Discuss about the Operations Management for Hawkesbury Cabinets Pty Ltd.
The case revolves around Hawkesbury Cabinets Pty Ltd. Founded by Mei & Fund Chen in 2008; the company specializes in designing and manufacturing customized kitchen cabinets. The owners specialize in the field of designing of cabinets and interior designing. With time popularity and demand of the company’s product has increased which has led to several operational issues for the company. The company diversified its product portfolio and wanted to create its own value proposition which required capabilities in its operations. As job responsibilities increased the owners tried to divide the work among them to manage the operations of the business(Bell, 2002).
Present Production System and Processes utilized by Hawkesbury Cabinets
Companies and firms adopt many improvements in their methods and measures of doing business so that they can improve their overall performance in terms of turnaround time as well as resource allocations and also overall profitability. Operation Management including logistic have always been regarded as one of the most crucial factors that the companies should invest in to gain a competitive edge. Supply chain as a stream has evolved over the years and several researches have been conducted in the space of lean manufacturing from which concepts can be derived to improve the operations of the company in concern(Ahlstrom, 2004).
Fung’s duty increases with the passage of time and he had to take care of the responsibility of an operational manager. Therefore it is necessary to understand the business requirements so that an appropriate and sustainable solution can be proposed.These solutions should be aimed at streamlining and optimizing the manufacturing process that can deal with the present issue of the company(Shah and Ward, 2007). Operation management differs a lot from the engineering and manufacturing department and is an integral responsibility of the management as thoughtful planning and calculations are very much necessary for successful production and profits with minimal overheads and turnaround time. Logistic, an important component of operation management looks after the overall flow of goods and products right from their point of production to the point where they are sold off to the consumers. The resources utilized in the process are physical as well as abstract components. The physical components includes materials used in production, workers, food, animals (if required) while the abstract components include time, work hours, packing, overhead, inventory, warehousing, transportation etc. Both the components incur a cost for the company and the complexity needs to analyzed and modeled as well as optimized to get the maximized profits(Connolly, 2007).
The Hawkesbury Cabinets does its operations in one single manufacturing unit in Mulgrave. That single manufacturing unit is responsible for manufacturing both customized and standardized kitchen cabinets. The equipments with which the cabinets are made comprises of very superior quality regular machines so that they are provided with the flexibility that is required for manufacturing varied designs. The layout of the factory comprises of many manufacturing machines grouped at one place; for example the cutting tables and saws are organized in one section while routers, shapers, in another. The less used items are kept in a place less visited by the workers. Assembly areas are also located with much strategic designs in the factory over many places. The cabinets are painted and given their finishing touch at a very environmentally measured section, which is located towards the end of the layout. The products produced by Hawkesbury Cabinets are thus of very high quality and are held in superior esteems. Their qualities reflect the superiority of materials and goods chosen to manufacture them and the skills and craftsmanship of the manufacturers and artisans. The standard as well as customized cabinets need to compete for the time of processing on the same manufacturing units by the same workers(Eroglu and Hofer, 2011).
Impact of new builders’ kitchen line on Operations
With the increase in the reputation of the company, the sales and demand increased manifold and many contracts with much lower volumes were signed with the builders for high quality standard cabinets. The company required to manufacture a limited range of kitchen cabinets in very low batches ranging from one to five cabinets of same specifications and measures. The company had to operate under stringent conditions for the manufacture of kitchen cabinets for clients which are standardized. The customized designs still accounts for most of company’s productions and sales, the standard ones were also picking up pace. They accounted for 40% of the volume and in terms of revenue 25%. The previous few months’ sale has increases a lot which required careful scheduling of work and trade-offs had to be made between the customized one and the standardized ones. The customized cabinets were given higher priority as they brought in higher profit margins. Hence, many standardized cabinets that were scheduled for delivery, were found left in the factory at different phases of completion. And the company is packed with many partially finished projects. This was one of the most important concerns for the company(Fullerton, Kennedy, and Widener, 2014).
Operation Management is one of the core competencies of the business. Giving the example of Toyota, the company creates a wide range of autos every year, 66% of them are traded. The way toward creating the Camry at Toyota's assembling plant in Altona is like delivering a cake (or some other item so far as that is concerned). The following stride is to change those crude materials into yield (completed items). Operation Managementgoes beyond manufacturing any product(Steckel, 2004). Severalattachmentstry to create good quality products. Toyota utilizes the idea of nonstop change to do this (alluded to in Japanese as kaizen). This implies all organization exercises — from the mechanical production system to client administration — are persistently investigated, so that new and better methods for doing things are presented if necessary(Jang, 2003).
Effect of the move to producing builders’ kitchens might have on the company’s financial structure
As Mein Chan was reviewed the progress of the company, she was very pleased to learn the company had expanded in terms of both volume and demand. The custom cabinets’ demand remains as it was while the demand for the standard ones are increasing steadily. But she was sad to learn that the profit margin of the company was not satisfactory; below expectation. She also found that the cost that is linked with the standard cabinet manufacturingwere rising exponentially while a significant portion of capital is tied up with producing materials in the inventory increasing the holding cost and inventory cost. Another drawback that was noticed was the increasing turnaround time for both the types of cabinets(Schowm, 2008).
Hence a good operation management is very much required in the effective and efficient process of manufacturing goods that would provide maximum profits. The present system of operation at the Hawkesbury Cabinets were taking the capacity limits against the call with the present layout at which they were manufacturing both the types of cabinets at the same using the resources. It was high time for the management of the company to look into carefully at the overall result that the new line of the standardized kitchen cabinets were having on the operations of the firm.
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Connolly, C. (2007) ‘Assembly operations streamlined by ABB’s global partner Programme’, Assembly Automation, 27(3), pp. 198–201. Doi: 10.1108/01445150710763204.
Eroglu, C. and Hofer, C. (2011) ‘Lean, leaner, too lean?The inventory-performance link revisited’, Journal of Operations Management, 29(4), pp. 356–369. Doi: 10.1016/j.jom.2010.05.002.
Fullerton, R.R., Kennedy, F.A. and Widener, S.K. (2014) ‘Lean manufacturing and firm performance: The incremental contribution of lean management accounting practices’, Journal of Operations Management, 32(7-8), pp. 414–428. Doi: 10.1016/j.jom.2014.09.002.
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Schowm, A. (2008) ‘Streamlined management’, Vital, 6(1), pp. 58–58. Doi: 10.1038/vital905.
Shah, R. and Ward, P.T. (2007) ‘Defining and developing measures of lean production’, Journal of Operations Management, 25(4), pp. 785–805. Doi: 10.1016/j.jom.2007.01.019.