A The following documents are attached:
• Final cumulative balanced scorecard ending with Quarter 4.
• Income Statement from the Quarter 5 performance report, showing quarters 1 through 4 results.
• Balance sheet from the Quarter 5 performance report, showing quarter 1 through 4 results.
B1
A budget is an itemized summary of what a business’s income and expenses will be for a given period of time, while allowing the business during this period to determine if they are able purchases items based on their budget. It’s an important tool that is used by management to help prioritize their spending and manage their money and allow them to identify any wasteful expenditure, respond quickly to any financial changes and to achieve their financial goals. A pro forma statement is a financial projection during a specific time period that businesses can use to make decisions in regards to planning and control and for reporting to external owners, investors and creditors. Management can use them for comparison and analysis under various conditions and it can help minimize the risks that are associated with starting and running a new business. The key to a pro forma statement is to have objective and reliable information in order to accurately project business profits and financial requirements. (Inc., 2013)
In regards to the simulation, the budget and pro forma income statements were used to determine if there was sufficient cash to invest in expanding the plant capacity, along with opening addition sales offices, increasing sales personnel, brands and marketing. In figure 1, plant expansion took place in the last three quarters of the year, while still maintaining a positive cash balance at the end of each quarter; however the lesson learned was that a more aggressive expansion could have taken place while keeping a positive cash balance. It was determined in the fourth quarter that if this aggressive expansion had taken place in the previous two quarters, the ability to meet customer demand would have been better met. Although cash flow remained positive throughout the year, each quarter the forecasted sales fell far short of the actual demand for product as you can see in figure 2, where the total actual sales units of 7,800 was far less than the demand of 14,378 units. This was not only a loss of sales revenue; it had the potential to frustrate new customers. In the fourth quarter when forecasting the number of units to be sold, it was realized that even though there were 16 sales people in three office locations, the production capacity was only 4,875 units even though the potential to sell more was inevitable. WCC Technologies failed in expanding their production facility quicker so it was decided in the fourth quarter after looking at the pro forma statements, to invest $2 million in the expansion of the production facility.

B2a In practice Just-in-time (JIT) and lean operations methods are very similar and the terms are often interchangeable, but regardless what strategy is used, three issues are fundamental to the operation managers; eliminate waste, remove variability or problems, and improve throughput. Just-in-time (JIT) manufacturing is a production model where items are created to meet demand verse creating them in surplus or in advance of their need. The purpose of JIT is to avoid waste that is associated with over production, waiting for materials and having excessive inventory. It’s a production strategy that continuously strives to improve a businesses return on investment while focused on throughput and reducing inventory. If the simulation allowed for JIT, WCC Technologies could have implemented the following:
Eliminate Waste
• An operations manager must make sure that they not produce more than what the customer orders or what could be sold in each quarter, however in regards of the simulation, WCC Technologies didn’t have an issue with overproduction, but the exact opposite, it had stock outs in each production quarter, which in turn was a loss of sales for the company. Figure 2
• Reduce the time to bring in raw materials into the plant, by having close partnerships with suppliers that would either store the raw materials either in their facilities that are close by or on WCC Technologies site to reduce queues and transportation time. This way WCC Technologies would get the material when they needed it without delay and without having to store unused materials or materials that could eventually be obsolete.
• Create a checklist that includes the 5Ss, plus the additional two that US managers tend to add, will keep the WCC Technologies facility in a neat and efficient workplace there by reducing waste: o Sort/segregate the work area to keep what is needed and to remove any items that are not valuable in the production process, which in turn creates space and improves work flow. o Simplify/straighten the work space to help improve work flow and reduce any unnecessary motions. o Shine/sweep keeps the facility clean and avoids clutter. o Standardize the production process to eliminate any variations that could create wasted time and materials. o Sustain/self- discipline by recognizing efforts and to motivate employees to constantly improve processes. o Safety. WCC Technologies would need to implement safety policy and procedures to eliminate cost from injury and workers compensation claims that would also waste production time. o Support/maintenance plans need to be put into place to reduce any problems with equipment and any unplanned production downtime.
Remove Variability or Problems
• WCC Technologies needs to have quality production processes in place to allow employees and the suppliers to produce the scheduled quantities and eliminate late or poor quality computers.
• WCC Technologies needs to make sure they understand what the customer is demanding in the computer market so that they are not producing computers that customers don’t want.
• WCC Technologies production process must have complete quality instructions so that the employees on the production line know exactly what is being produced and have the quality materials to produce them.
Improve Throughput Throughput is a measurement of either time or units that it takes to produce a product or computer, in this case, and deliver it to the consumer. A way for WCC Technologies to increase their throughput is to implement a pull system, which is a process to pull the raw materials through the production process to create the computer to be delivered to the customer when it is being asked for by the customer. To do this a Kanban process is put into place, which is when a type of signal, it could be a card or even a light, indicates when raw materials need to be delivered to a particular station for production.
B2b
Lean operations is a production practice that eliminates waste by focusing on what the customer wants, when they want it, through continuous improvement. This process is motivated by the workflow processes by the “pull” of the customer’s order and also a quality of the JIT strategy in improving the throughput. Lean operations has many of the JIT features, but unlike JIT, it externally focuses on the customer and by understanding what the customer wants, the entire production process can be designed from the customer’s perspective. WCC Technologies needs to incorporate as many of the JIT attributes in the lean operations strategy along with building systems that will help employees produce a more perfect product and develop these employees in training, teamwork and empowerment that will help meet the customer’s needs. One way WCC Technologies can set up their production layout is where there are different sections that assemble different parts on the computer, such as a specific section can put in the motherboard, power supply, memory and each section would have the necessary tools or systems, such as soldering equipment, to assemble these items in the computer housing case. For example, at the start of this production line, the first department would prepare the computer housing case, then it travels to the next department that connects the motherboard, then it’s off to get the power supply connected, and so on until it is completely assembled and ready for packaging and shipping. Each department is going to need different tools and systems to perform their needed task in the production line. WCC Technologies management will need to determine what each stop on the production line will do and what they will need to produce the computer. If the simulation had allowed for WCC Technologies to structure their production with a lean operations process, it’s possible the production capacity of the facility could have produced the needed stocks outs in figure 2 that were missing or even cut expenses, which would have increased their profitability. In addition to making sure each department has the systems or tools they need, WCC Technologies will need to make sure they develop the employees with training not only on their specific skill set, but cross train these employees so that if needed, they could step into a different department and fill a void if one becomes available. The company will also need to create an atmosphere of teamwork by educating the employees on what WCC Technologies’ expectations are for the entire organization and how important their contributions are for meeting these expectations. This cross training not only develops the employee, but it can be a powerful tool when combined with team work, and can allow for employee empowerment when on the production line. For an example, if an employee on the line see’s that a previous component was installed incorrectly or the component has an issue, the employee can stop the line to make sure this is corrected before moving the product down the line, thereby creating a product that the customer wants and expects. WCC Technologies will need to institute an employee recognition program for employees who work toward the team’s goals and process improvements, thereby helping solidify employee commitment. By incorporating employee development, WCC Technologies could have had the potential to produce more customer demanded products in each quarter than what was actually produced in figure 1.
B3
Work cells or a cellular production model is an arrangement in the production facility that organizes people and machines in groups that focus on one single product or group of related products. This type of organization is used when volume calls for special arrangement of machinery and equipment; however there are certain requirements that are needed for this arrangement to be successful. A company needs to identify families of product which are often done through the use of group technology codes, but for this identification, there needs to be a high level of training, along with empowerment of the employees. Each cell should contain its own equipment and resources to produce the required product, to include the ability to test each product. There are several advantages in using work cells over the traditional straight line method:
• Since work cells are tasked by group, they are inspected immediately and corrections are fixed on the spot, whereas the straight line method is not inspected until the end of assemble, which could produce more quality issues.
• In the work cell one person has the skillset to produce the entire product, but in the traditional method you need more people to produce one product because each person is skilled in only one aspect of the production process. Fewer employees would be needed in the work cell method, saving the company on wages.
• Employees can reach more of the work area in a work cell, since most work cells are laid out in a U –shape, however in the traditional method an employee would need to walk some distance to cover the entire work area in some cases, because this method is laid out in a straight line.
• Since the work cell is laid out in a U-shape it is easier to balance the tasks need for production and the added benefit is that employees can assist each other. Additionally, employees could be added when production is increased, whereas the straight line method makes it harder to balance the tasks because the work may not be evenly divided.
• Working in the U-shape, workers can communicate better than the traditional method because the straight line may be a long distance from beginning to end.
Using the work cell in the WCC Technologies facility would enable each work cell to produce one specific model of computer allowing the company to potentially reduce workers and labor cost, raw materials and finished goods inventories, and increase equipment and machinery utilization.
B4
One of the most expensive assets a company can have is inventory, which can be up to 50% of the company’s total invested capital. (Heizer & Render, 2010) A good operations manager must understand that to have good inventory management you need to walk a fine line between reducing costs by reducing inventory and making sure that you have enough inventories so you don’t run out of stock and upset the customer. There are four types of inventories; raw material, work-in process (WIP), maintenance/repair/operating (MROs), and finished goods inventory, however the simulation didn’t allow decisions to be made on the first three inventory types, but decisions on the finished goods inventory was established in regards to safety stock. Safety stock is extra inventory that can be produced on top of the planned production to allow for uneven demand; in essence it’s a buffer. In quarter two you can see in figure 3 that forecasted demand was fairly conservatively at 700 units with a safety stock of 55 units, however sales sold the entire operating capacity production of 780 units, leaving the quarter short by 360 units.
Since there was a negative surplus of inventory at the end of quarter two, the plant expansion had taken place, and the safety stock inventory was increased to 85 units, there still weren’t enough inventories produced, to keep up with demand in quarter three. Figure 4
By quarter four, WCC Technologies had wanted to forecast unit sales much higher than the 4,875 units, which was the plant maximum capacity, but it was not able too, due to the fact that the conservative expansion activities in the previous quarters prevented them from producing more than the 4,875 units. Safety stock was increased in quarter four from quarter three, but it was not enough to meet the demand of 10,367 units, leaving 5,492 units short for the
Although WCC Technologies did not have an issue with excess inventory in any of the quarters and there was safety stock forecasted for each quarter, the problem that transpired and increased during the first year was not expanding the plant capacity fast enough to keep up with the demand, even though there was capital for a more rapid expansion.
B5
Quality is the ability for an organization to produce a product or service that meets the customer needs and expectations. Quality or the lack of quality affects every department in an organization including suppliers and customers and this lack of quality can affect a company’s reputation, have major legal implications, and cause increase loses in future sales and revenue. Employee empowerment involves the employees in all steps of the production process so that the added responsibility and authority is shifted to the lowest levels in the company. It is said that 85% of quality problems have nothing to do with the employees performance, but rather more to do with the materials and the process, so to design equipment and processes that meet high quality standards, it would make sense to involve the employees who work with the systems in the production process to help achieve a quality product. (Heizer & Render, 2010)
No aspect of the production process was available to alter, in regards to the simulation, however if it were, one of the first things WCC Technologies would have done was to design their production culture to allow for employee empowerment. Designing the production process into U-shaped work cells and hiring skilled employees for each production model, would allow for fewer employees to be hired, thereby saving on cost, while giving each of these employees in a work cell the responsibility for producing the particular computer model from beginning to end and through testing. This would enable the work cell to help each other and share ideas on the best possible quality outcome for the model. If there were any issues with materials and/or equipment the model team would be able to communicate these issues immediately to management and together make decisions on said issues as quickly as possible to avoid any quality issues through continued improvements to the production process. A recognition program for employees who have helped improve the production process will help build high morale in the organization. WCC Technologies would need to develop their supervisors and managers to be more open and supportive to moving responsibility to the production employee, thereby helping to solidify the employee empowerment culture.
References
Heizer, J., & Render, B. (2010). Operations Management. In J. Heizer, & B. Render, Operations Management (pp. 190-206, 470-490). Lebanon, IN: Prentice Hall. Retrieved from Person Education: http://wpscms.pearsoncmg.com/wps/media/objects/9447/9673736/heizer10_flash_main.html?page=187
Inc.com. (2013, August 28). Pro-Forma Statments. Retrieved from Inc.com: http://www.inc.com/encyclopedia/pro-forma-statements.html