24, 03, 2014
QUESTION 1
- Develop a master production schedule for the bread-maker. What do the projected ending inventory and available-to-promise numbers look like? Has Realco “overpromised”? In your view, should Realco update either the forecast or the production numbers?
In this case, master production schedule form the core of this approach even though the stability of the approach is question because of the numerous assumptions on which it is based. The quantities supplied and demanded are derived from Jack’s unverified assumptions. Thigh heightens the cost of inventories, which consequently leads to the lowering of the profit margins for the firm. A firm’s competitive advantage is usually dependent on how they manage their cost and ensure they are as low as possible while at the same time maximizing on the profits. Technology and efficiency is a better impetus to reduced costs of production.
2. Comment on Jack’s approach to order promising. What are the advantages? The disadvantages? How would formal master scheduling improve this process? What organizational changes would be required?
The approach Jack has adopted of giving promises to his clients regarding the products they want even when he does not have them ready and therefore request for an extra week to deliver the products can only be effective in one-time incidences. This is mainly because there are times when clients need prompt delivery and they would prefer suppliers who have ready made products. Customer loyalty is an important aspect of business management and has to be the key goal for every business. Customers will tend to be pissed off every time the supplier asks for a week to deliver the products. In addition, there are so many other disadvantages associated with this mode of approach to doing business. For instance, it will be highly difficult for the firm to establish the actual demand of the products in the market. It also appears to be a disorganized way of doing business and most customers will opt for businesses that have an established structure and tradition of doing transactions.
This approach is also based on so many presumptions. For instance, the volume to be delivered is only assumed and this can be very dangerous as the firm may fail in delivering goods to some of their important client. The consequences of such a thing are just numerous and the losses associated with this can be very discouraging. There are higher chances for increased inventory costs, which correspondingly lead to an increase in the cost of production that leads to the ultimate decrease in the profits realized by the business. It is also an undesirable way of doing business because the firm may not be able to develop itself in terms of the volume of output as its production is only dependent on the emergency orders requested by their clients.
As stated before, by the fact that the firm’s potential production capacity cannot be instantaneously determined, it ushers in a myriad of challenges the business has to be prepared to deal with. For instance, it will be highly difficult to get the exact number of staff required in the business. The consequences of this may either be over-staffing or under-staffing. Each of these consequences has negative implications on the performance of the business. For instance, under-staffing will ultimately expose the business to sanctions and lawsuits by the labor unions because most of the staff will be strained. On the other hand, overstaffing leads to under-0utilization of employees. This implies that here will be some inconsistencies between the labor input and the output realized. In other words, the business will pay more on the wages than the output being realized. In addition, it is also next to an impossibility to have an accurate demand prediction because there is no pattern to be followed and everything seems to be done in haphazard manner. It will also be difficult to determine whether or not the firm is rising to market control or lagging behind other businesses in the industry.
Therefore, Jack’s proposed approach does not take into consideration some of the long-term implications of such an approach to the business performance. This does not really nullify the approach as merely obsolete but when both the advantages and disadvantages associated with this approach are put together and considered more keenly, it is true to say that the method is limited hence cannot be adopted for most businesses, especially in the current dynamic market conditions.
- Following up on Question 2, which do you think is worse, refusing a customer’s order upfront because you don’t have the units available or accepting the order and then failing to deliver? What are the implications for master scheduling?
It is better to turn down the customer’s request than accepting then fail to deliver as agreed or incur a lot of costs while hurriedly trying to cope with the new unplanned for demand. Businesses with a rich culture and established structure tend to have much success in the market than those that operate according to the demand in the market. The business should not produce more than its capacity as this will always come with much strain. In addition, it creates unnecessary pressure, especially on the employees and this lowers their morale. On the other hand, accepting to deliver goods to the customer is a really tough commitment that speaks a lot about the reputation of the business. Therefore, failure to deliver the products as agreed may taint the business negatively and through this, the business may lose more customers than if they would have turned down the customer’s request.
Master scheduling is an important aspect of business management and helps a great deal in minimizing losses. The essence of any business is to make profit by cutting on costs as much as possible. This means that it is possible to have many clients but with a higher production costs, as in the approach proposed by jack. However, master scheduling has numerous advantages, including:
- Leads to a more precise and simple scheduling
- It increases the productivity of the business hence leading to higher profits
- It also makes better the clientele services hence better business reputation
- It reduces material shortages resulting from unplanned for orders
- The cost of purchasing materials is lowered
- The inventory costs will be lower
- It also makes it possible to have an advanced production scheduling
- Better bargained lead times
- Manufacturing costs are adequately compacted
- It also improves the performance of both the technical and managerial staff because they will not be overworked
4. Suppose Realco produces 20,000 breadmakers every week, rather than 40,000 every other week. According to the master schedule record, what impact would this have on average inventory levels?(Bozarth. Introduction to Operations and Supply Chain Management, 2nd Edition. Pearson Learning Solutions 22.15)
For the business to make the best out of the master scheduling approach, it is imperative that it is based on the actual prevailing conditions in the market. The business should incorporate a highly effective marketing plan to increase its share in the market and step up their profit margins by rendering quality services to their customers. Therefore, conducting a market survey is inevitable as it is the starting point to knowing what customers really want. This will serve as an eye opener to the planning process and help in catering for the actual demand and be able to ascertain the proportion of control the business has in the market (Bozarth, 2014).
As stated previously in the MPS, the aim was to test whether or not these assumptions have and concrete foundation. Where corrections or modifications are inevitable, it will be important that they are adequately stated and the respective corrections made on time. This should then be accompanied by a new or modified activity schedule, including the workforce required to complete the work and all the successive stages the bread has to pass through until it is packed and delivered to the consumer (Pettersen, 2009).
It is also imperative that a totally different MPS needs to be designed and made central to the entire process and the procedures involved. This is then followed by the identification of all the materials that are required as well as the ratio analysis between the various materials. In addition, after all this has been put in place, the final product can then follow sooth. Ratios can be presented graphically by plotting the inputs against the outputs. It is expected that the graph shall take the shape of a curve, which is expected to increase continually until it reaches a point where it starts falling. This point represents the optimum point of production for the firm and it’s at this time that the firm will be experiencing economies of scale, including the reduction in the costs of inventory. In order for the business to achieve such a high optimal level, it is imperative that there is optimal utilization of the workforce and highly conducive working environment for the employees. In addition, it is important that there is a rough cut on the capacity required against what is currently being done (Pettersen, 2009).
It will be useless to implement the plans without prior consideration of the financial obligations that are associated with it. It is good practice when budgeting to allow for a 10 percent of the total budget as contingency, in order to cater for all the unforeseen events and unpredictable happenings.
QUESTION 2
1. Is Toyota’s focus on quality consistent with the Lean philosophy? Can a firm actually follow the Lean philosophy without having a strong quality focus? Explain.
The lean philosophy is derived from the principle of making sure that customers get what they want at the right time. It emphasizes more on maximizing profits through optimal production and ensuring the cost of production is as low as possible. This philosophy dictates that optimal production can only be achieved through maximum utilization of the available resources and lowering the wastages as much as possible. At the end of everything, fosters efficiency, which is an important ingredient to the realization of the quality output to the client (Pettersen, 2009).
The Toyota Company is a good example of a business that has ultimately succeeded in incorporating the lean philosophy in all their production lines. It is totally difficult for a firm to adopt the lean philosophy without reference to the quality of the output. This is in line with the fact that customers will always want quality regardless of the urgency with which the goods are demanded. Therefore, it follows that if the company wants to deliver the vehicles to the customers whenever they need them and the way they want them to look like, it is imperative that they have to ensure all the malfunctions within the vehicles are minimized as much as possible (Pettersen, 2009).
Reduction in the wastages will always ensure that there is efficiency in the operations of the company. In addition, it will be highly possible to recognize the errors whenever they sprout and deal with them accordingly to avoid releasing defective products in the market as competitors may use that for their own advantage. Wastage reduction adequately reduces the cost of production and improves the profit margins of the company. The most important aspect for any business is maximization of profit. Where the firm can achieve this more sufficiently, it will be easier to incorporate better and quality technology for their production systems, engage in research regarding better and more efficient products that suit customer needs and providing all the relevant information that is required for the firm
Therefore, it is difficult to focus on the lean philosophy without having quality in mind. However, in both scenarios, the outcome is similar in the sense that strict adherence to the lean philosophy will always bring quality into the picture. The two aspects correspond each other.
2. Who are the “coordinators” referred to in the article? What role have they played in educating Toyota’s workforce in promoting the TPS (Toyota Production System) philosophy? Why are they so hard to replicate?
The article refers to the mid-level managers initially in the former company in Japan. This is because of the role they play in coordinating the various activities within their dockets to ensure everything is done accordingly. They were the point of contact persons between the other firms in the various parts of the world and the mother firm located in Japan (Krafcik, 2008). The main firm has its own tradition that guides how certain functionalities are to be carried out within the firms. Coordinators are endowed with the responsibility of aligning the operations of the other firms outside Japan to rhyme with the philosophy of the main plant. They were mainly responsible for ensuring there is uniformity of the rules and regulations governing the conduct of all the other firms outside Japan. They would meet with the branch managers of the respective firms and exchange ideas regarding what ought to be done and how it should be done to avoid contradicting with the guiding framework set forth by the main plant.
The company’s production system is periodically improved to ensure the products are always of superior quality. The company has succeeded in ensuring ach employee grasps the concept inwardly and embraces it fully. The workforce in Japan has embraced the philosophy fully and with a lot of commitment. Mr. Nakada failed to deliver in George Town not because of incompetence but because of the cultural orientation. Communication was a barrier to him because all the managers and employees speak English in George Town. There is also a cultural difference between the American and the Japanese in the sense that the Japanese own the lean philosophy and are so committed to it, just like they are committed to their beliefs. However, the same does not apply to the American because of liberalism as everyone is entitled to his own opinion.
3. According to Hajime Oba, what is wrong with Detroit’s approach to Lean? Based on your understanding of American auto manufacturers, do you agree or disagree?
Detroit’s approach to the lean philosophy is not the right way of doing things; they only focus at reducing the cost of production without emphasis on the quality of the product through research and new innovations.
In my opinion, the approach is wrong and misinformed. Detroit ought to grasp the concept of considering that all customers expect quality at all times. The main goal of every business other than making profit is to satisfy their customers. Higher profit margins will only be possible where there are satisfied and loyal customers. Therefore, any business should ensure that it plays its role of ensuring maximum profits through lower costs of production whole at the same time ensuring that there is customer satisfaction through quality products. The two aspects cannot work independent of each other.
- There is an old saying, “Haste makes waste.” How does this apply to what is happening in the Georgetown plant? What is Toyota doing about it?
The Georgetown plant is really struggling with the aspect of time, and something has to be done about it. Production output should match the demand in the market. However, where the demand overwhelms the ability any firm can sustainably deliver, it becomes a disastrous. This implies that the firm needs to stick to their quality standards at all times regardless of whether or not there is increased demand. It is true that increased sales lead to higher revenue although this ought to change if nothing is done about quality. Therefore an increase in production should be reinforced with an improvement in quality.
Whenever there is an increase in the demand of vehicles, it is imperative that the firm has to employ more labor and add more machinery to step up their production capacity and meet the increased demand. Alternatively, the firm can choose to stick to their production capacity regardless of the increase in demand. However, this is not desirable as every firm would want to meet the demand in the market in a bid to maximize their profit margins (Holweg, 2007).
References
Bozarth. (2014). Introduction to Operations and Supply Chain Management, (2nd Edition).Pearson Learning Solutions.
Holweg, M. (2007). The genealogy of lean production. Journal of Operations Management 25 (2): 420–437. doi: 10.1016/j.jom.2006.04.001
Krafcik, John F. (2008). Triumph of the lean production system. Sloan Management Review 30 (1): 41–52
Pettersen, J. (2009). Defining lean production: some conceptual and practical issues. The TQM Journal, 21(2), 127 - 142
