As per the case,
The change over time between the products : 36 Hours
Lead time of order delivery: 3-4 weeks
Manufacturing cost of Mushroom/Bell anchor: $8 per pound
Manufacturing cost of Snag hook anchor: $11 per pound
Profit margin not so much.
As per the case study, it is evident that there is a lot of operational inefficiencies.
Challenges for which recommendations have been proposed are:
(b) Cost Management
(f) Technology adoption
(g) Supplychain Management
(h) Distribution Management
Recommendations proposed for (b) Cost Management:
1. Review the Raw Material cost. Order only EOQ (Economic Order Quantity) based on annual consumption & space available to store it.
2. Review the fixed cost component and convert it to variable as far as possible. For example plant operators & maintenance technicians can be outsourced. location of administrative building can be changed as per the site condition.
3. Analyze the transportation structure which one is cheaper Rail, Road or Ship. Reduce the stock transfers on company cost.
4. Maximize the institutional direct sales.
Recommendations proposed for (f) Technology Adoption:
1. Reduce the manual paper work. All transactions should be automated. Not to use so many of IT tools/software of different service providers.
2. Use integrated IT solution provider.
3. Use sophisticated ERP systems such as SAP etc.
Recommendations proposed for (g) Supply Chain Management:
1. Avoid back to back incoming rakes arrival.
2. Implement lean shipping station
3. Improve the loading facility. Automate it.
4. Separate loading point for rake & road loading
5. Parallel loading facility for rail & road.
6. Apply Theory of Constraints to find out bottlenecks & to reduce the product change over time.
7. Automate the information flow across the functions to increase efficiency in supply chain.
Recommendations proposed for (h) Distribution Management:
1. Separate storage for two different products.
2. Flexible loading for different products.
3. Need to change the distribution system. Look an option for direct dispatch.
4. Develop Channel partners. Limit the warehouse management partners.
5. Send the material direct to the customers i.e channel partners hence this will avoid the storage of the products.
6. Billing should be flexible i.e. Ex as well as FOR.
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