Problem Solution: Kuiper Leda
Kuiper Leda Incorporated (KL) is an electronic components manufacturer based in The Republic of Novamia. The company specializes in the production of Electronic Control Units (ECU) as well as Radio Frequency Identification Device (RFID Tags) for the automobile industry. Currently, they are a relatively small company that focuses on the quality of their product and delivery responsiveness. KL is looking to better control their inventory and expand their customer base. Midland Motors, a large and well-known original equipment manufacturer, has given KL an opportunity to achieve these goals. Midland has chosen KL to be the primary supplier for all of their ECU's ...view middle of the document...
Currently, KL has no set system and has high holding costs for their inventory.
This is an excellent time for KL to look into implementing a Just In Time (JIT) system into their daily operations. Since the contract with Midland Motors is for at least one year, they have a forecasted number to work with. Midland Motors is expecting monthly shipments from KL, this gives KL the opportunity to plan and forecast the inventory needed. Of course, they also have to keep in mind that they will still have to be able to fill orders from other clients that have previously placed orders or even new customers.
By signing the year contract with Midland Motors, KL has the opportunity to grow in the industry. It is currently dealing with smaller companies and smaller orders, but if it is able to fulfill Midland Motor's demand for ECU's, it will prove itself to be a competitive company in the industry.
Stakeholder Perspectives/Ethical Dilemmas
There are many people involved with the scenario. Senior management plays a key role in the entire operation. They are essentially the middleman between shareholders and the front-line of KL. Their responsibilities will conflict between both parties. They want to maximize shareholder value in the company while employees will want better working environments, wage increases, so forth. Managers have an obligation to both the company and the employees. They are the ones who oversee operations of the plant and the ones that deal with the problems when things go wrong.
Midland Motors is a significant stakeholder because they are the ones who will suffer the most if the ECU's and RFID Tags are not delivered on time or at all. They have a contract with KL to have on-time delivery of 250,000 ECU's and 35,000 RFID Tags in the time span of one year. They are dependent on those components in order to completely assemble their vehicles. In turn, Midland Motors has an obligation to KL for on-time payment of goods received.
Kuiper Leda will reevaluate its current inventory system, production processes, and distribution system in an effort to become more efficient.
KL would have reached its goals of expansion and efficiency by delivering quality and on time shipments to all of its clients without fail. Over the next 12 months this will be accomplished by restructuring their production processes and inventory management systems.
In order for Kuiper Leda to maintain the opportunities and increase shareholder wealth they must do several things in order to complete the circle. They must adapt a lean inventory model, increase their production capacity, and tighten up on their forecasting methods and distribution process, all while cutting costs. With this in mind it would be a benefit to have employees trained in the most current quality control method such as six sigma.
In cases such as that with Midland Motors outsourcing may be a huge advantage for a growing...