The Williams 3D printer company was experiencing growing pains early in 2015. Jasper Williams had developed his own unique design for making a 3D printer with this relatively new technology that was growing fairly rapidly in interest and in competitors. He had started by using his engineering skills as an individual inventor, but with some borrowed money he was able to set up a small production facility. His sales the first year were modest, as he made and sold only five printers. Now that he had been in the business for three years, he noticed that near the end of his fiscal year, he was likely to sell more than 20 units. He only had three other people on his management staff: John Johnson, the financial officer, Pamela Lopez, the production manager, and Mary Andrews, the marketing and sales manager. The following conversation took place during their most recent monthly planning meeting, where the key item on the agenda was to look at plans for the next fiscal year:

Jasper: “Mary, I think you mentioned that we are gaining a good reputation in a market that is growing rapidly, given that it is in the early stages of the life cycle. What do you think that means for sales this coming year?”

Mary: “I think our good reputation is going to be a real plus. Not only do several of our original customers plan on buying another printer from us, but they have also told other potential customers that they like our design, and some of those potential customers are likely to buy as well. I think it is very likely that we could double our sales next year to possibly 40 or more printers.”

Pamela: “We need to talk about that—perhaps you should hold back on making sales like that. We are already finding it tough to deliver on promises for this year. We have had a couple of late orders this year, and the only reason we didn’t have more late orders was that our workers agreed to work on some weekends. Problem is, I don’t know how agreeable they will be to that next year. While they like the extra money, they all have families and don’t want to spend that much time away from home.”

Mary: “Look, Pamela, we have worked hard to get the good reputation to increase our sales. What good does it do if we can’t meet the needs of people who want to buy from us? Last I knew, we were in business to make sales and therefore make money. We have a good profit margin on the printers that should make the company very profitable.”

Pamela: “Well the only way we can really expand to sell and make 40 units next year is to hire a lot more people. We possibly could hire a second shift, but our workers are skilled people who are making most of these printers in a somewhat unique design based on the specific needs of the customer. Skilled people like that often have several options as to where to work, and I am pretty sure most would not like to work a second shift where they could not spend evenings with their families. We could try to double the number of workers on the regular day shift, but that would mean duplicating all the current equipment as well. Also, while today we probably have the space in our facility to fit duplicate equipment, if we grow more the following year we will also have to expand our space requirements.”

At this point John Johnson, the financial manager, had to break into the conversation:

John: “We need to think long and hard about all this. After three years we are finally looking a little better financially, but adding a whole lot more people and equipment is going to cost us a lot. Also, you have to keep in mind that the printers have a pretty long lead time to produce, given that each customer specifies at least some unique aspect of design based on their individual needs, and also it takes a fair amount of time to build them. That means we get to see the money from the sale only after many weeks after the order is placed, but in the meantime we have to obtain materials and pay workers for today’s new orders—which are larger in number in this growing market we have. This implies that even though the profit per unit is good, we have a struggle with cash flow. Pamela, what about adding just one or two people as the sales grow, and then add some more later in the year as the sales continue to grow?”

Pamela: “I don’t see how that can help. Adding a duplicate person without additional equipment for them to work with makes no sense, and even if they could do the work, the other people in areas we don’t add would still have a lot more work to do without the time to do it.”

John: “Well we might be able to get another loan to help, but do we really want to do that just at the point we are starting to show some bottom-line profit?”

Jasper: “Okay, I understand each of your perspectives, but arguing back and forth doesn’t help. We need to figure out something to do that we can all agree on. Let’s get to work.”

Assignment

Try to help the management team out. After listing the key issues and characteristics of the environment and the problem, list all the possible alternative approaches they could take to deal with the issues. For each alternative, try to list the pros and cons likely involved. Then select an approach you would recommend and attempt to justify it.