Products standards and quality:
The company has prime focus on producing horns of top quality to enhance its brand image and awareness in the market. In order to maintain the quality, the company is using the finest quality of copper and tungsten that is the main component used in the production of horns. The company tries to make sure about using raw materials that are high in terms of quality as compared to its direct competitors in the market. In order to satisfy customers, the company gives a warranty claim to its customers as well, and that warranty is based on 10% of the product.
In addition to that, the company has also invested in new technology and machinery that is used in the production like fastening machines, coil winding machines, test benches and other machineries as well but, unfortunately, the technology and machinery have not been used in the production process.
Policies and procedures followed by MSL:
As mentioned above that the company is following a made to order strategy; hence, the main reason of implementing this strategy is the unpredictable demand of horns by the consumers. Further, as the prices of the raw materials are fluctuating as well, therefore, the company does not want to store especially raw material with higher prices. Moreover, the company also wants to do business with original equipment manufacturers as being a supplier of horns in the OEM market.
Apart from that, the company produces around 15000 horns monthly out of which only 20% of the production is used by the company and the rest is used by other companies. With 20% production in use, each horn is sold for rupees 150 per unit and payment is received within sixty days. In addition, selling is done through different workshops and wholesalers.
Current performance:
MSL’s approach is quiet clear because they have a clear strategy of expanding business by enhancing their operational skills and procedures. The company is penetrating into the original equipment market to increase sales in the core aspect of the business plan. MSL is facing around ten competitors in Delhi that have facilities of producing 28,000 horns as compared to MSL’s capacity of 15,000. A necessary clarification is required to set up a new plant and in order to set up a new and potential market of original equipment market. This optimistic approach of expansion will result in an increment of overall operational competence.
Capacity Utilization:
Capacity utilization is a metric that is used to identify output levels that are used by the company. The measure is always expressed in terms of percentage of the total output or production. Capacity utilization rate of the company is found to be -12%, which shows that the company is not utilizing its full capacity in production. One reason behind this is a lot of space that has been unused by the company. Secondly, the company had procured many automation devices like coil winding machines and other technology to facilitate workers but they were reluctant to use it (Refer exhibit 2 for calculations).
Key Issues Faced By MSL:
MSL as per the passage of time starts facing several problems, which need to be considered as soon as possible at this stage, so that expansion and growth should not suffer. Some serious concerns include the un-established brand name, fluctuated demand, sometimes the product returns, quality control issues, irregular stress on the plant, variability issues in prices of tungsten and copper.
The demand for MSL’s merchandise is impulsive because they are mostly used for the replacement in marketplace. This market comes to explosion for the duration of monsoon seasons as horns are likely to get scratched and damaged in the rain. Impulsiveness of the overall demand makes it very uncertain for the organization to make optimistic and workable plans. Furthermore, the organization has also dealt with some issues in order to process issues, sluggish approach towards the adaptation of new technology, lack of information technology system, and there are some additional issues in acquiring the approval from ISO. MSL is not an extremely recognized and is not known as well-established brand and on the other hand brands or companies that use the similar facility as MSL’s are leaning up. The lack of brand name issues in the automobile industry is turning into a hurdle for MSL to improve its operations. MSL is not capable of finding the issues of product return within service contract claim’s periods. A momentous digit of 10% comprises of rate of return of products...........................
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