5 Pages Posted: 1 Jun 2017
Charlie Reese, an operations manager for a fragrance manufacturer, is given a directive to reduce costs in order to free up working capital for other initiatives. Reese discovers that his initial plan to approach the problem from an inventory perspective would be unsustainable. In evaluating his options, he must determine which other areas of the production process to focus on.
Rev. Apr. 6, 2016
Charlie Reese sat at his desk, wondering what he should do next. Reese was the operations manager for the Prestige fragrance line at the Seneca, South Carolina, manufacturing plant of Belle, Inc., (Belle). The prior year, the senior vice president (SVP) of operations had issued a global directive to reduce costs and free up working capital. In response to this directive, the leadership team at the Seneca plant had worked endless hours to accomplish this goal. The consensus solution was to reduce the production quantities of each run in order to reduce the inventory investment at the plant. This solution was in line with the plant's Lean manufacturing initiative and would allow the plant to produce a wider variety of products and respond to changing customer demands.
Despite the plant's success in reducing on-hand inventory, doing so had an adverse effect on the overall production process. Over the previous few months, Reese had found it more and more difficult to meet his cost targets. Production costs for the Prestige line were up more than 15% over the prior year. In addition, the production line was barely able to meet the increased demand that the plant was experiencing for the Prestige fragrance products. Although Reese had originally welcomed the increased volume, thinking it would result in lower per-unit costs, he was growing increasingly wary. Reese needed to understand whether the increased costs were simply related to the increased demand, or whether something more systemic was going on. Either way, he knew something had to be done quickly.
Belle and the Cosmetics Industry
. . .
Keywords: Lean, production, inventory management, cost management, gemba, lean manufacturing
Suggested Citation: Suggested Citation
Here is the Coronavirus
related research on SSRN
This is a Darden A Case paper. Darden A Case charges $6.25 .
File name: UVA-OM-1518.pdf
If you wish to purchase the right to make copies of this paper for distribution to others, please select the quantity.