Aplichem Abridged Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Sunchem

Applichem’s 50% Japanese joint venture operates the Sunchem plant. It was completely managed by the Japanese employees and on regular basis reports to the Applichem’s pacific area. This plant was constructed back in the year 1957 and immediately started supplying to the Japanese customers. This manufacturing has been completely redesigned back in the year 1969 and as a result state of the art automation and waste recovery system has been introduced within the plant. Actually Sunchem’s drying capacity has been a constraint which limits its production volume back in the year 1982.

There was union at the plant. Moreover the raw material cost of the Sunchem plant was 91.86 U.S dollars / hundred pounds of Release-case. This raw material cost was at the highest level as compared to the rest three plants of Applichem Company. The trend continues and the operational cost of this plant is also at the highest level of around 50.56 U.S dollars / hundred pounds of Release-case. The packaging, loading and shipping cost reflecting the second highest level of 4.56 U.S dollars / hundred pounds of Release-case. But this low cost cannot help them in an effective manner because the total cost of production as per the exhibit 1 is 146.98 U.S dollars / hundred pounds of Release-case which is quite high, specifically when compared with Frankfurt plant that possess a total cost of 72.26 U.S dollars / hundred pounds of Release-case.

The annual design capacity of Sunchem plant is quite low at 5.0million lbs as compare to Mexico, Frankfurt and Gary that possess 27.0, 47.0 and 26.0 respectively. In a similar pattern the utility cost per million pounds of the Sunchem plant is around $35,675 which is far ahead from other three plants. By analyzing the data it can be said that Frankfurt is the most effective and efficient plant from many aspects like total cost of 72.6 U.S dollars / hundred pounds of Release-case, utility cost of around lowest $11,116 U.S dollars / hundred pounds of Release-case and most importantly it possesses the annual design capacity of highest 47.0 million lbs.

Q2: As Joe Spadaro, what would you do given the current over capacity situation and information provided by the recent productivity study? In particular, what would you do about the Gary facility?

Being Joe Spadaro I would immediately recommend the changes which were made by the Frankfurt plants. The issue regarding the currency fluctuation should be neglected at this span of time. Moreover the division of the indirect cost of operations was an issue while conducting the study, therefore complete reliance cannot be made in this study. Being Joe I would prefer to introduce the operational and technological excellence across the Gary plant for more efficient performance. I must also make sure that Gary plant could be more focused towards the maintaining quality standards by increasing penetration in North America. The Immediate actions which need to be taken are: