Elizabeth had experienced both bad and good times in business over a relatively short time. The initial stages in her business were never promising but eventually they did. Her business started to skyrocket after she got loyal customers who used to place regular orders. This led to the facility being small for the business. The fact that Biddy’s bakery outgrew its initial facility at a very fast speed made Elizabeth assumed that the case would be continuous.
She assumed that the business would continue growing thus going for a bigger facility. On moving to the new facility, she increased her production significantly. Before expanding her business, Elizabeth did not consider her market i.e. the number of loyal customers in relation to her production. The challenge was due to the unpredictability of the customers. Elizabeth should have analyzed the system before adopting her new strategy. This would have helped her in making informed decisions as far as the expansion of the business is concerned.
The aspect of facility design would have helped her in a big way because she would have known the capacity that would enable her to produce sufficient goods for the available customers irrespective of the season-high or low. Elizabeth should also have considered the economies of scale, which determines whether the demand is large enough to call for mass production or if the demand is unsteady, like in her case, that it cannot support a dedicated production facility. All these considerations are based on the availability of customers for her products.
The team of business students proposed that Biddy should start producing McDoogle pies in large volumes with major sales going to a local grocery store. Initially, she used to produce McDoogle pies as a specialty as well as other baked goods including cakes. Her main market of the pies was the local restaurants and the general populace. The proposal was solely based on a specific grocery store that was meant to take much of the pies.
This was wrong because in case of demolition or termination of the grocery business then Elizabeth would lose a large proportion of her market. The pies were also meant to occupy the remaining space with a misconception that they would all be bought. This would make her not to produce any other pies for her many customers that already knew about her and loved her products. They too did not put into consideration the production cost for the bakery’s mass production as well as the impact on her old-fashioned style and taste of the baked goods.
By accepting the proposal, her traditional operations would be null and irrelevant for she cannot achieve the production without the purchase of other new facilities to meet curb the production needs as well as her entire way of working including the products. The business would be different too because she would be part of a chain supply system termed as “all the steps and processes involved in delivering the product or service to the end customer “(Mabert & Venkataramanan, 1998, p. 543). These ensure that she does not compete with other people but the network will do that on her behalf.
It is true that the supply chain would help in enhancing her competitive advantages over the other bakeries. This is so because the competition would be her supply chain against the other supply chains though, in essence, she has advantages over others indirectly. Ultimately, her business will be answerable to a network unlike her usual way of working. In addition, she would enjoy the ability that the supply chain has in meeting the end-users’ demands “in the most efficient and effective manner has become a strategic capability that can lead to competitive advantage” (Ireland & Webb, 2007, p. 487; Jones, 1998, p. 4). This differentiates her current business with the proposal’s way of doing business as provided by the business students.
Elizabeth should embrace change and see the bigger picture of mass production for it has its many benefits, which include increased returns and customer satisfaction. The fact that there is a local grocery store chain to purchase much of her productions should propel her to make a decision of incurring the cost of production and reap enough benefits since with the new facility, her worries for the capacity would be catered for with a place to offload to- a ready market.
She should get into the supply chain that has “linked functions that are strategic resources in themselves and should be developed, managed and protected in order to gain and sustain competitive advantage” (Rungtusanatham et al, 2003, p. 1090). Elizabeth should, therefore, design a system that has the ability to produce quality goods that are sufficient to meet the customers’ demand in terms of quantity and timeliness. According to Frohlich and Westbrook, “the integration and management of the supply chains have the potential to lead to better performance in terms of costs, and differentiation, especially in manufacturing where large investments in assets and inventory are required” (2001, p. 190).
References
Frohlich, M. T. & Westbrook, R. 2001. Arcs of integration: An international study of supply chain strategies. Journal of Operations Management, 19(2): 185-200.
Ireland, R. D. & Webb, J. W. 2007b. A multi-theoretic perspective on trust and power in strategic supply chains. Journal of Operations Management, 25(2): 482-497.
Jones, C. 1998. Moving beyond ERP: Making the missing link. Logistics Focus, 6(7): 2-7.
Mabert, V. A. & Venkataramanan, M. A. 1998. Special research focus on supply chain linkages: Challenges for design and management in the 21st century. Decision Sciences, 29(3): 537-552.
Rungtusanatham, M., Salvador, F., Forza, C., & Choi, T. Y. 2003. Supply-chain linkages and operational performance a resource-based-view perspective. International Journal of Operations & Production Management, 23(9): 1084-1099.