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Albatross Anchors is a small family owned business that began in 1976. The company has grown exponentially over the years with more than one hundred and thirty employees. As the company grew, their operational issues in the production and administrative area grew as well. The organization has been faced with a lack of updated technology, out dated equipment, an inefficient layout which violates the U.S. safety and environmental standards, and a disorganized administration office. Therefore, production is not running smoothly, especially since in 1989 the company’s owner decided to expand the product line to include fabricated sang hook anchors along with manufacturing the original product line (bell/mushroom anchor). The company only sells on a wholesale level. There are many areas that the owner must plan and consider to improve in order to be successful and sustain its competitive advantage in the market place.
To find solutions for the problems, we begin by performing a process analysis and strategy and evaluate the performance of the current system that is in place. This will be the starting point for which the rest of the analysis and proposal will be based upon. This paper will cover three long and short term solutions to operational changes, and address four operational issues with regards to improve job retention, employee morale, and employee dedication to help the Albatross Anchor operation system improvement.
Carefully review the assignment scenario/case study. From the limited information in the scenario/case study, along with your answers to the unit three written assignment, identify at least three direct and specific long-term and three direct and specific short term operations changes that Albatross Anchor must make to gain a clear and sustainable competitive advantage (provide detailed information to validate and support each recommended change)
Long-Term Operational Changes
Information technology includes all the software, hardware and resources that collect, process, observe and execute information required for different activities of the business. The greater use of IT has been made possible with the advent of the latest technologies and tools which are developed to facilitate all business processes. In manufacturing, use of IT refers to the multitude of business applications and computer technologies. Large wholesale quantities are now scheduled and managed properly with the use of different computer tools. MRP and ERP are important software for manufacturing businesses that help wholesale manufacturers to know what quantities are in hand, how much is needed further and when.
Thus the use of them eliminates the need of storing extra inventories. Therefore, cost of inventory storage is also minimized which helps in overall reduction of operational costs. In addition, the role of IT in dropshipping seems to be more significant. Use of order tracking software and delivery tracking software are an essential part of this business model (Edgar, 2003).
Albatross currently has outdated obsolete machinery that could be the reason that the plant is unsafe and not up to workplace standard with a low level of production. Therefore, the company needs to invest in updated technology to not only speed up the production process effectively and efficiently, but also, to create a safer environment for employees. This will increase the workers’ morale with the belief that the company cares for their safety and ultimately, it will result in higher productivity and more profit with less cost. (02)
Currently, the company has about three to four weeks lead time on exceptionally large bulk orders. This suggests that they most likely are unable to respond to sudden increases in demand of both types of anchors in a short timeframe. Consequently, their slow production in which they have to switch to different machinery for each type of anchor, offers their competitors a chance to supply the market whenever they cannot fulfill sudden increases in demand. In order to be competitive enough and be able to take advantage of sudden rises in demand, Albatross Anchor needs to develop two manufacturing lines. This will ensure each anchor has its own production line. The two lines will also ensure that there is no need for changeovers or switch of equipments which will result in faster production. Also, this will meet sudden demand changes and increase competitiveness. This long term pursuit will effectively reduce the production time required and increase batch production of each anchor model.
In order for the company to take advantage of increases in demand and achieve high operational standards, the building needs a complete renovation. For example, the offices and the plant must be separated and more space given to production areas, since joined areas are cluttered and unsafe. They must Adopt a new layout. A modern plant design and safer working environments will permit faster production. Additionally, the enhancement of safety will reduce cases of potential work injuries, which could be very costly indeed. (O’Toole & Mackenzie, 2011). (03)
Back to speed in production and an efficient operational system and sudden increase change in demand, production requires enough space to store bulk raw materials and a bigger inventory storage capacity. They currently have limited warehousing space for finished products and raw materials, while the plant space is at a premium. They need to expand their storage area for finished products and raw materials rather than moving the product back and forth which is very costly.
Short-Term Operational Changes
(01) Environment and Safety:
The poor set up of the building is very inconvenient and unsafe for the workers. Although, the receiving area is appropriately located in relation to the raw material reception point but the storage area is inappropriately located because after reception the raw materials have to be moved into the storage area, which is at the far end in which they have to move the material across the manufacturing area. This is a waste of time, labor and is costly. They need to move the raw material storage area next to the reception area to avoid having to take it through the manufacturing area. This would lessen interruptions during manufacturing and enhance convenience. Also, the storage area of finished products should be located near the transport point from which inventory is dispatched for transport.
Albatross Anchor must update US safety and environmental standards immediately. According to the US Environmental Protection Agency (2011), the compliance and enforcement division releases the average annual fines collected by the EPA throughout the year. It is imperative that Albatross Anchor update the environmental standards of the plant to bring them up to code. The 2011 annual fees for the EPA as of December 8, 2011 was 3 billion in to clean up hazardous waste and 168 million in fines used to deter pollution (US Environmental Protection Agency, 2011).
(02) Shipping and Receiving:
Currently, Albatross Anchor receiving department has dual activity for shipping and receiving which gives rise to inconvenience when both activities have to be carried out simultaneously. Therefore, they have to set up a different area for each activity in order to enhance greater convenience and speed up the process of receiving and dispatching consignments. Also, setting specific shipping and receiving schedules for international shipping and incoming raw materials will eliminate mistakes and increase efficiency, set predetermined days to ship internationally and to receive incoming raw materials or stagger delivery of the goods.
(03) Administrative Office and Budgeting :
The administrative office needs to be separated from the production area via a new layout and get organized, cleaned up, and processes need to be put into place so this area can run more efficiently. Making changes to this area will eliminate interruptions and increase productivity and make room for better bookkeeping. At last, the company must develop a certain budget to encompass all of the necessary changes in updating the technology, building renovations, marketing, and any other operational expenses. In addition they should set aside a budget for training and educating employees over the updated technology, work safety.
From the list of ten operational issues in the Unit 6 assignment instructions select four operational issues. For each of the four operational issues explain in detail that operational issue will help Albatross Anchor improve; 1) job retention, 2) employee morale, and 3) employee dedication.
Operational Issue One: Cross Training
Training is a major feature of all companies that seek quality improvement. Deming’s 14 points refer to importance of employee education and training. Through proper training, an employee becomes skilled and more valuable to the company. The company gains because there is more flexibility in the workers. Cross training for a company provides a safety measure with more job coverage in the event of employee resignations and absenteeism, and sudden increases in a particular job activity. It is also a personal benefit to the employee.
Employees can also avoid overuse injuries, balance the development between muscle groups, and prevent boredom (Russell & Taylor III, 2011). Employees who have the opportunity to become cross trained are more likely to be more involved with their jobs. They become motivated which boosts their morale. Also, it makes them feel more valuable and appreciated, therefore, they show more dedication, quality and productivity increases that overall results in job retention.
Operational Issue Two: Gain sharing and profit sharing
Gainsharing and profit sharing allow employees to receive a portion of the gains when a company meets their objectives (Russell & Taylor III, 2011). It is a positive situation for both the employee and the company. Employees will feel more empowered because their contribution is making a difference. Employers benefit because profit sharing attracts dedicated employees (Hugh, 1990). Profit sharing and Gainsharing both contribute to employee dedication and increase morale because the performance of the employees is directly related to the financial objectives.
Operational Issue Three: Environmental analysis
Albatross Anchors has problems with the upkeep of the place. The proper training on work cleanliness to prevent health issues. Disposing of scrap instead of just throwing it out they can either recycle it or scrap it for cash. Either option will help keep the place clear from harmful objects. Therefore, an environmental analysis needs to be considered for these issues. If an employee is not working in a good environment whether it be the people that they are working with, or the conditions they are having to work under can lead to disgruntled employees and employees who will not be dedicated and would possibly look for other places to work. Giving good environmental workplaces can help the company all around and help to keep employees at the business and happy.
Operational Issue Four: Technology and automation
A company that has outdated technology and obsolete automation cannot only create an unsafe environment for employees, but also, it reduces the productivity since employees do not give their best effort. If Albatross Anchors would upgrade their technology, it would create a safe and exciting work place to learn the new system which ultimately speeds up the production with higher quality and efficiency. Also, it gives them a sense of accomplishment that can motivate employees to be more dedicated in the work place which can help with retention.
At last, Albatross Anchor needs to increase efficiency in terms of space and time by restructuring its facility to improve ergonomics and ease of flow of materials, products and people. Additionally, it needs to renew its plant so as to meet current standards and improve safety, which is an important element of production.
Hugh, L. (1990). Why profit sharing is important. Retrieved December 17, 2012 from http://www.ehow.com/facts_7175159_profit-sharing-important.html
O’Toole, G. & Mackenzie, L. (2011),. Occupation Analysis in Practice, 2nd edition, John Wiley and Sons
Russell, R. S., & Taylor III, B. W. (2011). Operations Management: Creating Value along the Supply Chain 7th edition. Retrieved December 17, 2012, from Wiley.com: http://bcs.wiley.com/he-bcs/Books?action=index&itemId=0470525908&bcsId=5869 Thomas, E. W. (2003). Role of technology in manufacturing competitiveness. Retrieved December 17, 2012 from eagar.mit.edu/EagarPapers/Eagar200.pdf US Environmental Protection Agency. (2011). Data, Planning and Results. Retrieved December 17, 2012, from http://www.epa.gov/compliance/data/results/annual/index.html