Stermon Mills Harvard Case Solution & Analysis

How will you know if Stermon has made progress on its manufacturing flexibility improvement plan?

If Stermon has made progress on its manufacturing flexibility, customers’ satisfaction will be increased and as a result sales will boost up. This would be done by reducing cycle time and improvement of the labor staff. After implementing the best option that may be option 1 & 2, the company would be able to measure it’s KPI (key performance indicator). The manufacturing cost will reduced by acquiring the system of JIT (Just in time), this will also ensure timely delivery to customers and more output can be generated by training the staff. Revenue will be maximized due to a reduction in the cost of inventory. The return /profitability will be increased. Cycle time would enhance customer satisfaction; if Stermon has made progress on its manufacturing flexibility plan then this could result in better profitability, more revenue generation and market recognition.

Conclusion

The four options that Saugoe presented to Mr. Kiefner represent the first step for Stermon to start thinking about customers as a powerful source of information that will help them to focus on things, which really matter in order to improve their sales and profitability.

Stermon should ultimately start the Sales and Operations Planning (S&OP) process, which is a powerful business planning process that involves: sales, marketing, operations, product development and finance in order to improve business profitability.

On a monthly basis, above departments should analyze: past sales, purchasing trends, inventory, customer service and satisfaction to decide actions that have to be implemented in the future.

The recommended options are options 1 and 2 in which most preferable is option 2. Option 2 would lead to cost-saving of manufacturing as in this era it is very important to reduce cost to increase profitability because customers want all specifications with competitive cost. If companies do not focus on cost-cutting, then they will not be in a position to sustain them in the longer term. Prices of un-coated papers are falling, people are not willing to pay that much and giant companies which are dealing in production of un-coated papers have already captured a high market share, as these companies enjoy economies of scale and low manufacturing costs, hence they are serving to customers on a larger scale, whereas company like Stermon needs to adopt strategies that not only reduce its cost but also improves its profit margin along with more customer satisfaction by improving its operational and manufacturing process. All above discussed options would help in this regard to integrate systems of Stermon in a better way and ensures to sustain it for those companies which have small business like the one mentioned in this particular case...................................

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