Franklin Fan Company, the maker of the electric fan, was established by engineers Dan Block and Ed Spriggs. The company was started in Dan Block’s garage and displayed slow but steady growth for seven years. It was during this time that Mr. Block and Mr. Spriggs decided to move the business to an old meatpacking warehouse located on Chicago’s South Side. The availability of space for the storage of inventory, the company began to produce additional lines of fans; growing the business. 15 years later, the company has once again relocated to a brand new warehouse and became the largest independent maker of fans in the north central area. The new storage space is more than 100,000 square feet. The additional space has increased capacity from 65% to 90%, but sales growth has not progressed.
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Proper inventory management is key to any organization with the aim of maximizing its sales and production. Franklin Fan Company has realized its stagnation in its sales even after increasing its range of products. As a material manager for the company, I have identified critical problems by the organization’s management such as lack of accurate inventory management, in the ability of the management to adapt to the increased scale of production and unclear spread of expenses for the organization’s output and distribution of its products. It is important for the sales of an organization to incline upon increasing its range of goods and inventories. The stagnation is a clear indication of a possible problem within the organization. However, it is clear that all the problems arise from inventory management practices employed by the company. Therefore, it is possible for the organization to apply inventory management skills that would maximize the sales of its products (Muller, 2011). In addition to that, it is also in suspense whether to increase the ordering costs for all the orders made by consumers to reduce the expenses of the organization or expenses from the pockets of the owners of the organization.
Analysis
Capacity is the maximum greatest amount that a manufacturing operation can produce. Manufacturing capacity is increased either to meet an immediate increase in customer demand or to meet a future increase in consumer demand. An immediate capacity increase is obtained by using equipment that is already on hand for more time through the use of additional shifts or overtime; or, outsourcing the work. Future capacity increases are attained using the current equipment more efficiently or buying new equipment. Franklin Fan Company seeks to grow its business units. Its objective is to gain growth in the fan market and obtain more market share. Franklin’s desire of growth has to be strong because the greater the market size, the greater the profit. The increase in manufacturing capacity results in increased costs, more significant complications, and need for skillful management. At the same time, inadequate production capacity can result in turning down orders, which could lead to customer dissatisfaction. Deficient capacity could also result in over usage of existing equipment and labor. Franklin Fan Company should be able to integrate business, growth and capacity planning for long-term existence.
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