Peoria Engine Plant Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Peoria Engine Plant Case Solution

Balance scorecard

Balance scorecard is considered as a framework, which is used to implement and manage the company’s specific strategies which belongs to the financial, learning and growth, customers and internal process perspectives.

Financial perspective

The company should set some financial goals for future, which are as follows:

The targeted net income that helps in generating finances for the company to invest in expansion activities should be 15 percent of the total sales.
The growth of the total sales must be 10 percent each year.
The Lower cost of production process by reducing the excess labor hours which are consumed in producing similar goods as budgeted labor hours.
Optimize the channels to minimize the distribution cost.

Learning and growth perspective

The company needs to set some learning and growth goals for the future, which are as follows:

The company would train its existing employees to consume less hours in producing one unit of output
In addition, the company would invest in the capital infrastructure, which would help it in recycling the waste of the manufacturing process, which would definitely reduce the cost of manufacturing the goods, ultimately increasing the profits.
In addition to this, company would invest in the technology in order to make sure that the budgets and other relevant things will auto generate the reports, which would require less human as well as financial resources.
In addition to this, the company would invest in the technology to innovate products and it would also invest in the innovative management style to make easy, quick and presentable goods, in order to have competitive advantage over its competitors and for the purpose of the reduction in its manufacturing cost.

Customer Perspective

The company should set some customer goals for future. These customer goals are as follows:

The company would clearly target the customer segment. For this purpose, the company would identify the potential users of the products.
After identifying the potential users; the company’s goal is to identify the areas which have the potential to generate more profits and revenues for the company, in future.
After selecting, the company would identify its pros and cons and relate them with its manufacturing process.
After being satisfied with pros and cons; the company would establish distribution techniques in order to find out if the product is easily available to the consumers or not.
In addition to this, the company needs to identify the customer’s needs and wants in order to design its final product.
Further, the company will evaluate the product features with the customers’ needs and wants that whether the product is satisfying the consumers or not. If they are found to be satisfying then the company then will evaluate the process, which make the customers delighted.

Internal Process Perspective

The company should need to set some internal process goals for future. These internal process goals are as follows:

The company needs to set out its strategic objectives such as the objectives related to the innovations, related to the product development and market development, related to the training and development, related to the process development and strategies related to the rules and regulations, such as: the timing of the labor, per hour units production, peak season production and off season production and its storage.

Recommendations

The Peoria Engine Plant needs different cost control and plant management measures in order to improve the productivity levels and the financial performance of the sub-division. The cost controlling and plant management measures are detailed as follows:

1.Cost Control Measures

·Improving Employee Productivity

The company keeps an oversupply of employees, which increases the cost structures and destroy the company’s profitability. Rather than maintaining an excessive labor supply, the company should hire the employees on part time basis or the company’s hiring should be based on season and trends to be expected in the future. This imitative will reduce the company’s cost and the productivity of employees. It is because currently, sometimes they remain idle and sometimes they are pressurized for extra shifts, which reduces the employees’ morale and their productivity.

·Capital Investment

As the company’s production of engines per person is less that the industry standards;itshould to put up capital investments in order to expand the plant capacity. The increased plant capacity would reduce the additional shifts requirement ad it would bring an efficiency in the plant’s production.

.Just-in-Time Inventory

The company’s production is mainly focused on the just-in-time production, which has increased the production shortages, idle plant and labor capacity. Instead of doing so, the company should follow just-in-time in its inventory management only. The production should be based on real time mass production. It would reduce the cost as the company will not be facing delayed production or cost increments due to idle labor and plant capacities.

·Changing Control Process

The company should also change its control and monitoring processes. Currently, the company’ supervisors and finance staffs have been preparing daily, weekly and monthly variance reports manually. Rather, the company should adopt technological systems in recording the labor hours and production figures. The software system will bring smart, cost-effective and accurate recordings, which will reduce the mangers’ time and efforts, thereby diverting their focus towards the key figures and actions to be taken.

Improved Variance Analysis

The company should prepare variance reports on quarterly and yearly basis. It is because the key information – which needs to get focused, is missed by the senior management, due to extensive variance reporting. The company should make budgets but it should allow the standard to be met within a greater time span, as good things take time to happen. Calculating daily basis variances does not provide key insights about the problems or bottlenecks in the production processes. Quarterly and yearly variance analysis will enable the management to look at a broader perspective, in improving the company’s production efficiency and its financial performance.

Machine Maintenance

Another cost controlling measure, to be adopted by Peoria Engine Plant’s management, is to maintain strict machines and tool maintenance. It is because due to poor maintenance, the company’s machines go through frequent breakdowns, which further keeps the plant and the labor capacities idle and increases the company’s cost of production.

2.Plant Management Measures

Real Time Production

The company should adopt real time mass production instead of just-in-time production as just-in-requires proper technological systems to keep the inventory and the production records. By following the real time production, the company will not be facing inventory shortage, idle labor force and plant capacities.

Automating Manual Workflows

Another technique, which could be used to improve the plant production efficiency is to automate the different production processes. Customization will reduce the company’s requirement of excess labor and would bring cost efficiency as well as productivity levels......................

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Peoria Engine Plant Harvard Case Solution & Analysis