Major Facts
The company produced radio frequency identification (RFID) tags for trade and pharmaceutical ventures. The firm centered on innovation and trend diversification in the business sectors. As production lines expanded, the company encountered managerial challenges. Shauna Breen was assigned to evaluate the company’s production cycle and recognize the challenges that emerge on the spot. It is crucial to execute fitting changes since the demand for RFID tags has been forecasted.
Morrison Company markets RFID tags to pharmaceuticals and retailers based on these submissions. RFID demand cuts across security control, contactless installment, chain management, and the pharmaceutical industry. Information filtered from these tags can be moved to the data framework to gather, observe, and screen clients. Morrison’s production strategy is categorized under six phases. The firm’s CEO, Jason Robbins, employed Shauna Breen to uncover critical issues and make recommendations to its management. Shauna’s internal and external operations audit showed that Morrison’s production practices did not align with the firm’s business plan. Breen’s examination of the firm’s stock management and task inventory revealed communication disruptions between workers and customers.
Major Problems
The increase in demand and production of RFID tags stretched the company’s production lines, and the challenges revealed inefficient production practices and management. For example, the company lacked electronic workstations, and handwritten orders amplified production and duplicated operations. There is a mismatch between the machine staff and the inventory department. As a result, the organization incurred losses from damaged products. The subsequent issue is supply deficiencies caused by restricted storage tanks and obsolete management practices. As a result, production managers reinvented its inefficiency as a strategic measurement for production.
Based on the case study, the Morrison franchise had no legitimate correspondence among its laborers and bosses, which hampered the smooth communication of its management and operations. Furthermore, sellers of the company could not continuously give their products on schedule, and there was no particular timetable, which affected the company’s revenue. The operational problems include supplier base, inadequate production materials, inefficient production practices, high production cost, incomplete orders, limited manufacturing capacity, production disruptions created by personalization, packaging delays, product defects, and high return rates.
Capacity Utilization Analysis
A capacity utilization analysis describes areas within the production process that limit or negatively reduce the factory’s potential.
The company procured ten machines that worked eight hours daily based on the analysis.
Based on the assumptions, the daily capacity for 1 machine = 1 x 20,000 units x 8 = 160,000 units
Weekly capacity = 160,000 x 5 = 800,000 units
Monthly capacity = 8,000,000 x 4 = 3,200,000 units
Annual capacity utilization = 3,200,000 x 12 months = 38,400,000 units
The above calculations show the theoretical capacity of the firm’s production lines. However, such analysis does not consider operational challenges or bottlenecks that hamper daily operations. The spreadsheet shows the firm’s annual capacity utilization and consolidation areas. Consequently, the analysis shows under-production due to inadequate floor space and poor management practices. The firm’s actual production lines for pharmaceutical and retail products do not meet the theoretical production capacity. The company cannot meet the forecasted future capacity based on this assumption.
The communication issues between production assistants and department managers influence the company’s capacity utilization (over and under). As a result, inventories are not properly documented to avoid under and overproduction. Based on the information provided, more pharmaceutical products were manufactured in October, March, and April. Consequently, more Retail products were produced in June, November, and December. Product volume change may be due to poor inventory management, storage space, production inefficiencies, and demand fluctuations. Morrison’s future capacity requirements reveal the need for storage expansion to meet its monthly requirements. The results show higher annual demands in 2014 and 2015. Thus, the rise in annual capacity utilization would result in storage expansion and effective management practices to avoid waste and product returns.
Table 1: Personalization Capacity
Daily capacity = 4 x 20000 x 8 = 640,000 units
Weekly capacity = 640,000 x 5 = 3,200,000
Monthly capacity = 3,200,000 x 4 week = 12,800,000
Annual capacity = 12,800,000 x 12 = 153,600,000
Where 1000 labels = 1 roll
Monthly capacity = 12,800,000 / 1000 = 12,800 rolls
The capacity for personalization exceeded the monthly target for December, which explains communications challenges between employees and production managers. The company should consider overall its management practices to overcome its challenges.
The company does not have the capacity for personalization under the existing structures.
The Production Process
Morrison’s production process consists of six steps for both pharmaceutical and retail tags. The production processes include inspection and inventory, parts selection, inlay testing, tag assembly, personalization, and wrapping. Consequently, the firm’s pharmaceutical lines utilize the large-batch process to minimize machine requirements, whiles its retail line uses the continuous-line procedure.
Differences in the Production Lines
Morrison’s production lines can be observed using the 4V analysis, including volume, variety, variation, and visibility. Under its volume analysis, the pharmaceutical lines have higher demand and monthly production than its retail lines. For example, the company produced 14,419 tags for pharmaceutical industries and 4,409 RFID for retail customers. The figures show a higher demand by one section of the firm’s target market. Consequently, retail tags require customized shapes and sizes compared to pharmaceutical product lines. The pharmaceutical product line has less competition, higher dependent industries, and annual revenue. However, the retail product line has higher competition, smaller dependent units, and requires customized or personalized tags.
Table 2: Product Characteristics
Competitive Priorities
The firm’s competitive priorities for each product line depend on cost, time, flexibility, and quality. Based on the analysis, cost, innovation, and time should be assigned to the pharmaceutical product line to improve production control and monitor RFID tags. Flexibility, quality, and time should be assigned to the retail product line to improve customer requirements within the company.
Table 3: Competitive Priorities
There is a mismatch between Morrison’s production lines and product characteristics, and pharmaceutical and retail tags are separated by competitive priorities, which explain the mismatch. The director noted the challenge of using the same production process for two different product lines.
Recommendations
The Morrison case study offers enormous difficulties that can be addressed by reorganizing the firm’s production and management framework. Concerning proposals, the management must decrease its product choices in the retail line, which will moderate the cost of materials and stock inventory. Furthermore, a shift to less and more normalized products is required because regularization or product uniformity lowers the cost of production. To mitigate storage challenges, the management should divide product lines between standard and customized tags. Design standardization would enhance product categorization and order frequency. Consequently, the production lines favor a continuous flow process, which improves supply distributions. Products should be completed within each batch process to avoid high return rates.
Since the two product lines suggest different competitive needs, operational suggestions should differ. Besides, it is fundamental to acquaint fitting changes with the working strategies. While it is sensible to utilize the EPR framework, appropriate procedures should be enforced within the inventory department. The submissions and reviews show that appropriate management practices must revamp the ailing production department. The management should increase its production capacity, collaborate with reliable suppliers, apply appropriate inventory forecasts, reorganize its order department, strengthen its pharmaceutical line, adopt the EPR system, and hire qualified experts to manage production plants. Consequently, the firm must acquire additional space to accommodate a large stock inventory and labels. The company should enact a delay policy, communication strategy, reward strategy, and scheduling framework to mitigate the challenges in each production line. Under its production strategy, the management should build a model of smart tags, replace defective tag tools, appoint experts to build machine parts and update its aggregate production plan to tackle consumer demands.