OPERATIONS MANAGEMENT OF Fatt choi Coffee

THE INPUT USED IN THE PRODUCTION PROCESS

INPUTS TRANSFORMATION OUTPUTS

Labor, Conversion process Goods and

capital, Services
management

Feedback Loop
INPUT

There are three types of inputs that have been used by this company to produce the best quality
coffee which is Arabica, lybrica and Robusta. Their main material used is Robusta coffee. There
are several factors why this company chooses Robusta as their main material. Firstly, is the
taste itself, from the information that we got from the company representative Mr. Ahyong
Robusta beans add body to the taste and make a nice creamy in the shot of espresso. 
Secondly, Robusta tree is suitable to farm in Malaysia because of the climate and the weather
especially at Tenom. Since Malaysia climates frequently changing (sometimes rainy and
summer), Robusta beans can stand from severe damage caused by the weather.

First process that should be done before Robusta beans can be produced as coffee beans, is
choosing the right beans and proceed to theprocess which is the beans should be cleaned from
any leftover dirt and harmful objects such as nails, dust, and etc. the cleaning process is done
by putting the beans on a specific net as it purified the beans which they separate the dirt’s from
the beans. The beans should not be washed in order to maintain the quality. Mostly the process
is done by the villagers near Tenom. They will choose the beans manually by hand. If they want
to sell the coffee, they will need to dry it again. To know whether the coffee is fully dry, it has
several characteristic to be observed such as its become light and when they shake it, it will
produce a “tik tok” sound.

TRANFORMATION

In transformation process, they are two types roasting the beans. The first roasting process that
produces pure coffee, the beans are roasted and directly dried off. The second roasting process
that producing coffee “O”, the beans are roasted twice and were added sugar while it was in the
roasting process, and changing the beans into black color. The standard time required to roast
the beans is between 45minutes to 1hour in order to produce 400kg of beans. The second
transformation process is grinding the beans in the grinding room, which separates into two
types of grinding methods that follows the customer requirement, whether the customer likes
their coffee to be grinded finely and unfinely.

Next step is the packaging process that includes two types of packaging. Firstly manual
packaging which involved the activity of weighting, sealing and labeling. After that, they will put it
in the storage box provided. The packaging used is air tight which can protect the product from
damage. Usually, they will pack the product 450 grams per packaging. The second type is by
automatic packaging using filter bag by using machine which required them to package in the
cold temperature. This process is can complete within 1minute for 60 small package (for 3 in 1
product). after all process finished, then the product are ready to be sold.

PROCESS STRATEGY APPLIED

Fatt choi coffee factory Tenom had applied product focus for its process strategy. As we
can see their facilities are organized by high volume but low variety of product, this
process also runs a long, continuous production to enable efficient processes. It is also
typically high fixed cost but low variable cost, the company also generally has less
skilled labor. As we observe they are using both foreign and local worker. Since, the
factory is not too large their only using few workers.
PRODUCT DESIGN STRATEGY

1) Differentiation

The company produces a very unique product design such as it has a variety product
mixed such as coffee mix, white coffee; cinnamon, herb (Tongkat ali & ginseng) and etc.
there are some product that can contribute to our health while we drink this coffee such
as it lowering blood pressure, reenergize our body and maintain our metabolism.

2) Low cost

Since Robusta is farmed locally they don’t have to import coffee beans from outside our
country. The fatt choi coffee Tenom factory had produced the product with a reasonable
price which everyone can afford to consume this product.
 3) Rapid response

The company has allowed their factory for a visit so at the same time they can build a
relationship with their customer. For each visit, they will provide a sample for the visitor
to taste the coffee and at the same time they will receive feedback about the coffee so
they can response rapidly if there is any complaint from the visitor. Other than that, they
also provide an official website so the customers from all over the place can keep in
touch and stay updated with them. They also provide their contact number to customer
for any requirement about the product.

CAPACITY PLANNING

Fatt choi coffee factory can produced 100 kg of coffee bean per hour. It can be
estimated that they can produce 1 -2 tan per day.
SCHEDULING

The working hour for this company is 8 hour per day. The packaging process must start
at 8 a.m sharp. There are 2 shift involved. They will start working at 8 am until 5 p.m.

Next, the company will pay the wages and salary per month depends to the starting
time of their employees.

MAINTENANCE

Since they are using machines in processing the coffee beans, they will service their
machine once for every two to three month. They will be off day for maintenance. For
the automatic packaging machine, they will frequently do maintenance once for every
two weeks.

QUALITY MANAGEMENT

To maintain the quality of their product, they have provided a quality control room which
they will have to test the coffee. They also make sure that they are following the
standards that have been stated in the act whereby they must at least 50 % of the
product contains coffee. The health unit will come to their factory for checking and verify
the product for standards. They also make sure that their employees are free from any
disease. They will hold a medical checkup two times for blood test before hiring them.
TECHNOLOGY ISSUE

Fatt Choi coffee factory is using a semi auto method in producing their products. For
example, during the first process, they are manually using their hand to pick the right
coffee beans, dry it and roasting it. But at the same time, they are also using a machine
for packaging in order to produce their product effectively and efficiently to meet their
customer demand.

COMPETITIVE ADVANTAGE

There are many competitors in the industries of coffee since people nowadays are likely
to consume coffee. One of its biggest competitors is Yit Foh Coffee factory which also
located near Tenom. But, there are several factors that differentiate them with their
rivals. Firstly, the main types of coffee they use, which is Robusta. Secondly, the aroma
and taste of the coffee is totally different from the others. This only can be recognized
by the coffee lovers only. Thirdly, they have many types of product mix and they also
supply to the airport, which they offer two times of its original price.

RELATED ISSUE TO OPERATIONS MANAGEMENT

Fatt Choi coffee Factory, Tenom has a very well organized operations management. In
term of location strategies, Tenom has become the best geographical area for planting
coffee trees that make it famous each day. By doing the location decision, they have
considered several key success factors for their company to be well known. Firstly is the
attractiveness of the region. Tenom is well known as the coffee land and it has attracted
many visitors to come to Tenom to taste the tastiness of the best Tenom Homemade
coffee and they provided Cabin to be rented so visitors can stay there for several days
to enjoy the wonderful trip to Fatt Choi Factory. In addition, Tenom is near to Keningau
whick Keningau is famous with producing cinnamon. Thus , Fatt Choi has diversified its
product by producing coffee with cinnamon. Secondly, is about the labor availability and
cost. Since they hire both local and foreign worker, they can pay cheaper wages and at
the same time increase productivity. Since the coffee tree is suitable to be farm in
Tenom, it can lower the cost for production process. Other than that, they also consider
the proximity to markets. Nowadays Coffee Tenom has a higher demand. During our
trip to Tenom,it has been said that there are one Spa company from the peninsular that
will order the coffee in bulk almost every month from Fatt Choi. That means, it has it
owns specialty why Fatt Choi coffee has been the chosen one. it gives the best service
of transportation. It also requires less cost because their method of processing the
coffee beans is semi auto.

Since nowadays there are many competitors, Fatt Choi has expanded their production
by becoming the agent for F&N and Seasons manufacturer, which means they are
joining the supply-chain partnering (joint venture). This has become one of the biggest
successes in operations management field.
REFERENCES

1. http://roastcoffee2u.com/en/home-and-office-promotion/ph101-coffee-promo-package.html
2. http://www.journals.elsevier.com/journal-of-operations-management/
3. http://meetings2.informs.org/Montreal98/TALKS/TD17.html
4. www.yahoo.com
5. www.google.com
6. Notes during the briefing(Q&A).
7. Slide Operations management.