OPERATIONS MANAGEMENT(MGT 345)

REPORT FOR THE VISIT TO FATTCHOI COFFEE TENOM FACTORY

GROUP MEMBERS : VALERIE FAZLINA VERNY (2009366673)

: NEDRA BINTI MOHAMED (2009921091)

: NAJURATY JUFRI (2009178253)

: HAMIZAH BINTI AJMAIN (2009145791)

PREPARED FOR : MADAM MYDAH ERIC

DUE DATE : 10 FEBRUARY 2012, FRIDAY

NO. CONTENT PAGE01. ACKNOWLEDGEMENT02. INTRODUCTION03. THE INPUT USED IN THE

PRODUCTION PROCESS04. THE TRANSFORMATION PROCESS05. PRODUCT DESIGN STRATEGY06. CAPACITY PLANNING07. SCHEDULING08. MAINTAINANCE09. QUALITY MANAGEMENT10. TECHNOLOGY ISSUES11. COMPETITIVE ADVANTAGE12. RELATED ISSUES TO

OPERATIONS MANAGEMENT

ACKNOWLEDGEMENT

First of all, we would like to thank to Allah s.w.t for giving us the

strength to finish this assignment. We feel very grateful for having

this opportunity because we have gained a lot of new experiences

during accomplishing this task together.

Next, we also want to say a million appreciation to our lecturer,

Madam Mydah Eric for guiding us during our trip to Fatt Choi Coffee

Factory,Tenom. Thank you for being patient with our behavior during

the trip. We have learnt a lot of experience and gained a very useful

knowledge about the company especially from the process of extracting

the seed (coffee) until it become finished product that we drink

today. After the trip, we finally recognized three types of coffee

that have been used all over the world in order to produce the best

coffee which is Robusta, Arabica and Lybrica.

Last but not least, thank you to our course mates that also involved

indirectly in this project for giving their cooperation and exchange a

very creative ideas during completing this task. We will never forget

their hard work for helping us to accomplish our goals for this

assignment.

INTRODUCTION

About Fatt choi Coffee Tenom Factory

Founded : 1986 founded in Tenom, Sabah,

Malaysia

Location : 274, Jalan Tenom Lama, 89908 Tenom,

Malaysia

About : We produce the Sabah famous "Tenom

Coffee".

Products: Cabin Accomodation:

Teak Wood Cabin Plantation Stay

Coffee Products:

1. Black Coffee Powder

2. Pure Coffee Powder

3. 2 in 1 Coffee Mixture Bags

4. 3 in 1 Instant Coffee Mix

5. Black Coffee Mixture Bags

6. 5 in 1 Tongkat Ali Ginseng Instant

Coffee Mix

7. 3 in 1 Coffee Mixture Bags

THE INPUT USED IN THE PRODUCTION PROCESS

INPUTS TRANSFORMATION OUTPUTS

ConversionLabor, capital,

Goodsand

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.

APPENDIX