Analysis: Hawkesbury Cabinets Pvt Ltd

Introduction:

Hawkesbury Cabinets Pty Ltd started its business as a custom build solution provider for kitchen cabinets. With time, the founding members, Fung and Chen realized the high potential in this industry. The company realized the huge demand and with the increased demand Hawkesbury Cabinets Pty Ltd started to manufacture standard kitchen cabinets. However, the priority for Fung and Chen was custom kitchen cabinets as the profit margins are relatively high in custom kitchen cabinet as compared to the standard kitchen cabinets. The organization has a single manufacturing facility in Mulgrave and the production facility has flexible machines that could be used to meet the demands of both custom (make to order) and standard (made as bulk) cabinets. With an increase in the demand, there was more press

Analysis

It can be inferred from the case study that Hawkesbury Cabinets Pty Ltd was established a small size manufacturing unit with a single factory in Mulgrave. However, the company is not able to manage the operations with an increase in the demand. It appears that somewhere, the company is not able to balance the demand of custom build and standard kitchen cabinets and this has resulted in increased lead times for both types of cabinets.

The current production system is simple in terms of processes. The company has single manufacturing facility in Mulgrave and the production facility has flexible machines that could be used to meet the demands of both custom and standard kitchen cabinets. The production facility has different areas where the associated equipment are grouped together. Saws and cutting tables are in one section, routers and shapers in another, whilst lathes and other less frequently used machines are kept away from the work area in their own section. There are common employees or craftsman for both type of cabinets. As per the current operation process, the scheduling of work is done for custom based cabinets and standard cabinets (Poppendieck, 2011). As per the current process, custom cabinets always get the priority in the scheduling process due to high profit margins. However, this has a negative impact on the lead time of standard cabinets.

The problem for Hawkesbury Cabinets Pty Ltd started when the company shifted its focus to accommodate new builders’ kitchen line. The company was doing well in the custom kitchen segment. However, Fung and Chen realized the market opportunity in standard kitchen segments. The problem for the company was that there was only a single manufacturing facility to support both types of products. Moreover, the process or the operational line was also the same. The work was done with the scheduling and scheduling algorithm was based on the priority based on the profit margins (Melnyk & Cooper, 2011). The problem for the company is that it is not able to balance the demand of custom build and standard kitchen cabinets and this has resulted in increased lead times for both types of cabinets. The problem is that the custom cabinets always get the priority in the scheduling process due to high profit margins and this impacts the lead time and profitability for standard cabinets.

The company manufacturers both type of cabinets out of the same production facility. The company’s move to include builder kitchen cabinets can have both positive and negative impact on the company financial. This step is a good step and in fact this step is the logical step to take the company forward (Williams, 2011). However, Fung and Chen should be able to overcome the risks and barriers. The founding members should realize that the existing operational facility is already at its full capacity and the overloading of capacity can have negative impact on delivery, quality and cost (Tan & Lim, 2013). The financial impact on the company may not be good in the short term as it would be required to make initial investment. However, if everything goes right then the company would be able to increase the profitability in long term. It is also important to mention that the step to move towards the standard kitchen can have an impact on other organizational functions also. The company would need the talented and skilled resources who can continue to deliver the high quality cabinets. The shift could also bring the change management issues in the existing employees as some of the employees may not be willing to change. There is also a risk that the new employees may not gel with the existing employees (Hasan & Shankar, 2012). The company should develop the strategy to expand only after considering all the pros and cons of expansion. The operational and supply chain issues are the key issue for the organization. However, Fung and Chen should also analyze the impact of operational and supply chain decisions on other organizational functions.

Conclusion

The above essay discusses the impact of the new builders’ kitchen line on Hawkesbury Cabinets’ operations and the impact that the move to producing builders’ kitchens might have on the company’s financial structure. With the above discussion it can be said that the existing manufacturing plant is already running at more than 100% capacity. This has resulted in some negative impacts like increased lead time for standard cabinets and increased cost of operations. This the time when Fung and Chen should take the decision about the future strategy of the company. If they want to take the company forward in the builders’ kitchen line, then they should be ready to expand their manufacturing facility (Dues & Tan, 2013). The work between custom and standard cabinet is divided on the basis of scheduling algorithm and this may not be the good idea for company to expand. Ideally, Hawkesbury Cabinets Pty Ltd should have two different production lines for custom products and standard products.

References

H., & Williams, T. (2011). Now, let's make it really complex (complicated) A systematic review of the complexities of projects. International Journal of Operations & Production Management, 31(9), 966-990.

Dues, C. M., Tan, K. H., & Lim, M. (2013). Green as the new Lean: how to use Lean practices as a catalyst to greening your supply chain. Journal of cleaner production, 40, 93-100.

Hasan, M. A., Sarkis, J., & Shankar, R. (2012). Agility and production flow layouts: An analytical decision analysis. Computers & Industrial Engineering, 62(4), 898-907.

Melnyk, S. A., Cooper, M. B., & Hartley, J. L. (2011). Managing operations across the supply chain. New York, NY: McGraw-Hill Irwin.

Poppendieck, M. (2011). Principles of lean thinking. IT Management Select, 18.

Costas, J., Ponte, B., de la Fuente, D., Pino, R., & Puche, J. (2015). Applying Goldratt’s Theory of Constraints to reduce the Bullwhip Effect through agent-based modeling. Expert Systems with Applications, 42(4), 2049-2060.