Manufacturing strategy assignment: Case Analysis of Leopard Tools

Question

Task:
1. Assignment Task Manufacturing Strategy & Global Supply Chain
Consider the Case Study detailed below, your task is to write a report analysing what the company approach should be. You need to refer to and critically discuss the theories covered in the module together with other applicable research which you have identified. You may consider referencing the core text for the module Slack et al “Operations Management” as well as referring to other reading you have undertaken.

• You are to critically analyse and discuss the Manufacturing Strategy and the Global Supply Chain approach which the company has adopted.
• Consider other options and approaches which they could adopt in the future and critically analyse and discuss the likely implications as well as advantages and constraints for each alternative.

Answer

Introduction
The present manufacturing strategy assignment discusses about the manufacturing strategy which is an important operation in businesses as it determines the quality of goods produced and its durability along with the value in the market. Therefore, companies undertaking manufacturing activities must be aware of the strategies that will lead to effective manufacturing of the products with zero or minimal defects. It is also related to the supply chain of the business. Supply chain refers to the process where the suppliers distribute the raw materials to the manufacturers, which eventually reaches the end-users. The supply chain has a wide range of effects on the manufacturing companies.

Some of these are costs and profit margins for the finished goods, availability of inputs that are required for the manufacturing process, the infrastructure of the company and how the companies interact with the external stakeholders such as the customers and the suppliers. This report on manufacturing strategy assignment will study the manufacturing strategy and the global supply chain undertaken by Leopard Tools.

Critically analyse and discuss the Manufacturing Strategy and the Global Supply Chain approach, which the company has adopted
Leopard Tools is a manufacturing company producing manual hand tools for professional artisans or for use at home. The company is medium-sized and is operating in the market for the last 100 years. It is based in Germany and is famous for its excellent quality of products such as chisels and other woodworking tools. Although the prices of its products are expensive, it had a large supply chain wherein the products were supplied to various users and organisations. The company is one of the biggest suppliers in the construction and joinery industries in Germany. However, with the advancement in technology, the traditional market has taken a hit as the clients of Leopard started using automated machinery and used mass production techniques. The manufacturing strategy undertaken by Leopard Tools is that of local manufacturing.

It is evident herein manufacturing strategy assignment that all the products manufactured and supplied by the company are majorly done in their Hamburg factory in Germany. This means that the company believes in local production. They have invested in updated manufacturing types of machinery such as CNC machines. Nevertheless, the factory is labour-intensive and not capital-intensive. This means that the labour force does most of the work instead of using the machines. Apart from that, most the factory workers are not aware of the techniques of using advanced machinery. This has led to higher manufacturing costs for the company. Machines can manufacture the products at cheaper rates but as the company is labour-intensive, it has to pay a high amount of remuneration to the workers.

The supply chain of the company is also local as they source most of their products from the local market. It also operates only in the German so the customer base is very limited. The batch size of the production is small and therefore, the optimum production capability of the workforce is not utilised. Many of the products are in business for a long time and there are no changes or modifications in them. This means that they can be obsolete for the current market and therefore, might not be required (Kleer & Piller, 2019). Continuous improvement of the production process and the product is necessary for surviving in the market and increase the share in the market. Nevertheless, Leopard Tools did not make any changes, which has decreased the demand for their products in the market. Nowadays, companies are increasingly becoming capital-intensive as it reduces manufacturing costs. Germany has high labour costs and hence companies source their materials from places having cheap labour such as India and China.

Moreover, it is also stated in the manufacturing strategy assignment that most of the products do not have a proper blueprint of design. It is manufactured with the knowledge of the staff. This can lead to higher design or production defects in the goods. It is very necessary to have a proper design for a product, as it will help in maintaining the uniformity of the product. Having no design means that the products are not uniform and this can lead to manufacturing defects. The domestic and labour-intensive manufacturing strategy has limited the operations and reaches of the company (Kwak, Seo & Mason, 2018). The domestic manufacturing costs are high which decreases the profit margin for the company. Every country has a minimum wage set for the workers and companies have to abide by them. Moreover, the production capacity is limited as the customers are limited. Although, Leopard Tools manufacture in high volumes, the demand is lesser than supply, which increases their stockholding and inventory costs.

Along with this, Leopard Tools operates locally and supplies its products only in Germany. The cyclical changes in the markets have a greater impact on the domestic firms as they do not have any other of selling their goods and generating profits. The market size and target market along with the access to labour and other resources are very limited. This has increased the costs of manufacturing and raw materials. It has also reduced the efficiency in the manufacturing process, as there is a lack of competition and the need for growth.

Consider other options and approaches in this manufacturing strategy assignment which they could adopt in the future and critically analyse and discuss the likely implications as well as advantages and constraints for each alternative

As the competition in the market has increased and the need for traditional tools is decreasing, Leopard Tools need to enhance their manufacturing strategy and the supply chain to sustain the market and continue with their operations. Firstly, the company needs to understand the areas in which they have to work on. As technological advancements have reduced the need for traditional wooden tools and given rise to mass production techniques, the company can choose to incorporate advanced technology in its operations. They must reduce the number of products lines and product manufactured by them and focuses on selling the ones, which have the highest demand. This will help the customers to understand which product they want and how they can use it. The batch size must be increased as it will enhance the production capabilities and reduce the time required to produce each unit (Kim & Chai, 2017). Therefore, the company can produce more units in lesser time. However, replacing traditional methods of manufacturing with advanced manufacturing techniques will reduce the requirement of labour. This can give rise to manufacturing defects of the products.

One of the key USPs of the company was that there was less number of complaints from the customers along with a low amount of product recalls. If there are any defects in the design, it might lead to design as well as product defects. This will increase customers’ complaints and pose a threat to the company. Moreover, the company needs to improve the quality or make any innovative products to attract and retain the customers (Tien, Anh & Thuc, 2019). The workflow needs to be increased within the factory as well as on the shop floor. Nevertheless, outsourcing of the manufacturing operations can prove to be beneficial for the company. Majority of the companies in the developed countries outsource their manufacturing operations to countries having cheap labour. This has a wide range of benefits for the company (Hsu, Tan & Zailani, S2016). Outsourcing of manufacturing operations and transferring to places having cheap labour will reduce the costs of manufacturing for the company along with making the product efficient. Most of the developing economics have high population leading to a huge workforce. As the jobs here are limited, the employers get an advantage of hiring employees at cheaper costs (Isaksson & Lantz, 2015).

Leopard Tools can outsource their manufacturing process to places like India, China, Mexico, Southeast Asia and others. The quality of the labour is very high and the workforce is very efficient. This means that the quality of products for the company will be improved. If Leopard Tools outsources their manufacturing process, they can close down their Hamburg factory and save on rents and other costs. Nevertheless, this process has some constraints as well. Although manufacturing outsourcing is undertaken in the chosen country, it can lead to moral and ethical issues for the company (Simangunsong, Hendry & Stevenson, 2016). For example, the working conditions of the employees in these companies can be very poor and difficult. They are subjected to a huge amount of pressure, low wages, and work for extremely long hours and are provided with poor living conditions. Moreover, outsourcing the manufacturing will lead to the loss of jobs of the people in the Hamburg factory. They will no longer have to manufacture the goods and this means that a large number of jobs are transferred to other countries. This can hamper the brand reputation of the company, as a large number of workers will lose their jobs for many years. Apart from that, the company will not have full control over its operations and there will be more issues and gaps in communications.

Another approach identified in the manufacturing strategy assignment that can be adopted by Leopard Tools is that of a global supply chain. It means that the company will start selling its products in the domestic as well as the international market. This can be beneficial for the company as it will increase the competition in the market and hence the business will try to enhance the quality of its goods. It will increase the market base and the number of the target audience will be large. Therefore, the company will have a global presence, which will increase their market share and profitability. Along with increasing the economic viability of the company, having a global supply chain will reduce the costs of operating and enhance the brand image (Gowa & Mansfield, 2015). Although the demand for products manufactured by Leopard Tools has decreased, there is a huge demand for traditional tools such as chisel and other wooden tools in the international market. In many places, people prefer purchasing products manufactured by local artisans and made with traditional tools and methods.

As the demand is high in the international market, the inventory costs for the business will reduce. Costs will be reduced in other areas of operations as well such as transportation, thefts and storage. However, the study developed in this manufacturing strategy assignment signifies that there are certain disadvantages of having a global supply chain. The countries where the company is supplying their products can have issues such as economic downturns, natural disasters or political unrest. This will influence the supply chain negatively as the company might lose their products to natural disasters or the supply can stop midway and not are transferred to the country due to political and international trade issues (Mangla et al., 2018). Moreover, every country has a different standard for regulation and therefore Leopard Tools must understand the laws and regulations of every country and accordingly operate. Failure of complying with the law can lead to banning the trade of that product. The fluctuations in the exchange rate are also risky for the business as Leopard tools might not be able to forecast the financial outcomes accurately. This can reduce the competence of the business in the international market.

Every country has its own cultures and choices and this can prove to be a hindrance for supplying the products globally. The culture of a specific place must be taken into account. Some of the mistaken include offending the locals by not following the protocols or inappropriate marketing, promotions or packaging. As the business will be operating at the global level, it is necessary to undertake necessary marketing activities to gain the attention of the customers and increase the sales of the products. Therefore, Leopard Tools must consider the local culture and their taste and preferences before developing marketing strategies.

Conclusion
The report on the manufacturing strategy assignment discussed the issues faced by Leopard Tools in their current operations. The causes for these issues were critically discussed and it was deduced that as the company is operating in the domestic market, it is facing a loss in the market share and increased manufacturing costs. Therefore, the company was suggested certain strategies and approaches that it can follow in the future to enhance its operations and profitability. These strategies were critically evaluated along with their advantages and disadvantages. Expanding the supply chain globally along with outsourcing the manufacturing operations will aid the company in reaching out to a larger market and expand its operations.

References
Gowa, J., & Mansfield, E. D. (2015). Power politics and international trade. Manufacturing strategy assignment In THE POLITICAL ECONOMY OF INTERNATIONAL TRADE (pp. 37-49).

Hsu, C. C., Tan, K. C., & Zailani, S. H. M. (2016). Strategic orientations, sustainable supply chain initiatives, and reverse logistics. International journal of operations & production management.

Isaksson, A., & Lantz, B. (2015). Outsourcing strategies and their impact on financial performance in small manufacturing firms in Sweden. The International Journal of Business and Finance Research, 9(4), 11-20.

Kim, M., & Chai, S. (2017). The impact of supplier innovativeness, information sharing and strategic sourcing on improving supply chain agility: Global supply chain perspective. International Journal of Production Economics, 187, 42-52.

Kleer, R., & Piller, F. T. (2019). Local manufacturing and structural shifts in competition: Market dynamics of additive manufacturing. International Journal of Production Economics, 216, 23-34.

Kwak, D. W., Seo, Y. J., & Mason, R. (2018). Investigating the relationship between supply chain innovation, risk management capabilities and competitive advantage in global supply chains. International Journal of Operations & Production Management.

Mangla, S. K., Luthra, S., Mishra, N., Singh, A., Rana, N. P., Dora, M., & Dwivedi, Y. (2018). Barriers to effective circular supply chain management in a developing country context. Production Planning & Control, 29(6), 551-569.

Simangunsong, E., Hendry, L. C., & Stevenson, M. (2016). Managing supply chain uncertainty with emerging ethical issues. International Journal of Operations & Production Management.

Tien, N. H., Anh, D. B. H., & Thuc, T. D. (2019). Manufacturing strategy assignment Global Supply Chain and Logistics Management.