Holly Farm Operations Management
... Introduction This consultancy report is prepared for Holly Farm in order to improve its future business. In the second part of this report; ‘Evaluation of Current Operations and Gillian’s Business Strategy’ and ‘Conclusion’, Holly Farm’s operations will be critically evaluated in the aspect of current and future potential capacity constraints and any other operational problems. ... Evaluation of Current Operations and Gillian’s Business Strategy 2. ... 1 Sales Forecast According to Gillian’s forecasts, while there will be an increase in farm shop sales by 50%, there will be a decline in retail shops sales by 13. ... Firstly, its retail shops sales has increased by 75% on average of each year, and its farm shop sales has increased by 28% on average each year for the latest five years. ... Secondly, since the ice cream market in the UK is mature and stable (Table 2), sudden changes of previous trend hardly happen excepting entering strong new players into the region, spoiling the farm’s reputation hugely and investing tremendously on the marketing for its farm shop. Moreover, in terms of Holly Farm’s managing on its farm visitors, this sudden change of the number of visitors could lead to collapses of its operations. ... I can assume that, when Holly Farm produced all of these ten items, the share of each item in their products would be the same as the market shares of each flavour ice cream in the whole market. ... In fact, it takes one hour to clean the ice cream making machine between flavours in Holly Farm. ... 1 Production Line Although it is clear that Holly Farm has a crucial capacity constraint on its production line, Gillian has hesitated to tackle this problem, as a result, has abandoned the growth strategy in spite of the recent sustainable growth trend of its annual revenue. ... While Holly Farm groped about the probability of producing the different volumes of packages of ice cream for responding special orders for the local catering trade, I would recommend that they stop attempting to do this. ... Moreover, Gillian wishes to increase the number of farm visitors in 2004 by 50%. ... 33% of total revenue of Holly Farm, including paying visitor sales; 11% and entrance fee; 22%, is provided from farm visitors, and 27% of total revenue of the farm is related to its milking parlour (Table 6). This incident clearly shows that if the milking parlour made visitors dissatisfied, the revenue of the farm would decline seriously. Therefore, without any solution for the capacity constraint related to milking parlour, the farm would neither be successful nor survive in the near future. ... 1 Raw Material Stock Control This case mentioned that Holly Farm has currently ordered raw materials on an ad hoc basis when an operative feels that the materials are required. While it maybe true that the quantities of the raw materials the farm uses are so small that the farm hardly has any other better ways to control them properly than one an ad hoc basis, their way to deal with stocks is obviously unsuitable because companies are to have raw material stocks in order mainly to have a buffer for productions, response to unexpected larger or smaller demands and take advantage of price discounts on large order. ... 2 Inventory control of final products Holly Farm did not control its stock level of final product in 2003. ... If the farm had not retained enough cash to supplement this negative cash flow, they would have had to raise money. However, potential cash suppliers such as banks, building societies and individual investors would not be willing to lend or give money to the farm because of the farm’s mismanagement of cash. ... Conclusion As I discussed above, Holly farm has many problems in its operations. ... Holly Farm is at a turning point. ... 1 Sales Forecast Since Gillian understands Holly Farm has a number of capacity constraints, she seemed to decide not to take the growth strategy but to take the profit focusing strategy, which is feasible by expanding the share of its farm shop sales in its total revenue only on the assumption that it is possible to increase in the number of its farm visitors and to accept all of the visitors.