Kuiper Leda - Problem Solution

Problem Solution: Kuiper Leda

Kuiper Leda Inc is a manufacturer of electronic components. Located in the Republic of Novamia, Kuiper specializes in the production of Electronic Control Units (ECUs) and sensors for the automotive industry. Their clients include automotive manufacturers and Original Manufacturers (OEMs). Recently the company entered into the manufacturing of Radio Frequency Identification Devices Tags (RFID) and has been producing them for the past six months. Because of their strong technology base, Kuiper has not only become a leader in the industry domestically, they continue to make great progress in the international market as well. (UOP, 2007) While Kuiper is much smaller than its competitors, they are well known for their quality and delivery responsiveness. Recently Kuiper received a large urgent order from a customer and will need to manufacture and supply higher volumes over its regular volume. The large order will put Kuiper over capacity and decisions need to be made whether the products can be made in house or outsourced. By performing a situation analysis on Kuiper, the following paper will dissect and discuss the current problems by identifying issues and opportunities, stakeholder perspectives/ethical dilemmas, problem statement, end-state vision, alternative solutions, analysis of alternative solutions, risk assessment and mitigation techniques, optimal solution and plan implementation. .

Situation Analysis

Issues and Opportunities

Inventory management is a very important concept in any organization. It involves planning and controlling inventory from the raw material stage to the final delivery at the customer's end. All essential supply chain activities should include inventory management as it requires in-depth planning. The principles of inventory management include inventory management and inventory control. Some of the basic principles of inventory management include sales forecasting, sales and operation planning, production planning, material requirements planning and inventory reduction. (Chase, Jacobs & Aquilano, 2006)

The main issue facing Kuiper is a large order placed by Midland Motors (MM), an OEM, of 250,000 ECUs and 35,000 RFIDs. MM has had unprecedented business and as they are one of the largest auto parts dealers, an order from them would benefit Kuiper tremendously. The order is urgent and Kuiper will need to manufacture and supply higher volumes over its regular orders and their current capacity is insufficient to handle the increased load on the plant. Kuiper has a daily capacity of 1,250 units for ECUs and 250 units for RFIDs. (UOP, 2007) Kuiper must now decide whether to accept the order and make a suitable margin, how they will meet this sudden increase, and can both of these products be made in-house or if they can outsource any product. While the volume may be a challenge, MM is a big company and they have a reputation for fostering close relationships with their suppliers. If Kuiper takes on this job and is successful, it could bring bigger business not only from MM, but from other OEMs as well. (UOP, 2007)

The ineffectiveness of production planning at Kuiper is another issue facing the organization. A company's business plan is very important as it provides a clear direction in terms of sales revenue, inventory, capacity and target for each year. The production plan considers annual forecasts in order to generate all demand figures. Without proper production planning, an organization will have a difficult time managing and controlling its inventory. For Kuiper, the time line for production plan is quarters and they are not even assured of customers who might cancel or reschedule orders. (Chase, Jacobs & Aquilano, 2006)

Other issues facing Kuiper are the sales forecasting not being accurate and efficient. Sales forecasting is a major part of inventory management. Forecasts are the basis of planning for the future and are vital to every business organization and every significant management decision. (Chase, Jacobs & Aquilano, 2006) Kuiper also needs to be able to manage quality as it relates to their supply chain. Kuiper is considering outsourcing some of the products to another company and the RFP from MM clearly outlines the quality specifications for components used in both products. By outsourcing these products, Kuiper could potentially put them at risk if the product is not up to quality standards. Kuiper could lose control of total quality management (TQM) if they decide to outsource. (Chase, Jacobs & Aquilano, 2006)

An opportunity available to Kuiper is just in time (JIT) inventory management. The JIT management strategy is aimed at improving return on investment of a business and its associated costs. In a JIT process, new stock is ordered when stock reaches the re-order level. This helps to save warehouse space and costs. Kuiper can also look to implement a total quality management system such as the Six Sigma. "Total quality management may be defined as "managing the entire organization so that it excels on all dimensions of products and services that are important to the customer" (Chase, Jacobs & Aquilano, 2006) The concept of six sigma will allow Kuiper to measure how much defects they have in their system and find ways to eliminate them.

Kuiper also has an opportunity in the implementation of an inventory system. "An inventory system is the set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be" (Chase et al, 2006). Considering the background of Kuiper and their goal to venture into the global market, an inventory system is needed. Since they are also planning on entering into longer-term relationships with their vendors to supply their needs for perhaps the entire year, Kuiper's focus will now be on when the goods will be delivered and how many to deliver.

Stakeholder Perspectives/Ethical Dilemmas

There are two main stakeholders in scenario, Kuiper, its senior management team and MM. Kuiper's competitors are one step ahead of them because they have a very strong supplier base and repeat orders from customers who are large OEMs. Kuiper needs to be able to ensure that their supply chain management, quality control and inventory management are issue free to remain competitive in the industry and keep MM as a long term customer. If Kuiper is not successful in filling the demand order they risk losing the customer which could lead to loss of company profit.

MM could potentially risk not achieving the quality that they need to provide for their customers. They are requesting this order from a company

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