Chads Creative Concepts designs and manufactures wood furnit

Chad’s Creative Concepts designs and manufactures wood furniture. Founded by Chad Thomas on the banks of Lake Erie in Sandusky, Ohio, the company began by producing custom-made wooden furniture for vacation cabins located along the cost of Lake Erie and on nearby Kelly’s Island and Bass Island. Being an ‘outdoors’ type himself, Chad Thomas originally wanted to bring ‘a bit of the outdoors’ inside. Chad’s Creative Concepts developed a solid reputation for creative designs and high-quality workmanship. Sales eventually encompassed the entire Great Lakes region. Along with growth came additional opportunities.

Traditionally, the company focused entirely on custom made furniture, with the customer specifying the kind of wood from which the piece would be made. As the company’s reputation grew and sales increased, the sales force began selling some of the more popular pieces to retail furniture outlets. This move into retail outlets led Chad’s Creative Concepts into the production of a more standard line of furniture. Buyers of this line were much more price sensitive and imposed more stringent delivery dominate sales, accounting for 60 percent of volume and 75 percent of dollar sales. Currently, the company operates a single manufacturing process in Sandusky, where both custom furniture and standard furniture are manufactured. The equipment is mainly general purpose in nature to provide the flexibility needed for producing custom pieces of furniture. The layout puts together saws in one section of the facility, lathes in another, and so on. The quality of the finished product reflects the quality of the wood chosen and the craftsmanship of individual workers. Both custom and standard furniture compete for processing time on the same equipment by the same craftspeople.

As he reviews the progress of Chad’s Creative Concepts, Chad Thomas is pleased to note that the company has grown. Sales of custom furniture remain strong, and sales of standard pieces are steadily increasing. However, finance and accounting indicate that profits are not what they should be. Costs associated with the standard line are rising. Dollars are being tied up in inventory, both of raw materials and work in progress. Expensive public warehouse space has to be rented to accommodate the inventory volume. Thomas also is concerned with increased lead times for both custom and standard orders which are causing longer promised delivery times. Capacity is being pushed, and no space if left in the plant for expansion. Thomas begins a careful assessment of the overall impact that the new standard line is having on his manufacturing process.

QUESTION:

State your analysis how you would apply the ten(10) strategic operations management decisions (1 paragraph per number)

1. Product and Service Design

2. Quality Management

3. Process and Capacity Design

4. Layout Design

5. Human Resources and Job Design

6. Supply Chain Management

7. Inventory Management

8. Location Planning

9. Scheduling

10. Maintenance

Solution

Product and Service Design - In starting of business the company was focused on entirely custom made furniture, with the customer specification, but as the company’s started growing, they moved into retail outlets with production standard line of furniture, where buyers were price sensitive and impose more stringent delivery requirements, and need same production equipments and production time. So the company should not ignore custom made furniture, as they are their strong profitable part of business. Quality Management- Company has grown rapidly because the quality of wood they use in manufacturing, which is reflected in the quality of the finished product, and the craftsmen who manufacture it. So to maintain their image and demand among the customer they should maintain their quality in both the perspective raw material and craftsmen. To retain their craftsmen they should give them proper pay structure and facilities. Process and Capacity Design- Both custom and standard furniture take same processing time on the same equipment and by same craftspeople, which is causing delay promised delivery time and in increased in lead times for both custom and standard orders and capacity is pushed, due to lack of space for expansion. To avoid this company should separate the production line after increasing its capacity. They should hire more efficient human resource. And also enlarge business capacity with more facilities. Layout Design- They should separate layout for both the product to ensure the delay in production process and increase capacity of business. Human Resources and Job Design- In the given case sale of standard pieces is growing, which indicate the effective work of front end of team, but end team is not able to produce the product to meet the demand. So the company should focus on hiring of more efficient craftsmen, and encourage overtime to existing staff to avoid delay in production. They should separate the craftsmen for both customized product and standard products. And encourage the exising craftesmen for over time to avoid delay in productions. Supply Chain Management- Company should assign different supply chain for both customized product and standard product in order to avoid delay in delivery, reduce lead time, and meet the customer expectations. Inventory Management- Rising cost related with standard line can be reduced by active sale and increased inventory cost in form of raw material and work in progress can be reduced by proper production process and efficient supply chain management. Increased cost of rented ware house can be reduced reallocating ware house to cheap and cost saving locations. Location Planning- Location planning should be based on availability of efficient craftsmen at low salary and rented warehouse at low price. It should not be so far from main city and should be easily reachable by customer. Scheduling- Sale of standard line is increasing so it requires regular scheduling. The company needs to make scheduling decision to ensure that there are fewer raw materials in status of work in progress. Maintenance- They should assign some maintenance cost to maintain the quality of product, and equipment needed in production process.