Just-in-time was being adopted by more and more manufacturers to enhance efficiencies In their manufacturing environments. All of these forces led unwelcome to a fundamental improvement. Having determined that achieving efficiencies depended on the plant becoming more customer driven and less production driven, Munchies tried to support changes that drove a customer orientation within the company. The biggest change affected the areas of production, logistics, sales, and customer service. In the new system, the logistics department assumed a coordinating role between the customer and production.
Logistics assumed the role of providing customer service on a day-to-day basis, interacting directly with customers to determine their specific needs and the exact timing of these needs In addition, munchies applies the Activity Based Costing analysis to segment its customer in order to gain the benefit of efficient information about customer. By using this approach, Munchies can take market advantage by better understanding various customers and providing respective products and services of each segment.
All things considered, unwelcome wanted to utilize Its equipment as efficiently as Seibel in order to not only ensure but maximize the return on assets. One of the necessarily competencies that would make Munchies to achieve this desired goal is having strong partnerships along with its supply chain. 1. The increasing set of customer demands In an Increasingly competitive market environment, the requirements from the Industry customers to their suppliers are getting tougher. Unwelcome, as a supplier of chemical products, Is confronted with a set of Increasing demands from its customers.
In order to keep their competitive edge, suppliers are demanding lower ricers for muscleman’s products, however, which should still have excellent quality. Moreover, many of them are striving for Just-in-time deliveries, which mean that munchies has to provide shorter lead times linked with precise delivery times for these goods. Small Just-in-time deliveries vs.. Long production runs For an Industry, which Is traditionally determined by long runs, high capacity utilization and backlogs of customer orders these sets of customer demands are indeed a challenge.
In order to efficiently tackle these problems, a supplier needs at least two important abilities. First, the production must be flexible enough to cope with sudden changes in market demands. Production units should be organized in such a way, that changing product lines can be achieved within a minimum of time. This goal could be achieved by setting up modern plants, which are capable of being set-up quickly, Ana wanly are allocate to spectral products secondly, Instant detailed and accurate information regarding customer’s needs is required.
This can be achieved through intense communication with the customers. If information, such as current inventory levels of customers as well as forecasted sales of customers ere known, the supplier could already react accordingly much in advance. 2. Segmenting the customer base and product mix Segmenting customer: Munchies realized that it was necessary to become more customers driven in order to increase production volume and to provide new products and services to its customers.
It should have a greater understanding of customers’ business needs, their product needs, and their informational requirements. By strategically segmenting its customers and products, Munchies can gain market advantage by better understanding various customers and providing captive products and services that each segment desires most. Munchies segments its customer base by using the Activity Based Costing analysis which segment customer into three classes, A, B, and C. Companies classified as “A” customers are the most profitable ones for the company.
Customer classified as B or C are less profitable consecutively. It is important for the company to look at segments of the market with the goal of understanding what each contributes to the company’s bottom line. With such an understanding, Munchies can devote particular attention to the A class customers, which account for 80% if the profits. But that does not mean that B and C class customers are ignored. Munchies can look at how it can develop products for that bottom portion of the group to provide the greatest value while managing costs.
Product mix: Munchies International produces over half a million tons of oleo chemicals annually for various customers around the globe. Munchies offers a wide product mix that includes polymers, cosmetics, rubbers, textiles, leathers, papers and lubricants. Offering a wide product mix provides an opportunity to increase the amount of goods sold to each customer. However, these reduces can only be offered at a cost: production, distribution and marketing efforts increase as well. Munchies also used the BBC analysis to segment the products it offered into three classes, A , B, and C.
The most profitable customer-product combination occurs when products class A are sold to customer class A. 3. Cooperation of production, sales, and logistics The cooperation of production, sales, and logistics is achieved through logistics serving sales and production serving logistics, which enables customers’ needs to drive the manufacturing process. Logistics and production schedule the most efficient production run to utilize equipments as effectively as possible in order to maximize return on assets.
It is furthermore supported by an upgraded computer control system which enhances technical processes to establish foolproof operations. Moreover, necessary data can be processed to analyze and self-correct problems occurring on the production floor. It also can pinpoint the specific areas where cost savings might be achieved. With customer needs as a top priority, all these three functional areas do everything accordingly, even though each of these functional areas has different roles and individual interests in the system.
Especially, with the new system applied, one department may have to exchange the roles with the other departments. There are a number of ideas that could be implemented, such as: Clearly telling Deterrent roles Ana responsibilities Tort can department In order to reduce or eliminate potential conflicts. Emphasizing that each department understands that they all have one important goal in common, which is proportioning customers’ needs; all tasks need to be accomplished according to customers’ needs.
More meetings and trainings can help to communicate potential conflicts of responsibilities as well as new and potential issues that are probable to occur between different departments. 4. The fundamental Changes (Transformations) The changing of customer demands and the increasing market pressure requires Munchies to continuously provide higher quality of service, reduced prices, development of new products, and improvement of current processes. The objective of all these activities is to increase the return on assets. Refer to appendix 1 for elements of the return on asset. To achieve this goal, several fundamental changes should be made. 1. Adopting Just-in-time: An important internal change is to adopt the Just-in-time TIT) concept to achieve cost savings. SIT includes reducing material cost and utilizing its equipments to reduce the idle time and improve the productivity. 2. Developing a new logistics, production and sales system: This organizational change highly contributes to better apply the SIT concept and increases the company’s efficiency.
In this system, logistics is the coordinator between production and the customers. Sales department focuses more on the market development. . Improving data processing system: Data processing system plays an important role in providing clear information flow and is crucial for production department, to schedule an efficient production run, and for logistics department, to achieve accurate delivery and follow-up customer services. 4.
Conducting personnel changes can contribute to the new strategy: Munchies implemented changes on employee performance measurement and Job description to support other fundamental changes. 5. Forming partnerships with delivers, suppliers even customers: This strategy will better achieve highly understanding and eating customer needs and improve company efficiency to increase the rate of return on assets. 5. Competencies in Muscleman’s supply chain In order to serve customer needs better, forming potential partnerships to facilitate Muscleman’s supply chain management.
On downstream side, Munchies establishes a mutual relationship where both partners focused on the customer. By doing so, having contracts with haulers to ensure the best tariffs were obtained and the best service delivered with a select number of haulers. Also, Munchies generates partnerships with certain customers. The company can obtain precise information of owe each customer was using its products and have the product solution to individual customer problems more efficiently.
Moreover, as for upstream side, Munchies established partnerships with its suppliers with whom they share information such as production schedules, anticipated needs, and critical parameters. Under implementing partnerships, Munchies works with a limited number of customers, suppliers, vendors, and haulers enabled the company to have potential information, develop better production, and coordinate logistic which establish efficiencies in costs and in the production cycle. (See Appendix 2)