The Morrison Company Essay
3626 WordsDec 2nd, 201315 Pages
FIN 485 – Brief Case #5
The Morrison Company
December 5, 2013
Case Overview/Key Issues
The Morrison Company is a manufacturer of Radio Frequency Identification Tags (RFID). These tags can be scanned from small distances away and are used to track items in the shipping and supply chain process. The Morrison Company provides RFIDs to companies in the Pharmaceutical and Retail industries. The company has seen a large increase in sales over the past year, which has forced production to increase as well. As production levels increased, problems began to arise in the production process that hindered Morrison’s ability to run the company at the most efficient and effective level. Shauna Breen was recently hired as the new Director of…show more content…
Another pro of the industry is that the tags require little customization. The customization phase of the production process is the bottleneck for most companies and by limiting this, companies are able to make larger batches and spend less per unit on the production of each. This is especially key for Morrison, because their biggest production bottleneck is in the customization phase, and by not having to go through this phase, they can meet their production schedule and use the extra capacity for other product lines. Morrison is positioned very well in this industry. In 2007, Morrison patented a production process that allowed them to produce tags with unmatched performance. This allowed them to gain a 30% market share in the pharmaceutical industry within 3 years. The higher priced HF tags also help contribute to Morrison’s financials. This product line accounts for roughly two thirds of their revenue and a little over $6 million in net earnings.
c. There are also a few pros and cons within the retail market. The main pro is that the market itself is growing. In 2010, retail sales account for 6-7% of global industry sales, however this is expected to increase to 10% by 2015. This is due to retailer’s use of the lower priced ultra high frequency tags on individual items. This allows retailers to track inventories and prevent lost or stolen goods. The first con of the industry is that the
SCM 479 - BrownThe Morrison Company Case Analysis1. What is the main issue in this case study? Do not summarize the case study; tell me what you think is the primary issue and why.The primary issue in this case study is the inability of the Morrison Company’s production team/facility to keep up with current customer orders. The reason why the productionteam is unable to keep up with current customer orders is due to a combination of inefficiencies in their production process, such as: their decentralized MRP system for organizing orders, lack of inventory management in the warehouse, low finished goods inventory/an overwhelming amount of WIP, and the lack of space for additional machines/costs associated with adding nightshifts in order to keep up with production. In addition, difficulties in standardizing due to the personalization of orders is a key issue because “more than 70% of retail product orders included personalization, compared to only 15% of pharmaceutical orders.” An additional quote to support this primary issue is that “bottlenecks commonly occurred during personalization, which negatively affected the subsequent packaging operation.” While the company faced economic troubles with their inability to upgrade their equipment during the recession, Morrison Company’s struggle to keep up with current customer orders remains the main issue of the casestudy due to its importance to the company’s operation.2. Identify and assess the operations problems occurring at the Morrison Company. Include adetailed capacity analysis in your assessment.Nick and MattThe Morrison Company faces many operational problems that hinder its performance that they must find solutions for in order to stay successful. One of these problems being that their Work-in-Progress Inventory is too high due to backup in personalization being 70% of business. The company worries about obsolescence, and therefore keeps their finished goods inventory as low as possible. While beneficial if obsolescence does become a factor, this slows down their production process, leading to those delayed orders as high as ten (10) weeks. The company is thinking ahead of their production to try and prevent the risk of the next best product, but this is causing their sales and reputation to be put on the line. Similarly, the company has a poor forecasting history due to lack of centralized system. When the company needs forecasting or a demand analysis, the production managers for the retail line and pharmaceutical line get together to produce monthly estimates. The two look at the marketing department’s sales forecast to determine the labor and parts needed. However, the two managers then split up and come up with their own production plans. This does not allow for accurate and current information for the master production schedule, which the entire forecast is based off of: “At the end of each day, Marc and I get together to determine the next day’s production.