Shipper Manufacturing Company Case Study
In order for the APD Division at Shipper to gradually shift from a low volume/sole-source product line to a higher volume/continuous product, manufacturing will need to adopt new operations objectives with respect to cost, delivery, quality and flexibility. The current customized products allow for costs to be passed through to the customer but with a producer designed product, more of the costs could fall internally and have a larger affect on profits. The price tag of the product will become a more important objective due to increased competition and we will therefore want to reduce costs and should be emphasized as the mission objective.
The shift from customer to producer designs will reduce flexibility since Shipper will aim for fewer manufactured products marketed at a wider audience. The quality objective should not change much from the current; Shipper would still want to maintain the quality standards they are known for, which may already provide for a distinct competence. Quality would be an order qualifier supporting the order winner of cost and can aide in positioning APD’s products as a strong competitor in the anticipated market.
Delivery as a qualifier will also help win orders in a more competitive environment and thus the objective should be to trim it down. New expectations may require stocking a finished goods inventory and possibly maintaining supplies to quickly produce the goods during peaks of demand. Higher and more normal volume shipping routines may also benefit the end of delivery process. Shipper can help solidify a competitive role in the expected market by establishing a competitive advantage derived from maintaining these objectives when moving towards a multiple customer and high production volume strategy. Many, if not all elements of operations will need adjustment to account for this change in strategy and manufacturing operations objectives. A low cost and improved delivery objective will put a more normal routine on many items and that ideally can improve a number of processes and costs along the way. The process should trend toward a high volume/low cost basis and involve repetition over a long period of time. Since these processes would be continually run, it would now be worth the investment of capital into more automated equipment to speed up production and duplication.
This should also reduce the labor intensity needed to produce the finished good and be more effective as a line flow as opposed to the current job shop approach. Furthermore, placing orders and stocking inventory will no longer run parallel as easily and may need to be separated in the process for more direct control and efficiency. The materials supply is already integrated vertically and is an existing benefit of the structure, greater possible savings might be achievable due to economies of scale with higher volumes.
The work force would be directly affected by the changes in the manufacturing equipment towards automation. Fewer and lower skilled laborers will be necessary, which will draw lower wages and reduce costs but open the potential for dissatisfaction with the job. Management of labor will still be as important as always and the need to maintain morale and a positive attitude could possibly come into play in order to keep workers motivated and production at a high level of quality. More growth opportunities may reveal themselves to laborers with the need for more direct control in manufacturing.
Quality control would need to evolve to consider the newer higher volume production versus the existing project orientation. The teamwork mentality may also suffer from the change to a line flow and may require a quality control panel to make up for the quality attitude lost by leaving a group project orientation. Other control factors need to evolve to accommodate the shift. More raw inputs and finished goods may have to be stocked on site and require better organization than the manual system.
Production and inventory control will need to get the manual system updated to the new computer system, to eliminate the dependency for expediting and stock chasing, which could only get worse with a larger production. Improved capacity should follow once operations move more towards the higher volume product line and fully utilize new equipment. Scheduling will most likely get more intricate and be streamlined to ensure maximum efficiency from the growing capacity as the operation changes to a line flow.
The organization may want to accommodate the new strategy and open up a trained production/inventory control position specific to APD, in addition to the materials management service for all divisions. Developing a quality control area directly under APD also may be advantageous, to incorporate quality assurance into the different steps of manufacturing instead of an end process inspection. It might create a better opportunity to prevent errors in house and reduce the need to correct them after the fact, preventatively reducing costs.