Operations Management Principles-Phase 2 DB1 - Case Study Example

Running Improving the Charleston Rehab Facility: A Proposal Improving the Charleston Rehab Facility: A Proposal The Charleston facility is encountering high costs, poor delivery times, and high inventories. Customer and distributor loyalty is suffering as a result. As a manufacturing company, our top management pays particular attention to operating performance. This proposal outlines recommendations on how to resolve the issues that are causing these poor results. Identify the alternatives.

There are a number of alternative solutions. Our analysis team addressed three and came up with what we would recommend as the best solution: 1. Outsource the copier rehabilitation function to a third party. We have found a number of facilities that perform copier rehabilitation, but none of a size we would require is independent. That is, the other copier rehabilitation facilities we’ve reviewed are in the hands of our competition. Since there is a lot of communication with our distributors, the team feels that it would be a competitive disadvantage to put this function in another company’s hands. 2. Consolidate rehabilitation into one of our other factories.

Although this would help to reduce plant overhead, we have a concern about distracting the other ‘focused factories’ in our network. Rehabilitation is significantly different from other types of production that a completely new set of skills and facilities would need to be incorporated. 3. Improve procedures at the Charleston plant in order to improve performance. The team feels that there are steps, outlined below, that can improve performance in a short period of time. The analysis team studied a series of performance measures.

We started with those used by the parent company. They are, in order, return on assets, income as a percent of sales, and customer satisfaction. We would propose that the following solution will address all three. As a part of the evaluation criteria, we’ve come up with seven measures that are the co—determinants of these three goals: (1 lower work-in-process inventory, (2) lower parts inventory, (3) reduce employee turnover, (4) improve processing time, (5) reduce purchasing costs, (6) improve customer satisfaction, and (7) improve bottom-line income and cash flow performance.

We recommend a five-step process to implement this plan. With your support, we can start this week and complete the changeovers required in the next 90 days: 1. Get a handle on forecasting demand: this can move us from a ‘stop-and-start” production mode to a steady-state mode, which should improve productivity. 2. Reduce actual processing time: the biggest block to this is on-site spare parts availability, covered below 3. Right-size our rehab capacity to meet average demand—rather than staffing for peak needs. 4. Change the forecasting and purchasing procedures to take advantage of steps 1-3. 5. Combine goals to insure that all managers are moving towards the same three goals.

In order to make this effective, we would propose a task force composed of the heads of Purchasing, Production and Production Planning, Cost Accounting, HR and the Plant Manager. After agreeing on goals, responsibilities and timetables, we would encourage your support for a speedy conclusion.