Free Essay

Custom Gear Case


Submitted By raihan88
Words 2012
Pages 9
1.0 Introduction

Custom Gear Inc, is a manufacturer of custom made metal gears weighing from ounces to over 50 pounds in Philadelphia. Custom Gear primarily sells the product to engineering research and development laboratories or very small manufacturers. The gears are made of different metals depending on the customer’s requirements. Over the past year, 40 different types of steel and brass alloys have been used as raw materials.

Business has been booming at Custom Gear which is shown through the company lost money for the first two years (2009 and 2010), but made small profits in 2011 and first quarter of 2012.Sales are rapidly increasing in 2009, 2010 and 2011. Through a recent market survey, it indicates that sales will be increase more in the next few years.

1.1 Organizational chart of the company


1.2 Duties and responsibilities

The President of Custom Gear is Mr. Roger Rhodes, the founder of Custom Gear. His responsibilities are:

a) Contacts with some of the large customers

b) Arranges financing needed by company

c) Sits in weekly production meeting

d) Discussing on problems like scheduling, employee and also production.

The Engineer is responsible on:

a) Design company’s products

b) Procurement and maintenance of equipment

c) Oversee the supervisor/foreman

d) Attends weekly production meetings

e) Spend most time on factory floor

The Expediter:

a) Review work in progress in the shop

b) Select orders which are behind schedules and ensure they are treated on rush basis

c) Looking for past due raw materials and lost orders

The work force consists of 50 highly skilled or semiskilled employees which are managed through family type approach.

2.0 Problem Being Faced By Custom Gear

i. Accepting Larger Order

Custom Gear accepting larger orders is about 100 gears or more. Nevertheless, lower prices were accepted on these orders to help them to pay their overhead. Besides that, their sales department is not part of the business and there is no link between them and the manufacturing team.

ii. Bottleneck

It was expressed concern by their supervisor, Joe Irvine that bottleneck which appears in the production process. In one week, the bottleneck could happen maybe in one machine centre, and the next week in other machine centre. These problems make it difficult to deliver the orders out on time.

iii. Layout

Custom gear used job-shop standard layout. By applying the standard job-shop layout, they have make mistakes which increased the lead time, thus resulted in the need for an expeditor. Each work has a common set of machines or processes. The materials flow from one work centre to another depends on the operations needed for the particular order.

iv. Employees

Custom Gear also make mistake in hiring their workers. They are hiring too many employees for the company needs.

3.0 Action Taken to Solve the Problems

As discussed in earlier question, Custom Gear Inc. facing a few problems such as accepting large order, bottleneck in production process, layout design in machines and processes and employees problem. Thus, in order for Mr. Rhode to solve this problem and take further action, he must refer and evaluate a precise decision based on operations strategy.

First of all, Mr. Rhode needs to consider of accepting large orders from customer without putting the small orders at stake. Mr. Rhode needs to know the consequences with accepting large orders. Yes, Mr. Rhode can accept the large order but not at discounted price in order to help company to cover overhead cost. Plus, by accepting the large order, Mr. Rhode should increase the capability and capacity of producing small orders so that it won’t be any case of lateness and delayed.

Improving capability and capacity are should be focusing on employee skills such as highly skill employee and expert and adding new machines or rent a new building to support large order production. Prior to that, Mr. Rhode need to forecast the demand from the customer, if he still proceeds on accepting large order, this capability and capacity of production should be focused on. Furthermore, Mr. Rhode need to make sure the order entry system is efficient at all the time. This including a customer is able to request a change in design after the order has already been placed. It may be necessary to stop production on these orders and wait for the new materials or for new designed to be clarified. Plus, they do not have a process that charges back the disagreement on these orders; they need to input a system where if the customer wants to alter design they have to pay for it.

Plus, the employee should make sure the customer sign off on the tolerances before the order begins processing since the customer’s prints submitted with the order were not always contain the tolerances required during machining. In addition, Mr. Rhode should improvise the original layout and redesign the production flow consecutively to reduce time during production. Refer back to the case; the physical layout and materials flow are not supporting a production line effectively. This is because, the typical order shows the place to process the raw material are distributed or scattered. This will lead to high time utilization. By redesigning the layout and production flow production will be quicker and effective. Plus, the employee will have the high mobility in production floor and avoid jumbled flow of product through the shop or building.

Plus, Mr. Rhode should relate the physical layout and material flow with effective operation scheduling to avoid delays and production effectiveness. According toVollman, “The priority planning and the shop floor control and the scheduling elements ultimately determine the performance of the production system.” this technique of operations scheduling forms a very important part and acts as the backbone for the performance of the manufacturing or the service organizations. With the help of the operations scheduling, there are two very important factors or the aspects of the resources within an organization that can be pertained are as follows: allocating the resources within an organization and setting up the timetable. In today’s competitive world, the orders that are placed either from the side of the customer or from the side of the assembly benches are to be completed on or before the contracted or the promised date. For fulfilling this, operations scheduling plays a very critical role and completely ensures that these dates are met. Mr. Rhode must have a proper schedule system in order for employee to manage the resources and process the order accordingly and avoid any unwanted circumstances in production line.

In small or big organization, employees are playing a huge role in determining a success of a company. Thus, Mr. Rhode also has to focus on the employee’s relations and not only operations side. Training and staff development is very important to make sure staffs are competence and give staff an opportunity to improve skills. The competence staff will benefits the company and let the employee remain knowledgeable. Moreover, Mr. Rhode should realize the employees in custom gear are not unionized and this can bring harm to the company. Employee relationship programmes need to be implemented so that employee stay motivated.

Lastly, if Mr. Rhode still had to consider accepting a large order from customer, he can choose the other option which is do outsourcing the order. Outsourcing the productions happened because of a few factors. For example, insufficient capacity, high cost involved producing in house and avoiding risk as well as quality maintenance. Plus, this method can avoid bottleneck problem. If a machine has a backlog of work then people don't just sit and watch it build up. They can sub-contract for instance. But, this option requires firm decision whether company wants to outsource all or partial of order and strong analytical skill from the company and may be harmful to the company.

4.0 The Relationship between the Cases with the Operations Strategy and Process Design Concepts

Custom Gear seems to not have a set of specific strategies in managing its business. The company might have a vision and mission but no strategies on how to translate those two. This could be seen when the company reacts rather spontaneously with issues and problems related to the operations. Whenever a problem arises, top management decided something without consulting whether the decision will be in line with the company’s strategies as it has none.

It is to be noted that organizational strategies is important because it guides the organization by providing direction for, and alignment of, the goals and strategies of the functional units. When an organization like Custom Gear operates without any formulated strategies, the approach will be like an old saying ‘we’ll cross the bridge when we reach the bridge. This means the company will think and decide whenever the needs are there. If business as usual, the operations will be just like any other day.

Being without clear strategies, Custom Gear will not be able to achieve the stated vision and mission. This is due to the main reason of not knowing the company’s core competencies; the special attributes possessed by Custom Gear that give it a competitive edge with the competitors in the industry. The company will also not able to define what kind of strengths, weaknesses, opportunities and threats it will face.

With no clear strategies, it will affect the operations as a whole; for example process layout. The company’s process layout is a job shop type. This is due to low volume of high variety custom gears made according to orders. However, with recent decision to accept larger quantities per customized gear has landed the company into a problem. The designed layout is to cater small production of gears for each order and not more than 100 gears. Without special work flow to differentiate small orders and large orders, it will make the process flow run not as planned. To overcome this problem, the company decided to assign an employee in identifying orders that are behind schedule. The company could not afford to abandon orders of high volume as the orders keep the company running at full capacity. The management sees an opportunity in making profit with these large orders but not knowing whether this will have affect on business’ daily operations. This might not be the case if a clear strategy is formulated in the first place.

5.0 Conclusion

Undeniably, every business based company in the market has the target to utilize the sources in order to maximize their profit and achieve their goal. Based on the case study, Custom Gear Incorporation is one of the companies which manufacture custom-made gears for its clients. Within the company, certain process control characteristics exist to provide operational support to the company. The management of the company should be implementing an efficient operational strategy in order to avoid any unwanted circumstances in production line. Through to the production process it would take any bad implication if the strategy is not clear determined.

Other than that, because economies of scale are usually not a part of a job shop's competitive edge, they compete on factors other than price. They compete on volume of the gear purchase, speed of product delivery, and customization. Besides that, the job shop is organized by process, where assembly lines or continuous flow operations are organized in a product layout. In the latter layout, equipment or work processes are arranged according to the exact steps in which the product is made and the path for each part resembles a straight line. Thus the company should have to improvise to the new layout and redesigning their production flow due to produce the gear to avoid bottleneck in the production process. In other hand, this will lead the productivity increase. This we can conclude that the management of organization should have to implement the right operational strategy to accomplish mission and goal by the company.


Case study on Custom Gear Inc. (2012).

Putra Business School, Dr. Azmawani Abdul Rahman. 2013. Operations Management.

Singapore: Mcgraw Hill.

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