Designing and Manufacturing Hawkesbury Cabinet Pty Ltd

Question: Discuss about the Designing and Manufacturing for Hawkesbury Cabinet Pty Ltd. Answer: Introduction Hawkesbury Cabinet Pty Ltd was founded in Mulgrave, Sydney in 2008. It started with designing and manufacturing the custom-built kitchen cabinetry to serve the needs of growing Chinese community in Hawkesbury. Hawkesbury Cabinet provides very high quality cabinets having top quality raw material by utilizing the skills of its skilled craftsmen. As the company evolved over a period of time, its reputation increases and company began to receive more and more orders. Gradually, Hawkesbury also got the attention of Builders who generally requires large number of standard kitchen cabinets. Hawkesbury signed contracts for making standard kitchen cabinets also. The problem started when the Hawkesbury started receiving large number of orders from builders line of kitchens as the factory layout is not designed for manufacturing large number of standard kitchen cabinets. Also, the client builders are more stringent about their requirements, which put extra pressure on the Hawkesbury cabinet. T he margin was also less in manufacturing the standard kitchen cabinets. Overall, the huge flow of orders has made the entire factory to work at its capacity and it becomes increasingly difficult for Hawkesbury cabinet to manage the incoming orders, which result in increase in raw material, work in process and finished goods inventory (Tjahjono et al., 2013). Increase in inventory is putting pressure on the balance sheet of the company and also giving rise to numerous other issues. All this can also effect the reputation of the Hawkesbury along with the quality of finished goods delivered to the customers provided these issues are not resolved on time. It is very important for the company to introspect and understand its set of problems before taking any actions in a hurry. Such phases are part of all the organizations when they are increasing their sales (Lambert Schwieterman, 2012). The objective of this essay is to discuss about the current production systems and processes used b y the organizations and how their existing systems were challenged when organization started receive large orders from builders for making Standard kitchen cabinet and the impact of all these issues on the financials of the company. Analysis The organization was started at a small scale with an aim to supply customized kitchen cabinets. Customized products require process layouts and the factory is setup in a process layout manner having shapers and routes in one section, saws and cutting tables in another section and lathes machines and other less used machines in another section. This layout is well designed for managing customized orders however it will not work efficiently for standard products. However, now the organization is receiving large number of orders for standard kitchen cabinets, which is not supported efficiently by existing layout. Also Currently, Hawkesbury is not scheduling the various orders intelligently leading to increase in raw material, work in process and finished goods inventory. They are using the profit margins as the only criteria, which is impacting the lead-time of the standard cabinets. For instance, Consider that standard order is about to complete but Hawkesbury receives one urgent order for manufacturing of customized kitchen cabinetry. As per their scheduling algorithm, the preference will be given to customized kitchen cabinetry because of higher profit margins. The problem with this approach is that work in process inventory will continue to rise and the organization has to bear the holding costs and other associated costs of the increasing inventory (Brigham, Ecker, Pesch, Schmidt, Weglarz, 2013). Already, Hawkesbury has rented one warehouse to keep the increase inventories. There is no proper mechanism/software to promise the delivery dates to the customers Delivery dates should be aligned with the scheduling algorithm (Dresner et al., 2012). If the organization is keep scheduling random jobs based on profit margins, the delivery of the standard cabinets will be delayed. There can be a risk to the credibility and reputation of the company. All the kitchen cabinets are processed on same set of machines by same skilled craftsmen so as to ensure the quality of cabinets. The margins in the standard items are less because they do not require to be processed by the skills craftsmen, as they are standard ones. If the Hawkesbury are using its skilled labor for processing standard kitchen cabinets, then it is not utilizing the full potential of its skilled craftsmen. Standard cabinets can be processed fully by less skilled labor also. Thus, the effect of orders from builders has led to under utilization of the staff which may cause the turnover among the employees (Mitchell Zatrick, 2015). There are also no formal roles and responsibilities and founding members of the organization takes managerial position and also comfortable in their new roles. But as the organizations is growing at a next level, there will be more and more responsibilities will come and voluntarily addressing the additional responsibility is not advisable (Munoz-Bullon, BUeno Vos-Saz, 2015). The effect of the move to manufacture the standard kitchen cabinets can have the negative impact on the financials of the organizations provided these issues remain unsolved, the probability of which is very less. There will be pressure on balance sheet as more money is invested in inventory and is not converted into sales while getting spent into buying additional raw material. This all will cause shortage of working capital (Brigham Ehrhardt, 2013). The situation will further be worsened before it improves. However, once all these issues will be resolved, balance sheet will improve a lot. Overall, the move to manufacture standard kitchen will be a very good decision in a long term. This will help the organization to increase its revenue by increasing its market share and targeting both standard and custom kitchen cabinets. Conclusion This essay discussed about the existing systems and processes of Hawkesbury and the key issues arises when they started receiving huge orders for standard kitchen cabinets. Those issues have affected the balance sheet of the company. Every organization faces these issues when they are growing aggressively; there is nothing uncommon about it. Successful startup, which is now established brands, also faced these issues once (Wasserman, 2012). And once Hawkesbury overcomes these issues, it will be seeing a huge growth. This essay does not focused on solving the issues but it focused deeply on the issues and how one issue is leading to another issue. It is important that the organization should take a balanced approach while dealing with both types of cabinets. The company should use the operations management principle in way that the optimization between both the designs could be achieved. The increased demand of standard cabinets should definitely be an integral part of the strategy. H owever, it should not mean that the company use compromise the customized cabinet segments. References BÅ‚aÃ…Â ¼ewicz, J., Ecker, K. H., Pesch, E., Schmidt, G., Weglarz, J. (2013).Scheduling computer and manufacturing processes. Springer Science Business Media. Brigham, E. F., Ehrhardt, M. C. (2013).Financial management: Theory practice. Cengage Learning. Mitchell, M., Zatzick, C. D. (2015). Skill underutilization and collective turnover in a professional service firm.Journal of Management Development,34(7), 787-802. 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