happen by using technology. Technology in case of the caf will involve using different machines such as mixer- grinder, coffee making machine, blender etc that can allow product innovation, delivery speed, increase productivity and less labor requirement. Competition: Studying the competitors in the market Tapri and mess. The offering of the caf is different from what its competitors offer. Tapri offer a very few quick snacks and packaged food items and beverages. Mess on the other hand over offers all the 3 meals of the day with standard menu and no flexibility for the student, which caters to the needs of almost 500 people per day. Based on the understanding of its competitors, the caf chose altogether a different need to cater - fast foods which none of the competitors offered like sandwiches, Chinese, south Indian etc. at a reasonable prices. The ease of entering the market subsists because of the unique offerings that are not offered by any other competitor, which differentiates it from tapri and mess.

Markets: Under this factor, the caf studied size of the potential customers that is almost 500 people, proximity for the students to reach the caf in between their classes, ease of entering a niche market, long term stability and growth potential.

Operation strategy is consistent with the organization strategy that is used to guide the operations function. Operation strategy should not be independently formulated. It should take into account the operation weaknesses and strengths. Operations hold high importance in the successful functioning of the business as it involves processing the input into output. Two factors hold universal strategic importance in operations: 1. Quality based strategy Quality is a factor that both, attracts as well as retains the customer. Caf 70 is moderate in terms of quality. It needs to improve on quality, to retain the customer base. But due to the unique offering compared to its competitors, quality is not questioned much by its customers. But efforts to improve quality of the items needs to be made as high quality will increase consumer satisfaction, reduce cost and increase productivity. 2. Time based strategy Time based strategies focus on reducing the time taken to perform various activities. Main advantage is reduction in cost and higher quality and higher productivity and innovations take place sooner.
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a) Processing time: The time taken to produce the food items can be reduced by keeping the pre-requisite ingredients ready. This can be scheduled as per the capacity and knowledge of the rush hours. Keeping the inputs to produce a food item ready can help to reduce the processing time. b) Changeover time: Having limited time frame to cater to the different demands of the consumers, it is necessary for the caf to have a high changeover time. There are 4 stoves and limited equipments. In the rush hours when different customers demand different items, lets at the same time there is an order for 5 items that are cooked on the stove, and there are only 3 stoves changeover time has to be high. c) Delivery time: the time needed to fill orders as surveyed from the consumers is moderate. Thus they need to work on reducing the time lag between order placing and delivery. d) Response time for complaints: Customer complaints about quality, wrong order, delivery time lag are readily rectified due to availability of the owner. Reducing the time needed to perform the work is one of the ways an organization can improve: Productivity.

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CAPACITY
Capacity is the upper limit or ceiling on the load that an operating unit can handle. Cafe 70 has the capacity of serving 200 students at a particular time, specially at its peak hours which are from 12.30 PM to 2.30PM. But the students who actually turn up at this time are only 150. Efficiency = = = Actual Output / Effective Capacity 150/200*100 75%

So Caf 70 has capacity of 200 but they are utilising only 75% of it. Also while measuring capacity following determinants should be kept in mind Facilities- the location of the caf, the layout of the caf, how accessible it is to students, what all extra benefits students get from there, how environmental friendly the caf is, etc. Product/Service- the products which the caf provide, the service which they give, how fast they deliver the food, how accurate they are while serving their products, etc.

Process- how much emphasis is given to the quality, how capable they are to serve the food on time, what procedure they go through as soon as they receive the order, how the processing of food is done, etc. Human Factors- no. of workers required to cook the food, no. of workers for serving, order-taking and their training , their salaries, benefits, rules, absenteeism, turnover, etc. Policy- code of conduct they follow, standard of their products, rules and regulations, etc. Operational-material management, scheduling of their work, quality assurance, maintenance standards, how will they work when equipment breakdown can occur, etc. Supply Chain- wholesalers, retailers, producers, etc.
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External Factors- Government regulations, union rules, pollution controls, etc.

Capacity Planning Process

1. 2. 3. 4. 5. 6. 7. 8. Estimate future capacity requirements. Evaluate existing capacity and facilities and identify gaps. Identify alternatives for meeting requirements. Conduct financial analysis of each alternative. Assess key qualitative issues for each alternative. Select the alternative to pursue that will be best in the long term. Implement the selected alternative. Monitor results.

On the basis of this Caf 70 estimates its capacity requirement that how many items they can produce and cater to the needs of the students. After that they evaluate what is their existing capacity and facilities and how they can bridge the gap with all the resources they have or they need more of resources. They need to identify the alternatives that how their requirements can be met. That is, if they need to buy a new equipment or buy more new resources then caf has to see the what all alternatives they have for that. For these alternatives they have to see the financial analysis of it so that they can set their budget and put money aside for it. Now, whatever alternative issues they identified, they should assess the qualitative issues for each alternative and select the best quality out of it. On the long term basis, which alternative will work work the best. Now after selecting the best alternative, they have to implement that alternative. After that they should monitor the result so that they are aware of it that whatever alternative they have chosen should be the best for them.

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STRADDLING
Straddling occurs when a company seeks to match what a competitor is doing by just adding new features, services or technologies to existing activities. This often creates problems due to the compromises that may need to be made. In this case the competition for caf 70 is a) Tapri& Mess in the campus b) Sugar & spice, Burgers & more, outside the campus In case of Tapri, the main competitive factor isquick and readily available food items such as bread pakora, potato cutlet, samosa etc with options of packaged beverages like cold drinks, juices etc. With the limited time constraints between the lectures the students prefer to go to tapri so that can grab a quick bite. In case of straddling with respect to tapri, Caf 70 has started selling cold drinks. Also as tapri started to offer instant coffee by using the coffee machine with powdered milk, Caf 70 also started to offer coffee made through coffee machine but in a better way since they used milk as compared to milk powder, thus offering a better quality but it takes extra time to make that coffee which has reduced the productivity as the workers operations get hampered to make other products. With respect to Mess, the offering of the mess is main course food items where caf 70 gets high competition. Not in respect of taste or quality, but the rule of compulsion of payment of mess fees for the 1 st year students. Since the mess fees have already been paid by the students, they are forced to eat there because of the guilt of spending extra in after having spent a sizeable amount for the mess. If caf 70 straddles in this case, the possibility of its failure is high because either ways the students will have to pay for the mess and so there are very low possibilities that people would come to caf 70 over mess keeping in mind the extra amount that they would pay.

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Key Indicators Their main consumers are students from second year batch who are not staying in hostels and have not paid at the college mess so they usually eat at caf 70. The peak rush hours are 12.30pm to 3pm at the lunch break which we have in between our classes. 90% of hostellers prefer to eat at mess as they provide the main course and they have paid for it and outsiders eat from caf. Raw Materials used- Groceries,sauces, rice, noodles, maida, spices come from a place called Market Yard.

Monthly Requirement- 150-200 kg of rice, 20 boxes of noodles and each box has 60 packets of noodles, 50-60 kg of maida, etc. Daily Requirement- 1000Rs. vegetables, milk worth 600-700 Rs., 600-700 Rs. bread.

Total Salary paid to the five employees (monthly) 10000 *1 5500 *3 3000 *1 = Rs.29500 Total Expense = 100000-150000 Rs. Total Income = 250000 Rs. Profit is Rs.100000 per month. Same is for almost all three cafes so they around 2.5 to 3 lakhs Rs. per month. Most ordered items are idli-sambhar, rolls, fried rice noodles and in drinks Bournvita and Oreo Shake. Finance- Mr. Prashant got scholarship of Rs. 25000, so they invested this amount as their initial investment in business in addition of what both Mr. Prahant and Ms. Parul borrowed money from their home. Also a great deal of help is given by the college with respect to utensils, the set up, place. So the initial investment was only Rs. 65000-70000 as made by both of them.

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LOCATION
The major influences on location decisions are location of raw materials. labor supply. market consideration. community- related factors. site related factors and climate.

Location will play an important role in determining the cost. Location near the market place where there is easy availability of raw material, cheaply available labor and there is very low transportation cost will be always preferred. As in case of caf 70, some of the raw materials are purchased from a store called market yard, and is then stocked in a warehouse which is located in Susgaon, Pune. Other perishable raw materials like milk, vegetables, bread, come from stores in Pashan and Susgaon on daily basis as they cant be stored or inventoried and is required on every day basis. These stores from which the raw materials are bought, and their warehouse is both located within a range of 15km, which makes it very convenient for them to get their raw materials as and when required. The location of caf 70 in International School Of Business & Media is in the center of the campus which makes it very convenient for every individual to avail its facilities. As it is located just behind the academic block its very convenient for students and the faculty to visit it during their 15 minutes break. As time is one of the most crucial elements for them so they would prefer it over the hostel canteen or sugar and spice which is located outside the campus. As there are more than100 guest lectures held in the auditorium of the campus , which is just a few walks away from caf 70, its very convenient for students to go there after or before a session, without wasting much of their time and satisfy their appetite. There are three ways that lead to caf 70, one from the auditorium, one from the academic block, and the other from the boys and girls hostels .Thus making it very convenient for everyone to access it as and when required.Its labor force includes five people( one head cook , three assistant cooks and a helper ) who are all from west Bengal and stay within a distance of 1km from the college and work for minimum wages, thus, making it very cost effective.

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SUGGESTIONS
Managing a caf is not an easy job. It has to cater to different customers having different needs. Caf 70 has been doing a good job so far with the variety of food items that they offer. Students prefer it over other eating joints due to the availability of variety of cuisines. The friendly and cooperative nature of the caf owner and members is also a reason for retaining of the students and the faculty. Following suggestions are given after interacting with the students about how the caf can improve on:

Hygiene issues- Utensils are sometimes not properly cleaned and the houseflies in the surrounding area, are also major hygiene factor that needs to be looked after. There is no wash basin for people to wash their hands, which is a major issue while considering hygiene factors. Main course items- Apart from the fast food items that they provide, they can also introduce main course items which would bring in more revenue for them, as students would prefer it over the hostel mess. Open at late night hours Most of the students stay in campus so, working late night is very common for them, and most of them would prefer late night snacks, thus bringing in more revenue for caf 70. Bakery items for Birthdays on pre-order Another source of revenue generation for caf 70 is providing birthday cakes on pre order basis, as there are no nearby bakeries available except sugar n spice thus they can provide quality cakes at marginal prices earn profits from it. Offer a new dish as Todays Special special dishes always attracts customers. As students are their main consumers they always like to experiment and try out new things, thus if they prefer it then it would bring in more revenue for them. Healthy items- One initiative that they can take is provide juices and fruits to the students. Many students these days are health conscious and would prefer them as part of their regular diet. Thus bringing in a new area of their revenue generation for them.
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Readily available snacks it can also introduce readily available products like patties or samosas which do not take much time for preparation and can be provided to the customers just by heating it in the oven, which would save a lot of time for the students and generate more money for them.

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