Foldrite Furniture Company based in Aurora, Colorado is in the process of changing its production

strategy based on a surge in demand for the current product line. It is also considering a change in
product offering based on current market trends. Based on the new sales forecast, they want to
come up with a production plan for the next six months.
The organization aspires to realize the four major goals viz.
innovation in products and processes
enhancement of customer responsiveness
achieve lean manufacturing
retention of workforce
1.2 System Overview
1.3 Appeal as an interesting problem
The case of Foldrite furniture company is compelling since it details the journey of the company
across
two decades and provides and insight into its early fruitful years, its reputation as an innovative
company, the
Phase 1 Foldrite Furniture Company
style with which it took over competitors, then its gradual decline and tryst with financial turmoil,
ambition to
be big by buying smaller players and its eventual buyout by a group of private investors.
Across the two decades and these phases, Foldrite was faced with fisting with various issues such
as
seasonal changes in demands, financial turmoil, workforce turnover, etc. In each scenario, the team
at Foldrite
has come up with innovative and organized production plans to maximize the utilization of work
force,machinery, resources, etc. and to generate good revenue at the end of year by implementing
various
strategies. Thus Foldrite comes to us an interesting problem due to its potential of providing an
insight into
various different scenarios & challenges and system behavior in all situations.
A particularly interesting problem of Foldrite is to develop the right production strategy to fulfill the
expected demand for Cloud Chair (due to its current buzz in the market). This is intriguing since in
order to
cater to expected demands, should the inventory be stacked, itd come at the cost of product
development
and R&D Budgets. Additionally, if hiring is done for the same, there will be the added expense of
the process
and training. And finally, should the design change be made such that it saves a minute on
assembly line, itd
still demand a one time cost of $15,000.
1.4 Teams Exposure to the System
Having had a taste of Services sector, our team is curious about the knitty-gritties of manufacturing
sector and product based companies. In order to be able to make wise technical and operational
decisions in
our careers, irrespective of industry, wed like to gain an understanding of variety of industries and
processes.
2. Environment
2.1 Users
1. Sales for details on current sales & future forecasts
2. Finance - credit report, budget, salary processing etc.
3. HumanResources hiring & training
4. R&D for continued innovation and improved designs
5. Operations production schedule, inventory calculation & estimates for raw material
6. Purchase communicate with the Contractors for acquisition of raw materials
7. Delivery Department Customization of user orders & Delivery guarantee
2.2 Nature of Current System
The system of Foldrite manufacturing is a medley of closed/mechanistic and open/adaptive
processes.
Department Behavior
Sales closed/mechanistic
Phase 1 Foldrite Furniture Company
Ankit Mittal, Sailee Latkar, Shefali Budhwani Page 4 5/25/2011
Finance closed/mechanistic
HR closed/mechanistic
R&D open/adaptive
Operations open/adaptive
Purchase closed/mechanistic
Delivery closed/mechanistic
Marketing open/adaptive
3. Narrative of the Existing System
Principal Inputs:
1. Credit Reports from Finance
2. Sales Forecast
3. Employees details from HR Department
4. Design details
Processes:
1. Determination of Production Strategy
2. Estimation of raw materials
3. Production
4. Delivery
Outputs:
1. Production Schedule
2. Raw Material order
3. Final product
4. Shipment to customer
4. Hierarchy of Organizational Problems
5. Project Goals & associated Problems
There are some major problems with the system and lack of IT processes which we would like to
address by listing some goals so that we canthereby obtain system improvement.
Problem #1: Credit is tight
Goal: To increase liquidity by increasing efficiency in production by ensuring below:
a. incorporate design changes in the products to reduce assembly time
b. utilize idle machinery on Fridays when the other ones are under maintenance
c. perform scheduling tasks efficiently in order to maximize resources (employees as well as
machinery)
d. Whenever demand calls for additional work force, resort to hiring instead of sub-contracting
since it is cheaper. The holding cost in case of subcontracting is a heavy burden which
outweighs its benefits
Problem#2: Unstable demand for products
Goal: To increase demand for products by:
a. making innovations to Cloud Chair to make it eco-friendly, so that it appeals to users & has
competitive advantage
b. making Cloud Chair viable for use as an indoor chair by adding upholstery
c. provision of a customer loyalty program, through which customers gain points for their
purchases which they can later redeem for other purchases in place of cash
Problem#3: High employee turnover, leading to decrease in productivity
Goal: Prevent decrease in productivity by:
a. preventing loss of skilled employees
b. increasing employee satisfaction, by promoting promising unskilled employees to skilled
employees, via training, exams etc. instead of hiring from outside in times ofneed of work
force increase
Problem # 4: Lack of Employee Referral System
Goal: To incorporate an online employee referral system in place to encourage employees to bring
in their
acquaintances and friends in order to encourage community building.
Problem # 5 Absence of feedback from employees
Goal: To have a central location in place for employee suggestions, feedback and grievances.
a. to establish an anonymous employee grievance system that increases employee satisfaction &
thereby increase productivity
b. to establish a suggestion box, through which employees can put in their suggestions for
absolutely any improvement and innovations. Constructive suggestions should account for
bonuses.
Problem # 6 Individual sales do not contribute sizable amounts
Goal: Increase targeted customer base by
a. improving sales web-site to attract more users
b. provide more discounts if orders are placed online
c. Invest on online advertising to boost sales (especially use social marketing to target the more
tech-savvy audience by marketing on Facebook, blogger etc.)
Problem # 7: Need for appraisal system
Goal: To have a 360 degree appraisal process in place wherein even superiors are rated by
subordinates in
order to ensure that everyone is treated fairly and there is no preferential treatment.
Problem # 8: Delivery slippages
Goal: To develop strategic partnershipswith shipping agencies and guarantee fixed 3 day shipping
to
customers. In case of slippage, next delivery is discounted for that customer and the cost is borne
by the
shipping agency.
Problem # 9: Risk of Quality standards not being met in case of bulk orders
Goal: Implement a rigid QA process to check quality of products. Introduce a new QA department
that designs
a QA structure so as to ensure meeting quality standards that has been set by company, and that
meets user
expectation. Also, able to handle the bulk orders by utilizing maximum use of resource, man power
and
provide on-time delivery of bulk orders without compromising with the quality. Explore the feasibility
of
automating the process.
Problem# 10: Risk of increase in raw material cost
Goal: Contracts should be established in order to deliver required amounts of raw materials at pre-
defined
rates. Foldrite might consider buying futures for the raw materials whose price it perceives would
increase.
Problem # 11: Possibility of damage to the machinery by being idle
Goal: To earn on idle machinery in off-season by renting out to other manufacturers/vendors
Problem # 12: Absence of client feedback system
Goal: Develop an online feedback system for online orders and a feedback form with return
envelope for
other orders in order to obtain the valuable customer feedback related to products & services.