Eastern Gear is a company that traditionally produced custom gears in small lots, and has recently been given the opportunity to begin producing larger volumes of gears per order. This is a typical small job shop which is owner operated. In addition, Eastern Gear has experienced a large increase in sales which is causing major problems in operations. Because of the wide range of problems presented, the case permits an overview of a job shop type of operation and practice at looking at the entire scope of operations including objectives, capacity, production and inventory control, organization, and quality.

 

1. What are the major problems being faced by Eastern Gear?

 

2. What action should Mr. Rhodes take to solve his problems?

 

3. How can this case be related to operations strategy and process design concepts?

Answer:

1. Major problems faced by Eastern Gear are as follows-

• Eastern Gear should have done a research before expanding their market size. They were traditionally a small company covering small lots of orders. They were needed to expand on a medium scale so that they can adjust to the market needs. Since they expanded on a large scale they were having problems trying to fulfill the large market needs.
• Eastern Gear got an opportunity to produce larger volumes of gear. The company was not ready for such a big order. But still, they went to complete the order even when they didn't have that kind of accuracy or efficiency to produce a high volume of gears.
• The operations management function in the company suffered because the whole company concentrated on producing and completing the large orders and waitlisted the small orders. This would affect their demand and supply proportion.
• Since the production is increasing they would be needing some specialized employees who can manufacture gears. And hence this would increase the cost of production and hence their total cost of a gear. Human resource management needs research and development before and then the actual recruitment. The Eastern gear company recruited a number of employees because they had more demand if the demand decreases then would the company decrease its employees as well. Hence it will be a big problem for the company to manage its employees and their salaries. Since new employees would be recruited they won't have time to train them which would lead to low-quality products.
• The company needs to rush the order because they have more pending orders in the waitlist which would influence the quality of products and their processing time.

2. Mr. Rhodes should take following actions to solve the problem-

• Mr. Rhodes should decrease the processing time. The company is taking more time in fulfilling orders. which will affect the company in the future. They need to make strategies and distribute the work between employees so that they won't be any confusion relating "who will do what".
• Mr. Rhodes could take a loan from the bank to finance some new machines for the production. It is because the company was habitual in producing less number of products but now they need more production rate. This would be possible if there were enough machines on which the employees could work freely without waiting to get the machine after an employee finishes.
• Mr. Rhodes should hire new and professional employees to make a quality product. This would cost more in comparison with unskilled employees. If Mr. Rhodes want he can employee low-skilled workers and train them. This would take time and with the current flow of orders, it is preferred that the company would hire skilled workers.
• Mr. Rhodes should understand his target market. Targeting and segmenting the market is very important. It would help him in focusing on one target customer. If the company wants to focus on large orders then it should focus on doing that rather then going for small orders. Mr. Rhodes needs to differentiate it so that they could fulfill their large orders without rushing for completing some small orders in the queue.

3. This can be related to operations strategy and process design concept because the main problem faced by Eastern Gear company was not being able to handle large orders. The operation strategy should have set before expanding their business. It was needed that the company would increase its machines and employees but they did that after taking the order. The management of its operations should have been done beforehand so that there is no delay in completion of an order. The company faced some problems because they have made big decisions without strategising the operations and process design. They were needed to make proper operations chart and set product cost and quality for the larger market needs.