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Operation Management Problems At Classics Cabinets Management Essay

Classic Cabinets makes two lines of products, they are simply tailor made kitchens which is traditional product and its one-off and small batch, another is builders kitchen line which is the new product and its own quantity manufacture for every single a payment work.

Operations traditionally identifies the production of goods and services separately, although the distinction between these two main types of procedures is increasingly difficult to make as manufacturers tend to merge product and service offerings. More generally, Operations Management aims to improve the content of value-added activities in any given process. Fundamentally, these value-adding creative activities should be aligned with market opportunity (see Marketing) for optimal enterprise performance. (Ackoff R, 1957)

The builders kitchen line is the high quality standardised kitchen lines that the company is making on an increasing basis. They traditionally made only tailor made kitchens(that is, made to individual customer preferences and specifications), which they still do. The issue is that they now have 2 separate products (standard (the builders line and custom made) and tailor made kitchens, each will require their own forecasting, scheduling, production lines etc, hiope this helps

The Scheduling trade-offs in the case study refer to the fact that the business does not have sufficient resources (space, machines, labour) to do all the work they now have so they have to make a 'trade-off' between your custom jobs and the builders line and prioritise or choose which to work on (schedule) at any given time

Operations management is an part of business worried about the production of goods and services, and involves the responsibility of ensuring that business functions are efficient in conditions of using as little resource as needed, and effective in conditions of meeting customer requirements. It is worried about managing the procedure that converts inputs (in the kinds of materials, labour and energy) into outputs (in the form of goods and services). (Ackoff R, 1957)

With starting any business, a company strategy must be set. This is a set of plans and policies to guarantee the organisation will be superior to others, have the ability to do well on the market and against competitors, and thus be able to grow and expand the business (Gardiner 2006). One of the first steps involve better understanding the surroundings the organisation intends to create in - this might determine resources, customer needs, and what competition the organisation will have. This research before set up the company is crucial as this can make sure that the company will be in more control, better prepare with functions and have an increased potential for being better than other same companies. The primary basic to attain whenever starting a business are to provide good quality products/services at reasonable prices, and with the best customer support. In this manner, we can perform customer satisfaction which is the most important factor that really helps to expand an enterprise.

At the start, in businesses and other organizations, internal reporting was made manually and only periodically, as a by-product of the accounting system and with some additional statistic(s), and gave limited and delayed information on management performance. Previously, data had to be separated individually by individuals as per the requirement and necessity of the organization. Later, data was distinguished from information, and instead of the assortment of mass of data, important, also to the idea data that is necessary by the organization was stored. (Nguyen D, 1998)

Early on, business computers were mostly used for relatively simple operations such as tracking sales or payroll data, often without much detail. As time passes these applications became more complex and began to store increasing levels of information while also interlinking with previously separate information systems. As increasingly more data was stored and linked man started to analyze this information into further detail, creating entire management reports from the raw, stored data. The term "MIS" arose to describe these kinds of applications, which were developed to provide managers with information about sales, inventories, and other data that could help in managing the enterprise. Today, the term is used broadly in a number of contexts and includes (but is not limited by): decision support systems, resource and folks management applications, ERP, SCM, CRM, project management and database retrieval application. (Nguyen D, 1998)

Business should tightly control the purchasing function as its decision on volume and ordering time will affect the location and stock levels of inventory. And the positioning and stock degrees of inventory ill affect quality, flexibility and lead times. Incorrect and delay information will result inventory in wrong place and place time (Gardiner 2006, p. 18).

Modern business information system (BIS) can offer real time control and measurement for both procurement and inventory department (Kroenke 2009, p. 67). Just how much parts should be ordered so when them should be order can computerized by stock control system. Then your dealership should use an transaction monitor device to record the position, status and perhaps values of the stocks. Finally, inventory control system can generate regular reports of stock value for different items. Additionally, it may record the amount of stock-outs or the number of incomplete orders (Slack C, 2004).

The project manager effectively involved in the project which under a restricted resource constraints and use the right methods and theories. From the project beginning to the end, they should planning, organizing, directing, coordination, control and evaluation, to achieve the objectives of the project. Members of different departments make a team for the project, project manager is the leader of the project team. Their responsibility is to lead his team promptly, quality completion of most work, to attain project objectives within budget.

For example, if you don't know whether it'll rain tomorrow, then you have circumstances of uncertainty. If you apply probabilities to the possible outcomes using weather forecasts or even simply a calibrated probability assessment, you have quantified the uncertainty. Suppose you quantify your uncertainty as a 90% potential for sunshine. (Wang G, 1990) If you are planning for a major, costly, outdoor event for tomorrow then you have risk since there's a 10% chance of rain and rain would be undesirable. Furthermore, if this is a small business event and you'll lose $100, 000 if it rains, then you have quantified the chance (a 10% chance of losing $100, 000). These situations can be made even more realistic by quantifying light rain vs. heavy rain, the cost of delays vs. outright cancellation, etc. (Wang G, 1990). The project manager should prepare for any uncertainties and variables because every forecast has marginal error. Unexpected demand and variables of purchasing can have effect on inventories and affect the service level (Gardiner 2006)

The critical issues we found after a fine analysis are less strategic production layout, workload burden on current staffs, inefficient work flows, etc. Thus, the manager should maintain the competencies by implementing the initiatives such as balancing the production lines with changing demands, re-scheduling the workload in daily operations. If they remain on these issues, the total amount sheet will be influenced in inventory, accumulated depreciation, GST control and equity-profit.

The term Production and Operations Management (POM) naturally represents organized process of producing goods and services. It really is basically the way of earning things, such as manufacturing something (Young 2009). The manufacturing industry contains typical cases in exploring procedure management theory. Even in U. S. over the centuries, a declined workforce was involved in the manufacturing industries and no-one could deny the positive contribution (80%) to country's GDP from growing service industry (Sprague 2007). However, the 2004 Boston Annual Meetings of the Decision Sciences Institute mentioned that 80% of the core courses in operations management were still focused heavily on manufacturing, which showed a mature operation management in manufacturing area (Heineke & Davis 2007).

In the new era, the manufacturing functions were evolving with the support of business strategy and computer-based procedure systems. The modern business community has reviewed the hidden lessons behind Japanese production management (JPM) phenomenon and found their leading practices becoming a global competitiveness (Sprague 2007). For instance, Toyota gets the best practice of introducing the operational excellence as a strategic weapon for enhancing processes, teamwork and quality via customer orienting and empowering employees while reducing operation costs and wastes (Liker 2004). Thus, a smart operation strategy as well as highly performed operation systems will improve the business competiveness.

Based on the evolution of manufacturing operations and procedure issues faced by Classics Cabinets, it is critical to focus on processes that add value to customers' desired cabinets. The procedure strategy is seen as an operating strategy conducted by business strategy and it is widely shared that the strategic procedure may offer a way to obtain competitive advantage (Hayes et. al 2005). Classics Cabinets' procedure performance objectives could timely respond to the changing needs of customers, which indicate that they were market-led company. Their managers, who've no clear self duties, cannot focus on constant objectives, thus, their procedures were not in a position to provide a long-term source of competitive advantage. So when demands in new manufacturing line boosted, it hit the business and questioned their functions on a basis of limited functions and resources (Reid & Sanders 2007).

Generally, as a manufacturing company, they cannot constantly address core competencies in the operations, such as experienced workers, efficient systems, creative products, flexible facilities, etc. , showing how their cabinets win orders on the market place (Slack et al. 2004).

The businesses strategy really helps to divide the operation requirements into two areas, named structure (production process) and infrastructure (operation system). Regarding to the truth, the Classics Cabinets has applied the basic open functions system. They first source the raw material from their suppliers. Then, they must have a location to create the products and after acquiring the materials, use a system to put together the new cabinets. Here, as a manufacturing company, the procedure is a transforming process converting a set of raw materials (inputs) into final cabinets (outputs). You will discover other resources that will feel the transformation process, such as labours, capitals equipments, etc. (Young 2009). Finally, the products would be delivered to a growing diverse clientele.

In an open system, the transformation process was mainly relies on customer feedback to ensure what they manufactured catered for the outside environment. Traditionally, Classics Cabinets only produced custom-made kitchens for customizing individual needs, which would consult with Anh, the master cabinet maker as well as the production and procedures manager, before they put the look into the manufacturing line. In this problem, they knew their clients well; they could gratify their specific needs 100%, so there were no needs worrying about whether the environment matched with the merchandise. However, as the business' growing, they added another production line, that was builders kitchen, which aimed at dealing with low volume contracts. Thus, the marketplace environment changed, these small 'spec' builders required standardized kitchen cabinetry with high quality, good price and stringent delivery service. Therefore, they have to take more notice of procedure processes.

Indeed, the product requires completion of certain tasks being carried out by work stations and flow lines consist of linked work stations. The Classic Cabinets had mixed multi model flow lines, that have been made for assembling two or more different models on the same flow line. There raised a strong balancing needs when every repetition of the duty is completed by same work station so when small level of several sizes' cabinets are produced through mixed model lines. As the company had limited manufacturing unit and sound quality from individual cabinetmakers, we assume the stations were closed and everything cabinets could only be made inside its boundaries. This implies the worker cannot finish his work in another station, he need to compete both custom and standard cabinets for processing time on the same equipment by the same craftspeople. Thus, the cabinets may transfer from lower boundary to the top in the boundaries where in fact the cabinet-making tools or equipments were positioned (Bautista & Cano 2008). Discussing the old manufacturing process, the custom-kitchen was always given the priority because of its high sales and margins. Nevertheless, based on the continuous boosting of the business, during the past couple of months, the Classics Cabinets met a sharp sales growth in builders' line, which suddenly increased staffs' workload. In this case, the Classic Cabinets faced too little workforce and common work methods for the increase of demand in builder's cabinets. When people is a key enabler in the procedure process, the best amount of workforce with the proper common work methods could brought a positive change to the production (Marksberry, Badurdeen & Maginnis 2011).

In addition, production layout will help in selecting and arranging recycleables, equipments and processes, which may ideally lead to a reduction processing time based on the flow of value-added procedures (Iqbal & Hashmi 2001; Marksberry, Badurdeen & Maginnis 2011). Due to maintaining the flexibility of satisfying both manufacturing lines, the factory layout had various equipments grouped together, which were strategically positioned in sections based on the frequency and need for use. However, due to scheduled standard cabinet components were left around in several stages of completion, the volume of work in process had increased while occupying the limited space. This brought about a rise in costs of inventory for renting expensive public warehouse.

As a consequence, the inventory challenging underlined the uniqueness in equipment where in fact the company could not maintain a frequent processing in a various product base (Marksberry, Badurdeen & Maginnis 2011). Moreover, there was a fact that the lead times had gone up for both custom and standard orders, which caused longer promised delivery times that made more inventory and ran far away from actual orders.

According to the case, it is obviously that the resources including the capital, labour, delivery condition is constraint and consideration time for incremental changes to keep carefully the sustainable production growth is the shorter the better. Thus, Chinh Chu, as the production and businesses manager, shall think seriously about the daily operational decisions the following:

Firstly, arrange the proportion to organize the manufacture of custom-made kitchen and standard kitchen in line with the short-term customer demand in currently. As BX Zhang (2008) asserted that customer demand accompanying with the amount of production capacity can have the fantastic influence on the budget, efficiency and profit margin of your company on the problem that the demand from the market was fluctuating. It could be articulated that both long-term and short-term demand goes up and down frequently, which directly affects the decisions about the product mix, the maximum amount of capital committed to each products with the same capability and core competence. Beneath the current data evidenced custom-made kitchens occupied the 75% of the company's sales income and 60% of total product volume, it is rational and reasonable for Chinh to believe and forecast in the short-term, almost all of customers remain choosing custom-designed kitchen as their first-choice. And promoting the standard kitchen is also simple for business growing. In addition, allocate the amount of money and resources priority on the custom-designed kitchen as the key way to obtain the income and key competitive advantage comparing with other rivals in the same industry. Definitely, if Chinh will not make the right decisions on the production part of the every individual product, it is hard to estimate accurately on the amount of the inputs should be needed in today's production.

Secondly, arrange and control the production schedule of custom-designed and standard kitchen line. In today's procedure condition, that is no more advanced technology brought in, no additional capital invested, no more production facilities and factories utilized, Chinh should be careful to consider on the schedule of production like the due date of every job, arrange effectively on manufacturing both products without leaving any idle time. Shisheng Li and Jinjiang Yuan (2011) believed jobs in the same group are recommended to operated in a single machine continuously, to be able to boost the efficiency and decrease the possibility of wasting time and money resources. As the case mentioned, now saws and cutting tables are in a single section, routers and shapers in another section. Plus some less commonly used machines are kept away from the working area. Chinh gets the responsibility to ascertain and valuate the factory layouts to facilitate the custom-kitchen production and strict enough time to achieve this change. Furthermore, Chinh also shall ponder no production conflict happening in the foreseeable future. It's possible that for a while under some criterion, the demand for kitchens will rise considerably such as real estate industry booms quickly in the Springvale. Just how to set up the operation of the standard kitchen without distracting the production of custom designed kitchen under the condition of the limited and scarce resources and time is the critical problem for Chich to resolve. If he does not tackle it well, the complete due date of assignment will be delayed, delivery time to customer delayed as well, resources may be idle using a chance to take the warehouse and raise the some direct and indirect costs, for instance labour costs and administrate costs related to inventory respectively.

The last but not the least, Chich shall make the decisions on the scheduling of the workforce and adjustment on employment level in the daily operation. Because during the competing time, both custom and standard kitchens are processed by the same machine and by the same craftsmaker, Chich should consider the workload and work stress factors before set the shifts rosters for the employees. To lessen the labor costs, Classic Cabinets incorporate the similar processes between two products into the same jobs. Once the company has got the high volume orders of either custom or standard cabinets, employees will in the fierce working environment, some mistakes happened unconsciously and job satisfaction will be dropped dramatically. The internal operational management will be crashed by poor employee satisfaction and high staff turnover rate. Furthermore, how many full-time, part-time, contract and informal workers should be employed is also a crucial issue for Chinh to think about. Different levels of workers may bring a large amount of advantages for company, such as balance the work and life for employees, increase employees' company loyalty and bring more qualified values to the customers or the finish users like shorten the delivery time and decrease the defective rate.

When Classic Cabinets bring into the Builder's kitchens, the positive and negative effects lead company's financial structure a different way in four areas: inventory, accumulated depreciation, GST control and equity- profit.

Inventory, company's assets, will increase after introducing the typical kitchen. The foundation of the increased amount comes from three facets: raw materials supporting and maintaining the typical kitchen's daily production and operation; work-in-process goods that happen to be left behind the custom-made kitchen in variety process of completion should be stored in the warehouse to wait for assembling and the final goods waiting for delivering to clients. There is no doubt that frequent inventory transaction will be increasing consistently if no improvement in the factory layouts and adjustment on the production lines.

Accumulated depreciation on equipment probably grows slightly. As Shirley Carlon (2008) quoted from AASB116 about plant, property and equipment, "depreciation is the procedure of allocating to expense the cost of a PPE asset over its useful (service) life in a rational and systematic matter". Because the company's production objective is conduct the standard kitchen line with no violates the priority of the custom-design cabinet production. As the due date is fixed and no more equipment acquired, the initial machines should be fully used and definitely will reduce its' useful life. As the costs of those equipments are settled, depreciation increase, so as the accumulated depreciation do.

GST control will literally increase. GST is the short of goods and services tax. It can be divided the concept into GST payed for suppliers and GST collected from the customers (Shirley Carlon, 2008). As Shirley Carlon (2008) mentioned every business transactions includes the GST from the suppliers to the consumers. As the maker, Classic Cabinet will purchase some components and raw materials from the suppliers making the GST paid, and sold the standard kitchens containing the GST collected. No matter how much amount they will reach, it surely will improve the liability of the business in the GST control catalogue somewhat.

Equity-profit possibly is negative. Although the typical cabinets have some potential to grow further, the costs apparently are greater than the custom ones. As the consequence of producing all custom components prior than standard ones, standard components should be moved to warehouse. Many costs can be recognized like the delivery fees, the rent expense for warehouse, the labour costs to secure and maintain raw materials, work-in-process and finish goods' sound quality, some sundry expenses such as electricity, additional depreciation expenses associated with adding the builder's cabinet line, and administrative costs related to monitor and control processes. If the full total profits are not larger enough, it probably makes losing by deducting those costs. Nevertheless, predicated on the current sales condition that most income attributes to custom-kitchen, the opportunity of getting the positive results is still very high with no advent of some unpredictable variables.

To conclude, based on analysis of Classic Cabinets' current production systems and processes, it is obviously to indentify the problems in the procedure management after brought in to the Builders' kitchen, like inefficiencies on the factory layout especially on the inventory section, low efficiency on arrangement of the equipments to create both lines, and increase employees' workload. So Chich should think about three parts in the daily-operation decision making: arrange the right proportion of each line based on the market short-term demand, schedule of the production and schedule of the employees' shifts. If the business will not treat those problems appropriately, inventory, accumulated depreciation, GST control and equity-profit will reflect this change in the balance sheet.

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