Blue Mountain Soft Drink Operations Management MBA Project

1. Operations Management
Project
]
Blue Mountain Soft
Drinks

2. Operation Management Contents
 Company History
 Company Background
 Objectives
 Missions
 Strategic Decisions
 Product Design
 Quality Management
 Process Design
 Location Decisions
 Layout Strategies
 Human Resource and Job
Designs
 Supply Chain Management
•Inventory
Control
• Maintenance
• Conclusion

3. Company History
 Loi Hein Company was established in 1996 by the
owner and C.E.O, Dr. Sai Sam Htun.
 In 2000, Loi Hein Company associated with Osotspa
Co., Ltd. (Thailand) and launched Shark energy drink
and gained the market leadership.
 In 2002, LHC launched his first own brand, Alpine which
is purified drinking water and also became the market
leader after a few years later.
 In 2008, in association with Green Spot Co., Ltd.
(Thailand) LHC developed and launched a non-
carbonated California Orange soft drink.
 In 2009, Loi Hein Company built the strong Loi Hein
Distribution Company (LHDC) as a part of business
management unit to emphasize on manufacturing soft
drink products.

4. Company Background
 Loi Hein Co., Ltd is an organization engaged in
manufacturing, marketing, selling and distributing
consumer products in Myanmar
 The main manufacturing centre is located on North
west of Yangon, in the pristine area of Htauk Kyant.
The manufacturing plant comprises of a water
processing plant, fully automated bottling lines for
purified drinking water and carbonated soft drinks
as well as integrated high capacity packaging line.
 All manufacturing processes are ISO 9001:2000
HACCP certified

5. Competitive Background of Local soft
Drink industry
Types of soft drink products
 Carbonated soft drinks
 Energy drinks
 Dairy related juices and fruit flavored drinks
No Name of Manufacturer Brands
1 MGS Beverage Star Cola,
Pepsi
2 Max Myanmar Co.,ltd Max
3 New Smart Co.,ltd Rocker
4 Green Circle Co.,ltd Ve Ve
5 Capital Diamond Star Co.,ltd Coca-Cola

6. Key Success factors of Blue
Mountain Soft Drinks
 Experienced in bottling manufacturing
 Launched by the same parent company of Alpine
purified drinking water
 Strong relationship with main wholesalers and
retailers
 Having the substantial property assets
 Locating near both customers and suppliers
 Ability to shift experienced workers from
predecessor alpine company
 Ability to compete with global soft drink companies
and local companies
 Understanding of consumer behavior via market
analysis

7. Key Success factors of Blue
Mountain Soft Drinks
Customers
 Downtown
area
 Wholesalers
 Retail-outlets
 Rep-offices
Factory Area
•Htauk Kyant Town
Ship, 15-20 km from
supplier
•Getting JIT supply
control, delivering by
suppliers themselves
•Experience labors in
same township
Suppliers
• Bago
Division (
Zayawady
Sugar factory)
•Local
farmers,
contractors
•20,000 kyats
/ ton
10-20
km
25-30
km

8. Objective
 To ensure the most efficient storage and warehouses for a
faster delivering schedules of products through nationwide
 To manage and control well in soft drink product operations
including supply chain management, inventory control and
distribution methods.
 To conduct our operations with integrity and respect of each
other in entire operation with great impact to environments
where our business touches in Myanmar.
 To become the leading and benchmark FMCG (Fast-moving
consumer goods ) distribution company in Myanmar.

9. Mission
 Blue Mountain soft drinks aim to be the
largest nationwide consumer product with a
value composition of safety, healthy and
customer satisfaction.
 To create opportunities for the growth of
employees improvement in both skills and
ethics among the surrounding environment of
the company organizational structure.
 Focus to build a stronger relationship with
distributors and retail outlets
 Aim to have transparency with realistic
incentives and rewards for all collaborated
members in entire process.

10. Strategic decisions of Blue
Mountain Soft Drinks Company
Strategies according to product life cycle
 As in maturity stage, product design and quality
standards stabilize
 Apply defensive strategy to maintain the market
position
 Competitive selling prices and cost become critical
so continuing improvement in production runs for
long-term and applying cost-cutting method

11. Blue Mountain Operation
strategy
Multi domestic strategy related with high local customer
responsiveness and low cost reduction
To meet with strategic decision,
Mass Production - production process of low variety withhigh
volumes and quality standardized soft-drink product.
Flow - Mass production is associated with a flow how a product
moves through the system from one work station to another.
Human Resource Effect - great communication network between
senior experienced employees and ordinary labors work force in
production process.
Matching cost cutting – the main ingredients such as sugar,
water, flavor and bottles are sourced locally with economical
costs and also in labor force. Bottling plant owned by parent
company.

12. PLC stage of Blue Mountain soft drink
Introduction Growth Maturity Decline
Sales,cost,andcashflow
Blue Mountain Stage
Maturity
Market Leader

13. Blue Mountain Product Life Cycle Stage
 Existence between the relationship of the product
and customer satisfaction
 Customer notice easily the name of the product
and rapidly possess the great percentage of
market shares and increase profitability since
established 2009 under the parent company Loi
Hein Co.,ltd.
 As in the maturity stage, need to improve
production considering long-term
 Monitoring and control the cost reduction while the
product is reaching the higher amount of sales
revenues

14. Defining product
 Main product varieties – Blue Mountain Cola, Orange,
Sparkling and Club Soda
 Bottle Type - Non-returnable plastic bottle
 Bottle Size - 380 ml per bottle , 24 bottles per case
 Nutrition Facts - Blue Mountain bottle 13oz (380 ml)
Sugars - total : 39g
Calories - total : 140g
Calories from Sugar - 140g

15. Bill of Materials (BOM)
Blue Mountain Cola
Serial Number Description Quantity
INGR 001 Sodium Benzoate 1.6 ml
INGR 002 Sodium Saccharin 0.384 ml
INGR 003 Sodium Cyclamate 3.84 ml
INGR 004 Citric Acid 25.92 ml
INGR 005 Aspartame 2.16 ml
INGR 006 L- Carnatine 29.76 ml
INGR 007 Carmoisine 0.002 ml
INGR 008 Cocoa Flavor 6.72 ml
INGR 009 Spring Water 7240 ml
INGR 010 Syrup 1810 ml

16. Bill of Materials (BOM)
Blue Mountain Orange
Serial Number Description Quantity
INGR 001 Sodium Benzoate 1.6 ml
INGR 002 Sodium Saccharin 0.384 ml
INGR 003 Sodium Cyclamate 3.84 ml
INGR 004 Citric Acid 25.92 ml
INGR 005 Aspartame 2.16 ml
INGR 006 L- Carnatine 29.76 ml
INGR 007 Carmoisine 0.002 ml
INGR 008 Orange Flavor 6.72 ml
INGR 009 Spring Water 7240 ml
INGR 010 Syrup 1810 ml

17. Bill of Materials (BOM)
Blue Mountain Sparkling
Serial Number Description Quantity
INGR 001 Sodium Benzoate 1.6 ml
INGR 002 Sodium Saccharin 0.384 ml
INGR 003 Sodium Cyclamate 3.84 ml
INGR 004 Citric Acid 25.92 ml
INGR 005 Aspartame 2.16 ml
INGR 006 L- Carnatine 29.76 ml
INGR 007 Carmoisine 0.002 ml
INGR 008 Lime Flavor 6.72 ml
INGR 009 Spring Water 7240 ml
INGR 010 Syrup 1810 ml

18. Bill of Materials (BOM)
Blue Mountain Club Soda
Serial Number Description Quantity
INGR 001 Sodium Benzoate 1.6 ml
INGR 002 Sodium Saccharin 0.384 ml
INGR 003 Sodium Cyclamate 3.84 ml
INGR 004 Citric Acid 25.92 ml
INGR 005 Aspartame 2.16 ml
INGR 006 L- Carnatine 29.76 ml
INGR 007 Carmoisine 0.002 ml
INGR 008 Spring Water 9057 ml

19. Technology Utilization of Blue Mountain
 Concerns about the product quality and reduce
production cost and to attain the equipment data
available on time
 Utilize modernized technology based Computer
aided machines to control
 Water processing plant
 Carbo-Cooler
 Ultra Hygienic Mixers

20. Quality and Low Cost Strategy
 Six Dimensions to measure the quality
of the soft-drink products.
- Safety
- Commercial
- Characteristics
- Brand Identity
- Conventional
- Artistic

21. Quality and Low Cost Strategy
 Blue Mountain soft drink product is a ISO 9001:
2000 HACCP quality standardized product.
 Among six dimensions, the company focus on
safety, commercial and brand awareness
 To match with the quality of the product and meet
customers satisfaction , blue mountain is focus
according to
- User Based Review
- Market Area Based Review
- Labors and Product Related Review

22. Quality and Low Cost Strategy
 User Based Review
- established and launched standardized
product
while some industries prefer more productivity
- target market area is the same in Upper
Myanmar region
containing both sub-urban areas and rural
areas
 Market Area Based Review
- Reach a peak of sales volumes in Ayeyarwady
Division located lower Myanmar and around
upper Myanmar regions
The following tables represent the market shares
held by both global soft drink brands and local

23. Quality and Low Cost Strategy
Labors and Product Related Review
- Blue Mountain soft-drink is based on low variety
with high volumes product type
- the great connection between employees and
our product is as important as the higher volume
production process
- The operation process is based on increasing
productivity and effectiveness of the labor
workforce
- As in this PLC stage, established the
communications between products and employees
via incentives and motivation among their
employee levels including openly supportive
supervisors

24. Quality and Low Cost
Strategy
- continue improving on the well built high morale
organization and work as a team within quality
circles
- These scatter diagram indicates Blue Mountain
soft-drinks product related to the labor
absenteeism
Scatter Diagram
Absenteeism
Productivity

25. Reducing Operation Costs Option Concerning with Quality
Reduction by Not Maintaining Six Sigma Quality
Concept
- Blue Mountain production process can be
measured and arranged carefully under high tech
facilitating plant and senior experienced employees
how to eliminate to reach minimum number to zero
number of defects
- Most Local soft drink manufacturers try not to build
six sigma program to get a competitive advantage
rather the competing on prices
- Six Sigma program will increase the operation
cost which Blue Mountain trend is not matching
- In a mean time BM customers are sensitive over

26. Reducing Operation Costs Option Concerning
with Quality
Six Sigma and Employee Empowerment
- necessary of high skilled quality inspectors with
higher salaries which is not also parallel with Blue
Mountain economic trend with long-term
consideration
- Towards the customer satisfaction with product
quality stabilization, Blue Mountain focus more on
the customer responsiveness with lowering the
manufacturing cost rather than hiring the quality
experts

27. Blue Mountain Process Design &
Strategy
Strategy
- Blue Mountain soft drink is using the product
focus strategy
- according to the PLC maturity stage, considering
for long-term production runs based on labor
efficiency and product quality
- produce low variety and high volume products
-invested in higher infrastructure costs and high
technology used facilities which are massive figure
of fixed costs
- So BM is focusing to reach the long-run
production based on this product focus strategy to
recover certain amount of costs and overheads

28. Soft-Drink Product Focus Strategy
Few inputs
 Water
 Sugar
Syrup
 Chemical
Compound
 Flavors
Output variations
Size = 380 ml
Packaging and
Label for each
bottle

29. Blue Mountain Soft-Drink Processing Step
Reaction
Chamber
Syrup
Traded City
water
Chlorine
injection Settling
Chamber
San
d
Filter
Clear
Well
Carbon
Tower
Polishers
Blender
Carbo
Cooler
Fille
r
Quality
Control
Lab
Filler Crowner
Filling and
Bottling
Inspection
Casing and
Distribution

30. Production Process Theory
 Syrup
starts with the preparation of thick high solid
syrup blending in steel tank with
-concentrate compound
-Natural Flavors
-Sodium Benzoate
-Sugar
-Treated water
Constant rate of blending ratio
1 syrup part : 5 parts of treated

31. Production Process Theory
 Syrup Room
is the area of a soft drink plant where the syrup is started or
prepared
at the mixing and blending stage, the treated syrup is
transferring through stainless steel pumps to the blender
 Traded City Water
receive from 300ft tube of water pipe lines
starts removing various impurities passing through
chlorination step, settling chamber and sand filter carbon
tower, pH clarification step and UV conductivity.
Purified water is used in preparation of syrup

32. Production Process Theory
Blending Tube
is the area that prepare final soft-drinks by blending
syrup and water in specific ratio of ( 1:5 )
Carbo-Cooler
Injection of carbon dioxide to give soft-drink
carbonation
through carbon dioxide – cooler room.
Filler Room
Encircle the area of a bottling line that includes
- filling section -Carbo-Cooler
- Capping section
- Proportioned (Blender)

33. Production Process Theory
Non-Returnable Plastic Bottles Washing
- Rinse the empty plastic bottles by using a series of water
sprays
- Use the sprays and high power used blower to remove dust,
fragments and unseen germs
- Then passing through warmer to avoid excess of
condensation
- After passing through warmer, transferring into filling steps,
labeling and case packaging area.
Final Soft-Drink Product
-Stacks the final soft-drink cases of non-returnable plastic
bottles systematically
- Arranges and deliver cases to storage for distribution.

34. Location
Decisions

35. Location of Blue Mountain
manufacturing center
 Located on a 10 acre site, in the pristine
area of Htauk Kyant, about 40 minutes drive
from Yangon
 The factory is positioned in very less
populated area and also far from residential
area of Htauk Kyant township.

36. Location of Blue Mountain
manufacturing center
The satellite picture of Blue mountain soft
drinks manufacturing center ( Source-Google
Earth)

37. Criteria used to choose the
location
 The Land should be cheaply available and should have
enough space for expanding of existing facilities in the
future.
 The factory has to be located far from residential area
so that people wouldn't be disturbed with noises and
privacy and consequently, it will avoid any legal actions
by residents.
 The availability of enough work force and technicians in
vicinity in order to run the factory smoothly.
 The place should not be very far from the main office
,banking and financial institutions which are located in
Yangon.
 The factory should be near the markets and suppliers to
avoid high transportation costs in obtaining raw
materials and distribution of finished goods to markets.
 Most importantly, there should be enough water
supplies to the plant. The place has access to both
massive flow of underground water and traded city

38. Layout Strategies

39. Why layout is important for plant
 To ensure the maximum efficiency of
production such as smooth, flexible and
rapid movement of material
 For utilization of space, equipment and
manpower
 To provides the employee's convenience,
safety and comfort at work
 To achieve the benchmark quantity and
quality of output at the minimal feasible cost
of manufacturing

40. Objectives based to design the
layout strategically
 To minimize imbalance in fabrication of
the production process
 To guarantee that work proceeds from
one point to another point without any
delay.
 To provide the ease of supervision and
control.
 To allow the ease of maintenance.
 To provide the employee safety and
health.
 To improve productivity

41. The repetitive and product-
oriented layout in a Soft Drink
factory

42. The structure of repetitive and product-
oriented layout in a Soft Drink factory
 The machines and equipment must be
positioned orderly due to the sequence of
operations needed for the production.
 The materials flow from one machine to
another in exact sequential order without
going backward or deviation.
 Clearly, the raw materials are put into the
very first machine and the processed
product flow to the next machine, which
means that output of previous machine
becomes the input of next machine.

43. Factors favorable for using
product oriented layout
1. Low variable cost of manufacturing per unit
2. Smooth and flawless operation
3. Lesser inventory costs
4. Simple and effective inspection of work and
production control
5. Rapid output with high volume

44. Factors unfavorable for using
product oriented layout
1. Large initial capital investment for machines and
equipment.
2. Large amount of overhead charges
3. Breakdown of one machine will slow down the
entire operation process.
4. Lack of flexibility to produce different products
because the machines and equipment are set up for
specific products.

45. Human resource and Job
design

46. Objectives of Blue Mountain’s
Human Resource Dept.
 To provide an adequate, competent and trained labors
for all levels of factory operation from bottom to top
management.
 To create the mutual faith and understanding among
employees, between workers and management level.
 To provide the security of employment to worker so that
they may not be worried by the uncertainties of their
future.
 To provide an advancement opportunities to workers
who are willing to learn and be under the training
programs to improve their ranks.
 To acknowledge the work and accomplishment of
workers by offering the incentives
 To ensure the well beings and work under safe
conditions of all the employees and take care of their
health.

47. Strategies for HR
HR department has been using some strategies to
provide the suitable work force to the operation in
these following areas.
 Recruitment and selection
 Training
 Job expansion ( Job enrichment and job rotation)
 Performance appraisal and reward system

48. Recruitment and selection
The company has to make sure to get right quantity
and quality of human resources at the right time for
different operational purpose. These are the some
methods that HR department is using to recruit
personnel
 The interviewee has to go through medical test
approved by the company in order to ensure the
candidate is free from transmitted diseases,
physical and mental disabilities, visual and hearing
defects
 The potential labors need to be tested by a task
which is designed to measure their dexterity and
learning capabilities.

49. Training
 All the recruited workers has to undergo certain
amount of training to get familiar with the factory
environment and they will be recorded in the
details of skills, qualifications, abilities, experiences
and responsibilities etc.
 From the training results, each of them will be
assigned of their suitable roles.

50. Job expansion
Need be done carefully because improper
placement will cause turnover, absenteeism,
accident rates and immorality.
 Job enrichment - a way of making job
more interesting and fulfilling. Entrust
capable employee in both planning and
controlling of the entire task
 The job rotation - the shifting of workers
from one work point to another so they
won't get bored of doing the repetitive jobs.
The labor can increase their skills and
knowledge about related job.

51. Performance appraisal and
reward system
The company gives out
 Bonuses for the employee who always come
regularly to the job in time.
 Extra cash to all workers if there is an
improvement in productivity of entire factory
than previous months
 Yearly rewards for workers who has been the
role model in morale and performance for that
year.
The company use both seniority-based and
performance-based merit system for job
advancements

52. Labor Productivity
Labor productivity =
Output
Input
Labor payrolls = 3500ks/ day
Basic Labor payrolls per operating month = 70,000ks
Operation Hours = One 8Hr Shift Duty ( 800
Labors )
Total Labor Hours = 6400 labor hours per day
Daily production amount = 60,000 bottles ( 2500 cases
)
Labor productivity = 9.375 bottle per labor hour

53. Supply Chain Management

54. The Supply Chain of Blue Mountain
Soft Drink
Manufactures
concentrated
beverage base and
syrup
Sugar Factory
Bottler
Blue Mountain
Soft Drink
manufacturer
Distributor
Retailer
Customer
Manufactures
Finish Bottle and
Cases
Sales and Deliver
Sales and Deliver

55. The Supply Chain Process
Water – Blue Mountain soft drink company collects water form local
source. There is no shortage of water.
Sugar – Sugar is supplied by Zayawaddy Sugar factory which is located
in Bago division
Bottles and cases - These are manufactured by a bottling factory in
Shwe Pyi Thar Town Ship
Label - Label is produced in the Blue Mountain manufacturing plant
according to forecasted demand
Production – After gathering all the ingredients and raw materials, the
products are finalized in the main factory.
Distribution – The finished soft drinks are then distributed to retailors
and wholesalers across the country.

56. Considered Factors in Supply Chain
Management
Speed – In Myanmar, Fast delivery is needed
because the demands for soft drinks are high and
cycle time of consumption is short.
Quality of distribution – Good handling and
transportation is needed to reduce scrap and return
cost
Vendor Managed Inventory – Company doesn’t
store the finished goods very long and distribute
immediately to the retailers which helps to reduce
cost.

57. Inventory Management

58. Two Types of management used
in Blue Mountain’s inventory
Just in Time inventory management In Raw materials
 Since the production amount is too high, the plant is not capable of
storing all the raw materials needed
 Maintaining Raw materials like high fructose syrup, sweetener,
carbonated gas are too costly, thus JIT is the best option for
production cost
 The plant collect the raw material as forecasted demand and quickly
produce the raw materials
Vendor Managed Inventory for finished goods
 The inventory of finished goods are maintained in phases
distributor ware house and retailor shops
 By this way, the factory doesn't need to hold those items and will
lead to less warehousing costs.

59. Maintenance

60. Most Common Equipment Problem in
BM operation process
Biofilms
 Microorganisms
 Found in water procession
 Attach to the surface like stainless steel piping via
adhesive-like material
 Poor particle control upstream can lead to high
maintenance cost and an increase in system
downtime

61. Solutions
Preventive Maintenance
To maintain the daily production run,
 Routine inspection by skillful technicians
 To avoid the critical equipment failure, using technology
to detect starting from early error stage and replace with
the original spare parts before it affect the entire
machine
 On the side of water processing plant , we can utilize
3M™ Series NB Filter Bags which can provide hyper
sensitivity filtration to flow rate
 Provide thermal treatment of the internal surface of the
steel pipe lines to prevent the growth of the algae within
these areas

62. Conclusion
 In this fierce, harsh and competitive
globalization era, we continue to maintain our
blue mountain soft drinks with stabilized quality
control.
 Continue to focus to maintain the market
leader position by giving the same excellent
customer preference taste.
 Considering on the alternative cost reduction
methods to improve the long run production
and forming a convenient and friendly
environment within the entire operation
process.