Summer Grills Inc is an old-line company that started out making supplies for th
ID: 361329 • Letter: S
Question
Summer Grills Inc is an old-line company that started out making supplies for the restaurant industry.
As that business waned, the company entered the electric
barbecue grill market, with five models of grills it sells nationally.
For many years the company maintained a single warehouse
from which it supplied its distributors.
The plant where the company produces barbecue sets is located
in a small town, and many workers have been with the company
for many years. During the transition from resturant supplies
to barbecue grills, many employees gave up their weekends to
help with changing over the plant and learning the new skills they
would need, without pay. In fact, Mike Johnson, the company president,
can reel off a string of such instances of worker loyalty. He
has vowed to never layoff any workers, and to maintain a full employment,
steady rate of output. “Yes, I know demand for these babies
(barbecue grills) is seasonal, but the inventory boys will just
have to deal with it. On an annual basis, our output matches sales.”
Inventory is handled by a system of four warehouses. There is
a central warehouse located near the plant that supplies some
customers directly, and the three regional warehouses.
The vice president for sales, Nancy Yates, is becoming increasingly
frustrated with the inventory system that she says “is antiquated
and unresponsive.” She points to increasing complaints
from regional sales managers about poor customer service, saying
customer orders go unfilled or are late, apparently due to shortages
at the regional warehouse. Regional warehouse managers,
stung by complaints from sales managers, have responded by increasing
their order sizes from the main warehouse, and maintaining
larger amounts of safety stock. This has resulted in increased
inventory holding costs, but it hasn’t eliminated the problem. Complaints
are still coming in from sales people about shortages and
lost sales. According to managers of the regional warehouses,
their orders to the main warehouse aren’t being shipped, or whenor when
they are, they are smaller quantities than requested. The manager
of the main warehouse, James Stanton, says his policy is
to give preference to “filling direct orders from actual customers,
rather than warehouse orders that might simply reflect warehouses
trying to replenish their safety stock. And besides, I never
know when I’ll get hit with an order from one of the regional warehouses.
I guess they think we’ve got an unlimited supply.” Then he
adds, “I thought when we added the warehouses, we could just
divide our inventory among the warehouses, and everything would
be okay.”
When informed of the “actual customers” remark, a regional
warehouse manager exclaimed, “We’re their biggest customer!”
Julie Berry also mentioned that on more than one occasion she
has found that items that were out of stock at one regional warehouse
were in ample supply in at least one other regional warehouse.
Take the position of a consultant called in by president Mike
Johnson. Complete a cause and effect analysis using the 5WHYs from the Toyota Production System (TPS) to get to the root of the problem.
Explanation / Answer
Answer :
Toyota's Production System (TPS) was developed between 1948 - 1975. This laid the foundation for lean production and manufacturing. Lean Production is a manufacturing or a production process in operations that runs of a school of thought that believes in increasing efficiency when it distinctively adds value to the customer. While production processes in operations had it's origins from six sigma. lean manufacturing is relatively new and it focuses on co creating value for the end customer.
Toyota's Production System (TPS) is a method of deriving the root cause of a problem by asking why in five stages . starting from the problem and then tracing it back to the larger issue in operations or business that is the under lying reason for the problem.
Summer Grills Inc 's inventory problems
The Problem
Summer Grills Inc had a problem with maintaining inventory and keeping up with the current demand of electric
barbecue grillers . Its current inventory levels were not sufficient for it re sellers and or dealers. Complaints were were being logged by dealers across the country about the lack of inventories. This resulted in delayed deliveries which was a problem for resellers and customers since they had already blocked their money in down payments and instalments for bulk orders were still being unproductive because of the disruption in their supply chain.
Toyota Production System (TPS)
Why #1 : Why aren't customer's and warehouse orders being fulfilled on time or in fill ?
Why#2 : Why isn't the warehousing team planning their inventory effectively and communicating the same to their factories ?
WHY#3 : If the factories or the manufacturing lines know about the supply deficit why aren't they shipping enough units with a buffer stock ?
WHY#4 : If the problem with the factories is over production and inventory and storage costs, why hasn't management accurately forecasted demand
Why#5 : If the management is producing limited number of units due to seasonal demand why not have lines of business one for B2C ( Business to Consumer) and one for B2B ( Business to Business) so the ware house which services bulk orders can pass on purchase order to the factory so that there is no over or under supply. And a separate warehouse can handle the inventory for B2C customers.
The underlying reason why Summer Grills Inc is the fact that they're not able to accurately forecast demand and budget for deviations in
estimates.
Estimation, Planning and Budgeting in the context of project management and software development often have to do with resources such as time and budget constrains, manpower or access to human resources , talent and technology. Estimation or Budgeting is a process of planned allocation of financial resources within an organisation for a specific department, function or a business objective. This way an organisation defines its strategy. It is a continuous process in which the organisation decides to implement a selected few strategies, details the implementation plan and keeps on appraising the progress & success of implementation through regular assessment taking into account constrains such as availability of resources , delivery timeframes, etc.
ROOT CASUE ANALYSIS : Mistakes that Summer Grills Inc is making in Estimation or Budgeting
- Over Supply or Under supply of resources such as time and budget constrains, manpower or access to human resources , talent and technology. due to lack of operational planning.
- Over estimating or under estimating the timeline of a project and the firm's or the teams ability to complete it within the given time frame and resource constraints.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.