Comparative analysis of organizational structures and practices

¶ … Organizations

Just because two companies are of a comparable size, and are in like businesses, does not mean that they are going to be alike in other ways. A comparison of Berger Ingredients and Hansell is one done between two companies which are both involved in the food industry and have some commonalities because of that fact. However, the companies are very different in the way that they conduct business and in some of the products that they sell. This comparison will first look at each company separately, the will compare the products and practices of both, before a few concluding statements with regard to the comparison.

Berger Ingredients is a relatively new company, established in 2009, that supplies raw food materials to other manufacturers who use these ingredients to make packaged foods. The company is a small scale operation which has 20 employees and only 1000 square meters of manufacturing space. The company does not require a larger space both because they have not been in business long enough to procure a larger customer base and because they do not make finished products for sale to consumers.

The market for the goods that Berger supplies is manufacturing concerns that make sausages, ham, bacon and salami. The spices in these meat products and the natural preservatives are what Berger deals in. Basically, they are a contractor to the companies that they represent. They are a company which acts as a middle man for the producers of the spices and other raw materials and the manufacturers of finished products. A major new component of the business is the research and development of other markets for the ingredients that they currently have available, and other products that they can sell to their current customers to enhance those company's business. A major issue that Berger Ingredients has to contend with control of pest populations which consume and nest around the salable products. This problem is a regular issue with QA and other systems within the plant (Dries & Mancini, 2006).

The ordering system for the plant is done through electronic means. A manager receives a fax, on a set ordering form, which requests an ingredients in amounts and types. The fax is followed up by a telephone call which confirms what the order is and that the interpretation of the order is correct. After the order is received and confirmed, it is entered into a system called the JIWA. This system is able to verify the inventory that the company has on hand, and determine whether the order can be filled with available inventory or not. If the product is not available, it is placed on back order and highlighted by the management system. After the order is entered into the system and a back order is placed, then Berger Ingredients can tell the customer when to expect the order.

The next step in this process is to generate a pick order that is sent to the employee responsible for filling the orders, so that the product (when it is on hand) can be sent to the customer (Piasecki, 2011). The picking system is critical because most of the products that Berger sells have a limited shelf life (around six months), and with 2000 plus products they have to know when something is going to expire. The products are also arranged on the shelves so that older products are picked first. Because of the low shelf life the inventory on hand is minimal with only a large volume of products that generate a high amount of sales kept as a safety margin.

When the order is picked it then goes to a QA inspector who makes sure that the order is correct. After the inspector checks the load for a specific customer, it is wrapped and a certificate of analysis is attached. Large volume orders are packed on pallets and shipped via rented truck. Smaller orders are packed boxes and cartons and shipped via TNT shipping. Every single order is labeled with a bar code that gives all information for the shipment, and enables the shipment to be tracked as it is en route. The ordering cycle is complete when the customer receives the product and has their QA verify that it is correct. If the customer QA officials find that there is a problem with the shipment, it is returned and reentered into the system for correction.

Another aspect of the QA program at Berger Ingredients is ensuring that the premixes they sell have the correct list of ingredients and that they are mixed to specification. The company uses a team concept to make sure that they are introducing mixes that are relevant to the market. The team, people from all departments, meets together and discusses the proper way to market and launch new products. The company then uses a reverse logistics program to make sure that the customers are satisfied with the products they receive. If the customer is not then Berger will try to remix the ingredients correctly, if that is not possible the resultant mess is sold to farmers as cattle feed.

The company uses key indicators and assistance from their distributors to make sure that their inventory of ingredients is what they currently need. By using a monthly end inventory value report and other inventory trackers the company is able to make sure that it maintains the product it needs, and that nothing goes out of date.

The second company under consideration in this comparison is Hansell. Much like Berger, it is a small company, but Hansell sells finished products instead of raw ingredients and ingredient mixes. Foods such as puddings, salad dressings, etc., are manufactured along with sales of honey, cooking oil and dried fruits. The company, established in 1990, has 20 employees and they work in a warehouse which has 3000 square meters of space. The company sells its products to wholesalers like Woolworths, Coles and Franklin.

The system for orders is much the same as that for Berger Ingredients with a few differences. Customers make their orders either via fax or email, the seller checks the order to make sure that the product is available, a credit check is conducted on the customer, and then the customer is sent an email confirming the order with the correct price and quantity. After this process the order is entered into a management system called ZAPTA. The ingredients for the foods that Hansells sells are all ordered from sellers overseas, so there are sometimes delays with regard to customs and quarantine. When the Hansells employee responsible for the order confirms that the required ingredients are available the customer is given a ship time. If the product is not available, the product is backordered. Hansells holds an eight-week inventory of the foods that it sells because they need to keep a sufficient inventory to counteract the delivery time from their suppliers.

After the order process is completed a pick order is generated. The warehouse picks the product, if it is immediately available, then it is consolidated and wrapped for dispatch. Large orders require that trucks be hired to carry the load, and these orders are packed and wrapped in pallets (Mayr & Bock, 2002). Small orders, as with those from Berger, are shipped via box or carton with TNT Express or UPS, or another carrier. The orders, whether they are large or small are sent with a barcode that can identify them throughout the shipping process. QA is also an important part of this company's process as inspectors make sure that the right product is sent to the correct customer and that all orders are filled to the specifications of the customer. If an item is rejected by a customer it cannot be returned because it is a finished product. Thus, if there is nothing materially wrong with the product it is given away to a food bank or other charity. If the error is in the ingredients then the product is thrown away so as not to endanger anyone who might consume it.

It is interesting to note that there are many similarities in the two companies. Both Berger and Hansell have 20 employees with whom they conduct their business. This means that every employee is involved in many aspects of the companies and understands more than just the processes that they are responsible for. This could be very valuable to the continued health of both businesses as they grow because a well-trained, flexible workforce is essential to a growing company (Bodwell, 2002). Also, a small company, such as these two are, is a nimble company (O'Daniel, 2011). This means that problems can be quickly solved because there are not a lot of layers of management for a decision to pass through. The information from Berger Ingredients pointedly discussed the use of teams from several areas of the company to make decisions regarding new products and how to market them. This is also good training for employees who may need to train others some day.

The ordering systems are also very similar. As noted, they both receive new orders via fax or email, they both confirm the order after it has been received by either calling the customer or emailing them, and both companies use a systems of checks to make sure that every item is correct before it is shipped. It seems that the phone call made by Berger Ingredients is the better way to proceed in this case. The main reason is that it is a personal touch which may make for a better relationship between Berger and its customers. The ordering systems both flow to a picking and then a QA system, which has many checks to make sure that everything is continuously correct. However, if either company makes a mistake, they have a system that can be used to either reuse or dispose of the product. Both companies seem to be environmentally aware in the fact that they both recycle most of their damaged products in some way. Berger uses any unusable products as cattle feed which it sells to farmers. Hansells recycles their by donating them to food pantries or throwing them away if they cannot be reused. In this case, Hansells seems the most responsible. They recycle by giving the food away to people who are less fortunate. Because the food is finished and not raw ingredients (like Berger) it cannot be repurposed and sent back to a customer. Therefore, Hansell should have a system to make sure that they have very little waste.

Both of the companies also use similar key indicators to make sure that they are maintaining a usable inventory. Since the products that Hansell makes are more perishable, as they are finished not raw, they only have an eight-week supply, versus a six-month supply, on hand at any time. The inventory management tools that Berger Ingredients uses is for the value of the material that they have in hand at the end of every month. It would seem that the value of the products is less important than what that inventory is, and what its expected shelf life is. Hansells uses the same marker, but it makes more sense in their case. The value of the inventory is important because they are selling finished product, not raw. Berger should change to using a consumption of raw material key indicator rather than what they use now because that would be more valuable to the type of business that they are.