In the consumer marketing segment, the company has given a guarantee to its customers saying that it would supply any item in any preferred color for five years continuously. So even if a single customer buys a particular product of a particular color, the company is forced to produce that particular product even if it is for a single customer in order to keep up its promise and at the same time safeguard its reputation.
The company has got a process based production system which also has certain demerits. The main problem with the process based production system is that two or more jobs undertaken by the production department may come to the same department at the same time. And there is obviously no possibility that the department can work on the same jobs simultaneously. Hence on of the jobs has to be kept waiting. As Focus Plastics Plc., is involved in large scale production, the process based system of production may result in several jobs that may be kept waiting in various departments at different stages. Thus , it is nothing more than a mere waste of time when a major portion of production time actually comprises the time in which jobs are needed to wait for getting processes in different departments and at various stages. Another disadvantage with this kind of production system is that it requires greater employee skill, more employees training, more number of supervisors and complex production control. If we consider the manufacturing system that is being followed by Focus Plastics Plc., it can be noticed that the company has got 24 large injection-moulding machines of different ages. Such machines would definitely need a person with good expertise and at the same time proper amount of training to handle such machines which actually is an expensive task for any organization.
The company is also lacking in planning. It was quoted that it had to produce a huge amount of pasta strainers in a particular color which resulted in entire rescheduling along with a waste of one hour’s production. This is because of over anticipation of the customers’ demand.
The company has also got a serious inventory problem. There has been a rapid increase in the inventory of the company over the past 10 years which is evident from the following ratios which are based on the financial information of the company. The major mistake that the company is committing is that it is producing the goods anticipating the customers’ demands. But anticipations may or may not be right all the time. If the anticipation is less than the acute value, then the company may lead in to loss of sales. In this case the anticipation is more than the actual value and hence it is resulting in piling up of inventory. Actually, increase in the level of inventory may lead to the product getting outdated because of ageing. Increased inventory may also result in blocking of the working capital and thereby resulting in reduced cash flows. Though Focus Plastic Plc. has considered inventory as a