A manufacturing firm's production strategy

A manufacturing firm’s production strategy must be aligned with its broader business strategy. Many firms seek to be low-cost, bulk providers of mass-produced goods. Others choose to produce smaller batches of more specialized products. Still others elect to remain highly flexible in their design and production specifications, quickly reacting to shifts in customer requirements. Identifying which competitive position a firm should occupy is crucial to its market positioning and financial success.

JD Engineering a manufacturer of food manufacturing plant acquires Harpers PLC, a manufacturer of paper and cardboard making plants, by reasons of diversification.

After a while, Harpers PLC have big problems with the operational business.

Almost every single department has his increasing problem. Harpers PLC on the hole has problems to survive.

Due to many complaints from customers in terms of product quality and late deliveries, the MD of the company employed an AP management consultant. The consultant issued a report about the company’s status. I want to specify the problems, which may cause the survival problems for the company, in the following assignment step by step.

I’ll also try to give some proposals how to solve those problems as a long term solution.

INVESTMENT:

The biggest problem in terms of “investment” is that several departments of the company initiated the purchases on their own interest. In many organizations, managers of different functions are measured in terms of their departmental efficiency and not in terms of overall effectiveness (a business perspective). Furthermore, their career prospects are governed by their performance within the functional value system.

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As a consequence, this leads to managers making trade-offs, which are not very optimal for the business as a whole. At Harpers PLC they initiated new investments and it concerned only the tribal area. The consequences were that the company haven’t gained the expected benefit of the investments.

In the past, Harpers invested in a variety of equipment, some of them are CNC machines, robots, individual PC’s etc.

Considering this problems I would say, that the company doesn’t and didn’t have a proper working central control of the investment operations, nowadays where severe competition dominates our everyday (business) life, the companies shouldn’t allow their self the luxury of “separated business operating”, at least not what concerns “new investments”.

Because- not the success of a single department but rather the success of the hole company is much more important. To reach this, the company has to has a corporate identity, a corporate strategy and a corporate aim, the development of a corporate policy comprising a coordinated set of main function inputs will mean that the business would be able to go in one consistent, coherent direction, based on a well-argued, well-understood, and well-formed strategy. This is partly achieved by moving away from argument, disagreement and misunderstanding.

Accordingly the investments must be thought-out for the whole company’s welfare. Manufacturing executives must think and act in a more strategic manner. In an environment traditionally geared to meeting output targets, the pressure on manufacturing has been to manage reactively, and to be operationally efficient, rather than strategically effective.

The purpose of thinking and managing strategically is not to just improve operational performance, or to defend market share. It is to gain competitive advantage, and it implies an attempt to mobilize manufacturing capability to help gain this competitive edge. It is imperative that manufacturing managers and people who are responsible for Investments take the initiative.

Harpers the invested in robots and individual PC’s which are not connected to each other. Probably this is a disinvestment, because it is very important and useful for communication reasons to have a network at every company.

SALES AND AFTER SALES

The case in the Sales department is that there are only 3 Salespersons covering the whole of the UK which is at odds with the purpose to expand company markets through the new product M 10 Packer. And only 10 % of the total volume of production is going to be exported through an agent. The biggest reason for the low grade is the reason that disinclination was dominating the company in terms of after sales support service. The tasks of the After Sales Department is to install new equipment at the customer site, train the customer’s operators, and guarantee a maintenance for up to 2 years of installation of the machines. The problem here is the worry about complications of communication and language and inflexibility in travel issues.

My opinion is that to keep pace with industry consolidation and maintain earnings and growth, many companies needs to expand internationally. Harpers PLC is a manufacturer of useful and competitive stuff. The company anticipated a significant gap, that’s why I think and hypothesize that further international expansion could close this gap. Other companies at the same industrial sector may have already begun to expand internationally or will do it soon. Harpers make its exports through an agent. But it could be also through alliances with local players, so that the After Sales Service could get easier. Even not, I think there is a real revolution becoming apparent and its ramifications affect all manufacturers, buyers, suppliers, and consumers. This revolution is none other than the product to service migration and it’s changing the way companies package their offerings. Today, scores of industries – telecommunications, automotive, IT, consumer electronics, and medical – capitalize on the services they offer, rather than just on products. Chances are, your business has started migrating too. Among the challenges ushered in by this migration is sales force readiness. When your offering becomes more service intensive you have to ask yourself, how armed is your sales force? Better yet: what does it take to structure your sales force to sell as effectively in a service-based reality? So it is strongly recommended that Harpers should build-up its sales force.

DESIGN

The situation in the Design Department is that there are 16 designers and draughtsman who are special skilled for this job. You can get a designer after an apprenticeship and it takes 6 years to gain the full know-how. In the last years they didn’t recruit new staff, so that most of the designers are old. Usually the staffs at the design department are totally busy, overtime work is common. Efforts to employ new staff failed due to lack of expertise. On the other hand, the implementation of CAD (Computer Aided Design) was shifted due to low cash flow and unawareness that it’s a very urgent and useful product considering that most of Harpers customers and sub contractors use CAD.

I would recommend the company to invest in CAD, as it is a Product with which almost all industrial companies deal with, given that the company will expand in the future, it is also useful because the draws of CAD are international accepted and known. I also would recommend introducing apprenticeships. Apprenticeships are very useful to train highly skilled staff from the young ages. The company will always need skilled persons, and flexible persons who are not necessarily elderly people. Young people will implicate motivation in work, fresh and dynamic atmosphere, creativity and they can also be a big help during the apprenticeship for the senior workers who are overloaded. Another good point is that apprentices are cheap.

Further on I would suggest Harpers to invest in future in Flexible Manufacturing Systems (FMS), which are not as difficult to operate as CNC Machines -Systems. FMS is system that consists of numerous programmable machine tools connected by an automated material handling system. This would not require highly skilled staff, because it is easier to handle and much more flexible than CNC.

PROCESS PLANING

Like in the Design department, the process planners have the similar problem with the short staff and rare skilled persons. Currently they cope the work-load, butt they will have big problems in case of increasing work. 60 % of work is process planning for manually operated machines. 40% is programming CNC machines. Programming Systems are not connected with CNC Machines as well as not with other computer based systems.

I would suggest to introduce apprenticeship or to increase the number of apprentices for avoiding short staff problems and for training high skilled staff. Investing in Flexible Systems is also required in this department as well as parts of CIM (Computer Integrated Manufacturing) modules like CAD, CAM. CIM allows the online and batch-related acquisition of process and quality data. The flow of material within a multi-stage production process can be planned at any time and monitored from the central station. Job and materials management permits job-controlled production. CIM enables paperless manufacturing and shop floor digitization. This would have the effect that the part programming systems would be linked to the Machines and computers, so that work can be done easier, much more efficiently and with less defects and failures.

PRODUCTION PLANNING:

This department is where the production and assembly areas are planned and scheduled. There are 30 employees, who are low grade staff. MRP (Material requirements planner) was installed 15 years ago, but is not successful. MRP is a planning system, with which you can plan exactly by single arithmetical calculations the size and timing of the requirements of the various lower-level work-in-progress items and raw-materials after the delivery schedule for the end-products is known. The problem is that the Senior Managers are unmotivated about using computers and they don’t have expertise how to develop such a system. There was a separation within the Production Planning area, each of which looked on its own approach. At the beginnings, they lost their trust to these systems, due to the prediction of the pc’s which were out of date.

As a result a complex system was installed, which involved a computer based system and a paperwork system. Mistakes are always common, causing many problems.

My opinion is that the problem why MRP didn’t work as expected could have a few reasons.

In most instances, inner-environmental factors, where the users are not motivated for changes in the manufacturing are leading to failures of MRP Systems and other innovative technologies. Production managers are often not involved in corporate policy decisions, until these decisions have started to take shape. The result is that production executives have less opportunity to contribute to decisions on strategy alternatives and, as a consequence, always appear to be complaining about the unrealistic demands made of them and the problems that invariably ensue.

Therefore Production managers should be involved and users should be teached and it is necessarily important that all users and managers should understand the system. Once they know the system and its benefits, they would be more motivated to use it. Harpers should also think about its staff, old senior staff is technical unaware and their willingness to learn about Information Technologies and other high tech equipments are less than the willingness of younger staff. One solution would be to shift the senior staff in other departments, which are less high-tech concerned and where they can use their Know-How. Then the younger and high-tech interested staff could replace them.

Another reason, why MRP didn’t work properly could be that to warrant successful operating, MRP must be operated with concomitant factors like JIT, CIM etc.

Factors like political factions causing conflict of interest which causes different company targets. Top-Down Management which sets the company aims and interests is required in such situations; thereby “own approaches” would be avoided. Other solution could be cross functional team of managers, who can help to simplify the business processes and restructure the organisation to better meet the company’s goals.