Supply Chain Task Essays

Supply Chain Task Essays Supply Chain Task Essay Supply Chain Task Essay I new however, that in order for the business to be successful, I would need to be somewhat conservative in Quarter 2. I chose to target the Mercedes and Travelers market segments as these two had several top things they wanted in a computer in common. While the market sizes were smaller, I thought if I produced the right products, I could be a market leader for both target segments. In Quarter 2 1 projected a demand of 350 units for my primary target market, the Mercedes group, and 170 units for my secondary group, the Traveler. My total forecasted demand was 500 units, and my available operating capacity was 520 units. I decided to sale my product to the Mercedes group for $3800. O/unit with a $100 rebate/unit and sold my product to the travelers for $3000. O/unit with a $100/rebate. I operated at 100% capacity for Quarter 2. I sold out of both products, under estimating my consumers. For the Mercedes group, I lost out on 158 sales and for the Travelers I lost out on 74 sales. At the end of quarter 2, I was still operating at a loss, but had significantly cut my loss from $-338,500 to $-195,018. Thanks to the common stock I sold this quarter, I still had a cash balance over a million dollars which helped me make changes for ratter 3. In Quarter 3 1 increased my projected demand too total of 2,000 units. I projected 1,250 units for the Mercedes group and 750 units for the Travelers. I only operated at 71% capacity this quarter, so I didnt do a very good Job of estimating what I would need to produce. I sold a total of 1,392 units, leaving an ending inventory of 75 units total between the two products. In quarter 3 1 finally turned a profit. I earned a net income of $947,091. I used the previous quarters pro-formal statements along with the current quarters projected statement to change some of my numbers. I didnt want to be overzealous and be too aggressive. I did decide to open an additional sales office, and also decided to produce two new products for the 4th quarter. Because I had a beginning cash balance of for the 3rd quarter, I had more than enough money to achieve all my goals for the quarter. In the 4th quarter I did not do a very good Job of estimating my demand. I estimated that I would have a demand of 3,610 units, but it actually ended up being triple that. I lost a total of 6,194 sales, which had I continued past the 4th quarter, probably would have meant a drop in business. Had I been able to go on past quarter 4, I would have increased my production capacity significantly. My beginning cash balance for quarter 4 was $2,671 ,759. 00 and my ending cash balance was $3,780,039. I know that by looking at all my financial statements that I would have had more than enough money to invest back into my company and I would have increased my production capacity significantly. I was at 100% capacity, and needed to triple the number of units I actually made in order to satisfy demand. In the end, by using the budgets and pro-formal statements, it allowed me to run a profitable business after only a ear. Had I not been able to use budgets and statements, Im sure my business would have had a very different outcome. Because I could play around with numbers prior to running my simulation, I was able to see where I needed to make adjustments, mainly with manufacturing, so that I could have a profitable business. 2: Discuss how you could have employed Just-in-time TIT) and Lean Operations to improve operating efficiency in your manufacturing facility. A: Just-in-time TIT) Just-in-time TIT) is an approach of continuous and forced problem solving via a focus on throughput and reduced inventory. (Higher Render, 2010) I tried to implement this methodology in my business. Only after quarter 3 did I have left over inventory, and that was a very small amount (75 units total) that I sold in quarter 4. Every other quarter there was no ending inventory, however I did not do a good enough of projecting my demand. By attempting to implement this system, it actually cost me sales since I didnt have any extra inventory on hand to sale. The other part of this is that I should have also done a better Job of forecasting my demand, so I would have produced enough products to meeting the actual demand of the customers. This is the downside to Just-in-time, as it opens businesses too number of risks, notably those associated with your supply chain. With no stock to fall back on, a minor disruption in supplies to your business from Just one supplier could force production to cease at very short notice. (Aimed, 2014) If I had been able to fully implement this system, and also better forecast my demand, then I think it would have made my business even more profitable. Even though I only had excess inventory once (after quarter 3), that was planned and not due to not being able to sell those units. If I had implemented Just in time, then I hind it would have allowed me to have all the available supplies J ust when I needed them, which would have allowed me to make more of my product to sell, which then would have meant I didnt lose sales due to not making enough. B: Lean Operations While Just In Time focuses on driving out the waste, Lean operations focuses on the customer. Understanding what the customer wants and ensuring customer input and feedback are the starting points for lean production. Lean operations means identifying customer value by analyzing all the activities required to produce the product from the customers perspective. (Higher Render, 2010) In the simulation I was somewhat able to apply Lean concepts, since I somewhat followed the principles of Just In Time. If I had been able to implement this is my business simulation, there are few things I would have done. 1 . Use Just In Time techniques to eliminate virtually all inventory: With KIT, materials arrive where they are needed when they are needed. When good units do not arrive Just as needed, a problem has been identified. By driving out waste and delay in this manger, KIT reduces costs associated with excess inventory, cuts variability and waste, and improves throughput. (Higher Render, 2010) 2. Develop partnerships with suppliers. This means that you are assisting your suppliers in understanding the needs of the customer through common objectives. 3. Reduce space requirements this can be done by properly laying out the space where your product is put together to minimize the travel distance. Having the correct supplies close by the areas where those supplies are needed can cut down on wasted time. 4. Develop employees through training, teamwork, and empowerment. Let the employees take pride in their work, and feel as if they have some say in the company, and that drives them to ark harder and better, which in return makes your product better. During my simulation I didnt have a lot of excess inventory, but there were definitely times that I wish I had excess inventory, only because I failed to properly forecast the demand of my product, sold out, and had quite a few lost customers. On the other hand, using these strategies would only help my business grow because I would not be wasting money or time on things that did not add value to the finished product, which in turn would drive up my costs, and lower profit margin on the products I was selling. : Discuss the applicability of work cells versus a traditional straight line method to the type of manufacturing facility used to assemble computers. Work cells reorganizes people and machines that would ordinarily be dispersed in various departments into a group that they can focus on making a single product or a group of related products. (Higher Render, 2010) Work cells come about as manufacturers identify products that have similar features. Work cells reduce waste since it allows a product to be put together in one space, which eliminates the need for the product to travel throughout the warehouse as it is assembled. There are overall advantages for a work cell according to Higher and Render, they are: 1 . Reduced work- in-process inventory because the work cell is designed to allow one piece to go from machine to machine. The next machine is ready to accept the work- in-process product, instead of the product having to wait for the next person/ machine to be available to continue the assembly process. 2. Less floor space is required because less space is needed between machines to accommodate work-in- process inventory (Higher Render, 2010) which allows you to maximize the space you have available, and potentially not need as much space since the cells are roped together, rather than using an assembly line that travels throughout the entire plant. 3. Reduced raw material and finished goods inventories since work cells allows for more rapid movement of the materials throughout the work cell. 4. Reduced direct labor costs due to improved communication among employees, better material flow and improved scheduling. (Higher Render, 2010) 5. Heightened sense of employee participation in both the company and the product. Employees accept added responsibility in the quality of the product because it is a direct result of them and their work cell. 6. Increased equipment and machine utilization due to better scheduling and faster material flow, thanks to advantage number 3 listed above. 7. R educed investment in machinery and equipment because good utilization reduces the number of machines and the amount of equipment and tooling. (Higher Render, 2010) All the above advantages culminate into allowing number 7 to succeed. This ultimately benefits the company from a lean perspective because work cells help eliminate waste waste from poor layout, waste from work-in-process inventory, waste from raw materials finished goods inventories, etc. There are also four requirements to the work cell as outlined by Higher and Render in the 10th edition of Operations Management, and they include: 1 . Identification of families of products, through the use of group technology codes 2. A high level of training, flexibility and empowerment of employees. 3. Being self-contained, with its own equipment and resources 4. Test at each station in the cell. The work cell strategy has multiple advantages over traditional assembly lines because a work cell groups similar tasks together and also inspects them immediately, instead of waiting until the product is finished. The cell also allows for a worker to reach more areas of the cell, which allows for fewer works (with the capability of adding more if needed due to demand), which then ultimately helps to increase the profit margin on the products. The area is more balanced and then because the shape of the cell is a U shape and you have fewer workers, communication improves. 4: Inventory Management I did not do a very good Job of managing my inventory for the simulation. For quarter 2 1 forecasted a total demand of 500 units, with my available operating capacity at 520 units. I produced 520 units, but my actual demand was 752 total nits, and I lost 232 sales. For quarter 3 1 projected the total demand for my 2 products to be 2,000 units. This quarter I d id a better Job of predicting demand, as I produced 1,467 units and sold 1,392 units leaving 75 units in inventory. In quarter 4, I once again did not project demand very well. I forecasted a total demand of 3, 610 units, sold 3,640 units, but my actual demand was 9,909 units, so I lost 6,194 sales. I applied the principle of Safety stock somewhat in quarter 3, as I purposely held back 75 units for my ending inventory, hoping that would create a buffer for the next ratter. Ultimately I didnt project the demand very well, as those 75 units were nowhere near enough to help make up for my poor projections in demand. Safety Stock is extra stock to allow for uneven demand; a buffer. (Higher Render, 2010) I didnt want to carry too much extra inventory, as I was afraid I would not be able to sale it and would be stuck having to carry over a lot of extra inventory from quarter to quarter. I believe if I had done a better Job of predicting my demand, I could have used safety stock to help make up for my bad projection numbers, while also being able to cut down on my lost sales due to selling out of my products. In the 4th quarter I introduced 2 new products while a lso keeping my 2 original products but lowering the price. I thought I would have higher demand for the new products and not as much for the older products. I was wrong on all counts. I way underestimated the demand for all 4 products, which cost me money in terms of lost sales. While I didnt have to carry the burden of too much extra stock, not having enough is also poor management and can make the business fail. 85: Continuous Improvement There are several programs that contribute to Continuous improvement, but one that I would have implemented in my business is employee empowerment. Employee empowerment is involving employees in every step of the production process. (Higher Render, 2010) I feel that empowering the employees only helps the company. Even though you have the executives making the day to day decision and running the organization, the employees are the ones on the ground floor and can sometimes notice problems before management can since they are the ones actually assembling the products and inspecting them. There is one stud y that indicated total quality management programs that delegate responsibility for quality to shop-floor employees tend to be twice as likely to succeed as those implemented with top-down directives. (Higher Render, 2010) When employees are able to take pride in their work, they perform at a better rate and the quality is also better. Just like with the work cell theory, employees have a heightened sense of quality to the product because it is a direct result of their work. There are several ways that I would attempt to increase employee empowerment n my company, they include developing communication networks to include the employees, creating teams and quality circles. A quality circle is a group of employees who meet regularly to solve work-related problems. (Higher Render, 2010) I would implement this in my company, a group of employees taken from all departments to meet and share not only their concerns, but also from co-workers. This group would work together to bring to light concerns made by the employees to management, as well as ideas that could help not only employee morale, but the company as a whole.