Nov 28, 2020 in Coursework

Chads Creative Concepts

Overview

Chads Creative Concepts is an organization that was set up by Chad Thomas with the main aim of crafting and manufacturing furniture meant for vacation cabins. It is located at Erie Sandusky in America. It initially started by producing custom made furniture, and within the least time, it had a high reputation for its elegant designs and highly featured workmanship. Chad Creative Concept Company grew its reputation and raised its sales within a short period of time. Due to the companys expansion rate, it was decided that the organization diversifies its operations in order to embark on the production of standard fittings. The sales team started selling its custom-made furniture to the retailers - a fact that led to the fabrication of a more typical line of furniture. The decision to include the standard furniture to Chad Creative Concepts expanded the companys market share, as it became appealing to a more price-sensitive group of people. It is because despite the high prices of the custom-made fittings, they still appealed to a large number of customers, since they have a chance to choose the type of furniture through the wood and design that is appealing to them. The competitive priorities for the two sets of furniture are meeting the orders each day, ensuring quality and quantity. Most of these priorities are similar what is different is the fact that the standard furniture gives a low profit margin.

Effects

The establishment of the standard line of furniture has brought several problems to the operations of Chad Creative Concepts. First, Chads all types of furniture are manufactured at the same physical facility using similar equipment for its manufacture. Since the profit margin for the custom made furniture is high the equipment and labor is mostly used to produce the custom made furniture and as a result it leads to a slowed production of standard furniture. This fact also strains Chads finances as the demand may exceed the production yet materials have to be procured. Its inventory is also strained, as there are many orders that customers place every single day. Hence, the company is forced to rent expensive warehouse to keep the raw materials.

Daily Decisions

Chad Thomas should ensure that the calendar for the day-to-day manufacturing is in line with the customers daily orders. The use of the same employees and tools to manufacture the two lines of furniture may be problematic, as it takes a very long time and energy to meet the demands of a growing customer base. For the company to be able to meet its daily demands, it is crucial to create a calendar that enables the company to meet its daily orders without much constraints involved. It is important to share the available resources with due care to ensure that the two lines of furniture have enough resources for its functioning.

In the long run, Chad has to decide whether he will continue operating with the same facility, use similar equipment for the two lines of furniture and have the same employees to run them furnishings separately. These decisions have to be considered while putting into effect issues that include separation of the current company into two. Chad has to establish the competitive priorities, which need urgent attention. At the moment, Chad has two key priorities to look at. First, he has to look at whether to have the first line of furniture of highly customized furnishings, which need more personnel at work and is highly focused on quality rather than quantity. Second, Chad has to look into the second line of furniture that requires low amount for its output and is not really concerned with variety. Both lines of fittings have gained remarkable success, but it has reached a point where growth is much needed due to factors that include capacity and the cost of inventory, which is rapidly increasing (Hartley, 2013).

Solutions

The problems that Chad Creative Concepts faces at the moment mostly surround its management. First, a major problem lies in the procurement process of the necessary materials. It mostly affects the standard line of furniture. Chad should implement a just in time system that makes it easy for the company to acquire materials for the manufacture of different furnishings. The system will make sure that there is less time wasted and high quality furnishings are produced. The just in time' system ensures the delivery of products at a time when the customer needs them. This fact ensures that the company saves on its working capital and ensure low inventory, which increases efficiency in the company. Chad should also improve on its scheduling. This will deal with its timing and synchronization of its functions. Chad should adopt the use of charts to help in sequencing their activities. In addition to these, Chad should look into improving its value chain a factor that looks more critically into the vale of an item rather than its cost. Moreover, Chad should adopt the use of information technology in its operations. At the moment, the company is known for its underutilization of information technology in operations. The use of technology in a company ensures low costs and improves efficiency of a company. Chad should rethink about introducing and operating e-business.

What is more, Chad should rethink about its business operations. One way of doing this is by choosing between the two lines of furniture and working on one that gives high returns. In case of Chad, he should think about deleting the standard line of furniture that brings in only 40 percent of the companys income. To do this, Chad should involve several accounting concepts, which determine which line of furniture gives high returns. Chad should also look into establishing a business model. Most successful businesses have a well-stipulated business model that states its operations.

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