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Case Study analysis (Operations Management) - Essay Example

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In order for companies to succeed in today’s competitive business environment managers must find ways to reduce costs and increase productivity in order to better serve their customers. Bruynzeel Keukens is a major player in the Dutch kitchen industry. The company is currently…
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Case Study analysis (Operations Management)
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Introduction In order for companies to succeed in today’s competitive business environment managers must find ways to reduce costs and increase productivity in order to better serve their customers. Bruynzeel Keukens is a major player in the Dutch kitchen industry. The company is currently facing issues in its supply chain management function. Its supply chain is extremely complex due to the fact that the company offers nearly 40 million combinations of kitchen setups. Many products of in the company supply chain has short product life cycles which increases raw materials and work in-process inventories. This paper provides answers to two questions from the Bruynzeel Keukens: Mastering Complexity case study.
1.
After reading the case study my recommendation for the company is to redesign its supply chain. The problems start with the company’s logistics. There is poor synchronization between up and downstream supply chains. Supplier lead time is twice as long as the optimal point needed to achieve efficiency. Bruynzeel Keukens has communication issues between the sales department and the inventory warehouse department. The company has problems keeping adequate inventory levels. Due to an inability to adequately estimate the demand for retail kitchen customer the enterprise keeps high inventory levels. All the problems the company faces with its supply chain is hurting the ability of the company to satisfy the customer needs. This can lead to lower customer retention rates. Companies that are unable to master their supply chain suffer from operating inefficiencies that hurt their profitability. Despite the fact the company currently holds an industry leading 23% market share the limitations of the company’s supply chain are a risk factor that can cause the business to lose market share points.
2.
Bruynzeel Keukens must implement changes in its supply chain practices in order to become a more flexible and efficient enterprise. A simple solution that can help minimize the bottlenecks and complexities of the system is reducing the kitchen combination alternatives by 50%. The firm would still offer 20 million potential combination of product variety which is still very impressive. In reality having such a high product variety does not add any value to the business. This simple solution will reduce the firm’s inventory costs. Another solution that can help the supply chain system is adaption of just-in-time (JIT) inventory system for the retail kitchen business segment. It would take between three to six months to switch to just in time inventory. In order to improve the internal communications at Bruynzeel Keukens the managerial staff could hire an outside consultant. The consultant would perform an internal audit of the organization to determine a plan to improve the internal communication of the company by changing the organizational culture. Since there is an immediate need to improve the communication between the sales department and the warehouse employees the company has to deal with this issue separately. A solution to deal with the issue is the creation of a resolution mechanism. The managers of each department would meet for five hours a week for a period of two months to discuss the issues that are preventing cooperation between the departments. Read More
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