Improving Planning and Production Process
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[pic 1]CASE STUDY NO. 9IMPROVING THE FORECASTING AND PRODUCTION PLANNING PROCESSES[pic 2]CASE PROBLEMA major producer/distributor of household electrical and hardware products suffered from poor customer service, manufacturing bottlenecks and organizational & functional inadequacies. New ownership was disappointed with financial performance and realized that significant improvements were necessary. Customer service metrics hovered below 70% (Orders shipped complete in 3 days or less), and a bloated SKU base included nearly 100 out of stock items. Inventory planning was ad-hoc and the forecasting process was inadequate. Ownership decided that immediate relief to service performance was required. DHC was retained to develop process improvements in the forecasting and planning areas, including organizational recommendations and IT integration.CASE ANALYSISBrief SummaryA household electrical and hardware producer/distributor has been suffering poor customer service, manufacturing bottlenecks, and other organizational and functional inadequacies on areas such as the forecasting and planning, which resulted to disappointments with financial performance. New ownership decided that immediate relief was required to regain service performance.Situational Analysis[pic 3][pic 4]Statement of the ProblemThe focal points of this case study are the weaknesses identified in the company under study. The analysis invested will be used to seek answers to the following questions:
What recommended alternatives could be indorsed to address the identified issues?What are the benefits of the chosen alternative?Alternative Course of ActionAlternative 1Alternative 2ABC Item Classification, Customer Segmentation, and Inventory AnalysisImplement a much appropriate layoutPROSPROSReduced working capital and activity costs in support of unproductive itemsElimination of manufacturing bottlenecks in relation to the existing production facility layoutIncreased improvement percentage on the number of items out of stockProcess improvements and a more balanced production lineMore efficient order shipping and better allocation of total marketing budgetEasier and better supervision and may reduce unnecessary handlingCONSCONSDoes not ensure accuracy, and may carry the risk of intrusion and fraud It requires great investment of time and moneyHigher cost of implementation in specialized equipment and softwareTime required for adaption to changes in the layoutCost of production rises due to shorter production runs and variationsMay threaten efficiency of firm on the implementation phaseRecommendationIt is most recommended to choose and implement the first alternative. The company must pursue with its improvement plans, and ask for third-party consultants to develop and implement process improvements throughout the organization. A replacement for the inadequate demand forecasting should be researched, identified, and recommended. Also, IT integration through installation of new software is advised to develop business processes that will strengthen relationship between various departments.