Stickley’s Furniture Case
Given the nature of business in which Stickley Furniture operates, the demands of the business and the types of customers they deal with, the most appropriate and well-suited production processing job for Stickley’s Furniture is Batch Processing. As highlighted in the case, Stickley’s Furniture has undergone a transition in their operations through the introduction of an automated system that assists the organization in speeding up the manufacturing process and reducing the human input or efforts required to complete the process. This was a timely move and well in line with the current scenario faced by the company. We have already learned that the company is undergoing a time of rejuvenation and revitalization and is recovering from a financial crisis. Implementing batch processing will reduce human interaction required to accomplish a task and result in the reduction of errors.
As one can observe, this will reduce the operational costs of the organization in the long run (Barker and Rawtani, 2005). Other forms of job processing include continuous, shop, repetitive, etc. Depending upon the type of industry and the requirements of the organization any or a hybrid of the mentioned processes can be utilized to meet the varying demands of the situation. In case of Stickley’s Furniture, the production process can be divided into two stages, such as: 1) uniform tasks, such as sawing of tools and identifying of faults in the equipment 2) gluing the unassembled furniture to convert idle pieces of wood and forming varied sized furniture as per the order from the customer. Bearing in mind the needs of the operations two types of processing jobs are employed at Stickley’s Furniture.
For the uniform and precision-based tasks a computer-controlled optimizer is employed to ensure that units produced are in strict adherence to specifications provided by the customer, or instructions fed into the machine by the operator. Once the optimizer has provided the output in accordance to the instructions fed into the system, the next stage of the production is the one that requires human intervention, i.e. application of glue and assembling of wooden pieces to form tables, chairs and other equipment, depending upon the size of the final order (Barker and Rawtani, 2005). So, for automated tasks Stickley’s Furniture uses batch processing, while for customized and regulation tasks, such as application of glue and assembly of equipment, Repetitive Process is employed.
Keeping Track of Job Status and Location during Production At Stickley’s Furniture, there are multiple orders and numerous items that are being processed simultaneously. Keeping track of every individual order and determining its location in the process and assembly lines are major areas of concern for the organization. Negligence on the part of the organization in this regard can prove to be detrimental, as it may lead to an eventual dissatisfaction on the part of customers. Realizing the severity of the matter, the organization has a well-laid out system of bar coding that helps the organization in keeping track of a job status and location of the order during the production process. To keep track of individual jobs, bar codes are used to register each job into the system, which is done by an operator that sticks bar codes on top of units moving from one point to another in the production process. Once a unit has gone through all the stages of production and is deemed to be completed, the bar code is removed and its details are fed into the database marking it as completed.
This system helps the organization monitor the performance of teams working on various orders, and also provide customers with updates regarding the status of their orders undergoing various stages of production. An Order for 40 Mission Oak Dining Room Sets 40 mission oak dining room sets order needs to be looked at from various perspectives, before the company decides upon taking it and forwarding it to the production department. To accomplish th task in an organized manner, the company needs to make sure that it has full capability and capacity to meet this demand (Gray and Larkson, 2002). Status of Pending Orders In Hand The company shall be required to understand the current status of previously pending orders in hand. This will help the company determine the resources available and the additional input that it will require to inject into the system to get the order done well and within the customer-prescribed deadline.
Future and Present Demand from the Market The organization must also bear in mind the seasonal pattern of demand in the industry, where sales are boosted in the first and third quarter of the financial year, while demand decreases in the second and fourth quarters. More importantly, the company should keep track of the white inventory that will help it determine additional raw materials to be purchased. Future Business Tradeoff Another significant aspect to be considered here is the reviving phase that the company is going through at this point in time. The company cannot afford to lose customers due to scarcity of resources and unavailability of labor and funds. This will roll out a negative impact to the customers and will snatch the future business away from the company. Labor Intensive RequirementsMoving from the management perspective of the order in hand, there are various question marks that the company needs to answer at the operational level to ensure that the nature of the order and the demands and requirements are well within the operational range and capacity of the organization.
The company is required to know the exact shape, size and dimensions of the dining sets required to be made for this order. Once the dimensions are made available to the production department, managers may plan a strategy to deliver the order in the most efficient manner possible. Quantifiable Variables Once the order has been forwarded to the operations and production department, managers can calculate resources to be allocated to this job in terms of the number of workers, labor hours, machines and equipment and number of machine hours. Profitability The company must also study the mark-up involved in the entire project. Cutting down costs and maximizing profits are the rules of the game. The company should study the cost structure of the entire project in great detail.
It is only after the company has solid grounds to believe in the project that it should give it the go ahead. Though relationship building at this stage is of great significance to the company, profitability should not be compromised, either. Once the company has collected the required information, as discussed and highlighted above, it will be in a better position to undertake a rational cost benefit analysis of the situation. Allocating resources to this task in an efficient and cost-effective manner and the output generated in terms of revenues and profits shall be the pain points that the company should consider before taking on this task (Gray and Larkson, 2002). Level Production Policy Level production policy adopted by Stickley’s Furniture is a commendable one.
This strategy is employed to meet increased demand during peak seasons. However, this strategy has its pros and cons. On the brighter side, levels of inventory already piled up by the company help it meet customer demand when there is a peak season. This is of great use, because denying customers during high season on the basis of unavailability of the product shall lead to the spread of a negative impression of Stickley’s Furniture in the market. While instant availability of the furniture may lead to customer delight and guarantee future sales (Kerzner, 2009). However, there are costs that are associated with customer delight.
Holding excessive inventory carries a lot of downsides as well. In the first place, inventory holding costs add up to the cost side of the income statement, thus producing a negative impact on the overall profitability of the company (Kerzner, 2009). Moreover, holding excessive inventory carries the risk of unsold and wasted production units held by the company, in case the anticipated demand from customers does not meet the actual demand in the market during a particular season. In this case, the company is making a bid for a foreseen and avoidable loss. This loss along with inventory holding costs may cause the situation for the company to go from bad to worse. Another high risk factor that is associated with the level production policy is the outdating aspect of the industry.
Holding inventory in bulk quantities does not allow the company to produce units or cater to instantaneous orders due to shortage of space in inventory storage facilities. Thus, if a bulk order comes in for a customized product, Stickley’s will not be in a position to meet the demand of the customer (Taylor, 2010). If inventory continues to pile up in warehousing facilities, Stickley’s Furniture will be faced with a constantly rising overhead cost and an outdated stock of furniture that does not have a high market value and, therefore, further exacerbates the company’s misfortunes. Here, the management needs to put their heads together and come up with a winning strategy. They must have a reasonable amount of white inventory along with a fair bit of capacity to work on customized and instantaneous orders (Taylor, 2010). Proposed Changes As has been already discussed in this paper, Stickley’s Furniture is looking for a turnaround strategy.
The market is extremely competitive and offering a vanilla product may not help Stickley’s Furniture to distinguish itself in the industry. There are certain initiatives that the company needs to take to make a mark and stand tall above the competition (Ferrell and Hartline, 2010). Strategic Planning The company’s management needs to re-visit their business model and processes. The company needs to realize what competitors are offering and what factors can make Stickley’s Furniture stand out from the crowd? Identifying a Niche Stickley’s Furniture will have to start from scratch again. They should not go after mass market straight from day one, but study their strengths and weaknesses and understand the reality of the situation.
To succeed in the long and short term, Stickley’s Furniture should define its points of differentiation and start catering to a selective target audience. Marketing Efforts Stickley’s Furniture must have a small department that looks after marketing processes of the company. This department will help the company study customer needs and requirements, and will also serve to communicate the company’s ideology and message to end customers. Adapting to digital marketing and making inroads into social media will help the company make a strong comeback in the market. Customer Relations Management Stickley’s Furniture shall emphasize upon building and maintaining sustainable relations with customers.
This can include greeting them warmly, offering them refreshments on their visit to the company showroom, calling them to learn of their product experience, as well as rewarding loyal customers with seasonal discounts and coupons.
