High Country Furniture - Essay Example

CASE STUDY: HIGH COUNTRY FURNITURE By Student’s name Course code and name Professor’s name University name City, State Date of submission Introduction Production and operations management is aimed at increasing the effectiveness and efficiency that is attached to a manufacturing environment. Other benefits that have also been acknowledged through research include; increment of a manufacturing company’s profitability, increment of revenue and quality, reduction in amount of investment needed for accomplishing a given goal and provision of basis for future innovation. This essay seeks to carry out a technical analysis of operational management concepts utilising a case of High Country Furniture whose main production process is being transitioned from job-shop production to batch production in order to meet a new demand for standardised items. The importance of efficient operations is highlighted in this paper using the root cause analysis of High Country Furniture’s new contract with Megan Jones. An argumentative approach is employed to explain the day-to-day operational issues that the company faces with corresponding opinions on how the current situations should be contained. Finally, the customary organisational issues that are brought about by the production of standardised furniture with respect to the financial structure are also featured due to the impact that they pose on the latter. It is evident that lack of proper operations management is the cause of failure by High Country Furniture to achieve efficient its overriding business objectives. Discussion High Country Furniture specialises in timber furniture and other exclusive works such as staircases joinery. Founded by Bill Williamson in 1950s, High Country Furniture underwent a management metamorphosis in late 1990s after Elspeth Cook took over thereby changing the company’s business outlook. High Country Furniture shifted their area of concentration from general joinery (cabinets, internal joineries and staircases) to custom furniture owing to decline in conventional business. Inasmuch as the old venture was deemed profitable, the need to diversify arose when Elspeth was approached by Megan Jones, a proprietor of a chain of home décor shops with an intention of coming up with a new line of exclusive handmade furniture. On consultation with the management team, Elspeth found it viable to engage the production line with Megan’s proposal thereby achieving acceptable profit levels. Initially the production facility was stretched into the weekends and overtimes in order to come up with the short-term capacity. Eventually, the new line of products was incorporated into the fulltime activities with an estimated 40% production level with a probable total revenue level of 25%. The factory layout (figure 1) is suited for efficient for high quality job-shop and small scale batch production of conventional furniture and the new line of furniture respectively. On finishing, the furniture is accompanied by a little brass plaque which denotes quality. On notable production catastrophe is that the custom furniture whose sales and profit margins are higher have been prioritised leaving the standard batches lying around the workshop. Expensive warehouse space, extended production lead times and stagnating work in progress have all been associated with the standard line raising concerns among the executive and especially Elspeth. Technical Analysis The High Country Furniture manufacturing facility engages in production of both custom and standard furniture. It is reiterated in the case study that the craftspeople and equipment are both handled with utmost care in order to give the best results. The company is still entangled in the old production technique rather referred to as job-shop production. According to Taylor and Russell (2011), job-shop production is characterised by low volume high variety products manufacture. General purpose machines are also utilised in an environment such as this since there are no specialisation requirements. In the case of High Country Furniture it has been observed that the company maintains highly skilled operators who can take up any incoming task regardless of the challenge. Job-shop production is also characterised by detailed planning for each product and work is done in order of priority as observed in the case study. There is a notable shift between the standard production and custom made furniture in an ad hoc manner. Figure 1: General production layout. The nature of the production systems that is applied by High Country Furniture is notably advantageous owing to the high professionalism that is achieved. A variety of products can also be achieved using this sort of production line without necessarily furnishing the workshop again (Kumar and Suresh, 2009). It is observed in the case that the proposal by Megan without deploying any new machineries apart from the ones in existence within the workshop. A review of the disadvantages that the job-shop technology poses to the company indicate that the inventory levels are higher that the management expected prompting hiring of external warehouse space in order to cater for the rise. The introduction of a new line of products therefore dictates the fact that the existing space had to be consumed up by the loose pieces which were waiting for assembly. Reiter (1966) in his study “A system for managing job-shop production” identifies some of the problems associated with job-shop production as the inability of the management to determine long-term strategic postures as noted in the case of High Country Furniture. This system of production has a lot of lead time that contribute to late deliveries and eventual loss of jobs. Controlling and planning for production does not achieve the required levels of efficiency which may lead to customer dissatisfaction. Further technical analysis indicates that the product mix emanates from the management which has to dictate every step that is made within the production floor. This consideration is seen to drag the progress of jobs at High Country Furniture hence the proliferation of pieces that are not required due to the introduction of a new system called batch production. While operational shop schedules indicate that the start to finish times is tight, the targets cannot be well achieved in a situation whereby the job-shop production procedure is being applied. According to Reiter (1966), the cost of time in comparison to other resources is projected to hit an all-time high, a factor that affects the price commitments that are made to clients. In a job-shop situation, scheduling is a major problem owing to the kind of tools that are being utilized at High Country Furniture. The only acceptable information in such a case is the completion status of a given job thus the pre-shop operations are deemed as unnecessary indicators for performance. The management systems applied for the shop floor are also not clear due to the number of order lying in the workshop thereby magnifying the lead times. The overtime work that is carried out to meet the initial supplies for Megan’s stores is further noted as a constraint to the cost of delivery. These among other key indicators of poor performance at High Country Furniture portray a technical failure in the production floor thereby forming the technical analysis. Problem Identification and Specification This section is concerned with the problems that resulted from the new contract with Megan Jones on High Country Furniture’s operations. There is no doubt that Megan’s proposal was attractive given the fact that the core objective of a company is growth through continuous prospecting for business opportunities. The major problem that is observed in the case of High Country Furniture is the strategic implementation of batch manufacturing process in a bid to meet the target set by Megan’s décor shops. Araujo and Queiroz (2010) keenly point out that while business may be booming, introduction of new strategies of production should be implemented seamlessly. The problem that resulted from Megan’s order was approached through utilization of the batch production method. However, there is no indication of a strategic approach such as training of employees and usage of new machines technically adapted for batch production. While quality is the main issue of concern to High Country Furniture, there was need to lower costs of production through retraining the human resources to adapt to the new change. Realistic interpretation of planned change through proper research was not taken into account (Bamford and Forrester, 2003) thereby resulting to the proliferation of batch produced parts and eventual need for external warehouse space. A lack of strategic approach resulted into increased lead times due to deployment of the same craftspeople and equipment in production of standard and custom furniture. It is also noted that scheduling the standard pieces more often in comparison to custom furniture was as a result of strategic demand forecasting methods. While Megan’s orders provided the firm with an opportunity for growth, the custom furniture was more profitable leaving the management at a crossroad. This led to ad hoc production of standardised features when scheduling trade-offs leading to losses and increased inventory volumes. The process of forecasting in this organisation was not clearly laid down resulting to higher supply than demand. The forecasting process therefore affected the organisation largely resulting to random production. While business forecasting is not only attached to prediction of demand, the profits, revenues, productivity changes raw materials key economic indicators and change in prices are also considered as important parameters (Stevenson, 2011). Day-to-Day Operational Issues The day-to-day operational issues that are faced at High Country Furniture emanate from lack of proper operational approach towards the existing workload. In the real essence, the organisation is using both job-shop and small scale batch production which leads it into confusion. According to Slack et al. (2010), the production process involves conversion of input into output. The inputs are considered as resources such as labour, machinery, ideas, designs and customer requirements. The major outputs that result from this arrangement include finished products, components and subassemblies. The main aim of production is to transform necessary inputs into outputs that shall be of satisfaction to the end user who is the client in this case. The main layout of this organisation was setup for job-shop production purposes. The fact that the operations were marred by the introduction of batch production process posed as a main challenge to the whole system. The batch production method requires a specialisation kind of approach which was not the case at High Country Furniture. Therefore the company has to undertake a lot of decisions on a daily basis so as to adjust to the challenges that are currently being faced. This has to be in accordance to the goals that are to be achieved on behalf of the client in order to achieve high levels of satisfaction. While operations management includes activities such as process creation, implementation and continuous improvement (Adam and Swamidass, 1996), High Country Furniture has a lot of deficiencies. The decisions set for the chain value support come from the high level of business strategy. It is therefore important for employees to be notified of the importance that is attached to production of standard furniture. The employees should also be monitored regarding the production of standard parts that are meant for assembly of goods to be supplied to Megan’s shops. The number of products to be produced is a decision that lies with the top management and somehow this point was noted by Elspeth. Market prices should also be checked by the accounting department on a day to day basis in order to establish a cause analysis for the stagnating nature of goods at the décor shops. Broader Organisational Issues Caused by Operational Problems The financial organisation structure of High Country Furniture evidently emerges from production of standardised furniture. The fact remains that the company has to seek for ways to dispose the extra pieces through commercialisation of the standard furniture sector. Introducing commercial buyers into buying off the standardised pieces shall shift the attention from job-shopping into batch production technology thereby bestowing the company with a new financial approach. Transforming the company structure as observed gave it a hybrid outlook making it difficult for the financial department to plan its operations. The case proves that commercial buyers (Megan’s décor shops) come with burdens and rigid conditions that are likely to affect all departments of an organisation both negatively and positively. This however does not deter organisations from engaging in risky activities that they are likely to benefit from. It therefore proves that organisational failure is inevitable and should be approached through preparedness to learn (Carmeli and Schaubroeck, 2008: 178). The transition crisis that is faced by the financial department at High Country Furniture denotes that the learning curve is not only flawed but also losses are incurred from the standardization operations. The shift from individual clients to commercial buyers is faced by inherent challenges due to exposure to a new class of competitors. The financial structure shall therefore strive as a result of maintaining a competitive advantage through operations management techniques that favour the new production process. By so doing, the competitive advantage achieved results products that are better and cheaper in order to ensure consumer satisfaction (Hickey et al., 2011). While the company has thrived in an environment that encourages conventional production of high quality furniture through job-shopping, the financial structure shall only be made better in a state whereby the operations are enhanced. What is observed in High Country Furniture’s case is a financial shock that can be managed if batch production is well implemented. Further improvements in company facilities shall pose as a threat to the financial structure due to concerted lobbying for efficiency by the company management headed by Elspeth. Conclusion Production and operations management is responsible for efficiency and effectiveness in most manufacturing environments. This essay uses an argumentative approach to analyse a case of High Country Furniture which is transitioning from job-shopping to hybrid system involving the latter and batch production in order to prove this argument. It is therefore paramount for organisations to deploy the principles of operations management as it is observed that transition does not end very well in the case study. From the technical point of view, it is observed that while the company is capable of producing high quality standard furniture, it is not dedicated to this kind of business through continuous improvement thereby plunging into problems related to strategy execution. The financial structure is also drawn into the skirmishes as the inventory stagnate causing losses due to warehouse rates. Inasmuch as Megan’s proposal presents challenges to High Country Furniture, business opportunities should be pursued with operations management in mind for success and consumer satisfaction. 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(1966) 'A system of Managing Job-shop production', The journal of business of the university of Chicago, vol. 39, no. 3, July, pp. 271-393. Slack, N., Chambers, S. and Johnston, R. (2010) Operations management, New York: Pearson. Stevenson, W. (2011) Operations Management, New York: McGraw-Hill Education. Taylor, B. and Russel, R.S. (2011) Operations management: Creating value along the supply chain, New York: John Wiley and Sons, Inc. Read More