What type of decision must Chad Thomas make daily for his company’s operations to run effectively? Over the long run?

Introduction

The insufficient demand experienced by different companies pushes them to operate below their highest capacity where they find it suitable to change the current policy they adopt in production. Decisions are made regarding the current capacity and how any change in it can affect current and future revenues, quality control, flexibility performance, costs and working capital. In the Chad case, the limited number of workers and reduced dependency on large scale equipment are among the factors behind capacity constraints. However, Chad’s furniture factory sales witnessed a flourishing phase due to the enhancements performed in the standard line of production, but this success was not accomplished without side-effects related to supply chain management. Thomas Chad found himself surrounded by shortage in warehousing place needed for the standard line of production, nevertheless, time scheduling was another problem he faced that may affect how honest will be his business regarding lead time and delivery promises to customers. The overall situation led to reduced profits that are not comparable to what it should be with the current production capacity the business has.

Analysis

What type of decision must Chad Thomas make daily for his company’s operations to run effectively? Over the long run?

Chad faces a situation where he needs to take proper decisions regarding current and future capacity, time scheduling and inventory management. His standard production line requires better time scheduling and he needs to find low cost warehouses. On the long run, Chad must be proactive to the new possibilities related to expansion, for instance, he must ensure having different suppliers to depend on, he also has to find new places for warehousing that are cost effective, he needs to make a plan for hiring new workers at the beginning of every season based on sales forecasts so he can deliver orders on time.

How did sales and marketing affect operations when they began to sell standard pieces to retail outlets?

With the increased sales of standard pieces, Chad business experienced a raise in revenue indexes which can reflect a situation of success. However, this success was coupled with a shortage of capacity needed to meet demand on time, because the business focused on custom line that is used to generate more revenues than the standard line. The rise in sales and marketing inversely affected operations and required time scheduling to deal with the increasing demand.

How has the move to producing standard furniture affected the company’s financial?

In spite of the increased sales in the standard line of production, profits were not high enough regarding the level of revenues the company receives from this line of production. The reason behind profit retract was the additional expenses related to warehousing to accommodate the inventory volumes.

What might Thomas have done differently to avoid some of the problems he now faces?

To avoid these problems in the future Chad needs to achieve cost management techniques that can help him raise profitability and not only revenues. Thomas must set long term plans regarding workers hiring and renting low cost areas for warehousing so he can handle demand for different product lines on time with no delay in delivery.

Conclusion

The current case discusses the issue of better supply chain management and how this can affect delivery time and profitability for any manufacturing company. Chad’s company works in furniture manufacturing and operates two product lines, the standard and the custom lines; with the increased demand for standard line pieces the company witnessed higher levels of revenues, however, the profitability was not high enough, resulting from the expenses incurred for warehouses and the poor time management. This implies the adoption of a long term enhancement strategy considering different issues such as renting low-cost warehousing areas and hiring more employees in order to be capable of delivering orders according to scheduled dead times.