Operational Management Hawkesbury Cabinets Pty Ltd

Question: Discuss about the Operational Management for Hawkesbury Cabinets Pty Ltd. Answer: Introduction: Hawkesbury cabinets Pty Ltd. is managed jointly by siblings Fung and Mei Chen, in which the former have the expertise of being a master cabinet maker and that Fung has the expertise in interior designing. The company have two main modes of a production system that holds the business line up and maintains the profit margin of the company. In one product type, the company take custom orders and design the kitchen cabinets based on the customers preference and design requirement. Another set of product is mainly prepared for spec builders which are denoted as a standardised product line. These kitchen cabinets have fixed design with a range of high quality. Though the company aimed to fulfil the requirement of the Chinese community in Hawkesbury, but the spec builder might be involved in supplying standardised kitchen cabinets to a customer of another cultural segment. The production system of Hawkesbury cabinets Pty Ltd. is managed by a single manufacturing unit located in Mulgrave region, in which both the mentioned product lines are manufactured. This unit contains high quality, expensive, and efficient machines that are functional for general purpose production operation. The factory space also contains varieties of tools and machines that are placed in particular work or section. The operational procedures related to painting and finishing are done in the environmentally controlled region which is functional towards the rear section of the unit (Alkaya Demirer, 2014). In general, the employees and craftspeople are common who are involved in both custom and standardised products. The finished products are placed in high esteem and that completion of orders in time is a prime objective of manufacturing unit. The above-mentioned details of the production system are traditional and was evidenced since the initial days of the company. In the present time, there is an increased demand for products that in turn is responsible for increased work pressure for the production unit. Ever since, with increased order demand, the corresponding pressure on craftspeople and other employees have been raised (Appelbaum, 2013). Likewise, the operating time of machines and equipment is also becoming a critical consideration to segment the time of production for custom and standardised products. This lead to increase in the inventory and warehouse volume. Additionally, owing to increased product demand, many of the raw material, intermediate products, and pre-finished products are also stored in the workplace, leading to a clogged condition of the unit (Nguyen, 2014). Overall, these situation leads to pushing of the manufacturing capacity to its limit that in turn impact the overall business procedure. Brief of the problem: At Hawkesbury cabinets Pty Ltd., the principal strength lies in the expert designing and cabinet making that in turn resulted in market popularity. The corresponding impact of this market attractiveness is further reflective of increased production demand of the kitchen cabinet products. On the other hand, Hawkesbury cabinets are facing significant issue related to meeting the demand of the market. Detailed explanation: Hawkesbury cabinets is involved in the production of both custom and standardised products to the market. The former product type is more important for the company as it makes the maximum profit margin. On the other hand, standardised products offer less profit margin, but the sales are increasing in a steady manner with time. It is the contract system, under which the company needs to supplement the products to the spec builder. As a result of increased burden on the production unit, the company fails to manage the timeliness of finished product supply (Mohamed, 2015). This problem is associated with product types, as because the equipment and the workforce involved in the production are common to both custom and standardised. Another issue that is also associated with the problem is an accumulation of raw materials, intermediate processed products, and semi-furnished products, within the space of production unit (Nguyen, 2014). Highlights of the problem: With the above-mentioned explanation, it can be realised that increased work pressure and a shortage of space is the key problem. The mentioned problems can be highlighted as: The increase in work pressure leads to increasing time investment by craftspeople and operating time of the machine. Shortage of space leads to clinginess in the warehouse, inventory and related space within the production unit. Profit margin is not equally distributed, which is reflective of active production engagement in standardised products despite low margin profit (Tan Karabati, 2013). Money investment becomes a concern especially in a situation where the finished product flow is delayed. The overall managerial issue appears in managing the increased production demand and maintaining the timeliness of finished product supply (Mohamed, 2015). The impact of this situation: The key impact of increased demand is reflective over the production unit. Custom products must be given preference, whereas owing to growing demand for standardised products, the intermediate parts and pre-furnished products are getting accumulated (Tan Karabati, 2013). Furthermore, this leads to delay in supplementing the finished products to market. The most critical impact of this situation could be on dissatisfaction and maintaining the commitment by Hawkesbury cabinets to its customers (Venkatesh, Rathi, Patwa, 2015). It is certainly true that the problem that is existing in the production unit, owing to increased supply demand, will have an adverse impact on the overall financial structure of the company. The prime move is determinant between the custom and standardised products, which further leads to improvement distribution of profit margin. For instance, custom products offer more profit margin, thus company must give preference to these commodities (Chen, Delmas, Lieberman, 2015). On the other hand, there is a stringy supply system associated with standardised products, because of which company need to maintain the production under the contract system. Note that company need to continue the production of the standardised product because of the contract system despite its low-profit margin (Shi Yu, 2013). Importantly, the cost associated with standardised product generation is also reported to be increased which leads to further reduction of the profit margin. Ultimately this situation lead s to delay in the custom product that in turn might result in (i) increased customer dissatisfaction; (ii) negative impact on the market image; (iii) increased negative pressure on production flow (Mohamed, 2015). Overall, this issue has a significant impact on the financial structure, because of following reason (Schmidt Nakajima, 2013): Custom product delay results in a reduction of future orders. Delay in standardised pressure leads to complicacy in the distribution structure of these products. Accumulation of raw material, intermediate products, and pre-furnished products leads to delay in the financial transaction or holding of money. Increased product or material accumulation is responsible for taking new rent for warehouse storage. This results in addition cost for the company. The financial disturbance to the production flow is also attributed to trapping of invested money in the form of raw material as well as intermediate products. Prior to this situation, the company use to maintain the timeliness of the product supply flow. As a result of this, product distribution and monetary transaction used to be regularly maintained. In contrast, the present situation leads to delay in the furnished products which lead to trapping of money in the various stages of the production system (Shi Yu, 2013). Likewise, for the storage of these products, the company also need to take another warehouse on rent, which in turn adds to more cost of production. Other issues that can be associated with this situation is increased frustration among employees for increased work pressure. Likewise, there is no evidence of giving financial motivation to the employees such that work procedure can be managed (Schmidt Nakajima, 2013). Overall, lack of such motivational strategies can lead to a decrease in managerial efficiency across the company. References: Alkaya, E., Demirer, G. N. (2014). Improving resource efficiency in surface coating/painting industry: practical experiences from a small-sized enterprise. Clean Technologies and Environmental Policy, 16(8), 1565-1575. Appelbaum, E. (2013). The impact of new forms of work organization on workers. Work and Employment in the High Performance Workplace, 120. Chen, C. M., Delmas, M. A., Lieberman, M. B. (2015). Production frontier methodologies and efficiency as a performance measure in strategic management research. Strategic Management Journal, 36(1), 19-36. Mohamed, A. A. M. (2015). Lead-Time Estimation Approach Using the Process Capability Index. International Journal of Supply Chain Management, 4(3). Nguyen, P. V. (2014). Lean ManufacturingImplementation and Benefit in Production Activities. Available at SSRN 2555428. Schmidt, M., Nakajima, M. (2013). Material flow cost accounting as an approach to improve resource efficiency in manufacturing companies. Resources, 2(3), 358-369. Shi, M., Yu, W. (2013). Supply chain management and financial performance: literature review and future directions. International Journal of Operations Production Management, 33(10), 1283-1317. Tan, B., Karabati, S. (2013). Retail inventory management with stock-out based dynamic demand substitution. International Journal of Production Economics, 145(1), 78-87. Venkatesh, V. G., Rathi, S., Patwa, S. (2015). Analysis on supply chain risks in Indian apparel retail chains and proposal of risk prioritization model using Interpretive structural modeling. Journal of Retailing and Consumer Services, 26, 153-167.