B2 Consulting – Proposal for WaveRiders MBE B Consulting ©

Agenda WaveRiders Current situation & Vision. MBE B Consulting © Agenda WaveRiders Current situation & Vision. Review on WaveRiders Knowledge & Assets Management with the criteria of EFQM. Approaches to Excellence for WaveRiders. Aftermaths for the future.

Company Structure–B2 Consulting MBE B Consulting © Company Structure–B2 Consulting High Performance. Delivered! Board of Directors:, Wei Zhao , William Tan, Reiya Yan, Hok In Leong, Longshi Yang, Rossmary Caballero

WaveRiders Current Situation and Vision MBE B Consulting © WaveRiders Current Situation and Vision “To become one of the most highly recognised leisure based corporation within Europe” WaveRiders current state of affairs Primary Priorities Increase Profit Cut Costs Secondary Priority Over Stocks

Asset management & knowledge management to solve the problems MBE B Consulting © Asset management & knowledge management to solve the problems Overstock High wastage High costs Asset management Improves communication Sharing of information between departments Knowledge management

MBE B Consulting © Review on WaveRiders Knowledge & Assets Management with the criteria of EFQM. Life-Cycle Management Analyse the current life-cycle procedures of WaveRiders: Identify major cost drivers Assess the total cost and financial benefits for WaveRiders: Cost control Criteria of EFQM (4c) Managing the maintenance and utilisation of assets to improve total asset life cycle performance. Developing a strategy for managing buildings, equipment and materials that supports the organisations policy and strategy. Definition: A life-cycle cost is simply an aggregate of the costs and financial benefits (including financial equivalents of impacts and benefits) of an asset, covering its whole life-cycle, from design through to final disposal.

Porter’s Value Chain (1985): WaveRiders Life-Cycle MBE B Consulting © Porter’s Value Chain (1985): WaveRiders Life-Cycle Horizontal progress: inbound -> operations -> ... Vertical progress: HR + TD + Procurement + FI

Define the “Boat” Distribution Costs Administration Costs Energy Costs MBE B Consulting © Distribution Costs Administration Costs Energy Costs Raw Materials it also includes the maintenance concept and organisation which will be used to support the equipment in defining the system to be costed, it should only be defined to the detail with which data will be available and to which the life cycle cost will be sensitive Direct Labour Overstocks Waste

Raw Material Procurement Major Cost Drivers MBE B Consulting © Raw Material Procurement Operations Distribution Factors Marketing and Sales After-sales Service Supplier selection Labour efficiency Selection of transport carriers Skills of sales force: low skilled sales incurred high costs Product recalls frequency Timing of raw mat. purchases Equipment usage Delivery schedule planning: quantity + frequency Products priced to generate sales volume Return of products: dissatisfied customers Price of raw mat. purchases Organizational planning Advertising Manufacturing technology

Solutions Supplier development: suppliers’ performance evaluation MBE B Consulting © Supplier development: suppliers’ performance evaluation Seek for new suppliers Implement Lean six sigma into operations Employees training Delivery schedule planning Decrease raw mat. price by ordering with other companies: increment of purchasing quantity From Make-to-Stock to Make-to-Order strategy shift Marketing through e-business(Social Media)

Solutions Supplier development: suppliers’ performance evaluation MBE B Consulting © Supplier development: suppliers’ performance evaluation Seek for new suppliers Implement Lean six sigma into operations Employees training Delivery schedule planning Decrease raw mat. price by ordering with other companies: increment of purchasing quantity From Make-to-Stock to Make-to-Order strategy shift Marketing through e-business(Social Media)

Suggestion: Make-to-Order Strategy MBE B Consulting © Key points: Make sure the sales reps are comfortable with the new process Supplier commitment is crucial Need closer collaboration between departments Implement the new process in increments; the company started with a 120-day cycle, then reduced it to three weeks, then one week Benefits for WaveRiders: Reduce costs: warehouse(labour, equipment, energy expenses, administration expenses) Reduce wastage Increase cash liquidity New concept: Customer customization

What you can expect! MBE B Consulting ©

Cont. - Resources Utilisation MBE B Consulting © Cont. - Resources Utilisation Resources Utilisation Inventory management Production Scheduling Criteria of EFQM (4c) Optimising material inventories. Optimising consumption of utilities. Managing the maintenance and utilisation of assets to improve total life cycle performance. Current Problems High Cost in Production and Operation High Waste in Production and Operation Over Stock

Approaches to Excellence for WaveRiders MBE B Consulting © Approaches to Excellence for WaveRiders Just In Time “to eliminate waste and to improve the flow of materials, so value is added throughout the transformation process” Benefits: Long–term relationship between supplier and buyer – buyer able to shift the responsibilities for inventory and quality to the supplier to reduce the inventory cost, reduced inspection, scrap and re-work costs. Involving the supplier in the design stages for Value Engineering Savings. Reducing material handling costs Reduced Set-up time Reduced storage facilities: Supplier parts flow through the production process, allowing point of assembly.

Simple Production System MBE B Consulting © What can WaveRiders do? WaveRiders Revised Layout Reduce Set-up time Simple Production System JIT Purchasing Management Support: Performance Measurement : Provide employees specific goals and targets and regularly present feedback and to develop greater congruence between these goals. Cross-training: problem- solving techniques + technical skills.

Aggregated planning Demand Pricing, Advertising and promotion MBE B Consulting © Aggregated planning Match between Demand + Supply Demand Pricing, Advertising and promotion Backlog or reservation, development of complementary products Aggregated planning Low inventories Good labour relations Low costs Flexibility to increase future output levels Good customer services AP costs Supply Hiring and layoffs Overtime and undertime costs Inventory carrying costs subcontracting an operational activity which does an aggregate plan for the production process, in advance of 2 to 18 months, to give an idea to management as to what quantity of materials and other resources are to be procured and when, so that the total cost of operations of the organization is kept to the minimum over that period. (Lin Pan et al)

AP strategies For WaveRiders MBE B Consulting © AP strategies For WaveRiders Level plans Using a constant workforce& produce similar quantities each time period Using inventories and backorders to absorb demand peaks &valleys Chase Plans Minimising finished good inventories by trying to keep pace with demand fluctuations Hybrid strategies Build-up inventories ahead of rising demand and use Lay-off furlough workers during lulls Subcontract production or hire temporary workers to cover short-term peaks Reassign workers to preventive maintenance during lulls Tools: The linear decision rule The transport method The linear programming Level plans: - Use a constant workforce & produce similar quantities each time period - Use inventories and backorders to absorb demand peaks & valleys Chase plans: - Minimize finished good inventories by trying to keep pace with demand fluctuations Hybrid Strategies - Build-up inventory ahead of rising demand and use backorders to level extreme peaks - Layoff or furlough workers during lulls - Subcontract production or hire temporary workers to cover short-term peaks - Reassign workers to preventive maintenance during lulls (R. Dan Reid et al)

Aftermaths for the future MBE B Consulting © Aftermaths for the future The potential profits for WaveRiders when both approaches have applied: Reduced raw material stocks by 70%. Increased inventory turnover by 80%. Reduced scrap by 50% Increased supplier quality by 30% Reduced supplier cost by 10%

Knowledge management Asset management would succeed MBE B Consulting © Knowledge management Asset management would succeed From Improved communication and coordination by applying knowledge management. Knowledge management could help: shared vision and culture at all levels; Increase the intellectual assets and speed up the innovation Increase the capability to respond customer and market needs quickly and then improve the corporate value.

KM for WaveRiders Provide knowledge sharing culture and environment MBE B Consulting © KM for WaveRiders Provide knowledge sharing culture and environment Empowerment (encourage to take risk and ownership) Motivate trust Remove barriers, eg “blaming” culture Training employees to share knowledge Support communication: meetings, feedback, reviews (Performance measurement)

Chief Knowledge Officer Use of CKO--- implementation of KM Chief Knowledge Officer the knowledge creation process should be purposeful, i.e. with a client for the outputs. The process of creation requires innovative individuals, more often than not working in teams. These are networks of experts with access to knowledge technologies including those for knowledge capture, storage and transfer. Outputs from knowledge creation are in the problem-solving domain for unknown problems and new knowledge, for instance in terms of process improvement. Measures of the success of knowledge creation need to include assessment of the reliability of the knowledge, the extent to which it solves a problem, timeliness, acceptability within the organisation and readiness to exploit it should it lead to new opportunities, the cost of exploitation and potential value.

MBE B Consulting © Questions & Answers?

MBE B Consulting © References: Pragman, Claudia. "JIT II: a purchasing concept for reducing lead times in time-based competition. (just-in-time management)." Business Horizons, July-August 1996 v39 n4 p54(5). Funk. Jeffrey L. “Just-in-time manufacturing and logistical complexity”. International Journal of Operations & Production Management, Vol. 15 No. 5, 1995, pp. 60-71. University Press. Waters-Fuller. Niall. “The benefits and costs of JIT sourcing – A study of Scottish suppliers”. International Journal Of Physical Distribution & Logistics Management, Vol. 26 No. 4. 1996. pp. 35-50. Implementing Knowledge Management: Three Strategies for Effective CKOs STEFFEN RAUB, HEC, Lausanne DANIEL VON WITTICH, University of Lausanne. European Management Journal Vol. 22, No. 6, pp. 714–724, 2004 Knowledge Management and process performance. Colin Armistead is Professor at The Business School, Bournemouth University, Bournemouth, UK. http://hbswk.hbs.edu/archive/4532.html