Procurement Essay Example

of product can be broken into discrete units in production line (Bozarth and Handfield2006). In the case, LWT often use six different styles of raw materials to produce 30 possible end products. Production line has two main distinct characteristics, production-based layout and cycle time. Firstly, product-based layout is a sort of layout where raw materials are used sequentially in terms of the steps required to make a product. Conveyor belt is quite often used to produce step by step in order to achieve production efficiency.

Secondly, cycle time is the actual time between completions of successive units for a line process on a production line. For example, LWT completes 1 shutter in 30 minutes, and thus 30 minutes for a shutter is the cycle time on the production line. However, cycle time also requires higher level of equipment and labor to finish the task in order to achieve consistent quality and high efficiency.

Customization –Make to Stock Make to stock is one of the manufacturing processes which are used as holding inventory at the end of the supply chain. In make-to-stock system, companies are necessarily able to evaluate demand to decide how much products they should produce and stock (Rabbani, 2011). As a consequence, make-to-stock has to be relied on forecasting. Make-to-stock (MTS) products involve no any customization. Generic products are produced in large amount of volumes to justify keeping a finished goods inventory. Consumers have to buy these products “off the shelf” from retail stores. In our scenario, LWT produces batches of 500 50 1000 of shutters as inventory.

Therefore, make to stock which is the least level of customization was

offering by LWT. As knowing LWT is using make-to-stock system, it has obviously objective for their products, it could cause producer-specified and inexpensive products. Make-to-stock system has advantages and disadvantages. On the one hand, make-to-stock could decrease the delivery time on products. However, MTS is based on forecasting in order to estimate the demand of consumers. If forecasting is not accurate, LWT could not plan their production and control inventory (Antony, 2005).

Point of customization Due to make-to-stock has no customization, and thus MTS products move along from the design stage to finished goods inventory prior to distribution. The reason is that MTS is based on internal efficiency and capacity utilization to produce products Therefore, MTS products occur prior to the customization point as upstream activities. Upstream activities have no effect on customer order (Bozarth and Handfield2006). LWT is using production line method to produce specified products and to deliver to consumers directly. Therefore, customization takes place late in the supply chain by MTS; it leads to shorter lead times and inexpensive cost of production. However, consumer’s need could not be satisfied as a result of inflexibility.

 Managerial challenges of LWT

Service package, service customization and consumer contact are the crucial managerial challenges when production line is used by LWT. Firstly, production line method is used to produce massive products and sell to consumers, so production line is belong to physical activities. Thus the managerial challenge for LWT is cost of production as a result of more management’s attention will be connected to capital expenditures (equipment, warehouses and transportations), material costs, and other tangible assets (References).

In fact, LWT has to

spend massive time to manage expensive tangible assets. Secondly, when service customization is low, the service packages are more standardized, for example, similar store layout, display and storage. However, LWT could employ low value of employees, but customer needs would be negatively affected by low skilled employees. Lastly, production line has negative effect on customer contact. When customer contact decreases, back-room operations are used by LWT. The back room is completed without direct customer contact.

Job

Shop Due to competition by Chinese company, LWT has been changing its manufacturing process in order to satisfy consumer’s need. Job shop is suitable strategy to satisfy the business strategy of LWT. Job shop is used to provide a wide variety of highly customized products to consumers. The main purpose of job shop is to concentrate on the requirements of consumer, but general-purpose equipment and broadly skilled workers are really necessary to fulfill.

Therefore, job shop could be used to support LWT to enhance its rivalry with competitor. There are some characteristics of job shop which could be considered by LWT, layout, employees, information and scheduling. Firstly, layout is in the job shop, similar equipment or functions is grouped together (Bozarth and Handfield2006). The layout is designed to minimize material handling, cost, and work in process inventories. Job shops use general purpose equipment rather than specialty, dedicated product-specific equipment (Pan, 2005). Secondly, employee plays a vital role to achieve different requirements of consumer. Highly skilled employees can operate several different classes of machinery.

However, these skilled employees would require higher salary than normal employees have. Thirdly, information is critical aspect of job shop. Information is

used to set up price, measure the cost of material, select orders of consumers and route order through the shop (Pan, 2005). Fourthly, scheduling is another aspect of job shop; company should work out the priority of different consumer’s order. Therefore, those aspects of job shop should be considered to use by LWT in order to achieve consumer’s need.

The level of customization

Make to order Job shop has been determined to be new manufacturing process for LWT, and Job shop is based on customer-specific. As a consequence, make-to-order is a new level of customization for LWT. Make-to-order system is holding no inventory at all and producing to order. In the make-to-order system, LWT recently produces based on actual customer demand instead of estimations (Zinn, et al 2003). Moreover, in the MTO process, individual orders can be identified during production. When each order is made to the customer specification, the jobs in process are actually associated with customers (Chopra et al, 2004). So this system is fully structured with respect to customer orders by LWT.

However, when make-to-order system is used by LWT, LWT should concentrate on advantages and overcome disadvantages of make-to-order. The main advantages of make-to-order are high variety of products and customer satisfaction. On the other hand, delivery promises and delivery time are main issues for LWT, which should be aware of. Specifically, inventories are eliminated, but customers must now wait for delivery, perhaps leading to loss of competitiveness on the part of the company. Therefore, the level of customization on make-to-order has been offering when job shop has started to use to support the change proposed by Chuck

Keown as new manufacturing process.

Point of customization

Make-to-order products push the customization further to the manufacturing process because of MTO process has higher flexibility for product customization (Bernhardt et al, 2007). Thus, MTO products could be found in job shop environment and it could occur between the step of sourcing materials and fabrication. This is downstream activities as a result of make-to-order system is used by LWT to achieve the requirements of customer. Thus, MTO occurs on customizations, which are downstream activities. Although early customization is flexibility in response to unique customer requirements, expensive cost of products and longer lead times should be aware of by LWT when it is in the level of MTO (Bozarth and Handfield2006)

Managerial challenges of LWT

As job shop is using by LWT, it also has managerial challenges, higher requirements of employees, knowledge and operation system, variable and unpredictable service package, and customer contacts. Firstly, job shop is intangible activity, which requires higher skilled employees to contact with consumers and uses useful knowledge to achieve consumer needs.

They could have complicated recruitment system to employ and training them. Secondly, job shop has high customization, but service package is unpredictable. Consumer needs are unique and different. LWT could not measure and forecast their needs and they have to spend large amount time on their needs. Finally, LWT which is retailer sells interior shutters to consumers, and thus front room operation is necessary as a result of LWT has to contact consumer directly in order to achieve consumer needs as retailer. Thus, LWT has to monitor its process of front room operation.

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