Case Study: Four Star Case Study

Case Study: Four Star Case Study

Abstract

Four Star Industries is one of the leading manufacturers of quality mattresses around the globe producing high quality mattresses that have been preferred by a vast majority of clients worldwide. The company mostly stands out from other mattress manufacturers owing to the quality and innovative products that they produce. As a manufacturing company, Four star Industries have gone through a myriad of challenges amongst them the issue of dealers demanding that various products remain in house lead to stock deficiency. Significantly, this paper shall take a look at the different ways in which Four Star industries have managed to effectively handle the problems that it has gone through the years that it has been in operation. In addition to analyzing how the company has solved the challenges that it has faced in the past, this paper has provided recommendations on the best way possible to deal with similar issues in the future. Such implementations include ways that the company could have made to prevent it from filing for bankruptcy.

 

 

Background

Four Star Industries is a family-owned manufacturing company based in Singapore. This organization that has been through several milestones was formed in the year 1966 by the parents of its Managing director Neo Gim Sin (Viswanathan, & Allampall, 2010). Unlike other mattress manufacturing companies, Four Star Industries hand-made its mattresses until the year 1968 when it decided to adopt the use of equipment made by Spuhl SA. The shift from hand manufacturing to the use of equipments in the company was an avenue of substantially increasing the quality of production in the organization. Currently, the challenges that the company is facing can be attributed to several steps and improvements that the organization went through in its former days.

First and foremost, the organization’s clientele base significantly increased owing to the advancement of the quality of its products. Secondly, the company came up with the concept of Pocketed Spring Mattress (PSM) that propelled the company to the most prominent producers of quality mattresses in the Singapore local market.

Issue

The company is, without a doubt, going through several challenges that are affecting its relationship with its clientele base. The major challenge facing this organization is one that pertains to stock and demand mismatches (Viswanathan, & Allampall, 2010). On the other hand, the individual issue of stock and demand mismatch that the company is facing is related to the occasional demand of the company’s products with a significant variety range that has been required by dealer requests. As a result of both issues in the organization, the stock-outs, and consequent production scheduling confusion culminated in unsatisfied customer orders, which reportedly fell to 60 percent. Stiff competition that Four Star Industries faced from both local and international companies that produce mattresses saw the company’s clientele demand high-end quality mattresses that the company struggled to create. All of these different factors combined significantly decreased the quantity of mattresses that the organization sells yearly. This decrease in sales substantially reduced the overall revenue that the company generates annually.

Analysis

A majority of the problems that this individual company is going through could be easily solved. From the case study, the company mostly faces challenges in the field of inventory and the variety of products that it produces, which currently cannot match the client’s demands of the same products (Viswanathan, & Allampall, 2010). As such, the company ought to work on decreasing the variety of mattress models that it offers to its clientele. This is a feasible solution, although it might not be an ideal solution to the company’s dealers. A second criterion that the company needs to assume is significantly reducing the batch of orders that it produces. This latter criterion might not auger well with the company’s dealers given that the logistical inventory processes had been transferred to the producers in a bid of decreasing the individual dependency on holding stock (Eckert, 2016). The last criteria that the company could assume to remedy its current situation involves lowering the associated cost of manufacturing. However, this might not solve the challenge of stock management and delayed production schedules.

Recommendations

Owing to the challenges that Four Star Industries is facing, the company should make use of the assemble-to-order system. This individual system is a distinctive model of warehouse management in which various products are manufactured or assembled from different components based on the orders that have been placed by clients (Eckert, 2016). Unlike other product and inventory management systems, this system facilitates a substantial increment in the order fulfillment rates. Another significant aspect that can result in a strategy to deal with order postponement is the sharing of relevant data with the company’s dealers. This individual strategy is substantial as it leads to the flexibility of adjusting to the constantly changing consumer and suppliers’ demands. Unlike other potential plans, adopting the assemble-to-order criteria and sharing of relevant information with dealers is a significant approach to the company’s problem, given that both models are a proven way of dealing with inventory and production challenges in organizations.

Conclusion

            As seen from the different milestones that the organization has gone through, Four Star industries might hold the capacity to produce a wide variety of mattresses. However, this growth might potentially lead to defections of both large and other small dealers that are important to the continuity of the organization. From the challenges of stock and demand mismatch that the organization faces, the company might stand to benefit by adopting an assemble-to-order system and sharing meaningful information regarding stock and demand significantly. Adopting an assemble-to-order system shall decrease the stock of finished goods substantially. As a measure of last resort, the organization has the potential of considering relocating its production facilities to different parts of the globe as a means of lowering the associated cost of production and sufficiently mitigating the challenges of inconsistent production schedules and surrounding inventory.

 

 

References

Eckert, R. (2016). Business innovation management and business innovation factory. Business Innovation Management, 209-248. https://doi.org/10.1007/978-3-658-13456-3_9

Viswanathan, S., & Allampall, D. G. (2010). Four Star Industries Matching Supply With Demand. the Asian Business Case Center. file:///C:/Users/Dell/Downloads/four_star_industries-case%20(1).pdf