NORTH SOUTH UNIVERSITY

SCHOOL OF BUSINESS AND

ECONOMICS

Case Study Analysis on Prominent Metals

MGT 314
Production Management
Section-15 Semester: Summer 2019
Submission Date: 27.08.2019

Submitted to
Wasif Syed Chowdhury (WSC)
Lecturer
Department of Management

Group Members
Name ID
Rifat Ara Tazree 1712168630
MD. Imran 1712955630
Samman Haque 1711102030
Robin Rahman 1711948030
 Executive summary
The following report is conducted on Prominent Metals. They are a small tin container
manufacturing company located in South Panishail, Zirani, Gazipur. Threat of new entrants is
relatively low, immense competition among the current players in the market. Bargaining
power of supplier is low and bargaining power of buyers is high. Threats of substitute product
is high as well.
We have conducted analysis on their different operational activities. Their manufacturing
process starts with raw materials such as tin plates, ink, copper wire, food grade grease, burnish
and plastic caps. They are dependent on various suppliers for these raw materials. By using the
Kraljic matrix, we have classified different materials based on financial risk and supply risk.
And, they have different relationship with their different suppliers. They have goodwill trust
with suppliers of lathe machine used for repairing parts of other machineries used in their
production system, competence trust with tin plate and ink suppliers and contractual
relationship with miscellaneous material suppliers. We also evaluated overall effectiveness of
the process and compared it to TPS. Next in que is inventory management. They classify their
inventory in two categories; raw materials and finished goods yet to be delivered. Lead time
varies for different types of raw materials although a few lead time are identical. They use
Material Requirement Planning (MRP), Perpetual Inventory Management, and do so by
maintaining a manual log book system to record and track inventory which is a hassle in this
modern times. Currently, they are producing at 75-80% capacity. They are in need of additional
storage capacity and production capacity needs to be planned properly for meeting future
demands. Lastly, quality is the top priority for Prominent Metals. They perform 2 major
functions; Quality Control and Quality Assurance. This enables them to ensure quality in their
product and process. Based on all these analysis, we have provided some recommendations. At
the end, we can say Prominent Metals’ production operation is pretty good and organized and
few changes in it can make it even better.
Table of Contents
Company Profile ................................................................................................................................ 1
INDUSTRY ANALYSIS .......................................................................................................................... 2
Process selection and layout.............................................................................................................. 3
Supply Chain Management ................................................................................................................ 5
Vendor analysis ............................................................................................................................. 6
Krajlic Matrix ................................................................................................................................. 7
SAKO Model ................................................................................................................................ 10
........................................................................................................................................................ 10
Inventory management ................................................................................................................... 11
Capacity Management..................................................................................................................... 12
Production Capacity..................................................................................................................... 12
Storage capacity .......................................................................................................................... 13
Quality Management....................................................................................................................... 15
Quality Control ............................................................................................................................ 15
Quality Assurance ........................................................................................................................ 16
Recommendation ............................................................................................................................ 16
Conclusion....................................................................................................................................... 17
Reference ........................................................................................................................................ 17
Appendix ......................................................................................................................................... 18
Company Profile

Prominent Metals was founded by Mr. Ahmed Rashid Lali in the year 1993. The factory is
located at South Panishail, Zirani, Gazipur. The business has been in operation for a total of
26years. It is mainly a B2B, meaning transaction takes place between businesses, such as one
involving a manufacturer and wholesaler, or a wholesaler and a retailer. They manufacture tin
containers for mustard oil for various companies such as PRAN and other local companies.
Mr. Lali started the business as he saw a rise of demand in the tin container manufacturing
industry and wanted to exploit the opportunities. In addition to that Mr. Lali wanted to create
employment opportunities in the area and help the under privileged.

Prominent Metals sets the industry standard in tin container manufacturing. It has been a
competitive player in the market since its inception in 1993. Prominent Metals believe in using
the highest quality of raw materials to ensure that its customers get the best finished products
in the market. In this highly competitive market where manufacturers are compromising quality
order to cut down costs, Prominent Metals maintains its quality at the expense of a lower profit
margin. The production operations and factory are looked after and taken care of by the
manager, Mr Bahar Ahmed. Mr. Lali has entrusted Mr. Bahar with such immense responsibility
as he has been working in the factory since its inception and knows the company’s policy and
priority better than anyone else.

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 INDUSTRY ANALYSIS

Threats of new Entry: Threat of coming into the industry is low. Opposition entering the
industry can take market share and valuable customers. In tin container manufacturing industry,
there are large capital requirements to enter the market it difficult to enter. A manufacturing
industry needs a large scale of fixed assets for starts up such as plants, land, labour and
equipment. Alternatively there is low product differentiation it making easier to become a
player within the industry. For example this tin manufactures company produce container for
Pran, Teer, Rupchada etc. similarly other local manufacturing can make it the container in a
same way. So they can hold the large market for manufacturing the container because

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complexity is high here because products all are same almost. Intellectual property can make a
difficulty for competitor to enter the market.

Competitive Rivalries: Rivalry among competition in the industry in a core competency to

have because if you can expose the weaknesses of your competitors, you can beat them. Henry
Ford once said, “Competition is the keen cutting edge of business, always shaving away at
costs” (Samanta, 2019). Intense rivalry is created with the industry being easier to enter than
to exist with high exist cost.

Supplier Power: The five forces used to analyse the customer tin container industry is supplier
power the power of a supplier is determined by how easily a producer can switch from different
input suppliers and the bargaining power of each party. Because of low product differentiation
power of supplier is low in this industry. Lower power is created for the supplier with high
competition because of a vast market of raw materials.

Buyer Power: Buying power is the power over the producer a consumer has relative to prices
and other determining factors. As there is a low differentiation, as well as strong product
dispensability, meaning buyers have the power to hop from company to company. So here in
this container manufacturing industry buyer power is high.

Threats of Substitution: Substitutes threaten the livelihood of an industry through

replacement and innovation. Substitutes play an important role especially in this industry
because tin containers are all substitutes for one another. So specialization is one of the key
aspects of being avoid this kind of threaten. Here in this industry threats of substitution is high.

Process selection and layout

‘Prominent Metals’ is a small tin container manufacturing company. It specializes in

manufacturing tin containers for mustard oil for the local market of Bangladesh. The company
ensures to provide the finest quality of tin containers. They start their production process on
the basis of orders received. A process is a set of interrelated or interacting activities which
transform input into outputs. Order of the containers usually vary in terms of final packing and
colouring therefore ‘Prominent Metals’ follows the Batch process method.

Batch Process: The company’s machineries are placed on a single floor sequentially divided in
two sectors (rooms).The raw materials (tin plate) slitting, printing and roll forming takes place
in one room and the wielding, flanging, lid and bottom seaming process in another room. This

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 helps the workers to work more efficiently. As part of batch process they produce a moderate
volume of tin containers with moderate level of variety.

A company’s layout play a big part in operations being carried out smoothly and efficiently.
The layout selection should go hand in hand with the process type selected. Prominent Metals
uses Process layout design which compliments their Batch process method. Process layout is
a layout that can handle varied processing requirements. It suits the company since the tin
containers they produce varies only in terms of final packaging and colouring. Their process
layout is divided into eight departments as follows:

Process Layout

Department A Department B Department C Department D

Slitting tin
Raw materials Rolling Welding
plates and
(Tin Plate)
printing

Department E Department F Department G Department H

Bottom Packaging
Flanging Lid Seaming
Seaming

In the process layout system manufacturing containers starts from department A and ends in
department H.

Department A: This department is in charge of providing raw materials (Tin plate) for
production

Department B: Slitting the tin plates in accordance of the required container size and colour
printing of the container takes place in this department.

Department C: After receiving the printed sized tin plates it is rolled in a circular form by the
workers.

Department D: The roll is placed in a side seam welding machine and is welded with copper
wire.

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Department E: The workers here attach the welded circular tin to a flanging machine which
shapes the containers into squared or circular containers and gives an outer pattern.

Department F & G: These two departments use seaming machines to seam the lid and bottom
of the container made of tin. While doing so they use food grade grease.

Department H: Packaging in accordance of the company order is done in this department. The
required company logo, product details are printed on the container.

Insight
From the process selection and layout it can be seen that Prominent Metals has levelled out the
workload for its workers and machines as each department is in charge of carrying out different
work of the production system. This matches with the 4 th principle of the Toyota Production
System ‘Heijunka’.

Supply Chain Management

A list of raw material used for tin container production

Copper
Ink
Wire

Plastic
Burnish
Cap

Tin Food
Tin
grade
Plates container grease

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Vendor analysis
Prominent Metals depend on their vendors’ ability to meet their needs in order to efficiently
carry out their production procedure. Since quality of the tin plates and ink is a major concern
among the raw materials, it is important for them to choose vendors who will be able to meet
their requirements. They do vendor analysis to assess the ability of existing or prospective
vendors for this raw materials.

They provide the lead time and quality requirements of the tin plates and ink for suppliers.
They also clarify the thickness, weight and temper grade of the tin plates and for ink the colours
and grade.
Next, they identify the strengths and weaknesses of each vendor, then compare them to find
the vendor that matches best as per the needs of their company.

After reviewing all the necessity information about a vendor such as their reputation, sales,
prices, services, lead time etc. among the potential vendors they choose Indian Tin Box Mfg
Co Pvt Ltd. for supply of tin plates and Ganga Inks for the supply of ink. Both the companies
are located in India which makes it easier to import the raw materials within a short span of
time.

For the other raw materials they decided to stick to the local market as there are abundant
suppliers, so they just have to choose from the one meeting the requirements of the company.
If any of them fail to meet the requirement of any particular raw material, they look at
alternative suppliers to meet demand.

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 Raw Suppleirs
Materials

Tin plates Indian Tin Box

Mfg Co Pvt Ltd.

Ink Ganga Inks

Copper wire Local supplier

Food grade Local supplier

grease

Burnish Local supplier

Plastic caps Local supplier

Krajlic Matrix
The relationship between the company and its suppliers should be well distinguished and
known. The Kraljic Matrix describes the relationship of a company and its suppliers segmented
into four categories based on financial risk and supply risk. Prominent Metals Kraljic Matrix
shows the following relationship.

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 Strategic Items
Leverage Items

High

Side seam welding

 Lathe machine machine
 Flanging machine
 Screen printing
Financial Risk

machine

Routine Items Bottleneck Items

Low

 Copper Wire  Tin Plates

 Burnish  Ink
 Food grade grease
 Plastic caps

Low High
Supply Risk

Routine Items: Copper wire, burnish, food grade grease and plastic caps are routine products
for manufacturing tin containers. These products are easy to purchase and also have a relative
low financial impact on the company. Purchasing strategy of these products include monitoring
order volumes and optimizing inventory levels.

Bottleneck Items: Tin plates and ink are bottleneck products. These items do not have that
much of a financial impact on the company but they have to be purchased form a single
supplier. Therefore there is high supply risk associated with these products. As suppliers of
these two products have the upper hand, Prominent Metals uses purchasing strategy of volume
insurance contract, and to reduce the dependency on these suppliers they are searching for
alternative suppliers too.

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Strategic Items: Side seaming welding machine, flanging machine and screen printing
machine are strategic items of Prominent Metals production process. Their production would
come to a halt without these machines. These items have a good financial impact on the
company and have a high supplier risk caused by difficulty of getting the machines. Thus the
company maintains long term collaboration by strategic alliance with suppliers.

Leverage Items: The lathe machine used for repairing parts of other machineries is the
leverage item. It has a high financial impact on the company but there are many suppliers in
the market. Therefore the supplier can be substituted with ease as all their offerings are pretty
much the same. Prominent Metals use competitive price biding to get this machine.

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 SAKO Model

SAKO INSTITUTIONAL TRUST MODEL

Obligations
Goodwill Trust
Relationship Type

Competence Trust

Contractual Trust

Arm’s
length

Short Medium Long

COPPER WIRE, BURNISH, FOOD GRADE GREASE, PLASTIC CAPS

TIN PLATE, INK
LATHE MACHINE

Prominent Metals has a contractual trust relationship with the local suppliers from whom they
purchase copper wire, burnish, food grade grease and plastic caps since the whole process is
mainly driven by the price factor. They are more prone to ensure lowest possible price rather
than building a relationship. In terms of competence trust they are well associated with Indian
Tin Box Mfg Co Pvt Ltd. and Ganga Inks. They have a good mutual understanding and trust

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with them, this ensures that Prominent Metals produces and delivers quality ensured tin
containers in a timely accurate manner. Prominent Metals maintain a goodwill trust relationship
with their lathe machine supplier.

Insights
Prominent Metals order its raw materials once it receives an order of containers. Therefore rely
on their supply chain to pull off the order. Therefore we can see that their supply chain is well
sorted out. Their selection of supplier is really clever as they meet their requirements quite
well and the relationship they maintain with their suppliers is long term which matches with
the Long term principle of the Toyota Production System.

Inventory management
"Inventory management is a core operation management activity. Effective inventory
management is important for the successful operation of most businesses and their supply
chains. Inventory management impacts operations, marketing, and finance. Poor inventory
management hampers operations, diminishes customer satisfaction, and increases operating
costs" (Stevenson, 2018).

Prominent Metals classifies inventory into two categories: Raw materials and Finished goods.
The amount of raw materials in stock depends on the order size they receive and finished goods
are stored in a warehouse in the same facility till they are delivered to customers.

Lead time
Raw materials are needed to be ordered beforehand. Lead time for different raw materials are
as follows:

Raw Material Lead time

Tin plate 1 month
Ink 6 days
Copper wire 3 days
Burnish 2 days
Plastic caps 1 day
Food grade grease 1 day

Inventory management system: Prominent Metals uses Material Required Planning

(MRP) and Perpetual Inventory System to manage their inventory.

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Material Requirement Planning (MRP): Based on the order size of containers the
manager places the order of raw materials required for production.

Perpetual Inventory System: Prominent Metals uses perpetual inventory system to keep a
track of their inventory. This means inventory is recorded when they are purchased and used
in production or delivered. Updates are made when inventory level changes. They keep track
of raw materials and finished goods that are yet to be delivered both manually in two
different log books.

Insights
Since Prominent Metals orders raw materials when they receive an order for containers they
should look for alternative suppliers who can provide them the raw materials with a quicker
lead time. This will help them reduce the holding cost and also help them achieve just in time
supply of raw materials which goes hand in hand with their production system. Furthermore
reduce the burden of manual tracking and recording of inventory of raw materials. Also they
should digitalize their inventory management system with the help of advanced software.

Capacity Management
“Capacity management refers to the act of ensuring a business maximizes its potential activities
and production output—at all times, under all conditions. The capacity of a business measures
how much companies can achieve, produce, or sell within a given time period.”
(Investopedia,2019)

Production Capacity
Prominent Metals estimated that the yearly demand total approximately to 620,500 units of tin
containers. Their daily production capacity is 1500 units of containers. This has increased from
being 1000 units of containers per day over the years. The factory operates at 75-80% capacity
with a total of 14hours of production per day with 2 hours of break for lunch and snacks. They
aim to increase production capacity to 3000 units in the near future as they expect the demand
to increase significantly. This would require them to expand the current factory premises to
install further machineries required to achieve the target and also additional labour force along
with it.

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 3500

3000

2500

2000

1500

1000

500

0
Previous Current Target

Capacity Demand Production

The above graph illustrates the comparison among the capacity, demand and actual production.
The company previously produced 800 containers per day whereas the demand was 1700
containers per day. After increasing their production capacity they still lacked to meet the
demand per day. Their total capacity has always been lower than the actual demand.

Storage capacity

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The company has limited storage capacity. As they have no additional space for a warehouse,
they store the raw materials and the finished goods in the same facility used for production.
Raw materials such as tin plates are majority of the times kept out in the open. Finished goods
that are yet to be delivered are stored in a room on the second floor which has a maximum
capacity of 20000 units of containers. When the room is filled to its maximum capacity
containers are stored in open spaces on the second floor. This shows that available capacity is
not sufficient. In addition with the plan of increasing production capacity more storage space
is going to be required.

Insights
Prominent Metal urgently need to figure out ways of increasing storage capacity. They can rent
facilities for storage purposes during the short run and for the long run during expansion of
capacity, carry out a proper planning of capacity and increase both storage and production
capacities. In addition to that production capacity has always been a concern when it comes to
meeting the demand. Therefore the company should properly evaluate the demand and plan
their production capacity accordingly.

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 Quality Management
“Quality management is the act of overseeing all activities and tasks needed to maintain a
desired level of excellence. This includes the determination of a quality policy, creating and
implementing quality planning and assurance, and quality control and quality improvement”
(Investopedia, 2019).

Since providing the best quality of the tin containers is top priority for Prominent Metals they
thoroughly check the quality of the raw materials before start of production and also during
production during each step the containers is checked for any faults and corrected right away.
This quality check is done by the manager in majority of the cases and in absence the workers
take the responsibility to do so.

 Production
 Raw inspection
Quality Quality Quality
material  Employee
Control Management Assurance
inspection Training

Quality Control

Raw Materials
Although the raw materials are supplied through reliable supplier they still go through selection
process. As soon as the main raw materials arrive in the factory the manager checks the quality
of them individually to ensure that production can start right away. For tin plates the weight is
checked if they meet the requirements to ensure the sustainability of the containers. For ink the
colour grade is tested by running a few sample prints, if it is not up to the mark the supplier is
informed immediately and asked for replacement. As for other raw materials such as plastic
caps for covering the pouring point of the container the sizes are matched with samples of
various litres of containers available at the factory.

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Quality Assurance

Production inspection
After the tin plates are sliced and printed they are checked again for accurate measurements. If
the measurement is not right then it is send to the slitting machine again to correct the size and
then moved down the production line. After the container is made a test is conducted to check
for any leaks in the container. It is done with the help of an air compressor machine which
pumps air into the container while it is placed in water, if there are any leaks in any certain area
of the container water bubbles form on that side and the defect is noticed. It is then send to the
welding machine to fix the leaks.

Employee Training
Workers are trained adequately through a training program to understand the quality checking
process and to act on their own to fix the problems in absence of the manager.

Insights
Prominent Metals quality management is right on point ensuring that the right quality finished
product is delivered to their customers. They follow the 5 th principle of the Toyota production
system ‘Jidoka’ which means they build a culture to stop to fix problems, to get quality right
the first time. It can be clearly seen in their production system. Also they follow the ideology
of ‘Genchi Genbutsu’ where the manager is actually present in the place to understand the
roots of the problem and come up with ways to solve the problems and improve the process.

Recommendation
After thorough analysis of the whole production system of Prominent Metals we would like to
recommend the following:

 Shift to just in time supply for better production rates.

 Incorporate digitalized means of recording inventory.
 They need to increase their storage capacity as soon as possible.
 Plan and sort out their production capacity in accordance to their demand.
 Meet the demand that is incurring or else competitors will grab their market.

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Conclusion
The following report illustrates the operation management of Prominent Metals. This report
consists of operational process of Prominent Metals which is described in an elaborative
manner starting from their process selection and layout, supply chain management, inventory
management, capacity management and quality management. The company operates the
management systems in accordance of their goal which is to provide the best quality of tin
containers. Their facility layout levels out workload and makes production procedure more
efficient and helps to ensure quality. They should increase their storage capacity and also try
to cope up their production capacity as per increase in demand. We find out that their inventory
management system is outdated as they still follow manual processes to record and keep track
of their inventory. They should use modern software to record and keep track of inventory.
They maintained a strong relationship with their suppliers, which is required to maintain their
production system as their suppliers are basically the heart of their manufacturing process. The
company is still working relentlessly for further improvement of their operations to take their
business to a more successful ground.

Reference
Ahmed, B. (2019, August 3). The case on Prominent Metals. (Rahman, R. Interviewer)

Stevenson, W. J. (2018). Inventory Management. In W. J. Stevenson, Operations Management.

McGraw-Hill

Barone, A. (2019, April 10). Quality Management. Retrieved from:

https://www.investopedia.com/terms/q/quality-management.asp

Samanta, S. (2019, July 4). 70 Motivational quotes by Henry Ford on success. Retrieved from:
https://quotesupdate.com/henry-ford-quotes.html

Bloomenthal, A. (2019, May 22). Business essentials-Capacity Management. Retrieved from:

https://www.investopedia.com/terms/c/capacity-management.asp

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Appendix

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