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Case 15 and 16, Case Study Example

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Words: 2345

Case Study

Case 15: The Realco Bread Master

According to Johnny Chang in the first case study, Realco Company owner, came up with a new brand of bread maker, which became a big accomplishment across the United States due to its features and pricing which were competitive. In the case, the most important issue that affects it is the formal planning during production process. According to the second case study, the main and most focused issue rotates around the highly ambitious growth plan of Toyota Company that appears to choke the scientific and human resources, and undermining the degree of quality. Language barriers, lack of time and cultural differences are the additional issues, which have resulted in problems of production.

A master schedule is where an organization develops a plan for its inventory and production.

Week 1 2 3 4 5 6 7 8
Sales orders 23500 23000 21500 15050 13600 11500 5400 1800
Demand 20000 20000 20000 20000 20000 20000 20000 20000
Inventory

7000

3500 3000 1500 4950 6400 8500 14600 17800
promises 3500 4000 5500 2950 600

It shows the quantities of each item to be completed a produced at the end of the every week. In a nutshell, MPS is the master of all schedules therefore, showcases future production. An MPS shows the resultant outputs with the use of inputs, which are vital in decision making in the organization. According to the MPS we get to see that the ending inventory that is projected is low compared to the available-to-promises value because there is no product to service the high demand, which would in the end fail to meet their customers’ demands, which leads to disappointment. Realco has overpromised, according to their sales orders on a weekly basis and the orders received weekly, we see that there will always be a deficit. In my view, Realco should adjust both the sales orders and the production numbers, which is to be determined by the season (off-peak and peak seasons). This will make certain that their customers are satisfied and that they will be able to meet the needs of all their customers. Therefore, when fulfilled consumers are introduced means their wants have been met and this in turn leads to retaining them and ensuring they become loyal to the organization (Bundy, 1999, p.64). Hence, this makes the organization increase its market niche. It is important that Realco meets the needs of the customers, which will be made possible by amending their sales orders and even their levels of production.

Jack’s move towards order promising is strategically placed in that it traps customer from others competitors to their market so that they may not get merchandise from other players. We see his strategy for an extra week, as well thought out plan, reason being that in case of any misfortunes that might affect delivery will not harm them and customers. This approach gives an assurance to Johnny that they will be able to meet demand since on a weekly basis catalogue is updated. With this approach, most of their customers who are satisfied with the company can draw or persuade some of their family and friends to buy products from the company and possibly become loyal customers to the company; this will in turn lead to an increase in the returns and the share market price (Bundy, 1999, p.66). It is also a competitive edge against their competitors. Advantages of this approach are that they get to retain customers to become loyal customers who will end up pulling their friends and family to the company, which will increase Realco’s proceeds and market share. Through this approach, we see that the company is able to return on its investment, that is, they are in a position to return the cost of production plus profit in a short period of time. Nonetheless, this approach has its downfall. If the whole thing does not follow the laid down plan, that is, if the consumer does not fulfil his pledge of getting his/her order at a certain period of time it could lead to losses. This is in terms of the merchandise produced. If Realco produces a large quantity of products and at the end of the day the customer is not content then it results to a loss. If the company adopts an MPS (master production schedule), it will cut down on the losses faced by the organization because if the sales orders and the production on the ground are equivalent to the consumer needs then there will be no losses. This goes an extra mile to show that the orders will be acceptable on the basis that the goods available can be promised. In conclusion to this, customers whose orders were promised will be guaranteed to receive their products as scheduled. For the strategy to be effective the company has to introduce some amendments. For example, the level of production should not rely on know-how, but rather on customer request. The worst thing that would happen is to accept a customer’s order and fail to deliver. This is because the company’s goal is to build an acceptable relationship with its customers so that customers may be confident in the company’s ability to meet on their needs. By accepting and failing to deliver, sends a bad image to the customer about the organization which will in turn make the customer seek refuge in the hands of other companies who are Realco’s competitors’ hence, losing business. When the company fails to deliver on the customer needs it inconveniences them, either by wasting their time and money and would result to the customer spreading the negative image to family and friends.

Master scheduling assists the company to know if they can deliver and meet customer’s needs. It also assists in deciding the demand of the market and is a way of solving the existing problems. This also aids them to recognize with how to achieve their short term goals.

If Realco was to reduce production level by half, from forty thousand to twenty thousand a week, it means that it would not be able to deliver on orders from the client. If Realco Company chooses to trim down their weekly production to a minimum of twenty thousand, then this would lead to a drop of sales by three thousand five hundred. This is because at times orders exceed placed orders on the existing products. Additionally, the stock levels are affected in a negative way, reason being the orders will drain the existing merchandise, and in the end there would be no merchandise for sale.

Concisely, when Realco adopts the use of Master Production Schedule, it curbs wastage of resources in the production department in such a way that by knowing the exact weekly orders of their clientele excess production is lessened, which results in a loss. The adoption of this type of system helps them become more organized, efficient and competitive. This makes them gain a large market share.

Case 16: A Bumpy Road for Toyota

Toyota being an automobile manufacturer founded in 1937 is the largest production and sales worldwide manufacturer. Vehicles manufactured by Toyota are tech savvy because they maximize on space to promote comfort as stated in their vision. In regard to the philosophy, it is worth noting that the company has focused on consistent quality since their levels of production have increased and thus, market share has been improved (Womack & Jones, 2003). Toyota automakers are considered as one of the companies that make large profit margins. The lean philosophy not only focuses on making sales, but also to achieve customer loyalty that means quality is a vital element. This is achieved by being up-to-date on any technological innovations that arise over time. This technology is the reason why the bullet proof of reliability reputation was accomplished by Toyota. The lean philosophy is not a common philosophy in many firms because their focus is not on quality. It is important to note that lean philosophy came to be as a result of quality. For any company to achieve expected long term goals, the focus should be on the consumers’ satisfaction in the end product. In addition to this, it is important to look into production to sustain efficiency in all departments (Womack & Jones, 2003).

The coordinators referred to in the article are Kichiro Toyoda who was the founding father of Toyota and engineer Taiichi Ohno whose sole accountability was the implementation of just-in-time that he had witnessed. Kichiro and Taiichi who were the founding fathers are also the people who formulated the lean production (Womack & Jones, 2003). Toyota’s naissance fathers contributed a gigantic task in making certain that Toyota’s personnel were well equipped as stated by the philosophy. Taiichi Ohno was in charge of training new employees at the Toyota’s elite Consulting Management Operations Division. He ensured that all employees under training implemented and were knowledgeable of the lean philosophy. Taiichi’s efforts are what made Toyota achieve high levels of production (Womack & Jones, 2003).

There was a language barrier in communicating the skills since the founding fathers spoke Japanese only while most of the trainees understood English only. In the end it led to difficulty in terms of reproducing the knowledge of the founding fathers. The issue here is language barrier and thus, trainees were not able to comprehend. Employees were not familiar with Japanese and thus, understanding each other became difficult. Internal communication in a company is vital as it enables employees work in the same surrounding and produce quality products that meets organizational goals, vision and mission statement. This leads to failure since set goals are not fulfilled. It is of the utmost importance that effectual communication in the organization exists in all departments both vertical and horizontal. Communication between all levels of management is important since they can solve existing issues that affects the company’s day-to-day operations.

According to Hajime Oba the lean production approach applied by Detroit is wrong reason being that his perspective towards the approach is that they do not understand the principles of the philosophy. According to him Toyota has succeeded by implementing the philosophy and therefore, other companies need to have this approach as their foundation in order to be successful (Womack & Jones, 2003). In order to comprehend the philosophy of lean production, one should know and be aligned to the purpose of Toyota’s founding fathers. The desire and vision that drove these founders were to have efficiency in production of high quality vehicles. Detroit was able to exceed competitors devoid of having all required data at hand. Recently there has been firm rivalry in companies that build automobiles. As a result, I do agree with Hajime Oba’s concept that the approach taken by Detroit to lean production is misguided and erroneous. The philosophy stipulates that manufacturers should eliminate waste alongside production of high-quality products (Womack & Jones, 2003).

In the late 1980’s and early 1990’s, Georgetown was one of the best automobile makers. It was named North America’s second best plant in 2001 behind Toyota’s Canadian plant. A big problem that Georgetown faced was to do with language barrier since most of the Toyota Production System masters only spoke in Japanese and most of the American employees spoke in English. These linguistic and cultural barriers made deep discussions on lean production unbearable. Demand for the case were too high and hence, the rush to keep up with demand made the automaker lose the importance of quality for they were more centred on quantity (Shirouzu & Moffett, 1997). As a result of this, customers began comparing about the car’s poor features like the cup holders and brakes. The production of poor cup holders and spongy brakes ultimately led to the collapse of the plant. To deal with the issue of quality, the Georgetown Toyota project introduced and recruited Hajime Oba to assist in the implementation. The system production plant faced scarcity even in coordinators from Japan. They also lost masters of lean production philosophy to old age and to competition. For Toyota to get Georgetown back on its feet, they had to introduce an eighteenth month plan so as to build back up for the top executives of the company (Shirouzu & Moffett, 1997). They have been able to establish that the problem rests in the actuality that, executing of time is a problem among the management team because they are in the office. To curb this problem, they have involved seventy middle level executives by including them in assignments. This ensured that the managers learnt more about Toyota Production System. Toyota came up with tactics every four years in a bid to be competitive for example, in 2008; they had a new plan that saw them use technology so as to meet their year’s strategic goal. This was to happen in such a way that it will not lose focus on the nature of manufactured goods centric (Shirouzu, 1997).

In conclusion, we get to see that Toyota made a mistake of not researching on the market they were investing in and that it is trying to take the lean philosophy and production to a new level. They anticipate this level to be easy in such a way that the new plant can function without the need of any coordinators who are richly experienced in this area. Toyota has massed their hope in the establishment of the new level, which will lead to the production of their products that are of high quality and will be highly resourceful. The above information, it is evident that the thesis has been scrutinized by the case study thoroughly by answering the specific queries asked.

References

Bundy, W. (Spring 1999). “Miller SQA: Leveraging Technology for Speed and Reliability. Supply Chain management Review, 3(2), 62-69.

Cox, J. & Blackstone, H. (2002). APICS Dictionary, 10th ed. Falls Church, VA: APICS. Hirouzu, N. & Moffett S. (May 8, 1997). “As Toyota Closes in on GM. Quality Concerns also grow”. The Wall Street Journal.

Womack, J. & Jones D. (2003). Lean Thinking: Banish Waste and Create Wealth in Your Corporation, Revised and Updates. New York: Free Press

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