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Module Name: Operations Management

Lecturer’s Name: Yash Gujadhur

Date of Submission: 30th March 2024

Submission Mode: BLACKBOARD (MANDATORY)

Total Marks: 30 marks

Word limit: 1500 words

Assignments question:

Fish Canning Ltd (FCL), started operation of a tuna processing plant in May 2003. Various factors
contributed to the setting up of this plant. These include the following: (i) the world-wide increase in
consumption of tuna fish; (ii) the location of the island, i.e. close to the main fishing banks; and (iii)
Mauritius, being part of the ACP group of countries is exempted from export duties to Europe.
FCL is located in the Port area in Port Louis. This location offers several advantages. The cost of
transportation of raw materials to the plant is not excessive. FCL receives its raw materials, i.e. frozen
fish from Tuna Refrigeration Ltd (TRL), a sister company by means of trucks, the two companies
being 1 km apart. Thus the fish does not defrost on the way. This is a critical factor in food safety. The
Port area is a strategic place as it is situated near the business and administrative centre of the island.
Moreover, the Port and Freeport area offer proper logistics and infrastructures to facilitate exportation
of the canned fish.
The factory produces 250 tons/day of the finished products of the required quality for both the
European and American markets. The EU has imposed a condition that the fish that is exported to EU
should be accompanied with all information so as to enable the consumer to trace the origin of the raw
fish, where it was processed, and the different processing stages it has undergone until the final
product. FCL has set up a traceability system to meet the above requirement.
The raw fish are supplied by reefers owned by the IBL Group and by other fishing vessels. The fish is
frozen, at temperature below 0°C, as soon as it is caught. The fish is unloaded by forklifts from the
fishing vessels and transported to Tuna Refrigeration Ltd (TRL). There the fish is stored in cold rooms
kept at temperatures of about -25°C. To cater for any shortage in supply that can occur due to bad
weather, TRL ensures that it always has fish in stock to supply to FCL for processing and to supply to
its other customers. The frozen fish is supplied to FCL, as and when needed.
Manufacturing Process
The processing of tuna is long and tedious. The cleaning of the fish is a labour intensive activity. FCL
obtains some of its manpower from areas such as Roche Bois and from the surrounding regions. Due
to shortage of local labour it also makes use of foreign labour from China. The tuna is first washed to
defrost it and the internal organs manually removed. It is then pre-cooked for 45 minutes to three hours
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depending on the size and type of the fish. The skin and dark meat are removed and the fish filleted.
The flakes are canned and the dark meat is canned separately, to be used as pet food. The loins are
sealed under vacuum in plastic bags. The sealed cans are heated under pressure (called retort cooking)
for 2 to 4 hours to kill any bacteria that might be present. Tests are carried out to ensure the product
meets the required standards. The product is also tasted by trained personnel as part of the quality
assurance exercise.
Plant Design
Plant layout is an important component of any production system. The former can be defined as a
technique of locating machines, processes and plant services within the factory so as to achieve the
greatest possible output of high quality at the lowest possible total cost of manufacturing. The plant of
FCL has been designed and set up in such a manner so as to satisfy the conditions laid down by the
Food Act, the European Commission directives, the requirements of the United States Department of
Agriculture and the European Union requirement on hygiene and traceability. Customer requirements
are strictly adhered to.
The forklift that unloads the raw frozen fish delivers them to the thawing section where their quality is
verified under strict conditions so as not to affect the quality of the canned fish. The different
processing sections are arranged following the different processing steps the fish undergoes until it
becomes the final product. The different components in the processing line have been placed in such a
way that the floor space is utilised to its optimum. Control of the different processes, e.g required
temperatures, is done by means of a computerised system. The various steps follow one after another.
Some of the flakes are packed in pouches of different sizes as per the client’s request. Other flakes and
bellies of the fish are canned according to a prescribed weight. The canned tuna flakes are normally
packed with different types of oil and sauces. Flavourings are also added. The loins on the other hand
are kept refrigerated. The canned and pouched flakes are generally stored in normal warehouse. The
loins on the other hand are kept in reefer containers. For local consumers FCL supplies its finished
product as canned tuna flakes whereas those for export are shipped either in normal containers, for
canned and pouched flakes, or in reefer containers for loins.
Production System
Production planning is systematically done to ensure that deadlines for delivery are met. The
Operations Manager of FCL prepares a calendar of production both for the local and international
markets. Personnel of the production department are made aware of the production schedule. This
department plans its daily activities in such a way that targets are met. Close monitoring and
supervision of the different stages is also carried out. FCL has set up a regular maintenance system that
ensures almost zero machine breakdown.
The fish is prepared following existing standards of the factory and the sequencing of the process is
from the reception of the fish to the final products. The latter are loins (splitting of fish into halves
along the median line), flakes and belly. The company has implemented the Hazard Analysis and
Critical Control Point (HACCP) Methodology in order to ensure food safety and meet the stringent
requirements imposed by its overseas customers and the local Food Act. No concession is made as
regard quality of the product.

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The actual production capacity of FCL is about 70%. It has to be noted that apart from the regular
maintenance of the machines and pre- cleaning of the factory before normal working shifts, regular
cleaning of the factory is carried out 4 times daily to prevent growth of micro-organisms. The factory
operates 24 hours and 6 days a week. During the period when the demand for the fish is high, the
capacity utilization increases to 90%. 100% capacity utilization cannot be achieved in practice due to
the reasons mentioned above. However, capacity utilization is crucial in such a factory. The Mauritius
Ports Authority has recently become more vigilant about effluents and industrial wastes. In order to
treat its waste water FCL set up a state of art waste water treatment plant. The treated water is used for
cleaning the factory and for irrigation of the lawns. Solid wastes are disposed of by ATICS Ltd.
Human Resource
FCL employs a total of about 1630 workers, both male and female out of which about 30% are
expatriates. The factory has a majority of female workers. The factory runs on a 24 hour basis which is
achieved by a two shifts system, 6 days a week. Each shift has 2 tea breaks and 1 lunch break. The
factory is fully air conditioned so as to provide a comfortable environment for its manual labour to
work in. There exists different sections in the production system, male workers are more concentrated
at the sections where more physical efforts is required, for example sections where sorting of fish is
carried out, cutting, cooking and cleaning with high water pressure jets. FCL does suffer from the
problem of absenteeism among the local workers. To address this problem, management has posted the
expatriate workers at the most important sections of the production line and has trained a good
proportion of the workers in order to make them multi-skilled. This enabled workers to be rotated from
one section to another without adversely affecting productivity. When labour from China became more
expensive, alternative sources were found from Bangladesh and Madagascar.
At the turn of the century cost of production increased. FCL was finding it difficult to compete with
low cost producers such as Thailand and China. The organization started making losses. It recruited an
industrial engineering team to review its system. Non-value added processes were eliminated. This
resulted in a leaner and more efficient organization, leading to an increase in sales. The organization
returned back to profitability.
(Source : Dr B. Abacousnac , Open University of Mauritius)

Questions:
1. “The success or failure of an organization depends to a large extent on its location “. Discuss
the factors which have determined the location of the plant. (10 marks)

2. Discuss why capacity utilization is important in a plant such as FCL. (10 marks)

3. With reference to the case, discuss five external factors impacting on FCL and indicate how it
responded to these factors. (10 marks)