Background
Coffee Maker Supreme is a worldwide manufacturer of coffee making machines. The company has achieved a global reach in the past few years through its modernized web-based sales approach. The company had manufacturing plants in four different locations across the globe. However, due to the increased demand for specialized and high-quality machines, the firm underwent significant changes.
Analysis
Introduced changes, such as a reduced number of factories, switching from 100% of products being checked to randomized quality inspections, and expansion of product variability and versatility were applied inefficiently. Outsourcing materials and components quality check onto suppliers while leaving quality control of the final product onto workers incurred additional stress. The results of these rapid changes led to severe issues with budget and customers’ satisfaction.
Unfavorable variances are a result of multiple issues co-occurring: yield problems with materials and components, manufacturing overhead expenses due to new product lines, and decreased quality due to the introduced changes in quality control. The total variance between budget and actual operational income is $18.8mn., which might lead to bankruptcy if left unresolved. The adverse outcome from these stockpiled problems, which led to this unsatisfactory number, is severely increased external failure costs and warranty work. Moreover, customer satisfaction regarding all aspects but features experienced a significant drop.
Recommendations
To reduce the amounted negative influences on the renovation process, CMS should start from the foundation of this issue. The supply chain must be reviewed, and the quality and yield of each factory that provides materials and components must be assessed to find weak elements. The number of new products and must be introduced slowly, with each new product thoroughly tested before becoming available for customers. To efficiently do so, the number of products to go through quality control must be lowered slowly from 100% down to a satisfactory percent of randomly picked final goods. CMS should monitor changes in customer satisfaction and the cost of quality throughout this process and inspect underlying reasons for any sudden shifts.