Discuss about the Operational Issues Faced by Hawkesbury Cabinets.
Hawkesbury cabinet is a kitchen cabinet manufacturing company that is mainly established to meet the requirement of the growing Chinese community at Hawkesbury by producing customized kitchen cabinets. Later it started manufacturing the standard cabinets for spec builders. According to Amorim et al. (2013), organization without proper process and product manufacturing planning it is impossible for organization like Hawkesbury cabinet to sustain in present completive market.
The following essay consist discussion about the different operational issues that are faced by the cabinet manufacturer. The effect of these issues on the financial health of the organization is also comprised in the following sections.
Current Production System and Processes Used by Hawkesbury
The Hawkesbury cabinet’s pty LTD established in 2008 was meant to satisfy the needs of the Chinese community in Hawkesbury. With the change of time, the customer base of the company became more diverse. As a result of this change in the demand, the responsibilities of both Fung and Mei chen has increased. At the beginning the kitchen cabinets were made according to the requirement of the client’s kitchen. The company is equipped with only one manufacturing facility at Mulgrave.
At this single manufacturing facility both the standard and custom kitchen cabinets are made. For producing the cabinets, company uses many general purpose machines and other several types of machines that are grouped together (Amorim et al., 2013). There are different sections in the whole production facility. Like one section contains cutting tables and saws, some other section contains shapers and routers. The equipments are arranged according to the their uses; as an example, if the lathe equipments are used frequently it will be kept in the work area so that it is available to the crafts people when ever required (Damez & Clerjon, 2013). On the contrary the less frequently used equipments are kept away from the work area so that it would not unnecessarily cover space the production facility (Hitt, Ireland & Hoskisson, 2012). Finishing and painting of the products are done in an environmentally controlled section of the facility which is established at the rear of the production facility.
In order to maintain the quality of the product Hawkesbury produces both standard and customized cabinets in small batches. This is done to meet the requirements of the price sensitive buyers of cabinets (Mrugalska, Akielaszek-Witczak & Stetter, 2014). But due to the lack of knowledge about the operations management, the production line of the company is now facing some issues that are acting as the obstacles in the expansion of business of the organization. The reason behind this can be stated as the lack of proper planning and execution of the plans in the organization and production facility. As there is no proper identification of the roles therefore it resulted into the lack of co ordination between different section of the business like inventory management, accounts management and production management. All this issues affected in tee delivery time, cost of the product, profit from the business etc.
Effect of the New Builders’ kitchen line on Hawkesbury Cabinets’ Operations
With the growth in its reputation, Hawkesbury cabinets started producing the standard cabinet for the spec builders. Therefore it can be said that the challenges faced by Hawkesbury cabinet is not related to sales, but related to effective and efficient utilization of raw materials, human resources and machines to meet deadlines in development and supply of the cabinets, overall profits etc (Damez & Clerjon, 2013). Since the clients of the standard cabinets are much more price sensitive and strict about the delivery timings of the product, than the clients of custom kitchen cabinets; therefore it is necessary for the company to maintain the standards of the products that are produced for the spec builders to retain the customers and reputation at the market.
Even though the clients of the standard cabinets are strict about the delivery time of the product but at the production facility the priority is given to the custom kitchen cabinets due to its higher rate of sales and profit from it. As a result of it, a lot of partially completed standard cabinets are left at the different places of the production facility which unnecessarily clogs up the space at the production facility (Amorim et al., 2013). This in turn increases the amount of work for the craftsmen at the facility at the same time the cost of production. Hence due to all this reasons the profit from the standard cabinets is not able to reach the desired bench mark.
Therefore it is important for the Hawkesbury cabinets to deploy proper manufacturing system so that, production cost can be minimized and efficiency of the production line can be improved with time. Moreover, use of proper operations management strategies can provide flexibility to the production line so that it can adopt with changing need of the market as well as customers (Krajewski, Ritzman & Malhotra, 2013). Previously the orders from the “spec” builders are accommodated and served with the existing equipments, machinery and human resources.
However, the company has not expanded any of its resources compared to past infrastructure, but the number of orders has increased by multiple folds (Hitt, Ireland & Hoskisson, 2012). Therefore it became hard for Hawkesbury cabinets to manage and supply increased number orders (for both customized and standard cabinets) in the promised time.
Therefore the inclusion of different manufacturing strategies like JIT can help HawkesBury cabinets in reducing the inventory cost, WIP stock (for standard cabinets), total time of production for a single unit or a batch of the products (Damez & Clerjon, 2013). At the same time it will increases the utilization of the space at production facility, quality of product and the number of products produced in a unit time.
The Effect of Producing Builders’ kitchens on Company’s Financial Structure
Growth in the number of orders from “spec” builders resulted into the gathering of huge stock of raw materials at the production facility. This causes blockage of capital of the business and space at production line. It also affected the production of custom cabinets that provide better profitability to the organization. Therefore, this will encourage the customers of the customers to check out the products of competitors and eventually loss of business for Hawkesbury cabinets (Damez & Clerjon, 2013). The liquidity of Hawkesbury also gets out of control due to its investment in acquiring bulk amount of raw materials for production.
Moreover excessive use of same process and mechanisms for catering the increased number orders (both custom and standard cabinets) will result into breakdown of machines and other resources (Amorim et al., 2013). If this break down of the craftsmanship exists for a single day, then it will harm the business and profit from of the organization very badly. Therefore it is suggested for the Hawkesbury to go for a perfect mix of orders (for standard and customized cabinets), so that it can sustain in the competitive market by making reasonable profit from its business (Stadtler, 2015).
For a business organization, most crucial point is its growth in the market as well as its business. This either helps in its success or breaks the sustainability of the organization in the market. Hence it is important for Hawkesbury to examine its process of production if there is any requirement of changes. If required (whether it’s technical, organizational or related to process of production) it must be changed and accommodated to enhance the production and skills of the employees at manufacturing facility. In addition to this, the company can also think about using warehouse management system to efficiently manage the inventory, so that uncompleted products do not clog up the space at the manufacturing facility.
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