Question:

Evaluate the company's position with regard to distribution and sales to customers, in the light of the competitive strategy. Suggest improvements to the way products are delivered from the factory to the customer.

Answer of above question related to below casestudy

Case Study - Filing Cabinets Ltd

FCL is a family business making office furniture. The company makes a wide range of filing cabinets with different numbers of drawers, different colours, and several different styles, which account for 40% of sales. They also make related office furniture such as lockers, tambour cabinets and pedestal cabinets. Most of the products are sold complete, although some are supplied in kit form, especially for export. The company owns sales companies in the Netherlands and in France.

The company mainly sells to a small number of distributors who retail office equipment through websites. FCL pays for advertising space in the websites, and pays the costs of special promotions such as incentives to sales staff. FCL operates a fleet of lorries that are used to deliver to the regional centres, and the distributors handle local deliveries. The distributors hold stocks of some items in a limited range of colours.

The company operates from a single factory and office complex, employing approximately 400 people. Of these, around 320 work in the factory. There are two production engineers. The factory produces over 30,000 individual parts per day. Annual turnover is approximately 34m, with a stock level of around 1.5m. In recent years, market pressure from overseas producers with acceptable quality products in limited ranges has forced prices and profit downwards and losses have been made. In response to this the company's strategy is to focus on cost together with offering a wide range of different products for all kinds of offices, with a wide range of colours and quick delivery.

Orders are typically for sets of items all in one colour for one customer such as when re-fitting premises. While filing cabinets are a big seller the orders may include varying numbers of other items. Distributors will also make orders for a wide variety of different items in different colours so that they have examples available in their showrooms. This means it is hard to be sure what orders to expect, even though certain products (3 or 4 drawer cabinets) are the biggest seller. Some colours are much more popular than others but having a wide range of colours is felt to be a competitive factor.

Manufacturing

All the products are made entirely from sheet steel, except for ancillary parts such as rubber feet, locks, plastic roller shutters, etc., which are purchased. All products follow a broadly similar manufacturing route. This involves material preparation, part manufacture, welding, painting, assembly and finally loading on the lorry.

Material preparation

A slitter-rewinder cuts the sheet steel to the standard width used for stamping most parts.

Part manufacture

Parts are made in the machine shop. Most items will need to visit a variety of digitally controlled punch presses, edge rollers and manual folding presses, which need setting for

each different job. Some work has been done to reduce set-up times through the use of pre-set tools and direct access to software from a central computer.

Welding

Spot welding is used to join parts where necessary. Access to the welding bay can be difficult as there are often large numbers of parts waiting. Welding can sometimes be a problem if one of the three welders is away.

Painting

All parts pass through a continuous dry powder coating process in which components are sprayed and then conveyed through an oven. The spray booth is sometimes unavailable due to nozzle blockages and when changing from one colour to another.

Parts Area

Finished parts are collected in the parts area until there is a complete set that can go to Assembly. The aim is not to hold stocks of parts, but there can be a lot of items here, as they constantly arrive from the powder coating in various sized batches of different colours of each item. Parts supervisors use computer terminals to check in each batch, and to check out each set sent to assembly, meaning that the computer should always know the quantities of items in the parts area. The area used for parts is large and growing, with parts often being stacked in offices and gangways.

Assembly

Painted parts are fitted together and packed as finished products for loading. The design of most items allows them to lock together with a minimum of extra components. Once the bulky products are assembled it causes difficulties if they have to be stored before loading. When products are stacked up it can cause damage and safety issues.

Loading

Each lorry-load of products is loaded in the correct (reverse) sequence to allow unloading at each of its drops. Sometimes parts can be late, meaning that a delivery has to go without some items, or wait and depart late. This has caused difficulties with distributors who sometimes prefer to deal with competitors, and drivers who can end up working unexpected long and unsocial hours.

Planning and Management

The company uses an MRP system. This processes all orders and produces a work list for each machine for each day. However, it is often impossible to process the work on the list, if the material has not arrived from the previous stage, and operations rarely happen at the intended time or in the correct sequence. This can cause delays when products cannot be assembled and must wait for parts to be produced. In some cases, parts are available but in the wrong colours. This can arise because many parts, such as drawer parts, are used in

different quantities for different products. The stock levels for these items are often inaccurate which may be because some parts are similar and sometimes colours such as mimosa and jonquil can be confused. A lot of effort is put into expediting parts and determining which products are ready for assembly.