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Albatross Anchor Case Study




Albatross Anchor Case Study;Albatross Anchor is a small family owned business that began in 1976 with four family members. Albatross anchor has grown exponentially and now employs one hundred and thirty people. Their one location/facility is situated on twelve acres of land located in a rural suburb of Small town, USA. The manufacturing plant and the main office are located in the same building with the manufacturing. The administrative offices are in the front of the building and the manufacturing area is in the back of the building. The manufacturing part of the building is antiquated, worn, dirty, technology deprived and it no longer meets all US safety and environmental standards and the administrative offices are shabby and inefficient.;The owners of this small business have added on various processes as needed within the limited space provided within the plant. When Albatross Anchor first opened its doors their expertise laid in the manufacture of the bell/mushroom anchor (using a foundry process). Because of international competition in 1989 the owners of Albatross Anchor made the decision to expand their product line to include fabricated snag hook anchors.;(Products);The bell anchor is used primarily by fresh water marine craft. They are manufactured primarily through a foundry process in which ore is transformed into a liquid state and poured into molds for production.;The snag hook anchor is used primarily for small to medium sized saltwater marine craft. The snag hook anchor is fabricated through the bending and welding of iron rods and flat iron into a hook design so that bedrock and seaweed can be snagged to hold the marine craft at anchor.;Each anchor is produced in multiple sizes to accommodate the type of craft requiring the anchor.;(Manufacturing);Each anchor type requires its own unique equipment and manufacturing process. Both manufacturing areas share the same shipping and receiving area, the warehouse area and administration. The manufacturing area of the plant has had to change to accommodate the manufacture of the two separate types of anchors. As each anchor requires its own manufacturing challenges the manufacturing line must be completely changed over each time the anchor type is changed. The time to switch over from one manufacturing process/operation to the other manufacturing process/operation is 36 hours.;The plant space is at a premium and warehousing space for raw materials and finished product is limited and located at the far south end of the building.;Plant antiquation and safety issues result in small batch production only. As a result lead time for large bulk orders is three to four weeks.;(Costs and shipping challenges);Current manufacturing costs are $12.00 per pound for mushroom/bell anchors and $6.00 per pound for snag hook anchors. While Albatross Anchor charges the same per unit as their competitors their profit margin is as much as 30% less due to operations inefficiencies.;Product size, bulk and weight (either anchor) requires shipment by rail and by specialized ground transportation (large trucks). Domestic orders are shipped by truck and international orders are shipped by rail and then by large freighter. These are the only two methods of shipment of product to customer.;Receipt of raw materials is by rail. Prior to the sale of anchors into the international market all shipments of finished product went out completely by truck and therefore all shipping activities were limited to the east side of the building. Now, because of the limitation of shipping product into the international marketplace all product shipments for international delivery go out of the receiving dock for shipment for transportation by rail and then by large freighter. Whereas prior to expansion into the international marketplace shipping had been limited to the shipping department and receiving was limited to the receiving area, now the receiving area must do double duty ? shipping of international orders and receipt of all raw materials.;Question One;Based on the information presented in the scenario discuss Albatross;Anchor?s competitiveness in relation to (please address all items in the below list and provide support for your conclusions);(a) Cost (consider cost of production, economies of scale in material;purchasing, cost or raw materials and finished goods sitting idle in the warehouse.);(b) Speed of manufacturing process from order to finished product.;(c) Flexibility in filling order(s);(d) Technology;(e) Capacity and facilities. The current floor plan is inefficient. Please tell what about the current floor plan makes it inefficient and give recommendations for improvement. What type of factory would be;best for mixed model manufacturing?;(f) Service to customers (what types of services would an anchor;company provide to marine wholesalers?;Question Two;There are many ways that mushroom/bell anchors may be manufactured. Albatross Anchor is considering two new manufacturing processes (Process A and Process B) to reduce costs. From the available information below determine which process has the lowest breakeven point (this validates the process is more cost effective) and report your analysis and supporting conclusion.;For each process the following fixed costs and variable costs are identified below;Anchor and Process Process A Process B;Sale price per anchor $35.00 $35.00;Total Fixed Cost $500,000.00 $750,000.00;Variable Cost per anchor $25.00 $23.00;Based on the above information identify;(Please enter the answers for the following two questions into the below;chart.);(a) The total fixed costs per anchor for Process A and for Process B;(b) The total number of anchors that would be Process A and for Process B at the breakeven point.;Anchor and Process Process A Process B;(a) Fixed costs per anchor;(b) The total number of anchors to attain;break-even point for Process A and Process B;(c) From your calculations identify whether you would recommend Process A or Process B for adoption (select only one). Please make sure to explain how you arrived at your conclusion.;Question Three;Based on the limited information in the case study along with your answers to questions one and two, identify at least two direct and specific long-term and two direct and specific short term operational changes that Albatross Anchor must make to gain a clear and sustainable competitive advantage.;Provide supporting information to validate and substantiate each;recommended change (be detailed in your justification for each).


Paper#32135 | Written in 18-Jul-2015

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