Going Inc. is known for its slogan, “Nothing comes close to Going” (MyCampus 2010). Since Going Inc. launched itself three years ago, it has become a favorite for those who want to avail of a ‘branded’ premier, private and customized airplane provider. The planes were developed with a specific niche audience as target as the planes have been built with a first class look and a luxurious interior and exterior, like Lexus, Eddie Bauer and Sony has been designed by the manufacturing division. The manufacturing division has been rolling out 15 planes a month, which are small and exclusive, meant for private use and with the best in power and speed in its class. However, certain problems have arisen with the skyrocketing demand for these ‘niche’ planes, which had not been anticipated by the company (Yasin 2007). The current requirement for the Bezna model of Going Inc. is about a 100 planes a month whereas the company’s production capacity is a mere 15 planes a month.
Let us study the production planning and capacity of the management division of Going Inc.
The company needs to produce high quality Bezna models with a high flexibility rating with a lead- time of 11 weeks instead of the 16 weeks that is now being offered to customers for providing planes that provide medium levels of quality and flexibility. The overhead cost of manufacture also needs to be lesser that it is now. If we study the production statistics per month, we find that the least number of planes made in each month is 10 in 2004, as opposed to a mere 4-8 units in 2002 and the maximum number of planes produced are 14, that too, only in the months of July and October, 2004. Considering it with the sales orders, we find that the demand of units was 5-10 in 2002 but it has drastically increased in 2003-2004, with the demand shooting up to 16 units in 2003 and 18-21 units per month in 2004, thus causing a deficit of 6-11 units per month in production capacity especially in the months of August, October, November and December, when the demand is the highest and the productions comparatively low. The current backlog of total production yearly is at a 100 planes. Going Inc. basically designs planes that have a 1000mile range and that has three base models, to be customized on request.
The production deficit can be lessened by strategic production planning. The targets have to be made at least 15-20 planes per month and more skilled workers should be brought in, especially in high- demand holiday seasons, like October to December. The company has a history of labor problems and conflicts. A convincing HR manager to talk to the unions should be hired, the salaries of the employees should be increased according to efficiency and more up-to- date training programs and workshops should be organized for them so that they should learn more about speed and efficiency techniques in the production of Bezna’s. If possible, an assembly line production service can also be used to increase the number of units produced. This will also help in lowering the overhead cost of production for each unit and also ensure faster production.
The company’s production has also been slow due to low quality products; mostly bought from the U.S. a lot of the material is scrap and can’t be used. Under such conditions, Going, Inc. should make tie-ups with quality parts providers, if need be, then get them imported, as the planes are to be of high quality. Also, a dedicated Quality Control Department should be put up who can survey the parts and test the planes produced. A blue print or model of the desired kind of planes can be demonstrated to the workers so that they follow the model and make good quality planes. As soon as the number of planes produced goes up, the initially high overhead cost of the production of each unit will go down (Yassinn 2007).
Let us look at the company’s inventory measures
Currently, the company owns only one assembly hangar in Houston, Texas whereas the Corporate Headquarters is in New York City. The hangar can only accommodate three planes to be built simultaneously. The hangar is rectangular in shape and thus only three planes can go for final assembly side by side. At this rate, the company estimates that only a maximum of 15 planes can be assembled and designed per month which is not enough, considering the sales figures demanding 21 units per month. This problem can be solved by building new hangars or if it is an expensive option, then the company can rent or take on lease a few unused hangars so that the number of planes assembled per month can go up (Browning 2006). The company can also provide for a bus to convey the employees and one quality inspection officer to the location of the rented hangars. The rent might seem steep in the beginning but considering the heavy sales units and the increasing demand for these luxury planes, the costs will be covered easily if more planes can be assembled. It can be a good option to rent low- cost hangars in other states or provincial areas and if needed, Going Inc. can hire local workers from the area and send its quality inspection officers there. Once the assembly area is decided, it will lead to higher levels of production. Another idea would be the expansion of the hangar at Texas by adding to the building (Browning 2006).
As the company provides many customization options to its customers, it is necessary that the minimum parts for customization have to be stored near the planes, which needs some space. A good idea to improve production numbers can be by having the customized part fitted in an adjoining shed or factory after the basic structure is assembled and then lead convey it to another shed for final assembling and line-up. Building these huge spaces might look cumbersome and costly at first but it will improve the speed of plane unit assembly drastically. Also, if this option is used, the company will not have to hire or lease out hangars in another state. It will save a lot of time and overhead costs of production (Sanchez 2005).
Thus, proper use of employee strength, use of technology in production planning and increasing storage and assembly space should be able to help Going Inc. fulfill the high sales targets per month. If needed, the above mentioned suggestions can only be implemented in the holiday season, when demand is at its peak.
References
Browning, T.R. (2006). Key concepts in modeling product development processes. Systems Engineering 9(2), 104-128.
MyCampus. (2010). Manufacturing Division. Web.
Sanchez, R. (2005). Strategic flexibility in product competition. Strategic Management Journal 16(S1), 135-159.
Yasin, M.M. (2007). Effective strategic and operational practices of manufacturing, service, and public sector organizations: An empirical examination. Systems Research and Behavioral Science 19(6), 589-598.
Yassinn, A.A. (2007). The Implications of Product Architecture on the Firm. Systems Engineering 10(2), 118-137.