Case study 02
01.) Do you think that Milliken and
Company is a FRO? Sitting evidence from the above discussion explain your
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.
selling price is made by using below mentioned formula.
price= production cost+ desired profit
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
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
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.
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
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
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.
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.
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,
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.
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.
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.
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
to the given scenario can be summarized details as follows.
An emphasis on
continuous improvement throughout the organization
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
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%.
to above advantages,
Milliken achieved a high market share
Retain customer for long periods of
Increased customer loyalty
Generated competitive advantages through
low price and high quality
Investment in research
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
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
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
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
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
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
The integration and
coordination of activities through the value chain
are two methods to save customers and create value through the value chain.
promotion campaign to attract customers
to sell firm’s product to customer
is the traditional method of manufacturing products. In here did not concern
about needs and want of customer. Firms produce products based on their
system differs from push system. It has many steps. Such as,
market survives to determine customer need and wants
on that design product
demand for the product
material and labour requirements for production
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.
Increased employee involvement on both
product design and manufacturing
Reduced the work in progress in inventory
Provide a basis for continuous
Generated more cash flows
addition to management taken action to eliminate limited value added activities
in the value chain. Example: removed management position of the organizational
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