Owens Precision Machinery - Essay Example

The company is a machine shop that has felt a recent surge of demand as the trend of insourcing has felt an increase after the recent recession. While the company is keeping up with the increasing demand, the company is also faces issues of dwindling cash reserves. In order to stay ahead of the competition, the company has to keep inventory in stock because of the longer lead time that suppliers require. For this, the company has to rely on outside investment which makes the President and owner consider whether he should sell off his company.

The aim of this paper is to analyze the future move of the company. Owen has two options: he could either sell the company or ask his friend and investor for another loan. In order to decide which option to pursue, Owen would have to analyze his company as well as the industry in which he operates. He needs to find out if the issue of capital shortage can be corrected in the near future and what steps should he take in order to solve the problem. If he feels that the company has no future, then the best course of action would be to sell off the company.

In order to recommend the best course of action for Owen Precision Machining, the first part studied business models that would help in analyzing the situation at hand. The models that have been used in the paper are: SWOT Analysis, Risk Reward Analysis, Just in Time Strategy, Vendor Managed Inventory, and Business Process Reengineering. SWOT helped in understanding the current standing of the company both internally as well as externally. The Risk Reward Analysis helped in evaluating the potential rewards in comparison with the risks for the options available for Christopher Owen.

Since the company was facing the biggest hurdle in managing its inventory, two strategies that were discussed are Just in Time Strategy and Vendor Managed Inventory. Lastly Business Process Reengineering was used to help guide the organization on how to attain the required changes. SWOT Analysis of the company showed that the company is in a favorable position both internally as well as externally. However, the company has to work on its threats in order to bring the company into a more favorable position.

The risk reward analysis revealed that the company is in the growing stages where the risks and rewards are both high. In this position, the company has to manage its operations in such a manner that it should be able to minimize the risk and thus entire the mature stage. Also the best option for OPM under the risk reward analysis is to retain the company but at the same time revise its operational strategy. The biggest issue that OPM is facing in this regard is managing its inventory so that cash is available for the company.

For this, the analysis suggests using a combination of Just in Time Strategy and Vendor Managed Inventory. In order to bring about the necessary changes, the Business Process Reengineering model will be followed. Once the company was analyzed through the above mentioned models, a set of recommendations were developed for the company. It was recommended that Owen not sell the company but rather retain ownership of the company. The company should ask Benson for a bigger loan in order to implement VMI and JIT Strategy.

Chapter One Owen’s Precision Machining is a small machine shop that operates with a total of 15 employees and under the leadership of the President and second generation owner, Christopher Owen. The company develops machine parts for robot prototypes and laboratory automation equipment. Before the economic crisis that hit the world in 2007, more and more companies were outsourcing their manufacturing to emerging countries around the world and chief among them was China. This trend of outsourcing had resulted in a decline