Coolit Systems: Developing An Operations Strategy Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Coolit Systems: Developing An Operations Strategy Case Solution

The company has high raw-material and WIP inventory, which is also increasing the warehousing and the inventory damage costs, as pointed out the VP.
The company needs additional shift in order to meet up with the demand expectations, as the capacity is not sufficient to meet the demand expectation till 2024.
The costs will increase as adding shifts will require the company to make investments of approximately $500000 in the instruments.

i.Outsourced Production

The company already has its outsourced production in China, which primarily manufactures cooling systems for the gaming computers market, but to cater with high end customers of the data centers market in North America; the company can opt for an outsourced production facility in North America. The pros and cons are described as below:

Pros

The company doesn’t need to be concerned-regarding the inventory handling or warehousing costs, as the outsourced manufacturer will be looking into this matter.
The company’s overall operation and production cost will be reduced, because of no excess inventory or warehousing related costs.
There will be no concern for maintain relationships with the suppliers of raw materials.
The company doesn’t need huge capital investments in order to increase the capacity for catering a rise in demand of cooling solutions.
Outsourcing can save time as the company’s management can divert its attention to more possible growth expansion and product development opportunities i.e. potential to increase efficiency(Lavska, 2017).

Cons

The greatest challenge that the company might face, could be to find out the best producer, which can produce the desired product of the company, without compromising on the quality standards, which is the basic requirement of the customers.
There is a risk inherent in operations especially in outsourcing, as the management has less control on the operations, raw material and the quality, which is the key requirement of the potential data center target market.

ii.Hybrid Production Approach

The third possible alternative is that the company use both the in-house production in Calgary and outsourced production to any North American firm. Also, as the company has an outsourced manufacturer in China, so it can use the same manufacturer with an inclusion of the in-house production in Calgary.This approach can lead towards both pros and cons, which are explained below:

Pros

As the customers of the gaming segment are less quality and execution concerned as compared to the investors in North America, so by having a hybrid production model, the company satisfy the needs of its both target customers.
The company can achieve expertise in regard to specific clients or channels in a hybrid model.
Also, the gaming market is generating constant but stable return so the company needs to keep it as outsourced as before and it should focus on meeting the demands of North American customers by having an in-house facility.
By catering to the needs of both the segments, the company can achieve large market share and growth, ultimately high profitability.

Cons

The hybrid is more time consuming as the company will have to look after the internal production as well as looking for the check and balance at the outsourced facility.
The hybrid requires extensive cooperation between the company and the outsourced facility management, which becomes difficult at times and involves greater cost.
The hybrid model is more complex and difficult to manage.
In maintaining a hybrid model, more staff will be required and also investment for manufacturing an in-house facility and running the operations.

Recommendation and Implementation

The recommended solution for Coolin systems is to have a hybrid production model catering to the target markets of gaming computers and data centers separately. It is because the company is earning a stable profitability from its gaming computers market but the customers of the data centers are more price sensitive and concerned about the quality and reliability of the product. Not only this, the product execution is another important factor for the targeted audience..........................

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Coolit Systems: Developing An Operations Strategy Harvard Case Solution & Analysis