Delivery, Quality and Flexibility

1. What objective should be adopted in manufacturing with respect to cost, delivery, quality and flexibility?

a) Cost

- Shipper’s current products are currently based on customer designed, therefore allowing shipper to pass most of the production cost to the customer. The cost is charge based on the products design requested.

- In his new business strategy, Wallace envisioned a gradual shift towards products that are sold to multiple customers and manufactured on a volume basis. The new strategy could affect APD’s profits. Shipper will likely have competitors in the market as they move towards higher volume continuous products and they will have to compete not only in term of quality but also the price. When there are many company producing same products, customer have the power to choose and decide as there are many options for them.

- One key objective to keep the costs low is to be efficient as possible throughout the manufacturing process. Shipper has to minimize wastage in order to make the most efficient use of scarce resources and therefore, save cost.

b) Delivery

- Wallace felt that the shift in business strategy might affect Shipper’s production and inventory control area. As the business grows, Shipper will need to cut their delivery time down and better predict inventory needs. They must decide on how much inventory is needed from raw materials to finished goods. Thus, it will allow the best delivery timeframes, better flexibility to customer demand and the minimizing of costs.

c) Quality

- As part of Shipper’s new business strategy , James Wallace has decided that Advance Products Division (APD) will continue to do what is has historically done best, that is respond to individual customer design requirements and tailor new products to unique

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