Manufacturing and Service Processes

Manufacturing and Service Processes

Questions

1. As of 2017, what type of manufacturing process did LWT

appear to be using? What level of customization was it

offering? Where was the point of customization?

2. Using Table 3.2 and Figure 3.12 as guides, how would you

describe the service side of LWT’s business prior to 2018?

What were the managerial challenges?

3. What type of manufacturing process is needed to support

the changes proposed by Chuck Keown? What level of

customization will LWT be offering? Where will the point

of customization be?

4. Using Table 3.2 and Figure 3.12 as guides, how will the

service side of the house change in 2018? What will the

new managerial challenges be?

5. Develop a list of 8 to 10 things that must happen in order

to accomplish the changes Chuck Keown envisions. Will

the new business model be more or less difficult to manage

than the old one? Justify your answer.

CASE STUDY

Manufacturing and Service Processes:

Loganville Window Treatments

Introduction

For nearly 50 years, Loganville Window Treatments (LWT) of

Loganville, Georgia, has made interior shutters that are sold

through decorating centers. Figure 3.20 shows some of the

various styles of shutters LWT makes.

Past Manufacturing and Service Operations: 2017

Traditionally, LWT supported a limited mix of standard products.

At any particular point in time, the mix of products

might consist of six different styles offered in five predetermined

sizes, resulting in 30 possible end products. LWT would

produce each of these end products in batches of 500 to 1,000

(depending on the popularity of each style/size combination)

and hold the finished products in the plant warehouse. When

a decorating center called in with an order, LWT would either

meet the order from the finished goods inventory or hold the

order to be shipped when the next batch was finished.

LWT’s products were sold through independent decorating

centers located across the United States and Canada. LWT would

send each of these decorating centers a copy of its catalog, and

the decorating centers would use these catalogs to market LWT’s

products to potential customers. It was the responsibility of

the decorating centers to work with customers to price out the

shutters, make sure the correct size and style were ordered from

LWT, and resolve any problems. As a result, LWT almost never

dealt directly with the final customers.

Manufacturing and Service Operations: 2018

By 2017, the influx of low-cost shutters made in China had

forced LWT to reconsider its business model. Specifically,

because of the low labor costs in China (20% of LWT’s labor

costs), Chinese manufacturers could make exact copies of

LWT’s products for substantially less and hold them in warehouses

across the United States and Canada. LWT’s traditional customers—the decorating centers—were turning more and

more to these alternative sources.

LWT decided to fight back. As Chuck Keown, president of

LWT, put it:

The only permanent advantage that we have over our competitors is

that we are located here in the United States, closer to the final customer.

So from now on, we will be a make-to-order manufacturer. We

will deal directly with customers and make shutters to whatever specific

measurements and finish they need. This means we can no longer

count on producing batches of 500 to 1,000 shutters at a time and

holding them in inventory. Rather, we will need to be able to make a

few at a time in one-off sizes, if that’s what the customer needs.

On the service and marketing side of the house, we will now

take orders directly from the customer. We will reach them through

the Internet and through catalogs. We will work with them to determine

what style best suits their needs, and to take the measurements

needed to make the shutters. When there is a problem, we

will work directly with the customer to resolve them.

Yes, this will require dramatic changes to our business. But it

also means we will be able to charge a premium for our products

and create a relationship with the customers that our Chinese rivals

will find difficult to emulate. As I see it, this is the only way

we can survive.

Questions

  1. As of 2017, what type of manufacturing process did LWT

appear to be using? What level of customization was it

offering? Where was the point of customization?

  1. Using Table 3.2 and Figure 3.12 as guides, how would you

describe the service side of LWT’s business prior to 2018?

What were the managerial challenges?

  1. What type of manufacturing process is needed to support

the changes proposed by Chuck Keown? What level of

customization will LWT be offering? Where will the point

of customization be?

  1. Using Table 3.2 and Figure 3.12 as guides, how will the

service side of the house change in 2018? What will the

new managerial challenges be?

  1. Develop a list of 8 to 10 things that must happen in order

to accomplish the changes Chuck Keown envisions. Will

the new business model be more or less difficult to manage

than the old one? Justify your answer.

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