26 PARTIStrategic Operations Management CASE STUDY Natural Designs Inc painted.

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26 PARTIStrategic Operations Management CASE STUDY Natural Designs Inc painted. Finally, the item is shipped directly to the atural Designs manufactures a variety of bird feed- customer's home. While this product has been wild ers, garden accessories, and other items intended observe nature popular with customers Jim McMaster has two major help people get in touch with and Founded in 1995 by nois, the company started Jim McMaster in LaGrange, Ill concerns. First, he is not sure that the customization when he was working as a is profitable-he charges an additional $10 per bird tations to students onfeeder, but he is not sure exactly how much extra birds and wildlife had a way of capturing their enthu labor is involved in fulfilling the customization por n: thus, McMaster started oftering presentations tion of the order. Second, despite assigning an em- to other schools in the greater Chicago area. Within a ployee to the custom bird feeder operation full time few years, McMaster was so busy doing presentations lead times on orders have gradually Increased from an at various schools, as well as running from his home, that he quit his full-time job as an prevents Natural Designs from meeting its promised elementary school teacher to form Natural Designs lead time of one week or less. In addition, during At first, Natural Designs was mostly Jim and his wife peak periods (early spring and early fall, the lead g nature camps average of 4.5 business days to 9.2 business days. This giving presentations and running camps, but gradu time can stretch to three or four weeks ally the company expanded to sell some of the bird feeders and other nature devices featured in his class ural Designs, he is pleased to note that sales are con- talks Today, the company has sales of $2 miltion per tinuing to grow overall at a rate of 10 percent per As Jim McMaster reviews the current state of Nat year, most of which comes from physical products year Furthermore, his work force is generally happy sold to outdoor, nature, and bird stores such as Wild and the business is profitable. However, his accoun- Birds Unlimited. ants have been telling him that profits are declining In the first few years of operation Jim McMaster as a percentage of sales and that the number of cus- and his wife, Sheila, produced bird feeders and other tomer retums of items and complaints has increased products in their garage. In 1997, howevet, the opera by over 30 percent in the past year. The capacity of tion became too large for their garage, so they rented the existing facility is extremely tight, and Jim is con- 4,000-square-foot facility for production and distrisidering either adding a second facility or moving to a bution purposes. They also hired two employees to larger 8,000-square-foot facility manage these two functions so that the McMasters could continue giving school talks. Today, Natural QUESTIONS Designs has 15 employees, 2 of which are focused solely on giving nature talks and selling the products to retailers interested in reselling Natural Designs 1. What types of decisions must Jim McMaster make i on a daily basis for Natural Designs to run ts. The product range consists of $00 stock smoothly? What kind of decisions must he make on a long-term basis? units (SkUs) One of the challenges faced by Natural Designs2 Describe the operations strategy for Natural De nvolves its customized bird feeders. This operation allows customers to get one of the 10 made-to-stock bd feeders and have it customized with their name signs Has this strategy changed as a result of the custom bird feeder operation? If yes, how? tate the offering of custom bird feeders? expansion options? Which would you recom 3. What might have been done dit carved in the wood, plus painting in any of 10 color schemes. This portion of the business has been growing by 50 percent per year and now repre 4. How should Mc Master analyee the alternative sents S100,000 per year in sales. A customer order is taken over the Internet and promised for delivery within one week. Then the item is pulled from stockarger facility arved with the appropriate name and address, and mend a second facility or a move to a single

Explanation / Answer

NATURAL DESIGNS INC

1. What types of decision must Jim McMaster make on a daily basis for natural design to run smoothly? What kind of decision must he make on long-term basis?

Jim McMaster has to take short-term decisions based on a daily basis are Infrastructural first and include:

Long-term decision making is structural and needs a huge amount of capital. The areas that need to improve are:

2.Describe the operation strategy for Natural Designs. Has this strategy changed as a result of the custom bird feeder operation? If yes, how?

Operation Strategies of Natural Designs.

Operations strategy of natural designs is laid through competitive priority for flexibility

Before customization process – the cost of operations was low due to standard products made to stock and on-time delivery was quite possible with minimal fluctuation in led time. In terms of flexibility, there were 10 standard products

After customization process –

What might have been done differently to facilitate the offering of custom bird feeders?

How should McMaster analyze the alternative expansion option? Which would you recommend: a second facility or a move to a single larger facility?

He should take into account several factors into account

A single larger facility brings in a lot of control and reduced complexity. But acquiring a single large space may be difficult.

A second facility is somewhat easy to expand. It may also help in serving addition consumers across a different geography. The problem is complexity

I would prefer a second facility because the organization is on a growth path and anyway it has to expand in future. Hence a second facility is more appropriate as the first step towards expansion

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