A family business that started in 1976, Albatross Anchors has grown causing some issues with administration and production over the past few years. At this current time, technology is outdated, not in compliance with US Safety and Environmental standards and extremely unorganized. There is a lack of space due to growth; consequently, it is now hindering the functionality of process. Albatross only sells at wholesale; therefore, bulk quantities are often ordered without the space to sustain the product. Implementing the changes suggested by KU Consulting will enable Albatross Anchors to once again, engage competitively and increase their overall profit.
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
(01) One of the biggest factors that are hindering the profit of Albatross Anchors is the outdated technology. The technology not only slows down the process to manufacture but also to purchase the supplies needed to in production and distribution of the anchors. Upgrading to a new technologically sound system such as Just-in-Time (JIT) which is used by many large corporations such as Harley Davidson, Toyota, Ford, General motors would benefit Albatross Anchors because “under ideal conditions a company operating at JIT manufacturing system would purchase only enough materials each day to meet that days needs. Moreover, the company would have no goods still in process at the end of the day, and all goods completed during the day would have been shipped immediately to customers.
As this sequence suggests, ‘just-in-time’ means that raw materials are received just in time to go into production, manufacturing parts are completed just in time to be assembled into products, and products are completed just in time to be shipped to customers” (Accounting for Management, 2012, p.2). By upgrading the technology, the changes will affect not only the company as a whole but the quicker availability for the customers of Albatross Anchors because of the correct amounts of raw materials that will be ready for manufacturing upon orders placed. (02) The purchase or lease of new machinery would be vital to eliminating the 36 hour switch between the different products that are manufactured.
Using two pieces of equipment simultaneously without having to wait the extended time between manufacturing one type of anchor to the other as the current situation would possibly double the output; therefore, increasing the profit significantly. Purchasing or leasing new machinery is usually quite costly and with a tight budget this could seem out of the realm of possibility; however, Business Equipment - Section 179 Expensing Allowance states, “smaller business owners who acquire [lease] equipment for their business: machinery, computers, software, and other tangible goods, to immediately write off the full price of the equipment rather than depreciating them over several years. Businesses that spend less than $560,000 a year on qualified equipment may write-off up to $139,000”(First Capital Equipment Leasing Corp, 1985-2013, p.1).
With the possibility of being able to write off the full amount of the equipment, would allow business to pick back up without the expenses being unmanageable. (03) With the new equipment, it would be necessary to create a new manufacturing area. Although space is already limited, which will be corrected in the short term goals, allowing the products from foundry to go to the correct machine to produce the different types of anchors, the process will speed up and the output increase. The ability to produce more anchors in shorter periods of time will benefit the company and add the competitive edge that Albatross Anchors is currently lacking.
Short-Term Operational Changes (01) With so many outdated processes, Albatross Anchors is no longer in compliance with the US Safety and Environmental standards set forth by OSHA. In order to protect the employees from injury as well as the company from possibly lawsuits put forth by individuals working there and fines by OSHA, each working area in the factory needs to be evaluated and updated to comply with governmental standards. Within the machinery area, personal protective equipment (PPE) needs to be worn. OSHA Title 29 CFR 1910.132(d)(1) states, “The employer shall assess the workplace to determine if hazards are present, or are likely to be present, which necessitate the use of personal protective equipment (PPE).
If such hazards are present, or likely to be present, the employer shall: i) Select, and have each affected employee use, the types of PPE that will protect the affected employee from the hazards identified in the hazard assessment; ii) Communicate selection decisions to each affected employee; and, iii) Select PPE that properly fits each affected employee” (Manufacturing-Safety, n.d., p.1). (02) The administration office needs to be cleaned and organized. With the office are being dingy and not running efficiently, some rearranging, cleaning and restructuring needs to happen. In order for the business to grow and be able to produce and sell more anchors, the administrative offices will need to get organized and run smoothly before the warehouse can increase their production.
The business is going to become competitive in the market but will be held behind if the administrative side such as payables and receivables stays as is or is not able to sustain the increase. (03) The warehouse needs temporary realignment and adjustment while the company is preparing to lease the new anchor machinery. In order to increase efficiently, the different stations within the warehouse need to rearrange because as of current, there is not a constant flow from one station to the next. By adjusting the warehouse to a more smooth flow, this will reduce the time for total production; therefore, more orders can be produced at a quicker rate, ultimately increase total profit. Also, allotted times for different departments need to be set. Receiving needs to be running during the morning hours, while manufacturing and shipping should be during the midday to evening hours to ensure that all orders prepared are out by that evening.
Question Two 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: With so much focus on getting up to the US Safety and Environmental Standards, ergonomics is the top issue that must be addressed. “Ergonomics is the science of fitting workplace conditions and job demands to the capabilities of the working population” (OSHA, n.d., p.1). In other words, the ability to have employees do their job successfully without putting them in danger or physical injury from intensity, frequency or duration. Employees that feel that their employers care for their well-being not only work more efficient but also are willing to stay due to satisfaction of the job.
Recognizing the possible hazards that may be present for the employees and correcting them is a sure way to pay the employees the respect they deserve as well as saving the company in the possibility of multiple lawsuits. Operational Issue Two: Technology is the key to today’s society. As the world advances, so much the companies that works within. Albatross Anchors is trying to improve and get back to a competitive company; therefore, online ordering for customers must be created as well as the purchasing department must have access to the best possible bargains for raw material. Russell & Taylor (2011) state, “technology advances have made it possible for middle-tier companies to establish a global presence” (p.464).
When Albatross Anchors becomes a successful company again, the employees will feel a better since of security and in return will be more dedicated to their work knowing they are making a difference instead of watching the company diminish. The use of technology will be one of the key aspects that bring the competitive edge back to Albatross Anchors and can virtually make them globally known. Operational Issue Three: Worker analysis is another issue that must be addressed when trying to determine what is in the best interest of Albatross Anchors. With lacking technology, at present, the processes are slower than they should be; therefore there is some leeway with time for the employees.
By doing a worker analysis, Human Resources would lay out specific job descriptions and classification for each employee. Having the ability to see the design of each job, evaluations can be done that would help lessen overtime and increase productivity. The employees that are working efficiently would be correctly compensated; whereas, the freeloading workers could be held to a more stringent plan (Dierdorff & Morgeson, 2011, p.1). The workers that are dedicated to Albatross Anchors will stay and make for a much happier result which in turn increases productivity.
Operational Issue Four: Cross training in the final of the operational issues that can really make or break Albatross Anchors. After issue three is addressed and getting the whole teams worker analysis to place and reassign employees, cross training the employees in different areas is imperative. When employees understand the jobs around them, it gives the person a better sense of how to approach one’s own job. “Cross-training leverages the company's talent within its current workforce.
In other words, it helps employees acquire new skills instead of spending money to recruit candidates from the outside. Shifting employee roles and assigning duties to an existing workforce is always less costly than conducting an external recruitment campaign. For small businesses, the cost savings may be reason enough to justify an in-house cross-training program” (Mayhew, 2013, p.1). Employees have a less likely chance to get bored with their jobs when they know other aspects. Also, an appreciation for what another person does within the company makes for higher morale over all employees.
Although Albatross Anchors is a family run business, there is plenty of room for growth and potential which will bring the competitive edge back to the company. The implementation of the short term and long term goals such as rearranging the warehouse and administration office, new technology and machinery will increase production and create an overall higher morale for the employees of Albatross Anchors. Once the company is within compliance with US Safety and Environmental standards including the use of PPE and following ergonomics, the efficiency of not only the business but of employees with significantly surge bringing Albatross Anchors back to that competitive edge where they belong.