Summary of Business Issue July 24, 2018 – Posted in: Essay Help Online, Free Essay Help Online
Summary of Business Issue
One of the most important things in regards to improving customer service is ensuring the timely delivery of products. At present, Emerson Electric has challenges ensuring they deliver their products on time. An important step towards resolving the issue is determining the cycle time of producing one good. The equations below can guide such an effort: (Summary of Business Issue)
Cycle time = WIP/Throughput.
Similarly; Throughput = WIP/Cycle time
According to the facts Emerson Electric has provided, the cycle time at the moment stands at 5 days. According to the equations above, there is a direct correlation between throughput and cycle time. This implies that as WIP grows, the cycle time naturally grows as well. Similarly, the cycle time decreases as the Work in Progress (WIP) decreases. Worth noting is the fact that the Throughput must remain constant for the proportionality to remain. The data that Emerson Electric has provided indicates that WIP is growing rapidly. Therefore, the cycle time is growing equally rapidly. This presents another impediment since their products are highly differentiated and most of the work would remain unfinished as a result of the rising WIP.
To improve on-time delivery, it would be beneficial to have some finished products in place to cater for customers’ needs before such a customer arrives. However, for those customers with unique requirements, such as those requiring specific measurements of the flanges, which need to be welded on the pipe that the customer has brought along, they may do the welding upon the customers’ arrival. The main reason for having some finished products in stock is because the WIP is growing. If they had some products in stock, the cycle time would improve significantly as well. Another way through which to improve on-time delivery is by managing the production schedule. The most effective way to do this is to reduce the time frame for measuring the production time of each product from daily to hourly. This way, the production managers can determine when something goes wrong in the process and the specific time it occurs. In addition, this could help keep track of customer demands over this same time frame. Moreover, it may aid in quicker reaction to problems.
A third method to improve timely delivery of products is to determine when the production process begins. By so doing, one could find that a certain area in the process that is slow and proceed to make it faster. One point to note is that the management should plan to begin their schedules from this slowest point. It is an efficient way to optimize operations.
Another way through which to improve punctuality in product delivery is reducing the cycle time from 5 days to about three. To achieve a 3-day cycle time, Emerson Electric should reduce their WIP. However, this would mean less products would be produced, which would be a self-defeating endeavor. In order to reduce the cycle while still maintaining the production level high, it would be beneficial to ensure there is strategic inventory buffer in place to cater for the instances when there are not enough products to supply to customers as soon as they require the particular product. Furthermore, the shift-day at the moment is 5 days. This represents the throughput. Currently, the throughput is calculated through the equation below:
Throughput = 13,300/5
For three days, Throughput = 13,300/3
The throughput would therefore increase substantially if the number of days for production would reduce to three. The management should therefore lay more emphasis on increasing throughput more, at the expense of WIP.
Furthermore, batching presents another problem. Batching refers to the gathering of invoices before they are processed. It takes up a lot of time when set aside as an assignment in itself. To reduce its impact on the business, Emerson Electric should process the invoices for each transaction as soon as it occurs to prevent their accumulation before the processing. This means that batching should be set aside as a process in itself. In contrast, it should occur at the conclusion of each trade. It would take up negligible time for each transaction but its effect on the business would be tremendous.
Finally, it is also important for the business to reduce leadtime. One way to do so is through streamlining distribution. More specifically, Emerson Electric should start by making products for the mass market. It would ensure that their products reach as many customers as practically possible. The disadvantage of doing so is that it would make their products more uniform. However, it would increase their sales, since they would reach more customers. Differentiating their products even more would cater for more individual needs, in reference to the fact that their products are highly differentiated. However, to get maximum response to the customer with minimal inventory investment, increased marketing would be most effective. This way, more customers would know about the product without necessarily making more. They should also place their products in high-demand areas. This would increase access to their products, in addition to improving their marketing through word-of-mouth recommendations from existing customers to potential ones.