The problem affecting the boot division is that there are high customer complaints about the boot services, thereby having high returns for the sold boots. These returns result in reduced efficiency and impair the ability of the facility to meeting its objectives. Such problems are affecting the firm’s profitability and thereby causing issues between the management of the customers. It is imperative to assess the costs incurred in the facility through the use of the affinity diagram.
Affinity Diagram
Manufacturing Costs
These are the costs involved in the manufacturing process. The type of costs involves the payments made to the manufacturers, the cost of resources used to service the manufacturing process, and training required for the same. Overhead costs involving electricity and insurance costs also affect the firm and cause an unprecedented rise in the cost of manufacturing the boots. High costs in these departments contribute to the inability of the firm providing quality products at a cheaper price.
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Production costs
The general production of the boots requires an investment of some costs to ascertain the whole procedure. This means that costs including machinery costs, and labour costs are incurred. For instance, labour costs on the supervisory team, salaries, bonuses, and loyalty costs for employees are imminent. Similarly, hiring and training costs are incurred by the department in their strategic positioning to meet the needs of the customers with the boots department.
Management Costs
In both the manufacturing and production processes, there is a need to explore some of the costs associated with both activities. This means that the service provision teams incur expenses in the inspection and administrative activities. Arguably, the departments further incur costs on how the managers extend their services to ensuring high efficiency in the teams. These costs are associated with product development, thereby ensuring improved outcomes in the department. However, if the costs are high and the facility is unable to manage the same, it leads to impaired productivity and thus having boots that do not fully satisfy the needs of the customers.
Utility costs
Various utilities are required to suffice the production and management of the boots. These resources incur a variety of costs that can contribute to raising the general price of the boots. However, in need of keeping the costs low, the firm may have opted to use fewer utilities and thereby increasing the risk of having inadequate products, thus the high returns that the company is facing.
Material Costs
Materials are a key requirement for the operations in the boot processing firm to be highly efficient. This means the business is expected to purchase leather, laces, glue, and other associated raw material purposed to assist in the manufacture and production of the boots in the facility. Such techniques have major expenses, which increase the general cost of production for the identified boots. Such aspects increase the general cost of production and reducing the same impairs the general quality of product outcomes.
Customer Service Costs
The customer services are expected to ensure the customer feels satisfied with the delivered products. This means that there is the inclusion of fees including the advertisement charges to promote the products, compensation for the salespersons, and the transportation costs. Meeting these costs require that the products be compensated at a higher value, thereby interfering with the customer’s ability to purchase them at high prices ( Chavez, Yu, Jacobs, & Feng, 2017) . Similarly, there are loyalty and reputational costs, including customer loyalty sales and losses.
References
Chavez, R., Yu, W., Jacobs, M. A., & Feng, M. (2017). Data-driven supply chains, manufacturing capability and customer satisfaction. Production Planning & Control , 28 (11-12), 906-918.
