Discuss about the Operational Issues for Hardships and Challenges.
Every organization wants to earn profits, but during the initial stages, there are so many hardships and challenges which one has to face. For sustainable growth, there is always a need for additional income for local and domestic manufacturing businesses, nevertheless large or small they are. Apart from this, they are always under the pressure of local competitors (Oltra & Luisa Flor, 2010). There are so many management theories which can be applied from time to time to overcome the challenges faced during production. Some of them are total quality management, just-in-time and theory of constraints. With the help of these presumptions, one can avoid the changes production system which can happen over the period either financially or operationally due to the above-mentioned reasons. The production business has changed drastically. Today, before starting any new manufacturing industry people are doing the research work and calculate the break-even cost to ensure the period by which they come to no profit and no loss stage.
Hawkesbury Cabinets Pty Ltd was initially set up to cater to the needs of the Chinese community in Hawkesbury. The major focus of the company was on the customised kitchen cabinets. The designs were unique and not were neither identical in nature nor regarding design. These were made in lesser volumes only on orders and were delivered to the customer after completion. Every item was made according to the preference and taste of the client. The primary concern of the business was customer orders. Due to the uniqueness of designs and customised cabinets the products were not stocked. Therefore, there is no wastage of resources of finished goods which keep on lying in the warehouse. The business was purely customer oriented with an aim to manufacture cabinets on time and proficiently (Yeh, 2000). A higher level of uncertainty and variety affects the production system and makes the processes complicated as compared to other organisations. The time of delivery is also long which is the greatest disadvantage as the production would start only after receiving the new order and completing the existing order. Due to this reason, there are lesser people now-a-days who look for customised products. The other major constraint due to the variability of the manufactured goods is that the technological requirement differs which leads to increase in the production cost. A detailed production plan is required for offering the trustworthy service and delivery on time, to the customers (So, 2000).
With the growth, the client base became more and more diverse, and the production system changed and started encountering production problems which affected the overall financial performance of the organisation. The company has now started accepting low volume contracts with high-quality standardised cabinets. The original production system changed. The products were standardised hence the production will be done in small batches which are known as job shop production (Ponnambalam, Ramkumar, & Jawahar, 2001). The flow of the production is still intermittent because the batches ranged from one to five cabinets. Not only this each operation requires a different direction or different material which resulted in the unpredictable time of finishing every batch. Due to this, the management came in trouble of managing the operations efficiently because of limited machines and limited labour. A high flexibility manufacturing equipment is required to accommodate this kind of small unique batches. The competition for the processing time grew manifold because of the addition of builders’ kitchen. The number of equipment was quite less. One equipment was doing the work for customised as well as standardised cabinets. Further, the processing also changed from client to client and from builder to builder.
Hawkesbury Cabinets Pty Ltd was using both the productions make to order as well as standardised kitchen cabinets. The production system used is known as the hybrid shop. In this, two or more forms are combined with the modification of output (Yokoyama, 2001). The production layout with the different type of equipment will be grouped together. Assembly lines were located in the area of production. With the increase in sales, there is an addition of job schedules as well as in the volume of work in progress. Due to increase in production of make to order and standardised kitchens the job scheduling became the cumbersome task which in turn leads to the production problems. The problems that arose at that time were related to staffing, scheduling of machines, etc. It was not easy to do the processing of each job with one equipment at all working areas for standardised as well as custom based cabinets. Also, the processing changes rapidly from one client to another. Therefore there was a need to come up with efficient schedules of production. Subsequently, there is an increase in the volume of cabinets that resulted in a factory setting where the partially finished products were made (Miltenburg, 2008). Due to this, there is the shifting of working pattern from builders’ kitchen to customised cabinet production without the pattern. It led to the difficulty in predicting the load of the work which has stopped because the client orders were flexible and diverse. Since the demand has increased of standardised cabinets this decision of changing the system deemed fit.
The new arrangement brought in new challenges. The requirement of standardised products is low, but the cost of inventory is high. Therefore a large storage space is required. The coordination of all the systems i.e. production, inventory and distribution, are necessary to minimise the cost and maximise the production. The maximum output, can be obtained with a single machine which can help in the manufacturing of different designs at a workplace. This problem is commonly found in small shop business. Further, a production plan will be required that will help in knowing which material and resources are necessary for completing the jobs on the stipulated time. The daily decisions will take into consideration the demands of builders’ and make on order cabinets, pending orders of customers, availability of raw material, the level of inventory, the capacity of production. Besides, the operational issues are complicated because it is a multi-task process that includes diverse operations distributed in the whole process (Priya Datta & Roy, 2011).
To cater all kinds of needs, a strategy is required. Several factors need to be considered while developing an operational plan. A production system comprises of both the standardised as well as customised cabinets created a complicated demand. Customised cabinets reflected the individualism and breaking of usual social taste. Products are not merely products rather they reflect the taste and status of the individual. Therefore, the strategy should be such that caters to the demands of the end user as well as the production concerns. The strategy should be different from the market based on the capacity, competency, resources, and capability. Certain operations theories which can be implemented to achieve the effectiveness are the theory of constraints, just-in-time and total quality management. Theory of constraints will help in focusing on the limitations of the production system. Just-in-time focuses on lean manufacturing and total quality management emphasise on producing the right output in the first time. Apart from this cost and profit related objectives needs to be taken into consideration from the economic point of view (Eden, 2004). The overall revenue comes from the inventory in the warehouse, work- in progress and finished products. The performance is assessed from the work-in-progress as well as from in-time performance. These issues affect the revenue of the company (Ross, Miller, & Carpenter, 2010). Operational issues also influence the performance of the business. The contract from the builder’s affected the operational strategy which has impacted the profit of the organisation to a great extent. The customised products which were started at the inception stage had higher profit margins, at the same time, it was pushing the capacity of manufacturing to its limit (Huang & Wu, 2014). Even after approaching it to limit the company was unable to make the profit.
In today’s competitive era, manufacturers are not only under pressure to develop their operations but also to sustain the development of the business and maintain the competitive advantage. To obtain the goal of profit well-designed product and successful operational strategy goes hand in hand. Small manufacturing businesses face enormous challenges in their way. In this essay due to nonavailability of profit the company started looking at other options apart from make on order cabinets and began to produce for builders’ kitchen. This action increased the volume of inventory for which the company was pushed to spend on the warehouse. It is evident that this move has impacted the outcome of the business to a great extent. Some of these kinds of production problems seemed hard to resolve but still there were several choices which were incorporated from time to time for improving the processes. It clearly implies that an effective strategy will result in a positive performance of the organisation.
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