MGT335 Grantham Operation Strategies of Natural- Designs Inc Case Study The requirements below must be met for your paper to be accepted and graded: Write
MGT335 Grantham Operation Strategies of Natural- Designs Inc Case Study The requirements below must be met for your paper to be accepted and graded:
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PARTI. Strategic Operations Management
CASE STUDY
Natural Designs Inc.
Net
atural Designs manufactures a variety of bird feed-
ers, garden accessories, and other items intended
to help people get in touch with and observe nature.
Founded in 1995 by Jim McMaster in LaGrange, Illi-
nois, the company started when he was working as a
fourth-grade teacher. Presentations to students on
birds and wildlife had a way of capturing their enthu-
siasm; thus, McMaster started offering presentations
to other schools in the greater Chicago area. Within a
few years, McMaster was so busy doing presentations
at various schools, as well as running nature camps
from his home, that he quit his full-time job as an
elementary school teacher to form Natural Designs.
At first, Natural Designs was mostly Jim and his wife
giving presentations and running camps, but gradu-
ally the company expanded to sell some of the bird
feeders and other nature devices featured in his class
talks. Today, the company has sales of $2 million per
year, most of which comes from physical products
sold to outdoor, nature, and bird stores such as Wild
Birds Unlimited.
In the first few years of operation, Jim McMaster
and his wife, Sheila, produced bird feeders and other
products in their garage. In 1997, however, the opera-
tion became too large for their garage, so they rented
a 4,000-square-foot facility for production and distri-
bution purposes. They also hired two employees to
manage these two functions so that the McMasters
could continue giving school talks. Today, Natural
Designs has 15 employees, 2 of which are focused
solely on giving nature talks and selling the products
to retailers interested in reselling Natural Designs
products. The product range consists of 500 stock-
keeping units (SKUS).
One of the challenges faced by Natural Designs
involves its customized bird feeders. This operation
allows customers to get one of the 10 made-to-stock
bird feeders and have it customized with their name
or address carved in the wood, plus painting in any of
10 color schemes. This portion of the business has
been growing by 50 percent per year and now repre-
sents $100,000 per year in sales. A customer order is
taken over the Internet and promised for delivery
within one week. Then the item is pulled from stock,
carved with the appropriate name and address, and
painted. Finally, the item is shipped directly to the
customer’s home. While this product has been wildly
popular with customers, Jim McMaster has two major
concerns. First, he is not sure that the customization
is profitable-he charges an additional $10 per bird
feeder, but he is not sure exactly how much extra
labor is involved in fulfilling the customization por-
tion of the order. Second, despite assigning an em-
ployee to the custom bird feeder operation full time,
lead times on orders have gradually increased from an
average of 4.5 business days to 9.2 business days. This
prevents Natural Designs from meeting its promised
lead time of one week or less. In addition, during
peak periods (early spring and early fall), the lead
time can stretch to three or four weeks.
As Jim McMaster reviews the current state of Nat-
ural Designs, he is pleased to note that sales are con-
tinuing to grow overall at a rate of 10 percent per
year. Furthermore, his work force is generally happy,
and the business is profitable. However, his accoun-
tants have been telling him that profits are declining
as a percentage of sales and that the number of cus-
tomer returns of items and complaints has increased
by over 30 percent in the past year. The capacity of
the existing facility is extremely tight, and Jim is con-
sidering either adding a second facility or moving to a
larger 8,000-square-foot facility.
QUESTIONS
1. What types of decisions must Jim McMaster make
on a daily basis for Natural Designs to run
smoothly? What kind of decisions must he make
on a long-term basis?
2. Describe the operations strategy for Natural De-
signs. Has this strategy changed as a result of the
custom bird feeder operation? If yes, how?
3. What might have been done differently to facili-
tate the offering of custom bird feeders?
4. How should McMaster analyze the alternative
expansion options? Which would you recom-
mend: a second facility or a move to a single,
larger facility?
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