Hi-pro performance is in a manufacturing crisis as each of its three national manufacturing systems is producing at inordinate levels. In the US section, the product is overperforming at +126% of the standard performance. In the Argentinian section, the performance is below par at -33% of standard performance. Finally, in the New Zealand section, the performance is dismal at -110% of standard performance. The product in question is a set of high-end fishing rods specifically designed for discriminating customers. It is also worthy of notice that the production assessment above has been undertaken in the 18 th month, a duration that would have allowed the product to overcome the vagaries of a novelty. Further, both overproduction and under-production presents adversities for the company (Mangan, Lalwani & Lalwani, 2016). Overproduction increases warehousing costs while underproduction can produce a market glut and also increase supply chain management costs.
It is worthy of notice that the case study does not relate to the volume of production for each of the markets but rather a comparison of the level of production and the respective manufacturing needs for each market. For example, it is possible and also likely that the New Zealand manufacturing system is making more rods than the US system but the demand for the rods in New Zealand is much higher than that of the USA. The nature of the product, being high-end fishing gear favors the scenario where the US market would be smaller than the Argentinian and New Zealand markets. An analysis of the production system would thus need to factor in issues such as the bearing factors for overproduction and underproduction. Further, manufacturing is not limited to what happens on the floor of the plant as it also includes the supply chain management process prior to the actual manufacturing and also after the manufacturing process (Mangan, Lalwani & Lalwani, 2016). An analysis of the Hi-Pro will need to combine and evaluate all these factors.
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There are two possible viable explanations for the overproduction in the USA market, all relating to poor strategic planning. The explanation lies on the floor of the plant and relates to the concept of Takt time. By definition, Takt time is the average duration between the start and completion of the manufacture of each unit of production (Siasos, 2017). The US manufacturing process may be overproducing because of a failure to correctly estimate the Takt time for manufacturing a single rod, within its system. A proper understanding of Takt time determines the rate of production for the plant thus preventing both over and underproduction (Siasos, 2017). Conversely, the overproduction on the US could be caused by poor coordination between the manufacturing and the sales department. The sales department could be giving the wrong data to the manufacturing department, based on unrealistic projections, thus leading to over-manufacturing. A further analysis of the US production system would thus be necessary to determine which of the two problems would be causing overproduction.
On the other hand, both the New Zealand and Argentinian markets could be underproducing due to a variety of reasons. The two countries are uniquely placed to have a high volume of leisure fishing, including by tourists all of which have the propensity for a large high-end fishing gear market (Leuven, 2018). It is thus possible that the manufacturing system is in order but the market itself is blooming rapidly (Mangan, Lalwani & Lalwani, 2016). This would be a good problem to have for a company and can be solved by bolstering the manufacturing processes or shifting some of the excess products from the USA to these markets. However, it is also possible that the two markets are facing underproduction due to issues relating to production, and not sales.
First, the underproduction may be related to a Takt time crisis where the manufacturing system, even at full production rate is not able to produce enough to meet the market needs (Siasos, 2017). Under the circumstances, the best solution would be to improve manufacturing systems by reducing Takt time. Specialized products such as high-end fishing gear are sensitive in manufacturing including hand-made components, thus improving Takt time includes both innovation and expansion. Secondly, the problem could also be stemming from the pre-manufacturing supply chain system which includes the gathering of the various raw materials and amenities for the manufacturing process (Mangan, Lalwani & Lalwani, 2016). The different components used for making the fishing rods and also amenities such as water, transport or power could be the limiting factor that needs to be remedied. Once again, further investigation will be necessary to evaluate and establish the source of the problem and remedy it as outlined above.
The problems and solutions defined above are, however, not mutually exclusive since global manufacturing is an exponentially complex process. The problems can be integrated at the global management level, where the management of the company focuses more on the US market than the two international market. Conversely, the problem of overproduction in the USA can also be utilized as a solution to the underproduction in the international market. Alternatively, if the issue in the international market is supply chain management, the successful system applied in the USA can be expanded to the international market, assuming it can operate under the unique national conditions of those markets. Each of the scenarios canvassed herein has the singular pre-condition in that it needs further research. The manufacturing crisis reflected in the case study could thus be a reflection of a material problem in the company, just as it could also be a sign that the company is growing too fast and thus needs to balance its international resources. The first step in solving the problem will thus be further research to better understand the respective issues in each of the national production systems.
References
Leuven, C. V. (2018, January 25). Fishing on a million acres of wild rivers in Argentine Patagonia. Retrieved from https://www.adventuresportsnetwork.com/sport/fishing/fishing-million-acres-wild-rivers-argentine-patagonia/
Mangan, J., Lalwani, C., & Lalwani, C. L. (2016). Global logistics and supply chain management . Hoboken, New Jersey: John Wiley & Sons
Siasos, G. I., Skondras, G. I., Gkanas, E., Hrissagis, K., & Makridis, S. S. (2017). The benefits of lean through an analysis and improvement of an existing production line. Mater. Sci. Eng. Adv. Res , 2 (1), 15-24
