Morrison Companys Supply Chain Management

NB: We do not resell your papers. Upon ordering, we do an original paper exclusively for you.

NB: All your data is kept safe from the public.

Table of Contents

Major Facts
Major Problems
Questions
Recommendations

Major Facts

The Morrison Company is a developer and manufacturer of radio frequency identification (RFID) tags for retail and pharmaceutical industries. Established in 2003, the firm focused on emerging technology to enter the markets. As production has started increasing, the company has had to deal with various problems. As the situation is getting worse, Shauna Breen becomes a Director of Operations at the Morrison Company. The principal task for her is to gain insight into the firms production process to identify those difficulties that arise on the spot. It is necessary to implement appropriate changes because the demand for RFID tags is going to expand, which will both aggravate the existing problems and bring new ones. Thus, a thorough analysis will help Breen develop a plan to address both current and future issues.

Major Problems

Even though the company is said to be relatively successful in the demand for its products, it does not mean that there are no severe operations problems. The supply shortage is one of the main issues for the Morrison Company. According to Breen, this shortage results in ineffective production controls and inefficiencies. Furthermore, as any lack cannot be planned, it is challenging for supervisors to specify a task for workers, while the latter cannot perform their assignments correctly and on time. As a result, the firm tends to deal with 10-week delays.

The second problem of production inefficiencies is closely connected with the aspect above. Thus, stock-outs usually mean that it is possible to complete some orders only partially. After that, these orders are either left on the factory floor or moved on to the packing area. It means that workers need more time and more separate operations to be performed to complete a single order. In addition to that, the company sometimes faces order returns due to the wrong content.

Finally, limited space is another principal problem that Breen should address to increase the companys performance. As soon as the demand is going to become higher, it is necessary to expand the production process, and it is a difficult task for the Morrison Company. The information above proves that all these problems are interconnected. Supply shortages make it impossible to complete orders on time, while the storage of partially completed orders aggravates the situations with the limited space. Thus, a comprehensive approach is required to address these and other emerging issues.

Questions

The Production Process

At the Morrison Company, the production process consists of six steps. They are (1) receiving, inspection, and inventory, (2) parts picking, (3) inlay fabrication and testing, (4) tag assembly and testing, (5) personalization, (6) testing. Each of these steps implies specific requirements and appropriate responsible persons. Even though some of them are simple processes, like receiving and parts picking, others are complex. For example, inlay fabrication is a precise process; even an extra millimeter results in severe problems. Thus, the two product lines are manufactured according to the same scheme above.

The differences in product lines

As has been mentioned, the Morrison Company specializes in the production of RFID tags for the retail and pharmaceutical industries. Even though these items perform the same functions in both of them, these product lines introduce significant differences for the manufacturer. In this case, the main problem is that the two are manufactured in the same production facility and using the same strategy. Volume represents the main difference between the product lines under analysis. When it is $36mm in the pharmaceutical industry, it is only $12mm in the retail one. Some discrepancies also refer to the market sizes of the lines; the retail sector offers a smaller size. Furthermore, there are inequalities between the product lines as to their labor contents, materials contents, rates of product changes, and others. In addition to that, the pharmaceutical segment impresses with a higher price per unit, and it manifests itself in different net profit margins. If it is 17% for the pharmaceuticals, the retail industry reckons on 2% only. Thus, the product lines under consideration imply many significant differences.

The competitive priorities of each product line

The information above makes it clear that the two product lines have various competitive priorities. On the one hand, the pharmaceutical industry pays more attention to superior performance and reliability. As soon as the products should meet strict government heal/life safety standards, cost is not a significant factor. That is why these products are of top quality, but customers are ready to order them even though they are expensive. On the other hand, the retail industry intensifies the role of price, since it is the leading competitive priority for this product line. As soon as this market segment has many competitors, the cost is one of the principal elements to compete with them. However, one should note that a chase for low prices means that the products will be of poor quality. In this case, the desired cost is achieved thanks to the atomization of the production process.

The match between the product characteristics and the processes at Morrison Company

Breen notes that there is a significant mismatch between the product characteristics and the production processes. According to the Director of Operations, the principal problem is that the product lines with different competitive priorities are manufactured in the same facility. This fact explains the great success of the pharmaceutical industry and relatively weak results in the retail domain. Various strategic approaches are required for the two product lines. Thus, it is necessary to take appropriate steps to solve existing problems.

Recommendations

The Morrison Company case offers significant challenges that can be solved structurally and implying infrastructure steps. As for infrastructure recommendations, Breen can utilize four of them. Firstly, it is necessary to decrease the number of options in the retail product line. This decision will reduce the amount of raw materials inventory. Secondly, a shift to fewer and more standardized products is required, because standardization makes it possible to achieve a lower cost that is the primary competitive priority in this industry. Furthermore, this competitive priority forces the company to prefer continuous-flow production processes. Thirdly, a larger amount of safety stock will be necessary to solve supply shortages. Finally, it is reasonable to eliminate the practice of leaving partially completed orders wait because they are frequently sent incomplete to a customer. This step will significantly decrease the return rate for the company.

Since the two product lines imply various competitive priorities, structural recommendations should be different for each of them. Firstly, the limited space of the company makes it necessary to relocate one of the industries, and retail one seems to benefit more from this relocation because this product line needs improvements. Secondly, it is essential to introduce appropriate changes to the operating policies. While it is reasonable to use an MRP system to replace hand-written production lists in the two industries, different steps can be taken as to inventory. Thus, the pharmaceutical industry should decrease the volumes of stock to unload the space. The opposite strategy should be applied to the retail segment, where increased volumes of inventory will help avoid supply shortages. Finally, Breed does not exclude an opportunity that some additional engineering adjustments will be helpful for both pharmaceutical and retail product lines.

Click Here To Order Now!