Case Analysis Hawkesbury Cabinets Pty Ltd

Question: Discuss about the Case Analysis for Hawkesbury Cabinets Pty Ltd. Answer: Introduction The Case describes a situation where high industry demand of a particular product lead to problematic operational and supply chain issues for a manufacturing company. Hawkesbury Cabinets is a manufacturing company that provides kitchen solutions. Currently the industry has demand for two types of kitchen solutions; custom made solutions and standard solutions. Fung Chen, who founded Hawkesbury Cabinets had foreseen this demand and thus started the manufacturing company with an objective to reap the profits of the high industry growth. The focus of their strategy was to make quick profit that was possible through custom made cabinets as the profit margins were high in that segment. But since the industry demand for standard cabinets was high too, they manufactured standard solutions also (Gilmour, 2013). Since the company had only a single manufacturing facility and a sole strategy to make quick profits, the manufacturing facility was bound to find itself under supply demand pressure soon. On top of that, there were a third segment of cabinets solutions was catching up in the industry known as the builders kitchen. This case analysis covers the aspects as to what Hawkesbury Cabinets need to consider while making this decision. Case Analysis Whenever a manufacturing company starts in a high demand industry, it faces a huge dilemma in terms of what approach to choose (Meredith, 2015). Whether to follow a quick profit through high margins approach or a sustainable growth with normal or low profit margins. The latter seems to be sustainable but the risk of a competitor getting into the industry and taking the market share is high. Hawkesbury Cabinets took the former approach where they tried to make profits through manufacturing of higher profit margins segment i.e. the custom cabinets solutions. They also manufactured the standard cabinets solutions but raw material, manufacturing, lead-time priorities were given to custom solutions. This resulted in a higher lead-time for standard cabinets. Since the demand was ever growing, soon the facility found itself under deadlock where lead time for both the segments increased since the operations and supply chain were not optimized and were just prioritized (Aghazadeh, Hafeznezami ,Najjar Huq, 2011). The manufacturing facility had a very simple design with flexible machines that could produce both custom cabinets and standard cabinets. Also the facility layout of the Mulgrave manufacturing facility was designed in such a way that all the frequently used machines such as saws, cutting tables, routers etc. were kept separate from lesser-used machines such as lathes. Human resources were also capable of building both the product types. The problem lied in the tasks scheduling. Instead of scheduling tasks based on the nature of work, the scheduling was done on the basis of priority. Custom made cabinets always got a higher priority than the standard cabinets. Thus, all the tasks were done for the custom made cabinets and then they were done for standard cabinets. This eventually led to an increased lead time for the standard solutions and also a higher WIP inventory and unnecessarily held on the resources. Since the manufacturing facility was already under pressure due to increase i n raw material WIP, costs and eventually leading to lower margins, the addition of this third product line could prove dangerous for the companys financials and operations if a proper strategy was not undertaken (Sabharwal,Syal Hastak, 2009). Hence, Fung and Chen did not understand the fact that in order to accommodate in ever increasing industry demand and to include additional product line, the manufacturing facility needs a lot of changes (Williams, 2011). At this point if Fung and Chen start the additional product line, the company would run into bigger problems such as increased lead time, lack of resources in terms of space, craftsman etc. Thus before adding the third product line, the manufacturing facility needs a lot of changes and optimization efforts. Following are some of the factors that Fung and Chen need to consider Financial Investment Adding a 3rd product line will definitely require additional investment in terms of expanding the facility with more machines, craftsman and raw materials. This investment would reduce the profit margins but will be beneficial in the long run (Pagell Shevchenko, 2014). Also the breakeven point would arrive a lot later than before. But this approach will be beneficial to sustain and grow in the industry Skilled Craftsmen In order to be a successful manufacturing company producing multiple product lines, the craftsmen must be highly skilled and experienced. Also, human resource management will have to be considered as when the company grows, human resources issues such as employee satisfaction, organizational behavior comes into picture (Nachiappan Anantharaman, 2006). Thus, skilled craftsman and a proper human resource management systems would be required Facility layout and process scheduling The tasks scheduling and facility layout needs a complete transformations and it should not be priority based. It should be tasks based irrespective of the profit margins (Seuring, 2013). Also since the demand is likely to increase in future, maintaining the quality along with producing quantity would be crucial Raw material procurement Since the scheduling should be based on the tasks, the raw material procurement is also a major point of concern (Vokurka Davis, 2004). Since the priority is not longer on higher profit margin product lines, a proper proportion of all the three product line orders must be there in order to maintain profitability and also maintain the share in the industry Conclusion All the above changes are required to in order to be sustainable in the industry that is ever growing and is likely to see huge competition in the coming future. Thus, a strategy change is required and the approach from quick profit making to a sustainable manufacturing facility is required (Beamon, 1999). This is not an easy approach because the profit margins for the company will reduce drastically and it will be difficult to maintain the same organizational strength and courage with a reduction in profit margins. But Fung and Chen should be focused more on the future of this industry rather than the present. For both to be successful in this strategy, it will be highly helpful if they could separate the manufacturing facility with custom cabinets being manufactured in one facility and the standard and the builders kitchen manufacturing in another facility. This would increase the investment substantially but will maintain the profitability in the custom cabinets and also help in gathering market share in the other two product lines. Since, there is enough demand in the market, the facility should not worry about the order and should soon find itself on the right path of sustainable growth. Based on the above discussion it can be said that the organization should have a plan to increase the scale of its operations. With the use of Information Technology in its Supply Chain, the organization can actually obtain a balance between the efficiency and responsiveness of its supply chain. In the end, the important thing is that the scalability of operations should not compromise the profitabilit y of the business. References Aghazadeh,S., Hafeznezami,S., Najjar,L., Huq, Z. (2011). The influence of work cells and facility layout on the manufacturing efficiency.Journal of Facilities Management, 9(3), 213 224. Beamon, B. (1999). Measuring supply chain performance.International Journal of Operations Production Management, 19(3), 275 292. Gilmour, P., 2013. Benchmarking supply chain operations.International Journal of Physical Distribution Logistics Management. H., Williams, T. (2011). 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