CASE ANALYSIS: MEUMET Harvard Case Solution & Analysis

CASE ANALYSIS: MEUMET Case Solution 

Introduction

Meumet is a family-based manufacturing metallic company, which was founded in 1985. There are five product lines in the company, which include Desks, Rolling, Cabinet, Coat stands, dividing moveable walls.About more than 80 % of the products are usually sold in white and grey color.The company achieved a significant growth with respect to revenue but along with the increase in revenue inventory of the company the also grew significantly. The company is facing the problem of increase in lead times and increase in inventory cost. It is expected that the decrease in efficiency of operations results in increase in defects ratio and decrease in sales revenue significantly.Moreover, the distribution network of the company is not working up to the mark as lead times of delivering orders have increased from 17 days to three months approximately.

Facts

I. There are no order requiring plans and quotations are accepted.
II. Office consists of 1 managing directors, 3 representatives, 3 driver-fitters and 1 repairer.
III. The intermediaries (Agencies) transmit the order from the customer and get the order done through a factory.
IV. During 1996 inventory, it revealed that a numerous number of agencies were holding the stocks of unsold product due to the cancellation of orders.
V. The factory divided into two workshops but the main steps do the production line are the same in both factories.
VI. About 60 % of the components used are very common to all products in these workshops.
VII. All the productions are made to order.

Problem Statement

It is expected that the company is facing certain problems with respect to supply chain management system. With the increase in sales revenue, there is a significant increase in inventories and defects ratio due to poor management. Below are the problems that the company is facing currently.
i. It is expected that lead time has increased significantly which results in decrease in sales revenue.
ii. Sales have been decreased in the first half of 2014 by 17.5 %.
iii. Defects ratio have also increased from 1% to 4% due to lack of appropriate control over operations and manufacturing department.
There are two possible options which couldhelp the company to sustain and maintain the growth of sales.

Recommendation

A. Just-in-time Approach

The MEUMET has to reinforce the mechanism of just-in-time in order to reduce the wastage because in this approach Company employs to increase efficiency. The finished goods are made when the order is processed or lowest quantity of inventory is stored so that it reduces the inventory cost and storage cost. The furniture business ismore towards the customization approach which means a customer make the order with his own personal choices and interest so the order would begin after the quotation from a customer processed.
It is expected that the management of the company could achieve significant savings in the form of low inventory cost, which could increases the overall performance of the company by increasing its profitability.
(Akbar Javadian Kootanaee, March 2013)..............

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