Inefficiency in Operations Hawkesbury Pty. Ltd.

Question: Discuss about the Inefficiency in Operations for Hawkesbury Pty. Ltd. Answer: Introduction: A manufacturing organization in the fixtures fittings sector named as Hawkesbury Cabinets Pty. Ltd. was commenced by Fung and Mei Chen in Sydney in 2008. Their unique selling proposition is that they manufacture customised kitchen cabinets. By profession, Mei Chen has been qualified as an interior designer and Fung has done masters in making cabinet. In the initial years of their enterprise, they had very diverse customer base. As time passes by, Fung carried forward the duties of production manager and an operations manager, while Mei took the responsibility of financial issues and management of the enterprise. In the growth stage of the company, they began to take orders from builders who want standardised kitchen cabinets of high quality in the building. Like in a batch, they have to manufacture 1-5 kitchens with similar requirements. After some time, the picture shows that major part of sales and revenue is still held by customised cabinets. However, standardised cabinets have a lso become a part of business which is demanding more strict delivery. The issue is that they have just one factory where both standardised as well as customised cabinets are manufactured. Earlier the place was spacious but now it has become quite congested. Although the factory layout is quite impressive with a different block for cutting, assembling, painting, etc. the quality of their finished goods reflect the quality of factory, raw materials and workforce. Since few months back, demand for standardised kitchens has increased rapidly. The problem is that the company is experiencing a rise in work- in- progress inventory and lead time to produce cabinets, especially standardised ones. Because the costs were rising, the company was losing liquidity. Owners believed that they are growing on a good pace but actually the profits were declining. Owners have a concern to re- design their operations and their management so that they can be efficient in rendering services to all of their clients. The main problems of Hawkesbury Pty. Ltd. are evident from its current meagre operational and production policies. Few of them are listed below in detail (Wiendahl, 1995). The first issue that is observed in the situation of this cabinet manufacturing company is that they have a huge pile of inventory blocked as work- in- progress. The company is having a single location where it can manufacture the goods. They are working in two separate lines of business- one is customised cabinets for high esteem clients and the other is standardised cabinets for builders. But they have only one set of equipments. This is the reason that they are facing a stack of work- in- progress inventory. (Padachi, 2006) The above situation has also led to another day- to- day crisis. The two business lines are not complementary to each other or they are not able to be operated hand in hand. Both of them compete with each other for the processing equipments. The company has more demand of standardised cabinetry, but they give priority to customised ones because of greater profit margins. Hence, it is also evident that there are no economies of scale experienced by the company (Hershey Waclawsky, 1996). The root cause of above stated troubles is the erroneous factory layout. They must have two set of machines for both type of cabinets separately. But they have all the things clotted at one place. Everything is jam- packed. This is the reason that furniture has to wait days long to get painted or assembled or delivered. In longer duration, it is going to be a major problem for the company (Abdou Dutta, 1990). Here we come across with another dilemma of late delivery. Timely delivery is one of the major eminences of any manufacturing enterprise. Due to congested processing units, the company is not able to deliver the cabinets to the customers, especially the standardised ones. This is a day- to- day problem of the organization. It will impact medium- term goodwill of the business adversely. The impact may be carried forward to long- term if the problem is not cured urgently (Partanen Haapasalo, 2004). One more facet is evident from the situation and that is of lead time. Lead time refers to the time taken to produce one unit of output. It is counted from the day when raw materials are procured till the day when final output is delivered. Longer the lead time, greater is the cost involved (Gerwin, 1993). If we have a look at the companys financial reports, then it is apparent that the profit margins have significantly reduced. Costs have increased rapidly. The company has lost its liquidity edge. The company has lost its efficiency. Less output with more cost and more resources. All these issues are hindering the companys growth and even survival (Neely, 2008). To conclude this essay on operational management of Hawkesbury, it can be said that introduction of standardised cabinets for individual builders has an adverse impact on the business. The company is losing its operational efficiency. However, it is not off beam to spread ones business in diverse areas. The issue is that the company is not able to handle the operational issues in a competent manner. Companys liquidity, cost- effectiveness and profitability are at stake. Not only that, but there is also a question on companys goodwill because they are not able to fulfil all the orders and the issue of timely delivery is already discussed. It is a high time for the company to resolve these dilemmas as early as possible. If not cured urgently, this problematic situation will be transformed into a serious management crisis. 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