Leagile Manufacturing System - Essay Example

? Leagile Manufacturing Assessment 2 Contents Contents 2 Executive Summary 3 Introduction 4 Linkages between Needs, the Company’s Strategiesand Its Current Operational Issues 5 Strategies that the company should develop to develop the Consumer Relationship and Supply Chain Activities 6 Solutions for the Steady Implementation of the Strategic Initiatives taken above 14 References 16 Executive Summary Leagile Manufacturing System is an operations concern operating both based on the paradigm of manufacturing and sales of machinery and other equipments produced. However in its operational and business aspects the concern was found to largely suffer from rising inventory cost. To this end, the Chief Executive Officer of the company delegated the responsibility to Scott Murphy, the Vice President of Operations to chalk out a strategy to help reduce cost of the inventory system. Scott Murphy in this connection is found to take resort to Just-in-Time concept to help resolve the inventory issue in the company. However of late it was found that the Just-in-Time concept though helped the concern to reduce the cost of inventory to a certain extent failed to satisfy the sales and business objectives. It contributed to the dissatisfaction of the customers in not getting the right product on the right time and also of the operations team suffering from lack of right resources to produce the needed product. Moreover the company was faced with another problem in which the current inventory level failed to meet the anticipated demand of the market leading to loss of business and inventory piling situations. Thus in this regard the paper focuses on unearthing the different inventory management strategies that can be taken by the company to both reduce the cost of inventory for the concern and also satisfy the needs of the consumers. Specific recommendations are also put in the paper as to the manner in which the different strategies that would be taken in regards to inventory management would be effectively implemented. Introduction The vice president of operations, Scott Murphy endeavored to transform the supply chain operations through the incorporation of models like the Just-in-Time framework. However the model failed to render any possible solutions to the existing supply chain problem of rising inventory cost and on the contrary created a huge problem for the company in its dealing with the customers. The consumer groups reflected high amount of problems in getting the right quantity and quality of products owing to the misappropriate use of the just-in-time model. Leagile manufacturing system is observed to largely falter owing to the excess availability of dead stock levels that failed to meet the fluctuating demand scenario in the external market. This fact led to the rise in cost of holding such dead inventories in regards to the customers and the concern itself. Moreover the system of placing orders to the suppliers and also in meeting the order requirements of the consumer groups received severe halts on account of inappropriate stock levels. The entire operational and sales teams’ efforts were in vain on account of such growing problems which also started reducing their motivation to render further productivity. In regards to the above problem the following paper aims at bringing about separate strategies that would in turn help to bring about effective strategies that would help in reducing the cost of holding inventory and also in helping in meeting consumer requirements. The paper in turn also focuses on the separate implementation activities that the organization should take in order to involve the separate stakeholders in the change process and thereby develop an enhanced cultural climate in the concern aiming at fostering better relationship with the consumers. Linkages between Customer Needs, the Company’s Strategies and Its Current Operational Issues Scott Murphy as the Vice President of Operations for Leagile Manufacturing Systems is found to have decided into implementing the concepts of Lean Time and Just-in-Time in the operational parameters of the company. However the objective for which such systems was conceptualized to be introduced by Scott in the company widely fell short for though the new systems helped in reducing the cost of inventory to a certain extent yet it failed to meet the expectations of the consumers. On the contrary it was found that largely depending on the concepts of Just-in-Time happened to affect the production and delivery cycle in a great manner. The customers having demanded a certain category of products on a bulk basis simply fell into trouble when such were not received by them within the stipulated time period. Thus these consumer groups were made bound to order quantities in large volumes that even exceeded their demands. This excess stock demanded by the consumers pertaining to different categories started acting as a buffer stock. The buffer stock was used by the consumers as a means to serve contingencies in cases where again the needed stock or raw material was not received by them from Leagile Manufacturing. However again this accounted for trouble. The buffer stock firstly had to be procured in large quantities and was also required to be held for longer time duration. Both these points happened to raise the inventory holding cost for the consumer companies for which these companies are found demanding a reduction in the cost of the products dispatched from Leagile. Further the consumers also complain that orders once made and goods received from Leagile turns outdated owing to changes in the external scenario like alterations in the demand and changes in behavior of the ultimate consumers. This scenario in turn creates a problem for both the customer of Leagile Manufacturing and also for the latter. Wherein, Sandy the sales manager is getting a huge amount of trouble in frequently checking in the order lists mailed by the consumer companies the companies on the other hand are complaining for rise in holding cost of unproductive and back dated inventory. Henceforth it is found that Scott’s dependence on the concepts of Just-in-Time and Lean Production happened to spread blunder for both the company and its consumers. Thus it was required by the company to develop some strategies to help in the development of relationships with both the consumers and as well as with the supplier groups. Strategies that the company should develop to develop the Consumer Relationship and Supply Chain Activities An important strategy that can be incorporated by the organizational managers of Leagile Manufacturing is the introduction of a high level system architecture coupled with the existing supply chain activities. The use of systems like Dynamic-Data-Driven Application software helps the business and manufacturing corporations to largely link up the different data pertaining to production and transportation scheduling activities along with linking up the supply chain and inventory management activities of the company. It is found that the use of such high integrated software would help the manufacturing concern in rightly reducing the cycle time related with the production activities. Such reduction in the lean time for the business corporations helps in optimization of the raw materials available with the company and thereby enhances the turnover cycle of materials from the supplier’s ends. Proper production and delivery scheduling in regards to the organization thereby improves the relationship of the company with the supplier groups. Further the use of the system would also help ensuring the inventory position for the firm at any point of time and thus there were fewer requirements for depending on systems like Just-in-Time production techniques (Celik, 2010 et al, and p.325-326). The manufacturing firm can also work on the deployment of Economic Order Quantity model to help in enhancing the effectiveness of the supply chain position in the concern. Through the use of economic order quantity the organizational managers can easily map the danger levels and the re-ordering levels for which adequate orders regarding stocks can be placed tom the suppliers. Further the use of the system also helps in reducing the piling up of the stock levels in the concern which was observed to be one of the main objectives behind the incorporation of Just-in-Time technology. The organization based on the Economic Order models can rightly justify the minimum price that would be required for ordering the optimum stock for meeting the demands of the hour. Henceforth the use of Economic Order Quantity can be identified as a strategic move taken by the concern in both reduces the level of stock and capital locking period for the concern. Henceforth the same can be taken as a strategic move that can be taken by the managers in regards to the enhancement of the supply chain management activities in the concern (Pasandideh, Niaki and Nia, 2009, p.329-330). Another strategic framework on which the managers of Leagile Manufacturing can work upon to help in the development of its supply chain activities is the use of the Kraljic Model that focuses to strategies the procurement functions. Prioritization of the procurement functions can be based made on a matrix set that tends to gauge the importance of such depending on its impact on the profitability and the supply chain activities. The model states that the procurement functions of the products from the suppliers can be conducted basically based on four parameters. In the first parameter the products that are evaluated to have less impact on the profitability parameter of the concern with also a less risk focus are required by the company to be procured in large amounts. The inventory levels relating to this product need to be highly optimized and standardized through effective order management made by the suppliers. In the second case the company also needs to employ its full purchasing and procurement potential behind such commodities that are analyzed to help the company gain on profitability and also has lesser risk avenues related to it. Apart from the above stated product categories the manufacturing firm is required to conduct a thorough analysis before setting on the procurement of products that tend to reflect moderate to high impact on the profitability parameter of the company with also larger amount of risk association. The manufacturing company in regards to such products is required to focus on the development of strategic plans regarding mitigating the rise of contingencies relating to such products. Further several type of risk guard mechanisms like insurance covers needs to be incorporated in regards to the procurement planning of such products by the company. Thus Leagile Manufacturing in accordance with the above discussion needs to first set priority for the products to be procured from the suppliers. This function can help in enhancing the effectiveness of the company in meeting the demands of its customers. Again the manufacturing company depending on the product matrix developed above needs to develop its relationship with the supplier groups. For products that have lesser impact on profits and also reflect lesser risk relation the manufacturing concern can go for arranging a larger supplier base for such. This helps the firm to gain on its bargaining potential while dealing with the suppliers. However for the products that is found to have a larger risk association the manufacturing concern is required to maintain an effective supplier base upon whom it requires to depend. Effective communication needs to be conducted with the supplier groups to reduce the potency of risk related to the procurement of commodities from them (Esteves and Barclay, 2011, p.208). Focusing on meeting the enhanced demands of the consumer bases the manufacturing companies need to work upon mechanisms that would help in the formulation of effective supply chain models for meeting the orders placed by the consumers. Strategically speaking the manufacturing companies can work upon a vendor management inventory system wherein the vendors or the customers effectively communicates with the manufacturing base and informs them about the changes in the external demand scenario and price changes. Similarly such mechanism can be employed by the manufacturing firm to get the knowledge about the amount of resources and inventories available with the customer in regards to the prior productions. This information would help the manufacturer in changing the production patterns to help produce newer product designs and thereby would gain on demands and market shares. An effective vendor management inventory system works on the incorporation of high amount of information technology components that tend to integrate the data sets of both the consumers and the product manufacturers or suppliers on a single plane. This tends to help the parties in providing the right information to act upon. Moreover the systems also advocate the employment of automated replenishment systems at the customer’s end for which the consumer parties are required to rightly feed in the data in the computer. The manufacturer herein is also required to conduct a survey from time to time based on such data sets about the demand conditions for the particular product to help in enhancing the deployment of such electronic software in the integration of supply chain management and customer relationship activities (Niranjan, Wagner and Weigold, 2011, p.40-41). The use of Vendor Management Inventory software earns a larger popularity in the literature of supply chain management activities in that it helps both the retailer and the supplier parties in a myriad number of ways. It can be inferred that the consumer groups of Leagile Manufacturing would get a high amount of advantage on the employment of this system for the entire workload of forecasting and planning the demand mechanisms related to the different products would shift to the company’s end. The company having the access to the inventory information of the different category of products at the consumer’s end can effectively work on the order mechanism to produce the right quantity and design of the goods to be sold and dispatched. Again the supplier or the manufacturer also gains in regards to the effective employment of such software in the supply chain management activities for it helps the manufacturer in rightly scheduling the transportation activities. This fact would help the manufacturer in also reducing the effect of transportation cost on the business (Sui, Gosavari and Lin, 2010, p.44-45). Another strategic concept that can be incorporated by the supplier groups in this context is the categorization of the products based on two types- functional products and innovative products. The producer or the manufacturer is required tom understand whether the set of products produced are such that they fall in the functional category that does not excite alterations in the demand cycle. Such products can be sold by the manufacturer in large amounts to the customers for being subjected to fewer amounts of fluctuations as regards to their designs. However another set of product is also demanded in the product market that is highly innovative in nature. These set of products being innovative are subjected to large amount of fluctuations and hence gets dumped in the warehouses when being dispatched in large numbers from the supplier’s end. Henceforth the manufacturer or the supplier is required to take the help of different types of supply chain management strategies in order to satisfy the requirements of the different product sets. This fact is considered helpful in reducing the gap between the demand and delivery gap pertaining to the different types of products. Thus for the functional type of products the supply chain mechanism needs to act on delivering smaller quantities or volumes of such products while enhancing on the frequency parameters. Thus the stock turn of the products can be increased while reducing the level of stocks in each turn. Further the lead time pertaining to the same can also be reduced enhancing the relationship base with the consumer parties. The supplier chain mechanism for innovative products needs to work upon forecasting and effective planning mechanisms help in the reduction of excess and unused stock levels at the customer’s end. Further such delivery and supply chain management systems also needs to render high focus on the level of market changes and thereby alter the supply chain mechanisms accordingly. However like addressing the supply chain functions for the functional products the supply chain activities for the innovative ones also need to focus on augmenting the frequency of the deliveries with also reducing the size of each shipment. Identification of the product as a functional or innovative one helps the product manufacturer like Leagile Manufacturing to decide on its delivery or supply mechanism. In turn it helps in reducing the happening of the stock out situation which in regards to the innovative products is quite high owing to its dependence on market fluctuations (Harris, Componation, and Farrington, 2010, p.31-36). Furthermore the enhancement made in the supply chain mechanisms can be properly evaluated based on the incorporation of methodologies like Six Sigma. The Six Sigma concept helps the manufacturing concerns in reducing the occurrence of errors in regards to the production and supply functions and thus works in helping in the value enhancements of the production and distribution functions. Moreover the endeavor to continuous quality improvement taken by Scott in the case is also emphasized owing to the employment of the Six Sigma concept in the production and distribution functions (Brown and Murray, 2010, p.3-4). The Leagile Manufacturing concern can also work on mass investment options for the steady incorporation of advanced order management software like the Enterprise Resource Planning system. Incorporation of the above system would help the concern in largely integrating the different organizational functions like marketing, operations, planning, finance and the like to help in the active and effective processing of business orders. This system though quite expensive in nature would help in strategically transforming the deliverable functions of the company focusing on meeting of consumer demands. The consumer relationship management activities can also be redesigned to help the company meet the enhanced needs of the consumer bases through transforming it as an active decision support system. Such software would help the management in effectively tracking the different orders made by the customers from time to time and also in the effective scheduling of such to meet the same in the stipulated time period. The order management functions can be dealt in effectively in that the decision support systems helps in integrating the views of the different functional teams to accomplish and enhance the consumer relationship functions. Further this system incorporated with the supply chain network helps in triggering the optimal utilization of the available resource base for the due achievement of organizational objectives. Working on the above systems helps in developing the relationship of the company with the consumer base and hence helps in building of the consumer’s trust and loyalty to the company (Oduoza and Xiong, 2009, p.399-401). Using the above strategies the Leagile Manufacturing concern is required to enhance its supply chain network to a massive extent where it can work with a chain of suppliers to help deliver the right product at the right time to the consumers. Segregating the product based on strategic priorities would help the manufacturing firm define the range of suppliers that would be required and also work on the scheduling of transportation activities. These facts would help the manufacturing firm in optimizing on the supply chain mechanism to help provide low cost products to the customers. Leagile manufacturing systems also needs to keep the right amount of stock levels to help in meeting the standardized needs of the customers at any point of time (Sarathy, 2006, p.40). Another strategic implication that needs to be taken care of by Leagile manufacturing concern is working on decisions aimed at reducing the level of lead time involved in terms of dispatching the ordered commodities to the consumers. It is found from the case that the firm like any other manufacturing concern suffers from both stock out and stock excess situations in its endeavor to satisfy the demands of the consumers. The firm fails to deliver the right amount of product matching the orders wherein the stock position of the company reflects being overstocked. Such stocks are such that only occupy the shelf space but have already turned out to be dead ones in relation to the current demand scenario. This fact enhances the lead time that is taken to get the ordered products reach the customer’s end (Heydari, Kazemzadeh and Chaharsooghi, 2009, p.1214). Finally Leagile manufacturing needs to make the product development activities quite flexible in regards to the changes in the external environment. The external environment of a company consisting of stakeholders like customers is always in a state of flux and thus requires the manufacturing concern’s production and supply scheduling activities to be quite synchronized to such changes. Further the production managers are also required to conduct a lot of forecasting activities depending on the external changes that would in turn help them in modifying the product depending on the external changes. Demand analysis needs to be conducted by the manufacturing concern depending both on marketing conditions and also based on individual scenarios to adequately judge the category, quantity and specifications of the goods to be produced. Working on this strategic set would help the company in avoiding the losses incurred out of excess cost involved in holding of dead stocks in the inventory. The manufacturing company is also required to share potential market information with the different supplier groups so as to reduce the delivery gaps and also to enhance on the quality paradigm of the products (Chong and Chen, 2009, p.398-402). After rendering a discussion on the strategic initiatives that need to be undertaken by the company in regards to developing its supply chain models to help in meeting the needs and demands of the customers the further analysis would reflect on the implications required for the same. Solutions for the Steady Implementation of the Strategic Initiatives taken above The manufacturing concerns like Leagile Manufacturing in order to enhance the supply chain activities based on the above strategies needs to work on to develop strategies to incorporate technology developed interface. Computerized operational environment coupled with trained people would help the concern to rightly help in the large scale use of data driven application systems which would help the concern in gathering large volumes of data from the external markets and would also help in mass storage functions for future uses. The operational and production managers of the company are also required to largely integrate the supplier groups through proper technological networking. This integration would help in the steady flow of communication between the different parties as to the criteria of products to be developed for meeting modified consumer demands. Similarly the managers should also work on developing technological framework that would help in effective forecasting of demand for the existing products in the future period. Enhanced use of information technology would help in working on the vendor management inventory software enabling the firms to optimize the resources at hand for effective production of the required commodities. Again the managers are also required to develop a culture within the concern that would help in encouraging the sharing of potential information between the different parties involved in the supply chain network (Niranjan, Wagner and Weigold, 2011, p.40). In the process of designing an effective decision support system regarding the supply chain management activities the firm is required to globally connect with its different branches and supplier groups. Such global networking is possible through the use of internet mechanism on an enhanced scale. Similarly the concern is also required to maintain a tracking system of the different orders already processed and remaining through a due date analysis system. This practice would help the concern in rightly meeting the requirements of the consumers on scheduled time periods. Again the managers in Leagile manufacturing are required to largely integrate the different functional departments in the concern like finance and marketing to help in the optimal utilization of the existing resource base for production of the required commodities (Oduoza and Xiong, 2009, p.399-401). The manufacturing concern is also required to create a team of people that would help in generating qualitative and quantitative data from the market through considerable market research activities. Effective market research activities would help the manufacturing concern in rightly gauging the changing demand and consumer behavior conditions and thereby designing the products accordingly Chong and Chen, 2009, p.403-404). References Brown, W., and Murray, S. (2010). Are Companies Continuously Improving Their Supply Chain? Engineering Management Journal. 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