Introduction
Shuzworld Inc. is operating in a very competitive market. The emerging technologies are defining new ways of conducting business in the world. Globalization is one factor that has completely changed the approach of doing business. Because of the advancement of technology, it is possible for an American firm to conduct the production process in China and find its market in South Africa. Shuzworld Inc is one such firm.
The management of this firm should appreciate that just as the firm, which is in American, is able to produce in China and market its products in China, America and other world markets. Other firms in the same industry have the same capacity. The shoe industry is very developed, with some of the leading firms having a market share spanning across many borders in the world.
Addidas and Nike have been keen to protect their market share and ensure that new firms do not eat into their market share. Although it is true that Shuzworld is not keen on manufacturing and selling of the sport shoes, it would still be viewed by these market giants as a threat because these firm are also producing general footwear.
The management of Shuzworld, both at the top level back at headquarters and in China, must appreciate that the market is very competitive and that it requires a lot of carefully calculated measures that would make it manage this competition. The management in China has a duty to ensure that production costs are made as low as possible. This would ensure that the firm is able to set prices that are competitive in the market and still make a profit.
There is also the need to ensure that the retailing process of the company is reflective of the market forces. The market is increasingly becoming more demanding due to the increasingly ease of accessing information. The firm must therefore ensure that it understand the needs of these market and then provide it with the products it requires in the best way possible.
The management must also appreciate the role of the human resource. As Sercu and Uppal (1995) put it, human resource is the first and most important assert in an organization. Shuzworld management at various plants in china has the responsibility to ensure that the personnel are well managed.
The employees should be assigned duties that require their expertise and they should have the zeal to see success in such firms. The Human Resource Management also has the role of ensuring that the personnel and machine ratio is well balanced to produce maximum output.
In order for Shuzworld Inc. to achieve the above objectives, the strategic planning department has a big role to play both at the firm headquarters and at its production plants in China. Decision Making Techniques has become increasingly important in the twenty first century.
Many firms are faced with various challenges that it has to overcome in order to remain competitive in the market. The challenge can be in the production department, the finance, human resource, procurement, marketing, quality assurance, or a combination of these. The management at every level in the company has the responsibility to ensure that these challenges are successfully overcome by coming up with decisions that will best suite each circumstance.
In various occasions, Shuzworld would be faced with various challenges which would require sound decision to be made in coming up with mitigation measures. According to Reilly and Brown (2007), it would be easier to make a decision based on one variable. The decision making team would only need to consider the consequences that failure of the decision would have against those of success and from this determine the impact hence the viability of the process.
This can even take a 50/50 rate of success to that of failure when making a decision. In this case, the decision can only be to maximize profits. However, this is not always the case in a normal business operation. In such cases, there are always various variables that have to be considered when coming up with a decision.
In this case, we would have such a need as to maximize the profits while keeping other constraints constant, or better still, minimizing the constrain. In this case, the management would have to determine the best way it can minimize the costs of production, while maximizing the profits. It will have to look at various variables when coming up with such a decision.
This paper seeks to issue recommendations to Shuzworld on how it can minimize its costs of production in its China plants while maximizing the profits.
Recommendation on How to Improve the Current Workflow in the Plant
Shuzworld Inc. production plants in China are doing their best to ensure that they minimize the cost of production while still maintaining the proper level of production. However, the plant needs some improvement in its current workflow in these plants. Although it rugged wear work boot assembly schedule has been designed to use the least time possible in order to minimize the total cost of production, a lot more still needs to be done.
This time can further be scaled down to minimize the time taken at the processing plant hence increase the possible output of the firm in totality. Given the appropriate staffing plan, Catherine Pang has a duty to ensure that the firm operates within the expected efficiency and the stipulated rate.
The current 46 minutes is fairly good, but the ultimate aim of this firm is to reduce this time so that more of these products can be produced within the week. This would help the plant to produce enough products that would meet the market demand both both in China and back in the United States markets. Alistair Wu and the various line managers in the plant should come up a strategy that would be efficient enough not to make the workforce feel strained to deliver
Process-Oriented Layout would be the best strategy to use in order to maximize the output in this process. In this strategy, all like machines and equipments would be grouped together. This would help solve the problem of scheduling of tasks, handling of the materials, and managing of labor cost.
This may involve arranging the work centers in order to minimize cost of handling the materials. By minimizing the moving distance between the centers, the management would be minimizing the number of people to move the materials between the points.
This would not only reduce the cost of labor for the plant but also reduce the time that would be taken to process the shoes hence increase the total output per week. This strategy would also lower the possibility of breakage of products due to reduced handling necessitated by the minimized distance between the centers. The diagram below shows a representation of the centralization of the work centers at the plant.
Output
The centers should be designed in such a way that when materials come from Center A, they can move efficiently to Center B where the processing should start. Center B should be located as close as possible to Center A where it receives the materials, and Center C where it would move its output.
Center D should also be located close to center C where it receives the materials for further refining and to center E where it would send its out. Center E would put final changes on the products and deliver the finished product to Center A, which in this case is the warehouse. This distance should also be as minimal as possible. From Center A, they would be distributed to various desired distribution centers. This process would continue.
Justification
The main aim of the management in this case would be to minimize cost as much as would be possible. The strategy would help towards achieving this in reducing the labor cost through reduced number of workforce, and reduced time for the production hence a possibility of increased production. The formula below would be used to demonstrate this reduced cost of production.
Minimizing Cost =
Where:
- n = the total number of the departments or work centers.
- I, j =individual departments.
- Xji = the total number of loads that are moved from center I to j.
- Cji= total cost of moving a load from center I to j.
Given the above formula, the line managers only need to reduce the number of centers as much as can be possible permissible (the total number of n). By reducing the value of j, and I the firm would reduce the total number of loads to be moved from one center to another (Xji).
This would ultimately reduce the total cost of moving a load from center I to j, which is the main aim of the management. In so doing however, the management should not sacrifice volume and quality to be produced for reduced cost because if this happens, then the rationale of the strategy would be lost.
Reason for the Choice of the Decision Analysis Tool
The choice of the decision analysis was arrived at after a consideration of various factors. Shuzworld has eight steps in their assembly, which would translate to eight centers. These centers should be reduced to five and some tasks merged to be performed in the smaller number of centers. This would reduce the total cost of production. By choosing this decision analysis tool, the management is able to trace the costs of production and see the direct benefits that would be generated from this strategy. It is easy to understand and to implement.
The management can therefore easily explain the reason for the change in production strategy to the workforce. It is important that the workforce understands and appreciates the change of strategy in the production plant so that they would cooperate and become the implementing team. They will also appreciate the decision to reschedule them to different departments or production units.
Initial and Ongoing Costs needed for the New Sandal Line
Maui Sandal Project is the newest project that is expected to produce sandals that Shuzworld expects to export to various countries including California and Southwest. The project is very ambitious and from the specifications given by Alistair Wu, there is need for proper planning of the project activities to help realize maximum cost of production.
Hetty Tarbox, who is the regional marketing manager, has reported Shanghai would need to produce batches of 10,000. From her market scan and evaluation, she notes that Maui Sandals would have a huge market both in China and various states in the US. According to Hetty’s estimates, the first batch would take an approximate of 1000 labor hours to be produced basing on the experience of previous new footwear lines.
Her estimates further demonstrate that the average cost of labor on an hourly rate is $ 1.08. The management of Shuzworld, especially the line managers at the manufacturing plants has the responsibility of coming up with a proper strategy of how it would plan the new production process.
The decision must take into consideration various factors that would make it possible for the firm to reduce the costs associated with labor and the capital (the tools and machines to be used in the plant). The decision should result in methods that would combine labor and capital to give maximum output at the least possible costs.
Learning Curve would be the best decision analysis tool for this firm to realize the best production cost in the new project. The current workforce would implement the project. This workforce would be responsible for various activities in the project and therefore the success or failure of the project largely lies in their hand.
According to the report given by Hetty, the production employees have an 80% learning curve based on the experience. The biggest question that Hetty puts across is how the production schedule should look like during the first fourth months and how the budget should be made during the same period.
The question would best be answered using the learning curve. The following diagram would help explain factors that the management needs to consider in order to come up with appropriate measures.
The Learning Curve above shows how the employees of this firm are likely to respond to the new methods of production. This curve would help respond to the question of how to schedule the production in the new project. During the initial period, spanning the time when the production begins to a few weeks after, the learning process will be very low.
The employees would still be new to the new production methods and therefore they would take longer periods to manage the production needs. At this time, the management should minimize the level of output and devote most of the resources (especially time) to making the employees understand the production methods.
Some methods of production take long periods to learn but once learnt it becomes very easy for the employees to apply the learnt message with a lot of ease. The production rate at this stage would be relatively low, and the management should be prepared to incur more losses in teaching the staff and other costs that would be incurred due to breakage and related cases. This stage in the learning curve is called slow beginning.
After the slow beginning, the next stage would be steep acceleration. The moment employees have mastered the production process, it becomes very easy for them to apply the knowledge in mass production process. This is the best stage for the firm to engage in mass production of the sandals.
This would most probably be between the tenth to twelfth month depending on the complexity of the process, the level of knowledge of the workforce involved and other factors that are associated with the learning process. It is very important for the quality assurance team to work hand in hand with the production department to ensure that the production process is done within the desirable precision and that the market standards are met.
The budgeting at this stage should heavily lean towards the raw materials and other variable costs that would yield maximum output. It is important to understand though, that production at this stage is not at its maximum because the learning curve shows strong growth of knowledge of the employees in the production methods. The more the employees learn and understand the production methods, the better it would be in producing more products of high quality within a shorter period (Sercu, & Uppal, 1995).
The last stage is called the plateau. At this stage, the employees shall have achieved the maximum in terms of learning the production methods. The firm shall be at the maximum level of production capacities. It would be best placed to supply the markets within the entire China, California, and Southwest.
The quality assurance team would have a lesser task because the production standards shall have already been set. The main task shall now be on Hetty Tarbox, the regional marketing manager and her team. They will have to increase the market share of the firm because of the increased production capacity of the firm.
Impact of Costs on the Decision to Continue Producing the New Line
The cost would be huge especially at the initial stage of production. This is because the firm would have to purchase tools and machines to initiate the process. The firm would also incur cost of training the workforce in the new line of production. There are also costs that are associated with production procedures like breakage, tear, and wear among others. However, these just normal costs should not be a hindrance from further production process.
Reason for the Choice of the Decision Analysis Tool
The decision analysis tool above was chosen because it would enable the management team understand the best stage they can consider initiating mass production of the sandals for the purpose of export to other countries.
Recommendation for the Staffing Plan
Human resource is one of the most important factors of production. There is always a need to ensure that the staff is assigned the appropriate task within a specified period. Staffing plan is one of the strategic planning functions that the human resource management must ensure that it does with the precision it requires.
A poorly planned staff would duplicate the work of others, fail to work as a unit or perform in a substantial manner, and the result would a chaotic workforce whose output would be way below the expected standards. It is therefore necessary that the staff is carefully planned at Shuzworld Shanghai plant in order to maximize their output hence increase cost-effectiveness at the plant.
The best approach that this firm can take in planning of the staff is Short-term Scheduling. In this regard, there are four practice areas that would critically be analyzed with various organizing principles to determine how its suits the firm in the manufacturing plant.
The first practical area would be the identification of business need. The first organizing principle in this area would be the determination of why there is need for the planning system. The management must clearly underline why there is need for this firm to develop this plan.
The business needs of the firm must clearly be stated in quantifiable terms. The management should collect the statistics in regard to the current workforce at the plant. With this data, the management must clearly come out with what this capacity can do, as well as the areas that may need some adjustment. Within the plant, there are currently four machine operators to be assigned to four machines. The need for the firm is to determine how to minimize cost of production; hence, we have only one variable to look at.
The table below shows the status of the firm at the production unit in terms of the cost being incurred by using the four workforces.
The management must understand operational needs. This would help it develop capacities based planning. With the current workforce, it is evident that workforces C and D are the costliest of all the operators at the plant. They cost $ 41 each per unit production. On the other hand, workforce B costs the least to the firm, at $ 37 per unit output. The production manager at this plant operational need is to minimize the cost of production as much as possible by determining how to organize shifts for the four operators (Reilly, & Brown, 2007).
This would bring us to the second practice area of identifying the requirement baseline, which is this case is to determine how best the management can shift the operators around to get the least cost of production. To achieve this, the management would need to bring in the next two of the ten organizing principles, which are technical requirement and technical performance measures.
The management would need to establish a performance measurement baseline, which is the third practical area in this model. The operators would need to be shifted from one task to another in order to incur the least cost in the total production cost. The following output is the best model that can be used to obtain the least cost of production.
Output
From the above analysis, it is evident that the firm can save up to nine dollars per unit output if the operators are properly shifted from one task to another with cost as the baseline. The fourth practical area that the management should observe is to execute the plan. The management should go for the best option in order to reduce the cost of the total production.
Reason for the Choice of the Decision Analysis Tool
The decision tool analysis used above was chosen because is simple to use and is straightforward in determining the cost of production. It also allows the management to view the success of the approach and determine if it should be continued or not.
Short-term Scheduling Techniques and Rules
Short-term Scheduling techniques are strategically important to Shuzworld at it production plants because it would facilitate faster movement of products within the facility hence lowering the costs associated with the same. Because the movement of the products within the facility would be enhanced, it would be easy to increase the capacity of production and increase dependable variables, which would ultimately result in increased customer satisfaction. Scheduling deals with timing of the operations.
The management must allocate and prioritize the demands within the production facility. It is important to determine whether to use forward or backward type of scheduling based on the task. Forward scheduling would be the most appropriate procedure for Shuzworld new production plant because it would produce feasible schedule that may be needed to plan the workforce.
The management should take close watch on the Input-Output Control measures. The operations manager and the line managers should work very closely in developing job-sequencing techniques. To help in coming up with the appropriate technique, Johnson’s Rule would be very helpful, especially given the centers that the production process goes through.
References
Reilly, K., & Brown, C. (2007). Investment Analysis and Portfolio Management. New York: Southwestern Thomson.
Sercu, P., & Uppal, R., (1995). International Financial Markets and the Firm. New York: SouthWestern.