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The presented case describes a company that manufacturers medium and small sized coolers. The coolers are usually used for outdoor events and picnics. The current problem affecting the company arises from its supply chain operations for the final products. The production and distributions are managed from the East Coast. This means that the West Coast’s customers find it hard to get the coolers. This is caused by the high freight rates and the final product’s low density. The decision to implement the idea of freight equalization has not delivered positive results in the company. The margins have been affected negatively after the firm took the hit for the less-than-truck-load shipments to its West Coast customers. The main alternatives for the firm include contracting a distribution facility, establishing a new facility on West Coast, or maintaining the current supply chain setup. The decision to distribute products from various locations presents various benefits. For instance, the customers will acquire the coolers in a timely manner, attract more customers, and maximize its profits (Agami, Saleh, & Rasmy, 2012). The approach will also strengthen the firm’s supply chain. The main disadvantage arises from the increased costs of doing business in the industry.
Manufacturing Operations Flows
Manufacturing companies use several steps to ensure products flow smoothly from the factories to the customers. The first step is acquisition of raw materials. These materials should be obtained in a timely manner. They should also meet the outlined quality requirements. This step is followed by the manufacturing process. The next step in the operations flow is warehousing. The finished products are stored in such a way that they can be shipped to the consumer in a timely manner (Agami et al., 2012). Marketing and delivery to the customer are the final steps. Finally, the firm can collect customers’ feedbacks in an attempt to make appropriate product improvements.
The acquisition of raw materials can take up to a year depending on their availability and production. The major activities during this step include identification of raw materials, transportation, and monitoring quality. The manufacturing process should not take more than a week since the process is automated. The right personnel should monitor the process in order to ensure every finished product satisfies the customer’s order. The right quantities of materials should be used to complete the product. The other crucial activity is examining the final products to detect defects. Warehousing and shipping can be undertaken simultaneously depending on the location of the customer (Azfar, Khan, & Gabriel, 2014). The main activity is to match client’s orders with the final product. Destinations should also be clearly labeled to minimize confusions during shipment. These steps should not take more than two weeks.
Each cooler can have a unique manufacturing and marketing timeline. This depends on the needs and location of the final user. Several risks emerge when certain activities throughout the manufacturing process are not completed. For example, the acquisition of poor quality raw materials will result in substandard products that fail to meet the customer’s needs. Failure to monitor defects can undermine the quality of the coolers. Inappropriate labeling of different products during warehousing will affect the supply chain process. Poor coordination during shipping and marketing can result in delayed delivery (Leonczuk, 2016). Failure to complete any of these activities on time will ensure substandard products are delivered to the customers. The malpractice can make it hard for the customers to receive the right products.
Metrics to Access Success
Firms should measure performance metrics (KPIs) in order to monitor profitability, customer satisfaction, and implement new improvement initiatives (Leonczuk, 2016). Such metrics help companies to identify the existing gaps capable of affecting the manufacturing and supply chain processes. This approach can result in new actions capable of improving the quality of the final products. The three major metrics that can be used by the above company to access success include “total delivered cost, customer service, and plan performance” (Azfar et al., 2014, p. 806).
It will be important for the firm to measure these three specific metrics continuously. To begin with, total delivered cost is a KPI focusing on the overall performance and profitability of the company. This KPI can be measured by factoring the firm’s operating costs, inventory, and supply variability. The firm can also measure the time taken for the completed products to reach the consumer. This measurement will then be used to tabulate the expenses and deduct them from the profits. The second KPI focuses on customer satisfaction. This attribute will monitor the demand variability and turnover. These aspects are then contrasted with the firm’s strategic goals (Leonczuk, 2016). The third KPI will measure the company’s adherence to its procurement, manufacturing, warehousing, distribution, and transportation schedules (Azfar et al., 2014). When the adherence rates are measured, it will be easier to identify new areas for improvement.
In non-hierarchical organizations, employees play a critical role towards promoting performance. These performance metrics should be shared with employees in order to understand areas that can be improved. The employees will improve their contributions and present new insights that can result in customer satisfaction (Agami et al., 2012). The use of these metrics can make it easier for different companies to manage every step of the manufacturing operations flow.
Agami, N., Saleh, M., & Rasmy, M. (2012). Supply chain performance measurement approaches: Review and classification. Journal of Organizational Management Studies, 1(1), 1-20.
Azfar, K., Khan, N., & Gabriel, H. (2014). Performance measurement: A conceptual framework for supply chain practices. Procedia: Social and Behavioral Sciences, 150(15), 803-812.
Leonczuk, D. (2016). Categories of supply chain performance indicators: An overview of approaches. Business, Management and Education, 14(1), 103-115.