Jones and Cousin Ltd has recently advanced to the leader position on the United Kingdom market for fiberscopic medical instruments. This market is shared with the rival company NMC Inc. and is expected to grow quickly over the next years.
The strategy used by the company to establish itself as the main manufacturer on this market seems to be an efficient one, as they started to sell innovative products at low prices and use continuous development to stay on top of the market. It means the development of different new or updated products each year and has the advantage of renewing the product line by using short life cycle products.
Their position is reinforced by the ...view middle of the document...
Another problem is the trend of panic ordering from dealers which happens during new products’ launch. As dealers are aware of Jones and Cousin incapability to fulfill their previous orders for new products, they tend to order more than necessary and hope that they will receive at least part of the order on time. The effect is a rise in demand that makes it hard for the company to supply. This panic ordering effect can be linked with the other problem of delayed delivery and poor service level, as if one of them appears and develop it can lead to an increase of the other one.
In addition to problems related to new products launching the company has to deal with difficulties regarding its entire product line. One major difficulty is the inability to respond quickly to an unexpected high demand, for either stable or new product. Figures using data from the Customer Service show that it takes at least two months for the finished good inventory to be replenished after high demand, showing the lack of flexibility from the production process. The manufacturing process could be responsible for this long period as it is mainly made of a succession of manual operations to assemble the different products.
The forecasting system is an issue for all manufacturing products since the company has problems with matching the demand. Major concern about forecasting is their accuracy as a majority of products’ forecasts don’t match with the real demand. Moreover, the collection of data concerning previous demand information has not always been done and kept for future analysis and improvement. It seems that the impact of forecasting process on performance level has been minimised.
One last issue for the company is the finished goods inventory high level, which is very disappointing for Jones and Cousin as it does not prevent them from poor service level. One recent study has been made by a hired consultant to study this finished goods inventory and the result indicates a possible reducing of 40% without hitting the service level. This possibility has been refused by management because of fearing another delivery performance’s drop but it shows a real problem in the company’s production management.
3. Possible reasons for Jones and Cousin’s problems
The different problems mentioned above are caused by several aspects of the production process. The first one is the forecasting process which is used to define the production planning for the components assembly into bulk instruments. An annual forecast is done first by the Marketing and Finance services and divided into monthly forecasts. Then before each month, adjustments to monthly forecasts are made by the Central Planning service and they define transfer requirement to finished goods inventory for each products. After getting approval, forecast are sent to business units to run the MRP calculation that set weekly production schedules and components part order. As we can see this process is a lengthy and...