Minimize Food waste at two Mobil Fuel stations at Auckland

 

BUDGETING

People/day		300	315	330	346
		1st year	2nd year	3rd year	4th year
REVENUE		$ 2,160,000.00	$ 2,268,000.00	$ 2,376,000.00	$ 2,491,200.00
COGS		$ 1,296,000.00	$ 1,360,800.00	$ 1,425,600.00	$ 1,494,720.00
ABNORMAL WASTAGE		$    216,000.00	$                     -	$                     -	$                     -
GROSS PROFIT		$    648,000.00	$    907,200.00	$    950,400.00	$    996,480.00
STAFF COST		$      50,000.00	$    100,000.00	$    100,000.00	$    100,000.00
LIGHTING COST		$      20,000.00	$      20,000.00	$      20,000.00	$      20,000.00
OTHER EXPENSES		$      20,000.00	$      10,000.00	$      10,000.00	$      10,000.00
SOFTWARE COST		$                     -	$    100,000.00	$                     -	$                     -
NET PROFIT		$    558,000.00	$    677,200.00	$    820,400.00	$    866,480.00

 

As the data is not sufficient to make an analysis so we have made certain assumption:

1. 300 footfalls per day in a café

2. Average income from per customer is $20

3. An increase of 5% footfalls after the implementation of the waste management software as increasing customer satisfaction will increase the traction of consumers.

4. Fixed cost of $100000 for development of the software

5. Running cost of $10000 for the software

6. Staff cost of $50000 before the implementation of software and $100000 after implementation

7. Lighting expenses of $20000

The one off cost of $100000 may have taken a hit in the profit but analyzing the longer term view the company’s profit and revenue has seen a stable growth.

Revenue has increased 5% year on year as the implementation of software coupled with the introduction of TQM (total quality management) , JIT system (just in time inventory) has made the customer experience to an another level which is the reason for the increase in footfalls and thus subsequently the revenue increase as well.

The preface of JIT has reduced the inventory holding cost but at the same time has increased the ordering cost as well which is reason why the COGS has also increased by 5%. We should also not forget that as Mobil is not ordering in bulk quantities they are not able to avail bulk discounts on goods purchased which has also offset the benefit of JIT.

Comparing the revenue and cost of goods sold we can calculate the GP margin which stands at 30% in the 1^st year but has increased by 10% to 40% in the next year itself after implementing the wastage software. The software has helped to reduce the abnormal wastage of 10 to 15% of the total sales which they were not able to control. But after implementing the system this abnormal cost has been totally vanished which leads to higher gross profit and thus higher margins.

As per the recommendation of converting some part time staff to full time and hiring some contractual based part time staff, this has led to staff cost doubling and thus has been a burden on the net profit of the company as well.

The franchise model which was present earlier has saved a substantial cost of renting the cafeteria. Franchise model has always been admired and most of the leading cafeteria chains or restaurants has implemented this model.

Last but not the least the determining factor whether the business has been making profit and whether the implementation of various changes will lead to a sustainable growth is the NET PROFIT. The net profit has been soaring higher every year and thus we can conclude that the implementation of the software will be a successful event for the company provided it is implemented correctly.

PROGRESS REPORTING

There are 5 steps of implementing this software of waste management:

1. Procuring: Procurement of the customized software is the 1^st and one of the most important steps of implementing a project (Rodríguez, et al. 2017).

2. Installation: Once procuring the software from the developer the next important step is to install the software with the help of an IT professional

3. Training:  The implementation of the software or the effective and efficient use of the software cannot be obtained unless and until we train the employees. Training is the most important part of implementing the project as the staff will run the software and it’s really very necessary to know the nuances of the software (Djekoune, Messaoudi & Amara, 2017).

4. Evaluate: Firstly the software should be implemented in a phased manner and evaluate whether it’s working as we expected or not.

5. Expansion: If we get a confirmation that the software is working very effective and efficiently and has been helpful in increasing footfalls as well as increasing profit then we must think of expanding the implementation of the software to other cafeteria which would increase the overall profit of Mobil group .

Right now we are in the first stage as it would take some time for the developer to develop the customized software which has been demanded. We are expecting the procurement of the software within 3 weeks so that we can make a trial run to check the efficacy of the software.

After procuring and installing which is expected to take another 4 weeks roughly, new staff will be recruited and will be trained for another 2 weeks. If the trail run goes successful and assuming everything goes fine, the full-fledged software will be available within the next 3 months

RISK MANAGEMENT

Risk is the possible outcome having associated probabilities of failure thus requiring the use of numerous quantitative and qualitative techniques to assess and mitigate a threat. The management of such unfavorable probabilities possible threat which is quantifiable is known as risk management (Development, 2020). Here we should identify the risk and assess the vulnerabilities to critical assets.

There arevarious risk that are susceptible while implementing this software. System bug or some flaw or error while calculating the waste of the cafeteria  can be one of them which can directly affect in the decision making of the management whether to implement the project or not.

One of the most important problems while dealing with software is data loss which is possible if there is a system crash or external threat (Willumsen, Oehmen, Stingl & Geraldi, 2019). Data loss is one of the most significant problems as it means loss of both time and money as it would require IT professionals to restitute and regain the data lost that is crucial for the business.

As we all know Prevention is better than cure therefore we should identify and mitigate the potential of data loss of a business by understanding the underlying problems of data loss.

The key points to keep in mind are:

1. Human error – Human are not infallible, therefore there is a high risk of error. But this can be mollified by keeping some permanent staffs and conducting regular trainings for the staffs.

2. Viruses and Malware ­­– Guard against virus can be done by appropriate anti-virus software as phishing and email based attack is very common.

3. Hard Drives – Hard drive crashes occur due to overuse of the computer or mishandling the hard drive. Traditional HDD are being replaced with SSD ( Solid state drivers) which are less likely to get damaged but has a disadvantage of being very expensive and thus it is not affordable for every organization.

4. Power Outages – It has the ability to shut down business operations temporarily and thus backups are a necessity.

5. Disasters – can happen anytime and can have a lasting effect on the business as it is very likely to lose data at times of disasters.

6. Hackers and Insiders – External hacking is one of the most pressing problems nowadays as unauthorized guests can cause serious damage to a company’s internal data (Shaw, Mikusz, Trotter, Harding & Davies, 2019). Thus we can mitigate these risks by not using servers of poor quality. We can also use firewalls to restrict the access of hackers. Last but not the least by using a strong password. We should also check the system in regular intervals to prevent cyber-crime.

Apart from the risks, it has some important advantages as well. It will give us various reports in hand like

1. Reports of food items to be displayed each day: This will make us cognizance about what is the taste of people coming in the shop so that we can display the most demanded items frequently. This will lead to an increase in revenue as well as the overall profitability

2. Report the items that expire or are wastage due to spoilage: As per the report some items expire after 3 hours of hot display and chilled items expire within 8 hours. Thus if we are able to collect the data which items are being wasted the most then we can have discount offer on those items which are on the verge of expiring to increase the revenue but sacrificing the GP margin but we should also keep in mind that it saved the wastage of food.

3. Generating reports on stock availability : Implementing JIT is very beneficial but we should also

QUALITY MANAGEMENT

One of the most important factors of a successful business is customer satisfaction. TQM (Total quality management) ensures long term success of a business by focusing on a basic yet very important component of customer satisfaction (Androniceanu, 2017).

This can be brought by having a fair idea of the most demanded items for a particular age group and for a particular season (Kulenovi? & Veselinovi?, 2019). This will have a meteoric rise in customer satisfaction as the customer will get the food items which are being demanded by them. As we are aware of the items thus we can roughly estimate the number of footfalls for that particular period of time which will reduce the serving time to the customer and will have a very fast service process.

There should be adequate communication within the organization as TQM inspires total employment involvement as well as the vision and mission of all the employees of the company aligned in same direction. The continual improvement by analytical and creative findings will make it more competitive and effective in running its operations (Obeidat, Hashem, Alansari| & Al-Salti, 2016).

Lean and six sigma stresses on collaborating team effort and reducing the wastage of any process (Martínez-Jurado&Moyano-Fuentes, 2014, pp 133). As per the observation considerable amount (10 to 15%) of the total stock per week is wasted due to spoilage. This can be mitigated by a significant % by implementing JIT (Just in time) System. JIT is an inventory management system that increases efficiency and decreases wastage of goods by ordering the goods as per requirement and not holding on stock (Shu, et. al., 2016, pp 770). This will increase the cost of ordering but will reduce the holding cost of the inventory as well(Shu,et. al., 2016, pp 770). The ordering cost mainly comprises of the transportation of the inventory from the supplier to the cafeteria. This can be controlled by having a good relationship with a big shop and also should keep in mind that the shop is near the cafeteria which will reduce the transportation cost as well as the time of delivering the goods.

Mobil should make their existing CRA full time workers as this will have a positive psychological impact on the employee to work effectively as well as efficiently. They should also implement bonus and overtime system. At times of peak footfalls which will be analysed by the software Mobil should also hire a few contractual or part time CRA in peak hours.

CHANGE MANAGEMENT

The only constant thing in this world is change and thus change may not seem to be very comfortable but it’s necessary to survive in this ever changing world. Change management is the collective process of changing the organizational functions and the processes of doing certain functions (Cameron & Green, 2019).

The implementation of JIT will be a challenging part of the management as they are not aware of the Reorder Level (The level or quantity of inventory when the company will reorder for fresh goods). A slight miscalculation or unawareness may lead to customer dissatisfaction as the food item will not be available. This also demands that the supplier or the deliverer should always be available or else there could be a stockout.

Some part time CRA converted to full time will increase the cost of the company as well which should be offset by the effectiveness and efficiency of the staff. Full time CRA requires long working hours which the part time CRA are not accustomed with. This will increase the operating expenses of the company which can be lead to a reduction in GP margin. But this can be offset by higher revenues then the cost of staff per item will reduce.

The implementation of the wastage software will require IT professionals or a trained staff who will manage the software. This introduction of the software will have huge fixed cost as well as running costs. Therefore we should analyze and be certain that the benefits of implementing the software is much higher than the cost of running the software or else it will be a financial disaster and will put a strain on the companies financial position.

The change can also lead to a significant rise in revenue as well as profits by standardized and simplified processes. The change should be implemented in a phased manner by series of trial runs and making sure that there is no flaw or errors in the system.

CONCLUSION

Therefore we believe that the implementation of the software coupled with other customer satisfaction metrics like TQM (total quality management) with inventory management systems like JIT will increase the revenue and net profit in the long run.

The onetime cost of procuring the software and training cost of the staff may be high but still it’s beneficial in the long run.

Therefore it is advisable that we should implement the waste management software which mitigate the wastage of foods as well as help in customer satisfaction and various other metrics.

REFERENCES

Androniceanu, A. (2017). The three-dimensional approach of Total Quality Management, an essential strategic option for business excellence. Amfiteatru Economic, 19(44), 61-78.

Cameron, E., & Green, M. (2019). Making sense of change management: A complete guide to the models, tools and techniques of organizational change. Kogan Page Publishers.

Development, C. (2020). What are the 5 Risk Management Process Steps?.Continuing Professional Development.Retrieved 29 April 2020, from https://continuingprofessionaldevelopment.org/risk-management-steps-in-risk-management-process/.

Djekoune, A. O., Messaoudi, K., & Amara, K. (2017). Incremental circle hough transform: An improved method for circle detection. Optik, 133, 17-31.

Kulenovi?, M., & Veselinovi?, L. (2019). Total quality management practices in Bosnia and Herzegovina: Do organizational contextual factors matter?. In 11th Research/Expert Conference with International Participation” QUALITY 2019 “, 14-16 June 2019, Neum, B&H (pp. 1-6). Zenica: University of Zenica, Faculty of Mechanical Engineering.

Martínez-Jurado, P. J., &Moyano-Fuentes, J. (2014). Lean management, supply chain management and sustainability: a literature review. Journal of Cleaner Production, 85, 134-150.

Obeidat, B. Y., Hashem, L., Alansari, I., & Al-Salti, Z. (2016). The effect of knowledge management uses on total quality management practices: A theoretical perspective. Journal of Management and strategy, 7(4), 18-29.

Rodríguez, P., Haghighatkhah, A., Lwakatare, L. E., Teppola, S., Suomalainen, T., Eskeli, J., ... & Oivo, M. (2017). Continuous deployment of software-intensive products and services: A systematic mapping study. Journal of Systems and Software, 123, 263-291.

Shaw, P., Mikusz, M., Trotter, L., Harding, M., & Davies, N. (2019). Towards an Understanding of Emerging Cyber Security Threats in Mapping the IoT..

Shu, Z., Wan, J., Li, D., Lin, J., Vasilakos, A. V., & Imran, M. (2016). Security in software-defined networking: Threats and countermeasures. Mobile Networks and Applications, 21(5), 764-776.

What is change management and organizational change? | APM. Apm.org.uk. (2020). Retrieved 29 April 2020, from https://www.apm.org.uk/resources/what-is-project-management/what-is-change-management/.

Willumsen, P., Oehmen, J., Stingl, V., & Geraldi, J. (2019). Value creation through project risk management. International Journal of Project Management, 37(5), 731-749

 

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