Loganville Window Treatments: Fundamentals Supply Chain Operations - Case Study Example

Name Instructor Course Date Fundamentals Supply Chain Operations Executive summary Faced with stiff competition from cheaper China products imported into the country, Loganville Window Treatments had to rethink about their operations in order to continue competing in the market. The company had an opportunity over the competitors in that they were close to target customers. The company president recommended a change in manufacturing processes as a means of competing with the counterparts. The report examines recommendation given by the president. In evaluates the manufacturing process in place and the recommended manufacturing process. The costs the company will incur in adopting the new system and the expected benefits are discussed. The report further examines customization process, its benefits and expected costs in changing from the current process. In addition, changes in the service process are addressed. The service process will deviate from just being physical to being intangible, developing human resources and interacting directly with the customers. The report found out that changing from line production to job shop production would require reconfiguration of the production systems such that the machines will be able to adjust quickly to taking up different designs and smaller quantities of each. To achieve this, the company may require development and integration of new functions. The report further found out that customization is good in retention of customers and creation of loyalty. It would therefore require employee training in addition to hiring experienced staff for the same. A few of the challenges addressed are costs incurred in implementing the changes and machine efficiency during production but there recommendations to counter the same. There are implementation and impact risks involved with the changes. Introduction This report examines the effects of customization in Loganville Window treatment (LWT) company. The company has been producing shutters and selling them through design shops. It is however facing serious competition from China counterparts who are selling similar but cheaper products. As a means of counteracting this competition, the company is considering customization, taking advantage of close proximity to customers. The report will examine the level of customization and its advantages; it further will address the current and recommended manufacturing processes and the service side. The benefits and costs involved in change of line production to job shop manufacturing are discussed. In addition, the report addresses expected challenges during customization and gives a few recommendations in respect to the same. The report will examine these aspects in line with recommendations by the company president. Level of customization The application of customization in manufacturing industry is to personalize products to meet customer demand and counter competition (Graeml and Csillag, 2). From the previous manufacturing specifications, the range of production was limited to specific style and size limiting customer selection. Specific batches produced were stored in warehouses and others produced. The products did not have a competitive advantage over the cheaper China products Customization will improve product manufactured such that it fits customer needs. There are different levels of customization depending on the service offered. The intended customization will vary the size, color, style and design of the final products depending on customer needs. This means there will be no stored products unless those ordered and not yet delivered to the customer. In addition, taking orders from customers will give a better insight on what they need and what is manufactured. The company is therefore able to align needs and manufactured products (Chandra and Kamrani, 12). Another benefit tied to customization is that the company will compete better in terms of prices with the cheaper China products as customers will be willing to pay more for products manufactured according to their specifications. In addition, the company will be able to plan better for mass market depending on the placed orders, as customer needs do not vary a great deal from one another. Placed orders will be used to determine the likely products customers may prefer for mass market (Graeml et al., 3). Customers will be able to obtain products that satisfy their needs. Though this is an advantage to the customer, it may lead to increased production cost to the company in terms of efforts put to design and produce the exact product (Graeml et al., 4). The recommendation by the president to manufacture shutters according to customer specifications will therefore aid the company to improve performance in the market. Manufacturing process The traditional manufacturing method used by Loganville window treatments involved production line manufacturing which involved production of a limited range of products initiated by the company and specifically designed according to specifications by the company. On realizing that the company was facing serious competition from China products, the manufacturing process was changed so that it focused more on customer needs and specifications. It embraced job shop manufacturing to satisfy customer needs. It ensures timely delivery of specific orders required by the customer reduces waste and operates with a specific budget. With the customer oriented manufacturing process, it is easy to evaluate performance and quality (Black and Kohser, 321). In addition, job shop results to high flexibility in product range, which is profitable. Embracing this production process would result to a difference in certain aspects of production components. The system will require being flexible in terms of volume, manufacturing, mix ratio, and delivery. The system will therefore be required to be highly responsive in managing demand in consideration of costs, quality, reliability and flexibility (Qiao, Roberto and McLean, 6). Line production method is rigid in terms of technology, human resource and management. Changing the manufacturing system to customization will require configuration of machinery, such that they absorb new designs fast enough and with required effectiveness. This will require developing and integrating new functions into the operating system (Qiao et al., 6). In addition, it requires training of employees to induce them into the new system and may require hiring of highly experienced personnel to effect the change in the company. According to the president, manufacturing orders given by the customer will ease warehouse storage and production will be in small quantities. The production processes involved will therefore need to change to accommodate the new recommendations. Service process Service process increases value as the customer interacts with the manufacturing process. Improving the quality of service processes increases revenue and reduces costs. Increased revenue is gained from making services more efficient and effective thus delighting customers and at the same time cutting costs. They therefore purchase more and refer others for the same services. There are cases where improving service processes has been found to double profits (Erickson, 4). From surveys done, increasing customer contact has a great deal of advantages in profit maximization. Customers are engaged both online and offline. LWT intends to engage customers through the internet and catalogues. The survey indicated that companies that invested heavily in internet and online communication with customers and other means of providing information to customers not availed by competitors succeeded a great deal in increasing customer salience (Erickson, 10). Customer engagement increases customer satisfaction and reduction of effort. It builds customer loyalty, such that the customer becomes a repeat one thus increased assurance of sales regardless of competition. In addition, loyal customers tend to purchase more, hence increase in sales. The customers also recommend the product to others leading to more sales and potential loyalty. More than half of recommended customers are most likely to be loyal to the product (Erickson, 11). In addition, improving service processes ensures elimination of out of date processes and steps. Working with the customers to understand the sizes and designs needed works a great deal in waste reduction and increasing effectiveness and efficiency of both human and material resources. Using the internet and other fast communication means eliminates unnecessary jobs that may involve reaching the customer physically. The service side of LWT was purely physical, considering only the capital expenditure. Orders were taken from decorating centers, which dealt directly with the customer. The company produced a narrow range of product design, sizes and batches, which were stored to fill upcoming orders. On the other hand, the service side of the new system is both physical and intangible, taking into consideration employee skills, knowledge, training and information. The president recommends that the service side of the company will work directly with the customer. Orders will be taken from the customers specifying the size and finishing needed. Problems are expected to occur with some specifications concerning technological aspects but these will be resolved directly with the customer. Customer engagement in manufacturing process boosts confidence and loyalty. Challenges Though the change in strategy is expected to revamp sales and profitability of the company, there are challenges expected in implementation of the same. First, introducing customer engagement involves incurring costs of technology, labor and process. In addition, change of management is expected to occur, such that marketing, sales and information technology department will have to collaborate (Black et al., 325). Before customization, catalogues produced were only for the decorating centers, as the company did not have any contact with the customers. Costs of producing more catalogues will be incurred to reach out to the targeted customers. The labor force will have to be trained and oriented into the new system. In addition, success in developing an effective online system to reach customers directly requires experienced professionals who will have to be hired increasing costs of labor. Upfront strategy and investment in hardware, software and development are expected to consume some costs when installing. The system will also incur development costs. These are costs in developing and testing out efficient internal workflow such that external personnel do not manage the internet system. Time consumption is expected in developing an effective upfront (Erickson, 13). Another challenge facing implementation of the system is the risk involved. If implementation of the system deviate from the original resources used in its development, then higher costs are expected leading to implementation risk. In addition, impact risk is expected if the technology needs are not met by the investment. If the total benefits achieved are lower than the benefits expected (Graeml et al., 5). Customization is a good solution to customer based manufacturing. It however poses a challenge in production cost of customer- specific products. It decreases efficiency in use of the manufacturing system, increasing both costs and complexity in production (Graeml et al., 7). The manufacturing system in place is designed to produce specific sized and numbers. Customization of the process will require that the machines respond quickly to producing small numbers of different designs. Considering the change is intended to satisfying customer needs, machines must respond quickly to meet deadlines stipulated by the customers (Qiao et al, 8). In order to utilize available resources effectively, it is important to design a product in consideration of available labor, inventory and equipment. Recommendations Customization to embrace customer specified products would require a change of machines to embrace those that are fast and adapted to small batches and varied designs. This being an expensive investment for the company, the current production line should be reconfigured to take up the changes. New designs from the customers are an opportunity for the company. The key objective of customization is to face every design the customer requires and effectively produce it. The system therefore needs to be fixed with quick, production-plan-configuration and resource-allocation capabilities to meet expected demand (ElMaraghy, 125). In addition, training of employees and hiring employees experienced in customization processes is needed. The current line production method rigidifies employee knowledge to specific levels of production process. Customization on the other hand requires employees who are able to work across different sectors (Qiao et al, 10). Control systems in the current production method are mostly hierarchical, with each employee under a specific boss. With customization, these systems may not work to obtain maximal benefits. Working across different functions in a functional manner will be required in order to trap fully potential in human resources. Functional management has high initial costs but is cost effective in the long term and ensures dynamic network operations (Qiao et al, 10). The company should change from hierarchical management and adopt functional management where different departments work together. The departments should adopt a data driven manufacturing system together with the configured technology. The data is used in configuration changes. In addition, the models developed in manufacturing should be designed in a way that they use the existing simulation model as developing one is expensive and time consuming (Qiao et al, 13). Work Cited Erickson, Jon. Measuring The Total Economic Impact Of Customer Engagement Forrester consulting Cambridge USA, 2008.Print Graeml R Alexandre and Csillag M. João. “Customization in the manufacturing industry: survey results in southeastern Brazil,” JISTEM - Journal of Information Systems and Technology Management vol.6 no.3 São Paulo, 2009. Print Qiao Guixiu, Lu Roberto and McLean Charles. Flexible Manufacturing System for Mass Customization Manufacturing, 2004 retrieved on 25/5/2012 from citeseerx.ist.psu.edu/viewdoc/download?.Net. Black J. T., Kohser A. Ronald. DeGarmo's Materials and Processes in Manufacturing Wiley. USA, 2001. Print. ElMaraghy A Hoda “Enabling Manufacturing Competitiveness and Economic Sustainability,” A Strategic Transformation. International Journal of Flexible Manufacturing Systems, Vol. 19, pp. 533547, 2012. Print Chandra Charu, Kamrani K Ali. Mass Customization: A Supply Chain Approach Library of Congress. NY, 2004. Print Read More