Following the monthly analysis, Ferndale Rugs Inc. has favorable sales volume, but the sales price variance is unfavorable. This calls for an action to make Ferndale Rugs Inc. a lean organization to maximize the profit. Generally, all production processes have a bottleneck that poses a challenge to the organization’s profitability. The company, therefore, needs to focus on the constraint as fast as possible to improve its profitability. The organization can be made lean through the implementation of the theory of constraints as discussed below.
The first step towards making Ferndale Rugs Inc. is preparing the workers for the change. This is done through setting and defining a clear goal to the team. The organizational culture and the acceptance of the change will significantly impact the process of lean implementation (Alefari et al., 2020). Sell your vision on the importance of making the organization lean, articulate the organization’s benefits and personal gains. Influencing the human resource could be a challenge, so you may choose to use a few influential members from various departments to help you sell the idea to the whole team.
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Identification of value is the next step towards creating a lean organization. Identify activities that add value to the organization and those that are waste. Some wastes are pure, while others aid the production process. Pure wastes are a bottleneck that needs to be eliminated. For instance, waiting and delays is pure waste. As a manager, be on a lookout on the workflow to identify the tasks that take too much time, identify the reason and eliminate these bottlenecks. One reason behind delays is multitasking. As a manager, limit the amount of work done by employers at a specific time.
Establishing a pull through production only when there is demand and avoid overproduction. As noted in the report, the volume of the sale was very high, but the sales price variance be unfavorable. The focus is on customer satisfaction, so focus on cycle time and throughout metrics. Always seek improvements. Most importantly identify the limiting factor, exploit it, subordinate it, alleviate and repeat the process.
Reference
Alefari, M., Almanei, M., & Salonitis, K. (2020). Lean manufacturing, leadership and employees: the case of UAE SME manufacturing companies. Journal of production and manufacturing research 8(1), 222-243. https://doi.org/10.1080/21693277.2020.1781704
