1.

0 INTRODUCTION

1.1 Company Background

History

In 1969, an American named Horatio Sye Slocumm was sent by International Executive
Service Corporation (IESC) to East Malaysia to start a bakery. Mr. Slocumm brought
with him 35 years of baking experience with one of America’s leading chain of bakeries.
Gardenia was born.

Gardenia Bakeries (KL) Sdn Bhd rolled the first loaf of bread off its line in 1986. Within
four short years, it became the bread market leader with an astounding 99 percent brand
recall rate and 80 percent top-of-mind recall.

Gardenia’s range of products grew and evolved through the years, becoming better and
better with each step. Leveraging on its brand strength, Gardenia now produces a
variety of baked products to safety consumers’ demands.

Gardenia Food Industries is a group of franchise related companies incorporated in East

Malaysia (Sabah & Sarawak), Brunei-Darussalam and the Republic of Indonesia
established for the manufacturing, packaging, and trade-distribution of Gardenia Brand
bakery ices and creamery products.

“S. E. Asia’s Gardenia Breads and Creameries”

In 1969, Gardenia Food Industries production of Gardenia bakery ices and creameries
foods was first established in Kota-Kinabalu Sabah Malaysia by its founder (Datuk)
Wong Tze Fatt, with North American bakery technical knowhow provided by Mr Scy
Slocum of Atlanta USA and creamery technical knowhow provided by Mr Jim Humphries
of California USA. Gardenia International Pty Ltd (Singapore) was subsequently set up
in the Republic of Singapore as (Datuk) Wong Tze Fatt’s franchise development arm to
promote his Gardenia Brand throughout the Far East and South East Asia.

Since its early beginnings the Gardenia Food Industries (GFI) group of franchise related
companies incorporated in East Malaysia, Brunei Darussalam and Indonesia were
acquired in 2004 by JWPK Holdings and managed as subsidiaries. GFI remains a group
of franchise related companies committed to its founding principles, with a singular
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 customer driven purpose in responding to popular demands to produce quality fresh
foods locally, which meets with international food processing and handling safety
standards and respective country requirements for both “green” and halal certified food
handling processes.

1.2 Product Produced

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GARDENIA PRODUCTS

Gardenia Delicia Waffle

Gardenia Delicia Bun

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 Gardenia Delicia Soft Roll

Gardenia Twiggies-Chocolate

Gardenia Twiggies-Cream Dream

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 Gardenia Toast’em

Gardenia Quick Bites

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Gardenia Fluffy Buns

Gardenia Squiggles

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Gardenia Breakthru

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2.0 MANUFACTURING/SERVICE PROCESS

2.1 How many products should factory be able to produce in and 8 hour shift?

Gardenia has total of 5 factories in west Malaysia which work 3 shifts per day, each shift
8 hours. In each shift, each factory will produce one type of bread. So, total up 5 different
bread from 5 different factories in the same time.

2.2 How many customers per day should a company be able to service?

Currently Gardenia has 52 outlets around west Malaysia to service. The factory
producing more than 550,000 leavened bread per day, more than 7.7millions slices or 2
slices per person.

2.3 How to determine facility size to achieve high levels of utilization

Staff in charged could not provide the exact answer because she is not from production
department but marketing department. However, she explained that each of Gardenia
products had different type of processing and all the machines will not be the same. The
first two steps will always be the same and the next step after that will be different.
Those steps are mixing the flour with yeast and rest it inside the mixer for 4 hours then
add in other ingredients such as honey, water, and low fat milk.

2.4 Do your company plan capacity over a time horizon (long range planning, intermediate
range planning, short range planning)

Production team of Gardenia will plan to produce one new product twice a year
(intermediate range planning). Different factory will come out with different product. After
that new product achieves the entire standard requested, the company will take at least
one year before launching it. This is because all the machines that use in production are
from German. From the setup of all the machines, maintenance of machines, training
and handling of machines until the last part start producing the breads, it take time up to
one year.

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2.5 How to measured capacity efficiency/effectiveness (any formula used)

Gardenia has produced 31 products in Malaysia. Last week they produce 440,000
breads. The effective capacity is 550,000 breads. The production line operates 7 days
per week with three 8-hours shifts per day. The line was process at the rate of 7639 per
hour.

Solution:

Design Capacity = (7 days x 3 shifts x 8 hours) x (7639 breads per hour)

= 1,283,352 breads

Utilization = Actual Output / Design Capacity

= 440,000 / 1,283,352
= 34.3%
= Utilization is not really 100%

Efficiency = Actual Output / Effective Capacity

= 440,000 / 550,000
= 80%
= Product is efficient.

Gardenia will increase or produce more production when the school holidays are ended
and start the new season and they will decrease the product when festival in Malaysia
was coming, this is a part of their strategic in operation.

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2.6 How to forecast future capacity requirement? Any relation with future demand?

Gardenia has future capacity to maintain their product every year. For the last year
Gardenia has produce two new product which is “breakthru” and “waffle”. Gardenia has
to achieve their target atleast one or two product every year; this is the strategic of
Gardenia to improve the quality in the market.

Every each new product Gardenia produce, they should have to prepare the new
machine to process that product. The machine is different depends on the product. All
the machine and training import from German and Gardenia will set up the machine
every two month.

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 Chart 1

The profit of Gardenia is higher. The variable cost and the fixed cost is balanced.
Gardenia will determine the entire of product is consistent in the market and achieve
profitability.

3.0 Product or service design

3.1 What types of product or services offered by company

There are various types of product that are twiggies, quick bites, toast’em, fluffy buns,
squiggles, delicia, delicia soft roll, breakthru, and waffle. Now, there are about 31
product that produce by gardenia.

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3.2 Explain about new product / services development strategy
 The latest product from gardenia is waffle. Waffle was launch on September 2011. They
come with various types of flavor that are banana, classic cinnamon, maple wholemeal,
fresh egg vanilla, and blueberry.

 The targeting market for this product is especially for kids, officer, and student.

3.3 Any technique to generate new product ideas

There are four technique or factor :

I. Import all raw materials from Canada and Europe. The raw material that
gardenia import is wheat.
II. Gardenia uses the technique of sponge and endough. The mixture of wheat,
dispensed water, yeast, vitamin and mineral are put together in this technique.

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 III. Gardenia uses high technological machine to make the product equally
manufactured with the great quality.
IV. Delivering. Gardenia will start delivering their fresh made product starting from
4.00 in the morning.

3.4 Cost of new product design

 A lot of cost needed to design a new product from gardenia. The latest product that
gardenia design is waffle. All the cost of new product are needed from brain storming to
develop new creative product , to buy new types of machine to develop the product and
also paying the worker’s salary. Designing and printing new types of packages can also
be a part of new product design. Gardenia has to design a very creative packaging
design to attract customers to buy their product.

3.5 Explain about product development stages?

Product Development Stages

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9
8
7
6
Month

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4
3
2
1 Product Development
0 Stages

Stages

Chart 2

 Generating Idea
– The idea come from the CEO himself and he will share the idea with R&D department.
From here, they will develop a new product according to CEO’s proposal. This process
usually takes around one month to discuss and present the idea.
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 Product Specification
– After the idea has been approved, R&D will start producing the product in small
quantity for further development and research. Additionally, at this stage they will start
creating the product packaging, marketing strategy and marketing research as well.
 Design review
– At this stage, the product will be presented to the CEO including the market research
and strategy.
 Test Market
– The market test will be held within the organization. This is to be done in order to avoid
company’s market competitor to replicate the company product.
 Introduction to the market
– A mass promotion is executed to promote the product. Types of promotion including
media and printed advertisement.
 Evaluation
– Three (3) months time is given to evaluate the product success. The product will be
retracted if it’s considered as failure.

3.6 Explain about department involve in product development

 Research and Development – Responsible to develop a product based on the
framework given by the CEO.
 Marketing – Developing the product market research, strategies, and promotion
 Quality Assurance – Ensuring the product is up to the Gardenia standard

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3.7 Explain about certain techniques involved to design product

A B
F E C
D
H
G
L I
K J
M M M M
N N N N

Chart 3 – O
Layout in Gardenia Factory

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The Process

A = Mixer(4hours)

B = Mixer 2(include honey,water,milk)

C = Divider(dolls into smaller bread)

D= Rounder

E= Check weight (over lender)

F= Intermediate proffer(small room, rest for 10 minutes)

G= Mowler(shaping rolls)

H= Final proofer

I = Auto lidder

J= Oven

K = Dependent

L= Bread coller(two towwel)

M= Slicer

N= Bagger(packaging)

O= Metal detector(associated with logistic department)

Chart 4

3.8 Company make or buy components of product

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 As you know, the Gardenia Company does not make any of the components because of
insufficient space in Malaysia. There are even some materials that are imported from
Canada and some parts of Europe. The materials that are brought in is wheat. Wheat is
the main material for Gardenia to produce breads.

The other materials like flour, sugar, honey and so on are all from suppliers which supply
their product to Gardenia. Gardenia buys flour from their main supplier that is Prestasi
Flour Mills Sdn Bhd. There are some other suppliers which supply to Gardenia that is
Federal Flour Mills Bhd (FFM) that is controlled by Tan Sri Robert Kuok. Gardenia also
buys flour from Malayan Flour Mills purely due to commercial reason. All the raw
material purchased by Gardenia is in large quantity.

From this, we can conclude that there is no any material made to produce the products
by Gardenia. All the materials are purchased directly from internal and external
suppliers.

4.0 Scheduling

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4.1 How company schedules machines, tools and people to make product or give services
to satisfied customer

These schedules handle by engineering department. They do maintenance every

Wednesday to clean up the machine. By the way, everyday they do the cleanliness
between the produce products to maintain the hygiene of the bread.

4.2 What basis the company doing scheduling (weekly, daily ,hourly basis )

This company usually use ‘hourly basis’ because they were work every day for 24 hours
per day.

4.3 How company control input and output to reduce overloading in the facility ( overloading-
crowding in factory ) ( under loading-idle capacity in facility )

This companies under control their product. Every day, every month and every year. The
product per day will be produce 550k breads.

4.4 Do these companies applied Gantt Charts? Explain ( planning charts used to schedule
resources and allocate time )

They applied Gantt Charts in marketing. Details are not mentioned since it is their
company’s strategy.

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4.5 How companies determine the order in which jobs should be done/customer should be
served.

Their products mainly distributed in Klang Valley. Some to the North and South
regions of Penisular Malaysia such as Perlis, Kedah and Johor.

For their factory in section 23, other products would be produced along the production
week except for the ‘butter scotch’ bread which only being produced 3 days per week.

They normal daily production would be about 550,000 in total for the whole factories.
They will reduce their production on public holidays since at that time the demand will be
decreased temporarily and they can start the production at the normal rate after that
especially when the demand raises again during school time started.

4.6 First come, first serve (FIFO)

The Gardenia company applying the First In First Out (FIFO) method to control the flow
of their production materials and finished products. The first in first out (FIFO) method is
used to introduce the subject of materials costing. The FIFO method of costing issued
materials follows the principle that materials used should carry the actual experienced
cost of the specific units used. The methods assume that materials are issued from the
oldest supply in stock and that the cost of those units when placed in stock is the cost of
those same units when issued. However, FIFO costing may be used even though
physical withdrawal is in a different order.

The reason why Gardenia Company used the First in First out (FIFO) method.

1. Materials used are drawn from the cost record in a logical and systematic manner.
2. Movement of materials in a continuous, orderly, single file manner represents a
condition necessary to and consistent with efficient materials control, particularly for
materials subject to deterioration, decay and quality are style changes.

First in First out (FIFO) method is recommended whenever:

1. The size and cost of units are large.

2. Materials are easily identified as belonging to a particular purchased lot.
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 3. Not more than two or three different receipts of the materials are on a materials card
at one time.

5.0 Appendix

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 GARDENIA BAKERIES SDN BHD

INDUSTRIAL VISIT
OPERATION MANAGEMENT SUBJECT

OPERATION MANAGEMENT STUDENTS AT GARDENIA

SPECIAL WELCOME NOTE CREATED BY GARDENIA FOR MSU STUDENTS

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 GARDENIA’S BREAD OVEN

GARDENIA’S DIVIDER DOH AND SPONGE MACHINE ACCORDING TO SIZES

MOWLER MACHINE (Shaping the bread)

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 SLICER (Cutting the bread into 7.7 slices each)

COLER MACHINE (The bread were cool down after the heating process)

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ORIGINAL WHEAT RECIPE FOR GARDENIA

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