Operation Management Stickley Furniture Production

Operation Management

Stickley Furniture

Production Processing

The management at Stickley Furniture is committed to delivering the highest quality products to their organizational customers. They are however also focused on reducing costs, alongside with achieving an increase in operational efficiency. All these desiderates have been integrated within the company's production processing, which basically resembles the traditional processing model, in which raw materials are being inputted and finished products are being outputted. In the case of Stickley, the input consists of logs, glues and other materials used in the manufacturing process and the output is represented by the pieces of furniture resulted in the process.

The predominant processing model is the continuous one, meaning that the manufacturer produces relatively large volumes of standardized products and the flows are in straight lines (Fredendall and Hill, 2001). This is true for Stickley as they mainly produce line items, rather than unique or limited pieces of furniture. Foremost, their working processes occur on continuous basis as one manufacturing stage is closely followed by the next. This feature also means that Stickley Furniture employs the concepts of repetitive production processing, a model in which each organizational unit performs the same given set of tasks, repeating these chores for various products.

The employees' work may at times become redundant with the usage of continuous and repetitive processing models, and this might generate two primary effects. First, the employees could begin to lose their desire and motivation to work due to the lack of stimulation and challenges in the process. Secondly, and this is more to the liking of the management and the overall well-being of the company, they could become extremely good at what they are doing, managing to increase their performances, and consequently the operational efficiency.

Stickley is also using batch processing. This refers to a type of processing operations in which the computer performs several chores without needing the assistance of humans. The most relevant example in this sense is given by the measurements and cuts performed by the computerized system. The new computer-controlled optimizer "determines the optimal set of cuttings, given the location of knots and other defects, and standard lengths needed for subsequent operations" (case).

2. Keeping Track of Job Status and Location

The manufacturing processes at Stickley Furniture are extremely complex and it is vital that each employee is familiar with and able to perform its assigned chores. In this line of thoughts then, it is important for the management to have a well established process of controlling the job status and location of each employee and task throughout the entire production processes.

The concept of production control is mostly met within manufacturing organizations and it has generated wide responses from the scholars' community, with various sources indicating various responsibilities. While some indicate that the process should simply verify and report progress and status, others believe that production control is also in charge of planning and scheduling. A most comprehensive and representative definition of production control is offered by the online version of the Business Dictionary (2009) and states that the concept refers to "methods and procedures employed in handling materials, parts, assemblies and subassemblies, from their raw or initial stage to the finished product stage in an organized and efficient manner. It also includes activities such as planning, scheduling, routing, dispatching, storage, etc."

Each economic agent establishes by itself the methodologies of ensuring process control. At Stickley Furniture, the control of production is ensured at various stages of the process, including the sequence of the job, sizes of the lots or the actual jobs of the employees. The sequence of jobs is generically determined through an analysis of the processing time and the remaining inventory (in terms of days supply on hand). In controlling the lot sizes, the managerial teams analyze the demand, the setup expenditures and the costs of carrying out the tasks - the average size of a lot is of 25 to 60 pieces (case).

Controlling the actual status and location of each job is a more challenging task and this can be explained by the simple fact that an increased numbers of jobs are being performed simultaneously. In order to however cope with the mission of controlling these jobs, the management at Stickley Furniture has assigned a code to each job. Whenever the employee completes his chore, he will send the code to the management's office, where it will be processed and introduced into the computerized system. This approach ensures an efficient control of job status and location. The case explains: "each job is accompanied by a set of bar codes that identify the job and the operation. As each operation is completed, the operator removes a bar code sticker and delivers it to the scheduling office where it is scanned into the computer, thereby enabling production control to keep track of progress on a job and to know its location in the shop."

3. Processing Information for an Order

Considering that the organization received an order for 40 mission oak dining room sets, they would give this order the utmost attention. The first reason as to this increased attention is based on the desire to produce high quality items that generate high levels of customer satisfaction. Secondly, the more personal reason is that the company's main production line (next to 50%) is composed from mission oak furniture, onto which the company's reputation has historically been built and which still constitutes a large part in the organization's image.

Having established the necessity of paying increased attention to the mission oak order, it is now vital to reveal the features which must be assessed in the respective situation. First of all, the company has to assess the requirements of such an endeavor. Amongst other things, the following questions will have to be answered: does the company possess sufficient staff capacity to complete the new project on time? If not, is it sustainable to hire more employees at this stage, without the certainty of having work for them in the future (how does the company feel about temporary employments or the 'borrowing' of skilled personnel from other similar organizations who are confronted with reduced demands of their products?).

Stickley's management must also consider its sources of raw materials to be used in the manufacturing of the 40 dining room sets. Do they currently own sufficient commodities and if not, can they acquire them efficiently (rapidly, cost-efficiently and at high qualities) from their suppliers? Provided that their regular suppliers cannot satisfy the immediate need for commodities, what alternatives does Stickley have? Can they still complete the project within the time limits given the commodity shortage?

Then, does the company possess sufficient financial resources to afford the purchasing and manufacturing of the products ordered? How will the payment from the customer be made? Could it be possible to pay an advance to cover for part of the initial costs? Is the endeavor worth in terms of technological efforts, considering that the computerized system and the manufacturing techniques will be exploited and reductions in their values will be registered?

As the previous lines have shown, the concerns raised by the new order refer to resource constraints, including labor force, technologies, capitals and raw materials. However, the management at Stickley must also assess the benefits derived from serving the 40 mission oak dinner set order. The main advantage lies in the insurance of a sustained working process, which consequently ensures organizational profits. Then, the second and most important reason is that this new order could strengthen Stickley's competitive position within the market and generate several additional and indirect benefits, such as advertising and new orders.

Otherwise put, the most appropriate manner to consider the launching of a new project is that of conducting a cost-benefit analysis. This could be completed with financial analyses which reveal the project's cash flows as well as the time it will take for the investment to generate a satisfactory return.

4. Benefits and Limitations Associated with the Level Production Policy

The results of numerous economic agents are influenced by time periods, which influence the resource and budget allocation, but also the demand for their manufactured products and/or delivered services. The demand which is influenced by time is called seasonal demand and sees that the buyers are only interested in purchasing the respective items during a particular time of the year. Ice-cream and cold refreshments can be seen as a relevant example in this sense as the demand for them is significantly stronger during summer time that it is during the winter seasons.

The furniture industry is also another relevant example of a seasonal demand. "Furniture, typically, has a very seasonal demand pattern. The cost of raw material is not as high as other manufacturing companies; also the material is readily available with below average lead times compared to other hi-tech or metal-cut manufacturers. Although, the carrying cost & transportation cost of the finished product (the furniture) is high because of the volume and labor intensity" (Vaishnav, 2003). Therefore, the demand considerations are pivotal in setting a level production policy. The management at Stickley Furniture revealed that the demand for their products tends to increase during the first and third quarters, whereas it reveals descendant trends throughout the second and fourth quarters. Given these fluctuations then, the organizational leaders have striven to develop a level production plan that ensures steady output and steady labor force. The plan sees that "during the second and fourth quarters, excess output goes into inventory; during the first and third quarters, excess demand is met using inventory. The company's policy of level output coupled with seasonal demand patterns means that prior to peak demand periods, excess output is used to build up inventories, which is then drawn down when demand exceeds production capacity during periods of peak production" (case).

The plan is simple and logic, yet it is met with some limitations. A first of these limitations is given by the changing needs of customers and fashion. In this order of ideas, customer demands and fashion trends in furniture might suffer changes from one season to the other. The products in the inventory built might then not comply with the emergent requirements and might as such generate reduced levels of sale and financial losses. Then, another disadvantage is given by price fluctuations: the costs of producing the items might be increased in the inventory building period, but the retail price might have to be reduced during the high demand season. The main benefit of this approach is however that it generates uniformity and stability throughout the entire year.

5. Suggested Changes

The new managerial team Stickley Furniture has achieved major mile stones and proof of this stands the single increase in employees from 20 to more than 1000. Despite the fact that their efforts are to be praised, some changes could occur in their business approach, with the aim of further strengthening the financial and market position of the furniture manufacturer. A first such change would revolve around the introduction of the job shop production process. This would generate increased costs, but these would return as the manufactured items would be sold at higher retail prices. They would be labeled 'limited edition', which has often proven successful in attracting the attention of wealthy consumers.

Then, as the pictures in the case have shown, the organization mostly produces furniture with classic styles and designs. However today, this market faces the risks of becoming a niche sector. In this order of ideas then, it would be advisable for Stickely to approach more modern designers and create new product lines. The new pieces of furniture would be more efficient, lighter and even multifunctional. Technologies would have to be replaced and some training would have to be offered, but the overall costs would be reduced as the modern furniture is easier to produce.

The Case of the Mexican Crazy Quilt

1. Appropriateness of the Project Organization Adoption

The developing features of the international market, amongst which of most notoriety are globalization and market liberalization, allow organizations to expand their operations internationally. Corporations open manufacturing plants in various regions of the globe in order to benefit from the comparative advantages of these regions. Some of the most notable comparative advantages include cheap labor force or an abundance of resources. This was the case of Linderman Industries when they decided to open a subsidiary in Mexico. However, just like any other multinational, Linderman Industries was faced with the challenge of running a complex plant, delegating responsibilities, forming teams and ensuring an adequate transition to a local managerial team. The latter task is an extremely challenging one, and in spite of the large amounts of theoretical information, each company must develop its own plan, based on the unique characteristics of each business. Issues to be taken into consideration when addressing the transition to another managerial team include the employees' resistance to change, the ability to form the proper managerial teams, the technological and training implications of the modifications, the resources required to ensure the project, the timeline or the desired efficiency of the process.

Linderman Industries considered that the best approach to achieving its established desiderates would be the adoption of project organization. This endeavor generated intense turmoil and internal frictions. The appointed Operations Manager Carl Conway faced major challenges in forming the team he desired. The reasons in this sense were highly complex, some generated by a simple resistance to and fear of change, whilst others were based on managerial decisions of not letting the employees move to another division. Conflicts also aroused in terms of decision making, with situations in which the parties shared opposite ideas relative to the approach of an issue. In spite of these issues however, the project was completed with success. "Despite these problems, and many more of a similar nature, Project Mexicano was successful, and the transition to Mexican management was made in just little over two years" (Reeser and Loper, 1978). Ultimately then, it can be affirmed with certainty that the adoption of project organization was an appropriate approach to getting the Mexican subsidiary started.

2. Getting the Desired People

The success of any endeavor is directly dependent on the abilities and efforts of the people involved in the project. This is always true, but even more so when the project has a magnitude such as the one of the transition to another managerial team. Given the high risks and complexity of the issues, it was only natural for project organization, run by operations manager Carl Conway, to be composed from the best staff members the company had produced by that time. However, putting up this team was an extremely challenging task and some subtasks had not led to the desired result.

Getting the desired people raises a crowd of multifaceted questions, whose answer may well determine the composition of the final team. Otherwise put, when selecting the desired people, the team manager has to consider the following issues:

What are the job characteristics and the skills required from the occupant of the position?

Does the individual targeted possess the skills required to do the job?

Is s/he interested and motivated to take on this new chore?

Is s/he able to engage in the project, and if not, what are the elements that restrain him/her? (for instance, the current boss does not want to let them go from their current job)

What are the incentives and perks of becoming engaged in the proposed project?

What is the future of the individual who decides to join the team, provided that the role of the new team is a limited one? Does it offer the employee any security for the future?

The reasons behind the impossibility to get the people Conway wanted are complex, but they should not impact his judgment or enthusiasm. The operations manager has to be able to comprehend that he might be met with refusals and should not take them personally - it's just business. However, Robert Linderman did announce the divisional managers that Conway could ask for some of their people, further more entitling him to select (and get) those he wanted. In this context then, the question that arises refers to the refusals received. Some motivators of this refusal could revolve around the following:

Conway only wanted to get the best employees in the division; divisional managers were not willing to let their best employees leave

Divisional managers might be preparing their subalterns to take on the task of running the division themselves one day

Divisional managers might be reticent to change and might not want to modify the structures of their teams

Personal conflicts - divisional managers might have a personal agenda against the operations manager and will not let their employees leave just to spite him

Divisional managers might fear that the overall performances of their department would decrease with the loss of a pivotal member

3. Turning down the Chance to Project Organization

The previous section has been focused on revealing the reasons which might prevent Conway from getting the people he wanted. These reason were however independent from the targeted individual and depended more on the decisions of the divisional managers currently employing the respective individuals. There are however situations, when, despite the approval of the divisional manager, the employee will refuse to join the team. A relevant example in this instance was constituted by Bert Mill. He was offered the position of managing production planning, and however he did not turn it down on the spot, he later on refused it. After a consultation with his wife, Mill decided he was at a point in his life and career where he did not want to take any risks. or, Operation Mexicano raised the question as to what would the team members do with the completion of the project. Bert Mill declined the offer as his priorities at that time were focused on job security, rather than opportunities for career advancements or other perks the job might have offered.

Considering that the individual is the sole determinant of his participation within the proposed project, his decision will be based on personal characteristics. Older employees are generally more reticent to change and prioritize job stability, whereas younger employees will take the chance of proving their worth and engaging in new tasks. The wage received on the new job, comparative to their current salary is yet another determinant. Also, a major part will be played by the marital status of the individual as their spouse could influence the final decisions. If the young male employee is a risk taker, but expects to become a father, it is less likely that he will trade in job security for unstable career development opportunities. Ultimately then, it cannot be said with certainty how many individual employees would refuse Conway's offer, but it is certain that some would. Among the reasons for the individual refusal, one could pinpoint to: