Subject: Growing Pains at Chad’s Creative Concepts
Chad’s Creative Concepts began as a manufacturer of high-quality, custom-made wooden furniture. The client base has been the vacation cabin residents surrounding its Sandusky, Ohio location. The company grew successful selling its custom furniture and eventually as sales increased, the sales force began selling to retailers. The furniture demanded by retailers is standardized, price sensitive, and requires faster delivery times. Sales of both lines of furniture are doing well, but the manufacturing facility is facing some problems. The standard line is competing for processing time on the same equipment as the custom line, which is resulting in unfinished inventory laying around the facility. The plant has run out of excess capacity and must rent expensive warehouse space. Chad must determine how to best meet the competitive priorities of both of his furniture lines in order to manage his operations most successfully.
Gaps in Chad’s Operations Strategy
The initiative taken by the sales force to sell to retailers directly impacted the operations at the production facility. Sales and marketing of the standard furniture line put constraints on the staff and equipment at the plant, as they tried to meet the demands of both of the furniture lines. Sales and marketing also impact the delivery times imposed on the processing team. A new production schedule was not implemented with the addition of the standard line. Instead, the custom line receives priority while the standard line is often left waiting at various points in the process. The move to produce standard furniture has left profits lacking. While the company and sales of the standard line continue to grow, the costs of producing the standard line are also increasing. The bulk of volume and sales are still in custom furniture. Money is being held in inventory as parts wait to be
References: Krajewski, L., Malhotra, M., &Ritzman, L. (2013). Chad’s Creative Concepts. Operations Management Process and Supply Chains (pp. 29-30). Upper Saddle River, NJ: Prentice Hall. Appendix