RJCT Task 1
B1.
Budgets and pro forma statements are very important to the success of the simulation. You needed to keep close track of your available funds, and it was also important to be able to predict how your expenditures would affect your success. Budgets are where we allot amounts to be spent in specific areas for the business. Without a budget, it is no doubt that spending would get out of control and the business would soon fail. Without a budget, I would have likely spent way too much on making and advertising my products in the simulation. It was great that each of these areas had a sort of guide when it came to how much was actually a good idea to spend. Pro forma statements are a sort of hypothetical or possible statement of the future based on certain inputs and factors. This was a great help in the simulation because it allows you to project possible future earnings, risks and so on. It also helped gauge whether or not our business in the simulation would be left with enough funds to continue. Both of these tools work hand in hand in an attempt to keep your company out of debt. I used these in the simulation to help me gauge just how much it might be wise to spend on things like expansion, inventory, and so on. I would decide if I had enough money to spend by keeping track of expenses in my budget, and then I would look at my pro forma statement to see what they would predict as the outcome of the quarter. This helped me decide whether or not to spend more, cut back, or maybe even to alter my products to be more profitable.
B2.
a. Just in time is somewhat simple to explain. It is producing just enough product right when you need it. It helps to eliminate excess inventory and the costs associated with that. It also helps you find and fix problems within your system. If something doesn't work, it will be evident when you are relying on everything to work as it should. This allows your business to become more and more efficient. In the simulation, it was important to try and make just enough product so as not to have too much inventory left in stock. It ties up precious capital and costs money to store and keep track of. The problem I faced most of the time was the lack of inventory. This problem can also be very hurtful to a company. It can create bad feelings amongst customers who might just decide to take their business elsewhere. This can result in the loss of sales, and also a loss of good feelings towards a company. This ill will created can be detrimental to the overall success and life of the company. During the actual simulation, there was no real way that you could implement a JIT system. The simulation simply didn't really have a way to do it. If I had been able to put JIT operations in place, the company would have been producing on an as needed basis, rather than just mass producing, and hoping it will be enough inventory and not too much. Had we been doing this, we might have been more aware of the need to expand the production so that we would not end up running out of inventory. I think overall we would have had more satisfied customers, and also a more profitable company. b. Lean operations goes hand in hand with just in time. It is focusing on what the consumer requires from the product you are producing to help eliminate waste. It is having the customer influence, or pull, to determine what is being produced and when. This also pertains to the simulation as it was very important to understand what the customer's needs and wants were so that you could design products to fill those needs. It was also important to understand the customer when it came time to market the products. The advertisements needed to specifically target certain groups to be effective in producing sales for the company. They also needed to be truthful so it was important that the products were up to par. In the simulation, there were three different types of customer groups, and each one expected different things out of their products. Just in time and lean operations would have you get to know your customer and specifically target that customer's needs and wants. There can be no one size fits all product here or your company will fail. If I had been able to implement lean operations into the simulation, I would have put an emphasis on eliminating activities and processes that add no value, and eliminating unnecessary inventories. This would allow us to take up less space with current activities and save time as well. By taking up less space, and only having the necessary components in the work space, and by having this work space set up efficiently, we will also save time on assembly and development. I would also make sure that my company develops good relationships with suppliers so that we could bring them on board with our lean operation strategies. Then, I would make sure that we are always developing and cross training our employees. If they understand more parts of the process as a whole, they may be able to offer suggestions on how to better processes or products.
B3.
Work cells are when employees and their machinery are arranged in such a way that the employees work exclusively on one product (or group of related products). Work cells could be a great idea to implement into the businesses in the simulation. They would be much more beneficial than using the more traditional straight line method. First of all, work cells require less space because of the decrease in work in progress inventory. They also require less raw materials and finished products inventories because the process is more streamlined, requiring less lead time when producing products. This method also allows for better use of available machinery, which will reduce the overall cost of machinery as well. Second, it empowers employees to have greater pride in their workmanship. It will also help employees take a little more personal pride in their work. Because of their total involvement, they may even be able to offer suggestions to improve the products. They may also come up with ideas for new products, or how to cut costs. This is the type of process that would greatly benefit the company in the simulation. When being able to cut down on all types of inventory, decrease production time, and increase employee involvement, production times and costs will decrease significantly. This is directly in line with what the computer company in the simulation was striving for. Because of the decrease in space needed to produce (due mostly to the decrease in various part inventories) we would quite possibly be able to increase production capacity without expanding our actual facility. Had we been using work cells, and been able to have a higher production capacity in our facility, we may have been able to get closer to producing enough units to satisfy our actual demand.
B4.
In the simulation, I was striving to achieve a just in time or lean operation. In other words, I was hoping to be able to produce the amounts of inventory desired by customers, and not too much more than that. It is important to understand that inventory sitting on a shelf costs money, and also ties up money that could be potentially useful in another aspect of your business. During the simulation, my company was not able to fulfill demand in quarter 3, this created customer ill will in quarter 4.There was a demand of 1,047 units for the Master Elite I and a demand of 596 units for the Travel Pro. My company only produced 704 units of the Master Elite I, and 401 units of the Travel Pro. This resulted in a loss of 538 unit sales total. According to the simulation, I did not receive any penalties for this ill will. Overall, my management of inventory within the simulation was somewhat successful. I was operating at my companies current 100% capacity, so this was as close as I could get to the necessary units. Obviously, this would be an indicator that production capacity needs to be increased. If I had the option to do the simulation for a second time, I would have increased the possible capacity of my factories in anticipation of these higher demands. I would have worked at having more safety stock to begin with for the first quarter. When planning for a small overage, I underestimated the popularity of the products I was producing. My company ended up without a buffer, suffered a loss of potential sales, and had to start off the next quarter fresh out of inventory.
B5.
There are several specific continuous improvement programs that could have been used within the simulation to achieve ultimate quality assurance goals. The one I would like to focus on is Benchmarking. Benchmarking involves observing other companies who do some sort of version of what you do, only better. I think I would implement this program in sales, marketing and production. The simulation did a wonderful job of showing us what our competitors were doing with their advertising and how much money they were spending. If the simulation had had a way for us to specifically use benchmarking, it would have been an extremely valuable tool. If we were using benchmarking, we would need to carefully look at our competition. If someone is doing more sales than us, or ranked more highly by the consumers, we must analyze what they are doing differently, and try to hold ourselves up to that example. If we were to compare ourselves to a company that is doing better in a specific area, it would allow us to either imitate or improve on the process, therefore bettering our company. Say there is a company that is dominating a specific market that we want to compete in. We need to directly analyze what they are doing (product type and features, advertising, research, and so on) and compare ourselves to them. If their product has newer features, we better update. If their advertising is more effective, we need to try and figure out why. By comparing ourselves to a company with high standards, we will be forced to raise ours as well. I think that given the chance to repeat the simulation, I would have taken a lot more time to study the competition. In specifics, I think I would have personally paid closer attention to their actual products and the features of these products. I think this would have helped me expand my current product line offerings. I also think that had I used benchmarking, our quality control would have been better, and we would have also been a lot less likely to run out of inventory, as we would have less defects. I would have used it so that we might specifically compare our products, their quality and the responses from consumers. The possibilities for improvement would be continual and nearly limitless.