Case · Can retain customers · Can increase brand

Case study 02

 

01.) Do you think that Milliken and
Company is a FRO? Sitting evidence from the above discussion explain your
answer.

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Yes,
I think that Milliken and the company is a fast response organization. A fast
response organization is built based on the six dimensions. Such as: cost,
quality, dependability, flexibility, time and service. According to the given
scenario, it can be proved as follows.

 

Product
selling price is made by using below mentioned formula.

Selling
price= production cost+ desired profit

When
a cost is increased, the selling price definitely increases. So should be controlled
product cost within the organization. To achieve that Milliken had adopted
advanced technologies and introduced a computer aided design system to the organization.
As a result of the above strategies Milliken can reduce their production cost
as follows,

·        
Minimize the human interventions to the
production system. Hence Milliken can save cost of maintaining staff. Because
no need to maintain big staff to perform the operation.

·        
CAD system helps to speed up the  manufacturing process while providing textile
designs on time

In
addition to above strategy management had taken action to eliminate limited
value added activities in the value chain to reduce costs. When production cost
is low, Milliken can offer competitive price to the market. It will reason  attract more customers. Because most of customers
are price sensitive in textile market.

 

Customers
expect a high quality product. They tend to pay more for a quality product.  Organizations can generate competitive
advantages while providing quality products. Milliken provides quality products
to the market. Following evidence proved it.

·        
Milliken won one of the two Malcolm
Baldrige National Quality Award in 1989

·        
Management introduced the internal group
for continuous improvement in quality

 

 

 

Quality
product provides more benefits to the Milliken. Such as,

·        
Can easily attract customers

·        
Can retain customers

·        
Can increase brand loyalty of customers

·        
Can reduce production cost

·        
Can compete in the market

 

Milliken
has the capability to manufacture varieties of product. This is called as
process flexibility. According to the given scenario Milliken has produced
48,000 textile and chemical products. It proves that they have a high level of
process flexibility. The different fabrics are produced at different rates by
the same loom. It proves that flexibility of combination of material.

 

Milliken
faced a lot of unplanned downtimes. It was caused to stoppage of productions.
Previously they used mechanic staff to repair machine. But the problem is they have
taken long hours to repair the machine. To avoid that Milliken was taking
action to automate their repair and maintenance functions to speed up the
manufacturing process. And also after the adaptation of new technology to
decorative business unit, such unit consumes fewer looms hours to manufacture
an order. Fewer looms hours create a high level of operational flexibility and
responsiveness. Now production is taken shorter period of time than the past.

 

Milliken
management introduced a new strategy for the production.  First, they identified customer wants and
needs. After that recognized quantity required to fulfill customer orders.
Based on that will start the manufacturing process to complete customer order
on time. This method consists with high level of dependability.

 

In the market Milliken competes
well through above six dimensions as follows,

 

Uses
technological advancements to minimize cost than competitors. If production cost
is low, can offer low price product to the customers. Customers are price
sensitive. Therefore they attract Milliken’s products. It will be caused to
increase both product demand and production. When production is increased
Milliken can get advantages from economies of scale. They can buy bulk
quantities of materials and components. When they are purchasing bulk quantities,
suppliers will offer discount prices to the Milliken.

 

Milliken
maintains a high level of product quality. So can increase customer attraction
and retains. Both low price and high quality product helps to create customer
loyalty toward the Milliken’s product. Traditionally high quality products are
offered at high prices. If high quality product can offer reasonable price, can
generate competitive advantages. 
Milliken has capabilities to generate competitive advantages through low
cost and high quality.

 

Milliken
had taken action to speed up the production process and minimize human
intervention on production activities to eliminate breakdowns. So they can
fulfill customer’s orders on time and also they have a high level of
operational flexibility. If fulfill customers’ orders on time, it will reason
increase customer satisfaction toward the company. Satisfy customer never leaves
out from Milliken. 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

02) Identify and illustrate the FRO
structural prerequisites followed by Milliken And Company.

 

Successful
companies heavily invested on structural prerequisites to enhance their
operation. Based on nature, these investments can be categorized under o4
areas. Such as,

 

·        
An emphasis on continuous improvement
throughout the organization

·        
Investment in research and development

·        
The adoption of advanced product,
process, and organizational / managerial technology

·        
The integration and coordination of
activities through the value chain

 

According
to the given scenario can be summarized details as follows.

 

An emphasis on
continuous improvement throughout the organization

 

Continuous
improvements mean that continually makes small changes within an organization.
Small changes provide a road map to massive changes. This concept is
universally known as Kaizen. Kaizen is the secret behind the success of
Japanese firms.

 

Milliken
management had introduced Kaizen principles to all levels of the firm. They
arranged corrective- action groups to deal with numerous interior issues with
quality. These groups consist with lower level employees, a process improvement
specialist and managers. And also 200 suppliers and 500 customer action groups
were created in that period. As a result of the above changes, Milliken able to
achieved 60% drop in the cost of nonconformance. And also reduce the percentage
of the number of off-quality discounts and customer returns. As well as on time
deliveries improved from 75% to 99%.

 

Due
to above advantages,

·        
Milliken achieved a high market share

·        
Retain customer for long periods of
times

·        
Increased customer loyalty

·        
Generated competitive advantages through
low price and high quality

Investment in research
and development

 

In
current practice Milliken allocated 2% of sales revenue, for research and
development (R&D) activities. R&D is the best way to achieve
innovations.  Milliken is developing
their own machineries to save proprietary technology within the firm. Research
and development activities provide a lot of advantages for Milliken. Such as,

 

·        
Can generate competitive advantages over
market rivalry

·        
Can enter new markets with new products

·        
Can stimulate employees

·        
Can enhance product quality while
minimizing production cost

 

The adoption of
advanced product, process, and organizational / managerial technology

 

Machine
operators faced a lot of unexpected downtime on the machine. In previously Milliken
used mechanic staff to repair breakdowns. Problem was they have taken long
hours to repair machines. As a result of that increased ideal time of machine
operators. To overcome this issue introduced an automated system to repair and
maintenance. Through this system they obtained below mentioned advantages.

 

·        
Speed up their production process while
minimizing human intervention

·        
Decreased ideal time of machine
operators

·        
Respond  and deliver customer orders on time

 

 Milliken had adapted to the advanced
technologies to survive in the market. Management introduced new looms to the
decorative fabrics business unit. That looms can run at a high cycle rates.
This is caused to improved amount of lineal feet of fabric woven per loom hour.
As a result of that Milliken has enabled to cut the minimum efficient length of
run. Milliken can function beneficially on short run due to high cycle rate.
And also it was caused to increase operational flexibility and responsiveness.
Now Milliken can carry out production run in a shorter period of time than
pass.

 

 

Decorative
fabric business unit waste time can be minimized by reducing the design cycle
time. To achieve above target management introduced a computer aided design
system (CAD) to the decorative fabrics business unit. It generated following
advantages,

 

·        
It saves time of designers

·        
Incurred low cost to design process

·        
Eliminated manual drafting

·        
Product can be designed quickly

·        
Provided high accuracy

·        
Reduced cycle time

·        
Can easily carry out modifications and
enlargements

 

The integration and
coordination of activities through the value chain

 

There
are two methods to save customers and create value through the value chain.
Such as,

·        
Push system

Conduct
promotion campaign to attract customers
 

 

Tries
to sell firm’s product to customer
 
 

 

 

 

 

 

This
is the traditional method of manufacturing products. In here did not concern
about needs and want of customer. Firms produce products based on their
preference.

 

·        
Pull system

 

Pull
system differs from push system. It has many steps. Such as,

Ø  Conduct
market survives to determine customer need and wants

Ø  Based
on that design product

Ø  Forecast
demand for the product

Ø  Identify
material and labour requirements for production

Ø  Start
production process

 

This
is the newest way of manufacturing products. Under this method manufacture do
not allocate more money on promotions. There is no risk in the market.
Manufacture can sell their product easily without any extra effort. Milliken
moved from a push system to pull system. It generated more value to Milliken.
Such as,

 

·        
Increased employee involvement on both
product design and manufacturing

·        
Reduced the work in progress in inventory

·        
Provide a basis for continuous
improvements

·        
Generated more cash flows

In
addition to management taken action to eliminate limited value added activities
in the value chain. Example: removed management position of the organizational
structure.

 

Milliken
got support from their key suppliers and customers for new product development.
Suppliers know how to minimize costs through material handling. Customers know
what type of product features satisfy their needs and wants.  Suppliers and customers ideas helpful to the generate
more value.