Kuiper Leda

Running head: GAP ANALYSIS: KUIPER LEDA

Gap Analysis: Kuiper Leda

Gap Analysis: Kuiper Leda

Kuiper Leda Incorporated (KL) is a company that manufactures Electronic Control Units (ECU's) as well as Radio Frequency Identification Device (RFID Tags) for the automobile industry. Currently, they are a relatively small company that focuses on quality of their product and delivery responsiveness. Because of this, Midland Motors, a well-known large company, has chosen KL as a supplier for all of their ECU's and RFID Tags. Midland Motors has signed a year-long contract with KL for 250,000 ECU's and 35,000 RFID Tags to be evenly distributed in the upcoming year. Since Midland Motor's order exceeds KL's daily capacity, KL must now organize their structure to increase capacity and/or decide whether it's better to outsource part or all of the component needed.

Situation Analysis

Issue and Opportunity Identification

Midland Motors is a large company that keeps close, long-lasting relationships with their vendors; it would be a devastating decision to turn their order down. After accepting Midland's order, KL is first faced with the decision to manufacture everything in house or to outsource in order to meet their demand. A huge issue is the lack of a structured process. With an order this important, both financially and publicly, KL needs to develop a system that will allow them to intake orders from other customers as well as meet the daily/weekly output of ECU's and RFID Tags for Midland Motors.

The next decision would be to create and implement an inventory system that will allow KL to track their inventory from when it arrives at the door to the point of shipment to the client. Currently, KL has no set system and has high holding costs for their inventory.

This is an excellent time for KL to look into implementing a Just In Time (JIT) system into their daily operations. Since the contract with Midland Motors is for at least one year, they have a forecasted number to work with. Midland Motors is expecting monthly shipments from KL, this gives KL the opportunity to plan and forecast the inventory needed. Of course, they also have to keep in mind that they will still have to be able to fill orders from other clients that have previously placed orders or even new customers.

By signing the year contract with Midland Motors, KL has the opportunity to grow in the industry. It is currently dealing with smaller companies and smaller orders, but if it is able to fulfill Midland Motor's demand for ECU's, it will prove itself to be a competitive company in the industry.

Stakeholder Perspectives/Ethical Dilemmas

There are many people involved with many different and conflicting views in this situation. Midland Motors is a significant stakeholder because they are the ones who will suffer the most if the ECU's and RFID Tags are not delivered on time or at all. They have a contract with KL to have on-time delivery of 250,000 ECU's and 35,000 RFID Tags in the time span of one year. They are dependent on those components in order to completely assemble their vehicles. In turn, Midland Motors has an obligation to KL for on-time payment of goods received.

Senior management plays a key role in the entire operation. They are essentially the middleman between shareholders and the front-line of KL. Their responsibilities will conflict between both parties. Shareholders will want to maximize shareholder value in the company while employees will want better working environments, wage increases, so forth. Managers have an obligation to both the company and the employees. They are the ones who oversee smooth operations of the plant and the ones that deal with the problems when things go wrong.

End-State Vision

In order to continue to grow within the automotive industry, KL must solve all of the internal issues with inventory and production in order to efficiently run operations and deliver timely shipment to all of their clients. Once KL has a set system of inventory management as well as risk management, it will be a more capable company that accepts the challenges of the unforeseen public demand.

Gap Analysis

As a growing company in the automotive industry, KL needs to be able to adapt to the changing settings. KL is used to dealing with a smaller clientele and smaller orders; however, an opportunity arose when Midland Motors signed a one year contract with them. This is an open door to the deal with the "big dogs" of the industry depending on how the account with Midland Motors works out. If Midland Motors, a big, well-respected and well-known company is dealing with KL, then other big companies out there will notice if a quality product is being delivered from KL to Midland Motors. Again, this is an open door to a bigger clientele.

Without a proper inventory system, KL will not be able to meet the demand and/or the quality that Midland Motors is expecting. I believe the Just In Time system will work very well with KL's current state. KL is aware of how many ECU's and RFID Tags to produce on a monthly basis, therefore, they should be able to easily forecast the amount of inventory needed at the given time. Of course, there will be a safety stock in case of an unexpected large order that is needed immediately. With the JIT system, KL will only suffer for one cycle (for example, two weeks in-between delivery time of the next shipment) and KL should be back on schedule by the next cycle.

Of course, what good is a new inventory system if its efficiency is not measured? KL will need to implement an evaluation system of its new inventory system. Six Sigma is an excellent and very popular method to continuously improve quality within a process. Many will argue that the cost of Six Sigma exceeds the benefit. However, in the long run, it will prevent many other issues that aren't directly involved with production, such as customer returns and quality defects.

Conclusion

To conclude, this paper covered the Kuiper Leda Incorporated scenario. It discussed the challenges that KL's had to face when presented with an opportunity to work with a large