Essay Sample on Five Star Tool Co: Growth & Supply Constraints

Introduction

Five Star Tool company deals with the manufacturing of cutting tools which are coated with Diamond which is typically used by the jewellers. Small family members own the five-star tools company. For the past two years, the company has been experiencing growth and a vast increase in the coating and the sharpening process. The growth has resulted in the company experiencing constraints and even not able to make a full supply to their regular customers. The company's management has made steps to help in reducing constrains experience by the company losing in the coating and sharpening.

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The five-star tools if formed by combining the three major production processes. The first process involves cutting the blanks into different size (Becker, DeFond, Jiambalvo & Subramanyam, 1998). The second process is where the blanks taken through a chemical bath, which makes the coating of the blanks. The last process which experiences constraint is where the surface done with the diamond chips; again, this is where sharpening of the blade is done. Constrains have been I identified in the sharpening and coating departments which also require skilled personnel and equipment which are very expensive. After the first step of determining the areas of constrains, the company has made several changes to reduce constraints and increase productivity within the company.

The decision to cross-train workers from other department was the first to be reached by the management. The trained workers from another department would assist in reducing the workload in the coating and sharpening process. With many workers in the processing sector, there was a need to increase level strictness of the inspection station before the coating and sharpening process. The inspection would assist to in reducing the valuable time wasted and the resources used in buying the expensive additional machinery. The company paid attention to reducing the defective unit. This helped a great deal in that the faulty units which are processed and then finally scrapped would be sold to make a profit for the company. The need for five-star tools to participate in subcontracting some of the work was also made to assist in meeting all the demand of the customers. The management decided to implement the operation of the source management team. That would help in managing and scheduling the breaks of workers and how the work shifts operate.

The management of the five-star tool decided that at the inspection station, there was no need to employ additional staff. The decision for not hiring was based on the point that the employees who were working work at the chemical bath area were also in the position to work in the inspection station. The decision, according to the management, would help to free up 240 hours in the process of coating and sharpening of the blanks. It is predicted that the possible profit that the company is likely to reap per year in association with the number of hours generated by the company is gotten by 240 hours multiply $850.From the calculation of the profit margin in an hour is $204000 increase in the profit which the five-star tool generated.

The Goldratt's theory helps in pointing out the new binding constraint (Dettmer, 1997). The responsibility of identifying any possible limitation in the manufacturing process is a critical activity which each company should do on a routine basis. By identifying the bottleneck and solving the problem within the manufacturing process of the company, the company will operate smoothly and be sure of the effortlessness of the operation.

The difficulty experienced by the Five-star Tool is what most the manufacturing companies are going through. But the worst always occur, when management is not in a position to identify the constraints at the early stage. By identifying constraints within the company, there will be an increase in the profit made by the company. A lot of effort will now be concentrated on the products which will earn the benefit to the company. From the five-star tools company, it is recommended that until all the constraints are cleared. The production process in a company should always be concentrated on the production of the profitable model to the company. From the data of the company, we find that the model C210 contributed about $1250 per hour without the constraints. This is higher compared to $537.5 per hour with the constraints in the coating and sharpening stage. The presence of the limitations indicates that a lot of resources both the capital and the human resources will be used in the production when the barriers are not taken care of. In any company, it is recommended that all the constraint should be removed first for-profit maximization and efficiency in the production process.

Conclusion

Companies are formed with the sole purpose of making a profit. The efficiency and reliability of the company's products will always contribute to the loyalty of the customers. For the company to win the trusts of the clients, they must prove the constant supply of the products and should be of a high standard. With the highly skilled management department, proper policies will be generated to help identify and provide solutions to the constraints that might hinder the production process. The identification and solutions of the restrictions will contribute to profit maximization within the company.

References

Becker, C. L., DeFond, M. L., Jiambalvo, J., & Subramanyam, K. R. (1998). The effect of audit quality on earnings management. Contemporary Accounting Research, 15(1), 1-24.

Dettmer, H. W. (1997). Goldratt's theory of constraints: a systems approach to continuous improvement. ASQ Quality Press.