Running head: OPERATIONAL MANAGEMENT ISSUES 1

Central Queensland University

Operational Management Issues, (a Case Study of

Hawkesbury Cabinets Pty Ltd)

Course : Operations Management

Course Code : MGMT20130

Operational Management Issues 2

Operations management is management concerned with controlling and designing

production process and redesigning business operations in goods or services production (Slack,

2015). Operations management entails the responsibility of ensuring effective business

operations regarding meeting the requirements of customers and efficient regarding using few

resources as available (Heras-Saizarbitoria & Boiral, 2013). We take a look at Hawkesbury

Cabinets Pty Ltd, a company founded in Mulgrave, Sydney in 2008 that deals with designing and

manufacturing of custom-built kitchen cabinetry. The company was originally founded to meet

the needs of a growing community and due to increase in reputation, it has ever since

experienced a more and more diverse client bases. Having been founded by two siblings, during

the development stages they did not see a need to identify their roles formally (Langabeer &

Helton, 2015). Instead, one took the role of production and operations manager with the other

finding interest in the financial and general management of the enterprise, thereby becoming the

general manager. Despite the increased level of production and a variety of produces, the

development of the company was below par as no company can develop without proper

operational management skills (Marshall, Metters & Pagell, 2016).

At the early stages of the company, the two siblings were the sole producers. They

completely focused on custom-made kitchens, with the consumers having their specifications on

the type of kitchen design. Increase in demand as a result of fame made the company receive

contracts in which they signed to supply small ‘spec’ builders, individuals or organizations that

carry out residential house construction work on land they own, with a variety of high quality

standardized kitchen cabinetry (Monczka et al, 2015). In the contracts, it was required of the

company to produce a limited range of the products in small batches that ranged from one

kitchen to five all of similar requirements. The Hawkesbury Cabinets system entails both the
Operational Management Issues 3

standard and custom kitchen cabinets in a unit manufacturing facility. For the purpose of

flexibility in producing a range of custom designed cabinets, the cabinet-making tool is mainly

comprised of general purpose machines of high quality. Within the factory, another equipment

also useful to the production is also grouped in differed sections (Heras-Saizarbitoria & Boiral,

2013). The sections include; saws and cutting tables, routers and shapers, lathes and other

frequently used machines, and also painting and finishing which is done in a controlled

environment stationed at the rear of the facility (Marshall, Metters & Pagell, 2016).

The end products are a representation of the quality of the raw materials just as much as

the craftsmanship of the cabinet maker. The production system, however, does not allow for both

the standard and custom cabinets to be produced at the same time and instead compete for the

craftsmen and processing time. The operations system pushed the level of manufacturing to the

limit and give the layout, and there was no space left for expanding the plant (Gaiardelli, 2013).

As observed as seen comprised both the organizational behavior which included division of labor

between the siblings, and also technological elements that constituted machine and tools. The

concept of systems of production can be extended to the to the service sector with the knowledge

that services do have critical differences regarding the material product (Gaiardelli, 2013).

Compositing the configuration of output systems entails both organizational and

technological variables. Choices in production technology include process technology,

outscoring processes, fractionating capacity, capacity location, dimensioning capacity, variety

and trade-off volume. In the organizational area, choices include: defining worker

responsibilities and skills, information flow, team coordination and employee incentives

(Subramanian & Ramanathan, 2012). Pertaining production planning, push and pull approach are

distinguished fundamentally in that, the pull production system is authorized depending on the
Operational Management Issues 4

level of inventory whereas push approach is production based on the degree of demand. The

Hawkesbury Cabinets Pty Ltd used push approach as a method of production. In this context,

barriers of loading, part type selection, applications of operations research and sequencing all

have a critical role to play (Heras-Saizarbitoria & Boiral, 2013).

Businesses are always carried out with the aim of maximizing profit which is attached to

increase in demand. Similarly to Hawkesbury Cabinets Pty Ltd, there was an increase in demand

for the new builders’ line of the kitchen that made the sales increase steadily (Langabeer &

Helton, 2015). This led to the regular scheduling of work to build the builders’ line of the kitchen

to ensure the community demand of the product was met. However, the custom kitchen was still

a major commodity as they were of higher sales and brought with them high-profit margins

(Bowersox, Carter & Monczka, 2013). Given the one way of production, these two commodities

had to compete for manpower and processing time.

Continuous scheduling of trade-offs and processing of custom kitchens brought about a

lump of standard cabinet components left unfinished in a range of different completion stages.

The overall set up made the one-time large manufacturing factory an area clogged up with

incomplete pieces of work. I believe the company indeed was trying to build a good customer

relationship given their struggle to produce both the types of commodities (Walters, 2014). By

building healthy relationships with the consumers, a company is more likely to encourage

customers to come back. It would be easy to say the company was likely to have a bad customer

relationship given the delay which resulted from prolonged delivery of items already promised.

Ensuring that promised goods are supplied to consumers within the agreed range of time is an

essential element whose failure leads to a bad relationship between the business and the

customers (Foropon & McLachlin, 2013). It should be known that it does cost five times to lure a
Operational Management Issues 5

new customer than it takes to retain one that already exists. It would be significant to have a sales

environment that is fair, stable, and serves the needs of the customers. The manner in which the

consumers are dealt with determines whether they stay with you or opt for your competitor

(Bowersox, Carter & Monczka, 2013).

When Hawkesbury Cabinets Pty Ltd started producing builders’ kitchen, we notice a lot

of changes in different sectors ranging from their level and ways of production to the changes

within financial sectors (Walters, 2014). The company indeed was growing but what teases,

given the fact that the sales of custom kitchens stayed dominant whereas those of builders’ line

rising steadily, is that there was no development of equal quantity (Foropon & McLachlin,

2013). The profit margins were not high enough, and a rising amount of capital was being used

for raw materials inventory, processing of products and finished goods. Given the increase in the

volume of stocks, nearby warehouses were being rented and also the cost of producing standard

builders’ line was as well rising (Bromiley & Rau, 2016).

It would be argued that Hawkesbury Cabinets Pty Ltd and the sibling owners had no

business structure. The two siblings shared positions with one of them fulfilling the role of

production and operations manager while the other taking the role of general management

(Gunasekaran & Ngai, 2012). No formal identification of roles are mentioned for the two owners

and instead a fair and comfortable sharing of managerial responsibilities (Bromiley & Rau,

2016). There are a variety of business structures ranging from sole trader business structures to

those that have two or more parties as the business managers. The choice on the type of structure

to use depends on factors like finance requirements, establishment costs, type and size of

business as well as, taxation (Peng & Lai, 2012). The final decision on the choice of corporate

structure should be made after consultations with the solicitor or accountant. Give there were two
Operational Management Issues 6

members with the will to carry out a business, there are business structures that support business

systems with more than a sole trader. Examples of such business set-ups include the Normal

Partnerships, Limited Partnerships and, Incorporated Limited Partnerships (Bowersox, Carter &

Monczka, 2013).

Hawkesbury Cabinets Pty Ltd developed in such a manner that they were no space in a

previously spacious manufacturing area. Facility design entails finding out the location, layout,

and capacity for the production facility. Capacity as a measure is the ability of an organization to

provide the goods and services as demanded and in the quantity as requested by the customers

promptly (Coughlan, et al, 2016). Capacity planning thus includes determining the ability of the

facilities, estimating demand and being able to change the capacity of an organization to respond

to demand. Planning the system illustrates how management gurus utilize the limited resources

as a result of the system of production design. The results of such planning processes may be to

alter the system design to cope with changes within the environment (Subramanian &

Ramanathan, 2012). For instance, a company may decide to decrease or increase capacity to

meet the changing demand.

In conclusion, in any business enterprise products and services are produced. For this,

specific operations are performed through a combination of raw materials, assembling or

processing the components, using the services of machines, workers, tools and power

(Heras‐Saizarbitoria & Boiral, 2013). Even if there is an increase in the level of production and a

variety of products, the development of a company is likely to be below par if the correct

operational management practices are not put into use. Other crucial management problems

include safety management systems, maintenance policies, supply chain integration, and facility

management (Coughlan, et al, 2016).

Operational Management Issues 7

References

Bowersox, D. J., Carter, P. L., &Monczka, R. M. (2013). Materials logistics

management. International Journal of Physical Distribution & Logistics Management.

Bromiley, P., & Rau, D. (2016). Operations management and the resource based view: Another

view. Journal of Operations Management, 41, 95-106.

Coughlan, P., Draaijer, D., Godsell, J., & Boer, H. (2016). Operations and supply chain

management-the role of academics and practitioners in the development of research and

practice. International Journal of Operations and Production Management.

Foropon, C., &McLachlin, R. (2013). Metaphors in operations management theory

building. International Journal of Operations & Production Management, 33(2), 181-

196.

Gaiardelli, P. (2013). Key concepts in operations management, by Michel Leseure. Production

Planning & Control, 24(12), 1101-1102.

Gunasekaran, A., & Ngai, E. W. (2012). The future of operations management: an outlook and

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Heras‐Saizarbitoria, I., &Boiral, O. (2013). ISO 9001 and ISO 14001: towards a research agenda

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47-65.

Langabeer II, J. R., & Helton, J. (2015). Health care operations management. Jones & Bartlett

Publishers.
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Marshall, D., Metters, R., &Pagell, M. (2016). Changing a Leopard's Spots: A New Research

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Monczka, R. M., Handfield, R. B., Giunipero, L. C., & Patterson, J. L. (2015). Purchasing and

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Slack, N. (2015). Operations strategy. John Wiley & Sons, Ltd.

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