At the end of Chapter 3, read the case study Custom Molds, Inc. ?Answer the topical questions at the end of the case study ?Be thorough and complete in your responses ?Upload your completed document using the digital drop box provided ?All case studies are due by Sunday at 11:59 p. m. ET ?1. Custom Molds has reached a point in its development where its competitive priorities are changing due to ?its traditional fabrication market shrinking and its newer parts manufacturing market is growing. It faces two ?distinct sets of issues requiring different perspectives.
Firstly, day-to-day operational issues, waste and ?delays are mounting up, whilst alongside that, the changing environmental market factors lead to growing ?strategic dissonance (Burgelman & Grove, 1996). ?Major Strategic Issues: The Millers are facing a strategic inflection point (SIP) due to the shrinking size of ?their core market (Burgelman & Grove, 1996). Their core competencies were traditionally fabrication, but ?through development of their capabilities in customisation of molds, they took strategic steps to forward
?vertically integrate into parts manufacture (Prahalad & Hamel, 1990). Through the 1980s, this strategy ?allowed them to grow, but by 1990, their core fabrication market started shrinking (Appendix A – Fig. 2). ?Their customers moved towards stronger strategic supplier relationships, rather than backwards integration. ?Strategic alliances allow customers to rely on their suppliers to develop low cost manufacturing ?competencies ensuring timely delivery of high quality parts. ?
These changes in the external environment impact both the fabrication and the manufacturing sides of the ?business. For fabrication, although the number of orders remained the approximately the same, the market ?for multiple molds was shrinking, so the absolute number fabricated was reducing. Although it can be ?assumed that fabrications orders with high order size would have been discounted, the 18% fall in fabricated ?molds from 722 in 1988 to 591 in 1990 would have significantly impacted revenue generated from the ?fabrication market.
The market for Custom Mold’s core competencies of fabricating molds was shrinking and ?changing the competitive priorities of the company (Appendix A – Fig. 3). ?Simultaneously, manufacturing was experiencing massive growth in the number of manufactured parts ?(Appendix A – Fig. 4).
Although the order numbers remained around the same, changes in the demand ?characteristics of their customers meant that Custom Molds experienced a growth in the number of parts ?manufactured of 143% between 1988 and 1990. Although a direct association between increased parts ?manufactured and revenue cannot be assumed due to bulk discounting, it is clear that Custom.
Molds would ?have experienced revenue growth in the manufacturing segment. The company achieved these levels of ?growth, even though the sales team was specifically focusing on limited quantities. This apparently ?unplanned increase suggests strategic dissonance, since the level of growth of manufacturing department ?appears to be well outside of expressed strategic intent to target limited quantities for Research and ?Development efforts. Appendix A – Fig. 5 shows Porter’s (2008) five forces analysis of the industry.
?Major Operations Issues: On the operational side, due to the vast increase in demand for parts ?manufacture, Custom Molds experienced difficulties meeting quality and delivery objectives. As demand ?characteristics increased for manufacturing parts, there was consequent increase in lead time on parts. The ?theoretical maximum performance of 5000 parts per day from the injection moulding department, shows that ?even the largest order sizes could be completed within a single day.
Furthermore, the annual operating?output of 114850 parts in 1990 from the injection moulding department could be completed in 23 days of ?theoretical optimal operational working time, excluding setup times and other supporting processes.
Thus, ?Custom Molds was suffering from an efficiency issue, rather than a capacity issue. ?Bottlenecks were occurring throughout the manufacturing process and quality issues were increasing. These ?performance issues were likely due to the fact that there was unplanned growth beyond the available ?capacity given the process issues.
There were numerous non-value-adding processes throughout the ?workflow, including significant delays, many inspection steps, storage and transport. Parts were not being ?manufactured at optimum speeds and as pressures of late deliveries and mounting backlogs built up, the ?consequent increased focus on delivery times conflicted with the competitive priority of producing high ?quality, so quality of finished goods suffered. These operational difficulties required process analysis to ?streamline and enhance the workflow to deliver greater value to the customer (Krajewski & Ritzman, 2004).