Abstract
Whistler Corporation was facing severe problems in the manufacturing process and intense competition because of which the costs kept on rising and the company had to face a loss. The company also lost its market share from 21% to 12%. The management took strict action instantly; in order to resolve the problem and bring the company back on track. There were different alternatives that could be applied which include changing the entire system of the company, building relation with suppliers or to move manufacturing off-shore. After evaluating the pros and cons, the alternative of off-shoring was given higher importance as it would help in maintaining the core competencies of the company.
Whistler Corp Case Analysis
Whistler’s work followed ‘push-based model’ rather than the ‘pull method’ through demand of the customers (Olhager & Östlund, 1990). This was because the high demand in the market accepted whatever was produced. The idea of producing “as much as you can” caused increased quality problems and more defects in the product along with a higher work in process inventory to be managed. The market was highly competitive because of the rapidly growing idea of outsourcing supplies from low cost countries (Kannan & Tan, 2006).
The market was becoming saturated (Liu & Yang, 2009), and the growth in the market had ceased. In fact, the U.S. market for radar detector has decreased in the last few years and the export was also banned in some parts of Europe. There was a rising demand of the products that use a similar methodology or internal products but that required proper marketing and engineering before it could be manufactured.
The company had been losing $500,000 per month because of increasing cost of production, increasing labor cost, more defects in the assembly lines, more inventory in the work in progress which created inefficient usage of floor space and many more. Another plant in Fitchburg was setup to cover some of the problems, but that too resulted in high transportation costs, the capacity was low and other problems existed.
On account of the company’s strong design and engineering capabilities, it quickly became a dominant and profitable player in the small but growing market for radar detectors. However as the demand grew, the inefficiencies in the operating system increased because of the major changes that were brought in by the changing nature of the industry. The lead time of the manufacturing and the put rates increased drastically (Leitch, 2001). A work of 8 hours took almost 23 days in process. The change in the setup was not only increasing the work in process inventory but was also causing higher defects which resulted in increasing costs.
The company was good at maintaining low number of models. As they had increased the number of models and the production units; hence the problems arose. The long experience in the design and engineering were the core competencies of the company (Gallon, Stillman & Coates, 1995) while the external pressure from the competitors especially for cost was the major threat.
Whistler must decide on choosing from the following alternatives as early as possible in order to avoid further problems. It can either:
- Install JIT synchronized production line and The RACE-ME Program
- Expand relation with supplier
- Or move production off-shore
All the above alternatives have pros and cons. In installing the new system, there is a risk of inability to replicate the pilot system in the whole company. Although this system has produced extremely desirable results by reducing the production time considerably, ways to reduce defects, and above all, the usage of breaking up the batches in to small lots, but the risks of this alternative are high. Besides, even if the company manages to improve the system within it, the external pressure of reduced demand will bring losses to the company. The relationship with supplier will solve the cost issue but the issues in operating process will remain the same. However, the moving off-shore alternative will allow the company to focus on finding new alternatives where this mechanism can be used and .........................
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