Production And Operation Management Of Supply Chain Excellence – New Balance Case Study

Background of New Balance

Describe about the Production and operation management of Supply Chain Excellence?

There is a discussion on New Balance Athletic Shoe, Incorporation operation process, supply chain system and the new process adopted Lean Manufacturing. New Balance Athletic shoe, Inc is known as New Balance. There is a discussion about the challenged faced by New Balance workforce in managing their supply chain system, Lean manufacturing system and the benefits. The reason behind adoption of new manufacturing process i.e. Lean manufacturing process with their negative and positive effect on organization is also discussed (Chopra and Meindl, 2007). The report is having a brief explanation about the challenges faced by New Balance Company in their supply chain system and manufacturing system. There is a brief discussion on New Balance history, polices which affects their expenditure cost in comparison of their competitors. The report is having an analysis on implication of lean manufacturing process in New balance with its benefits.

New Balance is footwear US based company founded by William J. Railey in 1906. The market share of New Balance in US market is 12%. In footwear market New Balance is third ranked, behind Nike and Adidas (Tang, Teo and Wei, 2008). The sub brands of new balance are Dunham, PF-Flyers, Aravon, Warrior and Brine. New Balance is one of the largest seller and manufacturer of sports footwear in footwear market of US. New Balance manufactures sports products taking into consideration all customers (Carreira, 2005). New balance is a leading maker in US in sports shoes in comparison of other competitors present in sports market (Tang, Teo and Wei, 2008). New Balance other than Sports shoes manufactures many other products which are used in athletics, sports worldwide. New Balance goal is to help athletes in achieving success, set records and win medals every time. New Balance develop sports product for other customers also so that they are influenced toward healthy live. Company always focus on their customers requirement and demand for sports product. New Balance tries to deliver their customers fashionable as well as good quality product in affordable price range. New balance sports Product Company so they follow different policies regarding environment, social surrounding or society and others. They try to develop their sports product without harming environment, society and others i.e. they work in ethical manner. New balance at present time is having more than 1000 models of sports product that are manufactured outside USA and UK with a high sales rate in comparison of their competitors. In comparison of their competitors New Balance sports products are of high range but the main difference which company claim in their product is technical feature difference as they have inserted blended gel inside their shoes, heel of their sports product is comfortable for every age group people and others. There are several reasons behind unsuccessful story of New Balance in other countries in comparison to their competitors as they do not use celebrity advertising, their product line and others. On the hand New Balance competitors outsource their manufacturing process to others to cut down the cost but New Balance do not adopt outsourcing policy which affects their manufacturing cost.

New Balance Key Operational Objective

As mentioned in case study the key to operation of New Balance is their workforce or employees. The main factor behind operation of New Balance is the front line workers i.e. their employees. Operation system can be improved by improving or changing the working style of workforce. New balance is follow a training policy where the new employees have to pass through initial or induction training (Greeff and Ghoshal, 2004). At the end of training process of new employees’ new balance analyze their team building quality. New workforces are influenced while training session to work in a group or team (Bolstorff and Rosenbaum, 2007). Every new employee is grouped with experience employees so that the new once come to know about work, roles and responsibilities easily. Initial learning process is important so that every employee before starting main jobs is aware and comfortable with work and working environment of New Balance (Slideshare.net, 2009). Initial learning process of New Balance is beneficial for both employees as well as organization as they help New Balance to maintain process flow of communication and task distribution (Campuzano and Mula, 2011). After completing selection process New Balance organizes initial learning process for their new employees (Bisen and Srivastava, 2009). New employees are given 7 to 8 week training in which experience employees try to make them comfortable in business environment. The main aim of New Balance for organizing this initial learning is to motivate team work within organization. Other than team based work reward system also help New Balance management in motivating their employees (Bolstorff and Rosenbaum, 2007). As mentioned in case study New Balance used to follow hourly based wages system but few years later adopted team based piece rate system due to which company has to face several problems in production and employees team work (Bhadur, 2008). After analyzing the problem faced by their employees, New Balance again adopted hourly based wage system. Hourly wage systems help organization in motivating individual employees for improving their performance (Lan and Unhelkar, 2006). New balance organized training in initial face to evaluate whether employees are comfortable in business environment or not. Sports product manufacturing main factor for operation is their employees and the changing demand of their customers. New balance always tries to influence their employees for performing better by adopting different strategies and methods like changing reward system, organizing different events inside and outside the premises. New Balance provides medical as well as their facilities to their employees and the dependents, so that the trust and loyalty of employees are continued for long time. Initial training helps New Balance employees in different ways like they help them to know their roles and responsibility before starting of their work , help in making aware employees to the working culture of the organization and others. When new employees join they have to undergo initial training which is conducted by the senior or experience employees of New Balance. New Balance in a regular time gap provide training related to technology, change in business culture or change in policies , rules and regulation to their experience employees which help organization in increasing their productivity and profitability.

Challenges Faced by New Balance While Managing Their Supply Chain System

As discussed in case study the challenges faced by new balance in their supply chain management system are globalization of their manufacturing system, safety of their products, quality of their products, delivery of products to their customers, inefficient inventory in warehouse, use of  latest technology and others (Lan and Unhelkar, 2006). As mentioned in case study New balance have two suppliers of their sports product in china who never use to supply proper amount of shoes required and the quality of shoes were also sometimes poor which effected the New Balance market frame (Lan and Unhelkar, 2006). The main problem faced by New Balance in their supply chain system was their suppliers of different parts which they require for final product. In case study under foreign suppliers it is mentioned the main problem New Balance used to face was manage different cities suppliers and their delivery (Tang, Teo and Wei, 2008). New balance have connection with two suppliers in china who used to provide them with sole, upper part of shoes and kit, mostly suppliers from china used to delivery insufficient quantity of product or they used to send poor quality of product which later on effects final shoe production and their delivery (Bolstorff and Rosenbaum, 2007). As per case study New Balance management by consulting their supervisors decided to order some amount of items prior to their production process. Which help them to start their initial development process of shoes (Wilson, 2010). One of the main challenge faced by New balance as per case study is diversification in technology. In comparison of other competitors New Balance always have to keep their technical support strong and updated (Bisen and Srivastava, 2009). Customers always except a good quality product on time. So to increase customer number and level of satisfaction New balance should focus on their product quality and safety while delivering the shoes and other products (Bolstorff and Rosenbaum, 2007). One other challenge faced by New Balance is on time delivery by suppliers to company and from New Balance to their customers (Bhadur, 2008). To maintain a proper delivery time New balance decided to keep some shoes in their warehouse so that if customer ordered fewer amounts of shoes it can be immediately delivered. Supply chain management of New Balance products depends on various factors as the manufacturing of product, warehouse of New Balance, logistic facility of organization, customers and their suppliers of raw material and others. Every factor affects the supply chain system of New Balance in different ways. The issue of supplier which affects the supply chain system of New Balance is as the extended lead time, the long pending contract time, long purchase time taken by customer. The problem in manufacturing section which affects the supply chain system is weak communication between manufacturing section and New Balance other department. Suppose the deadline or the delivery time of sports shoe for USA customer is five weeks but manufacturing department do not delivery their final product to logistic, whole supply chain system will be affected. Supply chain management of New Balance is always dependent all other department of organization. If single department faces any problem while whole production cycles then whole supply chain system will be affected.

New Balance after facing various problems in their manufacturing process decided to adopt a new process of manufacturing i.e. Lean Manufacturing process. Lean Manufacturing process helps New Balance in eliminating the waste which incurred while production cycle of their products (Tang, Teo and Wei, 2008). As mentioned in case study lean manufacturing was implicated by New Balance to focus on their production cycle by taking into consideration only their customers i.e. for developing sports product New Balance always analyze their customers’ requirement (Tang, Teo and Wei, 2008). Lean manufacturing process help New Balance in various ways like their helped in improving the level of current business model used by New Balance and in improving their work performance (Bisen and Srivastava, 2009).  Lean manufacturing was implicated by New balance to improve their never ending production cycle and to reduce the waste of raw materials while designing, manufacturing, distributing process of sports product. As discussed in given case study the main focus of new manufacturing process adopted by New Balance was to increase their profit share and efficiency of production in less time (Wilson, 2010). New balance adopted lean manufacturing to avoid over production of their sports product as the products available in warehouse of company will be utilized first (Tang, Teo and Wei, 2008). As per case study New balance after analyzing several problems regarding wastage of raw materials, inventory mismatching with available products and other problem with the help of their supervisors decided to implement Lean manufacturing process so that they can – reduce wastage of their raw materials, maximize their flow of products, able to meet their customers requirement easily, delivery sports on time to their customers situated in different regions and others (Slideshare.net, 2009). Wastes as mentioned in case study are the actions which are not involved in production cycle but are carried in every production cycle which just increases the production cost. Lean manufacturing process of adopted by New Balance after analyzing the whole problem which they faced while production cycle. New Balance while their production found that the waste which incurred while manufacturing and production of sports product effected their production if future. To reduce the wastage quantity while their production cycle Lean manufacturing was adopted. While production, manufacturing, supplying or distribution wastes like overproduction, defective products and others were reduced. Lean manufacturing process helped New Balance to produce more number of sports products by reducing the wastage. Different wastages which prior adopting Lean manufacturing process affected their production cycle are as overproduction, defective products, long transportation time or waiting time, insufficient amount of raw material, and warehouse store capacity insufficiency as per production. Suppose the production of one style of shoe is done in more amounts in comparison to its demand in market then the store’s inventory will be of no use after sometime and New Balance have to incur loss. New Balance after implementing Lean manufacturing process started planning their business process and production as per the demand of their customers and market. New process for monitoring the lean manufacturing process created a separate department whose responsibility was to analyze the working and effect of lean manufacturing on New Balance supply chain system as well as other cycle.

Lean manufacturing was adopted by New Balance to increase their productivity of shoes, it helped in decreasing the lead time required for manufacturing of shoes. As per the case study lean manufacturing help New Balance in improving their product quality which increased number of customers (Bhadur, 2008). The other benefits mentioned in case study are it helps in increasing the efficiency by reducing their workforce, help New Balance in motivating their employees to perform better (Chopra and Meindl, 2007). Lean manufacturing process helped New Balance to increase the productivity by reducing the wastage of raw material while production cycle of shoes. After implementation of Lean manufacturing process New Balance evaluated that the production cycle and delivery process always was on time (Slideshare.net, 2014). As mentioned in given case study New Balance in starting of 2000 adopted New Balance Executional Excellence (NB2E) for their shoe production (Greeff and Ghoshal, 2004). NB2E was adopted by New Balance to reduce the time of delivery and order, which help in gathering more number of customers. New Balance always works as per their customer requirement and need regarding sports products. Lean manufacturing in New Balance was implemented to reduce the time gap between order of their product and the delivery time (Lan and Unhelkar, 2006). Lean manufacturing main benefit in New balance was to reduce their waste material which increases the profit share of company. Lean manufacturing process was adopted by New Balance to improve their efficiency as well as their productivity share (Wilson, 2010). Lean manufacturing helped New balancing to motivate their workforce by giving them reward or hike in wages if production share increases. Lean manufacturing process helped New Balance to reduce the amount of wastages in production and other business cycle. The main factor on which New Balance should work is on the communication process of their with their employees and customers. Lean manufacturing process implementation as mentioned in case study increased the profit share and productivity of New Balance by reducing their waste amount. Lean manufacturing implementation in New Balance is beneficial in context to their customers, suppliers, manufacturers and others. The other benefits is lean manufacturing help New Balance to work in Just- in- time policy, that is it helped in doing their all work on time whether it is manufacturing, production, delivery of products or others. Products were delivered to their customers on time which increases number of customers. Suppose when products are stored in warehouse for a long time due to less demand or any manufacturing defects, the loss incurred will affect profit rate of New Balance. Lean manufacturing helps New balance in reducing their production cost, reduce their production or other cycle time. As mentioned in case study lean manufacturing implementation in New Balance results in positive manner by improving efficiency of organization, safety of products in warehouse and while delivery process. It also helps in eliminating the production of unnecessary inventory or stock.

Conclusion

In this report there is a discussion about New Balance organization operational process, factors which main key role in its operation. Different challenges faced by New Balance in managing their supply chain management system, after evaluating different factors which affect the manufacturing process and the reason behind adopting Lean manufacturing process. There is further light on the benefits of Lean manufacturing in New Balance. Lean manufacturing process is adopted by New Balance after facing various problems in production, manufacturing, delivering and other process (Slideshare.net, 2014). The main factor on which operation of New balance depends is their workforce so to increase efficiency and productivity New Balance always motivated their workforce by different reward systems and other actions. As mentioned in case study the problem which New Balance use to face regarding supply chain system was their coordination with different suppliers and distributors (Scribd.com, 2015). The main point of focus of this report is New Balance different challenges which company faced in supply chain management, manufacturing management and the solution which they adopted. Above discussion is done on the basis of case study of New Balance sports Product Company’s different problem regarding supply chain system and the new process adoption effect on business process. New balance after analyzing properly the problem faced by them in production cycle which affected their profit rate adopted a new manufacturing process Lean Manufacturing process which in comparison of other competitors improved their production and market share.

References:

Anon, (2015). [online] Available at: https://www.diverbi.com/wp-content/uploads/new-balance-case-study.pdf [Accessed 10 Mar. 2015].

Anon, (2015). [online] Available at: https://file:///C:/Users/Admin/Downloads/manh-new-balance-case-study-en-us.pdf [Accessed 10 Mar. 2015].

Bhadur, R. (2008). Production and operation management. Jaipur, India: Book Enclave.

Bisen, V. and Srivastava, S. (2009). Production & operation management. Lucknow, India: Word-Press.

Bolstorff, P. and Rosenbaum, R. (2007). Supply chain excellence. New York: AMACOM.

Campuzano, F. and Mula, J. (2011). Supply chain simulation. London: Springer.

Carreira, B. (2005). Lean manufacturing that works. New York: AMACOM.

Chopra, S. and Meindl, P. (2007). Supply chain management. Upper Saddle River, N.J.: Pearson Prentice Hall.

Greeff, G. and Ghoshal, R. (2004). Practical E-manufacturing and supply chain management. Oxford: Newnes.

Lan, Y. and Unhelkar, B. (2006). Global integrated supply chain systems. Hershey, PA: Idea Group Pub.

Scribd.com, (2015). New Balance Athletic Shoe Inc Presentation. [online] Available at: https://www.scribd.com/doc/137256681/New-Balance-Athletic-Shoe-Inc-Presentation#scribd [Accessed 10 Mar. 2015].

Slideshare.net, (2009). New Balance shoes. [online] Available at: https://www.slideshare.net/thats4u83/new-balance-shoes [Accessed 10 Mar. 2015].

Slideshare.net, (2014). New balance Case Study. [online] Available at: https://www.slideshare.net/mchughk/new-balance-case-study-40376956 [Accessed 10 Mar. 2015].

Tang, C., Teo, C. and Wei, K. (2008). Supply chain analysis. New York: Springer.

Wilson, L. (2010). How to implement lean manufacturing. New York: McGraw-Hill.