Southern New Hampshire University

Module 1 Final Project

Southern New Hampshire University

Introduction

        Arun Mittra is a Vice President of Operations at A-Cat Corporation, with a competent Operations Manager, Shirish Ratnapurki leading the charge on forecasting and production planning.  A-Cat Corporation at the time was a leading manufacturer of electrical appliances in India.  They created products including TVs, FM Radio Kits, and other appliances.  Products like TVs and refrigerators required a voltage regulator, or stabilizer.  The voltage regulators protected the appliances they sold from power surges, common in rural parts of India.  One of the components included in the voltage regulator was a transformer.  It was one of the expensive components, and suddenly became one of the harder components to source (Sharma, 2013).  

        A-Cat Corporation has recently started having a difficult time procuring transformers for a few reasons, all related to the component market.  The transformer supplier went through a consolidation, so there was only now one company to choose from instead of four.  Having such a consolidation creates not only a monopoly, but also a constraint on supply which drives up the cost.  When there is only one company that can produce a product, there can also be capacity constraints as well.  The supply becomes much more uncertain and inflexible with only one supplier.  A-Cat Corporation is not in a position where they can spend extra money to buy their way through this component constraint as they appeal to a very price sensitive market, instead of competing with other companies that compete in the full market (Sharma, 2013).  

        Recently, A-Cat Corporation has seen a decline in their sales of the voltage regulators from their customers.  Because of the decline in sales, A-Cat has started to consider different ways of inventorying and purchasing the voltage regulators, and related components within the regulators, namely the transformers.  A-Cat in is a situation where they need to be more accurate on their forecasting as to ensure a steady supply, at the same price, and in time for their customers that may need these in a rush.  Keeping higher inventory could lead to a stoppage in ordering from the supplier, which would increase prices.  Keeping too low inventory could lead to a longer lead time when the supplier can’t handle larger orders.  Forecasting incorrectly will have an impact on the inventory levels.  Lastly, the inventory can’t be too high as that will eat away at the working capital which puts a constraint on business operations (Sharma, 2013).

        It is up to Shirish Ratnapurki to come up with a better solution for the transformers and forecasting them, with better accuracy to keep the business afloat, even with the lower sales recently.  This plan needs to be proposed to the Vice President of Operations, Arun Mittra.  Another internal stakeholder is the sales department, where their input to the forecast for the products transformers and voltage regulators go inside of needs to be more accurate.  Lastly, the external stakeholder is the company that A-Cat purchases these transformers from and providing them with better forecasting information and purchases will lead to a better relationship.

Analysis Plan

        It is evident that there are a few issues impacting the operational processes at A-Cat Corporation.  First, the sales have been fluctuating enough to the point that he supplier has started to question them.  There are external forces in the market that have led to the sales decreasing.  It is unclear if the sales will continue to decrease or if they will level off.  Second, the consolidation of suppliers is another quantifiable factor that A-Cat must deal with.  Going from four separate suppliers to only one has many operational implications.  Most simplistically, if there is now an issue at the supplier, there is nowhere else to turn.  Other issues arise from having a monopolistic supply, including price, capacity, and quality of the products.  

        Lastly, having an incorrect forecast which seems too simplistic has led to operational issues with procuring the supply, and also manufacturing the rest of the electronic products as a reasonable price.  If A-Cat cannot get their supply of transformers, they cannot sell to their customers which will then impact the sales.  Having lower sales only leads to less working capital to reinvest in the company.  

        The problem the faces A-Cat Corporation is that the need for an improved forecasting process with more accurate information has become more necessary now than ever before.  Their problem lies around having too few inputs to the forecast, and too simplistic form of forecasting with very little statistical processes involved.  The solution need to be a quarterly forecast of the transformers that Mittra can rely on.  Also, this forecast needs to be simplistic enough that any stakeholder or operations employee can understand.