Why might this be argued as being an improvement for the company? Explain. 1. Ca

Question

Why might this be argued as being an improvement for the company? Explain. 1. Capacity Utilization 1. 3-years ago = 92% 2. Today = 83%

Williams Companv Case Company Information Williams Company has made major changes to its supply chain over the last 3-years, all in an effort to improve its supply chain throughput. Improved throughput means cost savings, improved overall operations from materials acquisitions to inventory control, reduced returns and higher customer satisfaction levels Some (not all) of Williams Company Metrics Related to Their Supply Chain Metrics Over the Last Three Years e Planning: o Average Inventory carrying cost 3-years ago $0.58 per product item . Today = $0.41 per product item o Average percentage of obsolete inventory on hand · 3-years ago = 4.8% of total product sales · Today = 2.2% of total product sales Annual production volume 3-years ago=2.19M units Today2.47M units . Source: o Average material acquisition costs · 3-years ago = $2.98 per unit . Today = $2.46 per unit o Average payment period · 3-years ago = 31 days per supplier/partner ·Today = 22 days per supplier/partner Make: o Average number of defects per thousand units - 3-years ago 98 . Today=88 o Average make cycle time · 3-years ago = 21 days Today 23 days o Average capacity utilization (with no new expansion or capital expenditures) · 3-years ago = 92% . Today=83% Deliver: o Average fill rate 3-years ago=78% . Today = 93% o Average return rate per 1000 units sold 3-years ago=5.6% . Today= 4.1% Additional information Williams Annual Sales Today = $23.9M 3-years ago= $18.3M

Explanation / Answer

Hi,

Thanks for the question.

Even though the capacity utilization of the company decreased, there are other factors which went in the favour of the company and might have saved the overall cost for the question.

These include:

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