Headquartered in Guwahati, Assam, imiAID manufactures first-aid kits for healthcare providers and institutions. The major flaw in the company’s strategy lies in the fact that few clients are aware of the product. In response, imiAID has developed a new strategy to improve their selling process. Their selling process is composed of three major stages: appointment, presentation and distribution, and collection. Changes should focus on decreasing production costs and developing new marketing strategies to enhance brand awareness among clients.
While considering inventory management at imiAID, it should be acknowledged that simply maintaining a large amount of inventory can be wasteful and costly. Therefore, keeping stockrooms and warehouses is not a viable option for maintaining the appropriate level of production costs. The company should invest in applications and technologies that can decrease their inventory. Furthermore, the major challenge of their production process lies in the fact that imiAID has a great number of diverse suppliers – both high-end and raw material suppliers – which makes it difficult to define the time required for assembling boxes with finished products. Therefore, they face risks related to delays and unforeseen events. If one supplier fails to deliver on time, the entire assembly process will be delayed, which implies a reduced return on assets.
The company should recognize and distinguish between the different costs associated with inventory management. There are four major types of costs that can be predicted during the manufacturing process: ordering costs, inventory holding costs, unit costs, and shortage costs. Judging from the case study, inventory-holding and shortage costs are two major concerns of imiAID. Inventory-holding costs “…reflect the opportunity cost associated with using the funds invested in inventory for alternative uses and investments” (Collier and Evans 2017, p. 218). Shortage costs refer to lost sales and backorders, service expenses for external clients, or costs related to production and assembly lines for internal clients. For imiAID, shortage costs are an important consideration because they influence the amount of finished kits that can be proposed to clients at an affordable price. Therefore, it would be more effective to buy larger quantities at a lower price per unit, thus decreasing the other cost categories and overall expense.
Apart from changes in inventory management, the company can also streamline their sales strategy. Consumer perceptions of value and worth are regarded as the prevailing elements of goods selection and behavior. Their selling process should incorporate new ways of evaluating customer perception, including the development of new distribution channels, such as specialized stores where medical equipment can be bought. This may in turn lead to new methods of cooperation. Customer relationship management should be used to promote a better post-consumption experience – it can also improve sales and increase revenue, by launching new designs and diversifying kits for specific segments of the population. For instance, imiAID could conduct surveys of the industries and organizations that require first aid kits. Construction companies, healthcare organizations, or chemical industries are some examples of entities where the risk of physical damage is greatest. By doing this, imiAID can predict the quantities required for a specific distribution channel in the future. Shifts in production can open new customer segments for sales.
In addition, imiAID should focus on new ways to appeal to customers. Additional promotional campaigns can facilitate the process. Apart from presentations made directly to clients, there should also be options for those who prefer buying items at a store. The packaging itself should provide sufficient information about the value of the product. Additionally, the company could also create a campaign for medical establishments and develop partnerships when presenting their products at different sites. This might help them attract more clients. Such a marketing approach is oriented more toward internal advertising, which often excludes the possibility of engaging external, new clients. Therefore, external clients must be engaged by video presentation on their website or at regional stores. Finally, there should be sales managers at all possible locations to ensure that the market segment increases and can provide a good opportunity for controlling sales growth.
The integration of social media and information technologies can also provide a significant advantage for the business’s development. For instance, clients could look through advertisements, such as images, press releases, and videos, and decide whether the goods imiAID sells are essential products. There should also be mass mailing of new product launch announcements for attracting new companies and industries and incorporating them into product distribution.
The relocation of the manufacturing facility relies on the company’s intentions when it comes to growth, business development, operational cost reduction, and new managerial and sales strategies. However, the company should focus on the financial and operational risks related to relocation. The company’s decision to move operations has been predetermined by their intention to increase material growth in revenues, as well as anticipated production and operational changes. Hence, the success of any change depends upon the possibility of accumulating growth opportunity, reducing the cost of operations, decreasing production costs, and defining distribution channels accurately. Location can have a significant influence on access to the product by both the manufacturer and consumers. The company tends to locate their facilities where inputs are cheaper. Factors that location can also affect include communications, labor supply, financial incentives, and power supply.
Localization in the corporate setting is the degree to which managers are substituted by local employees, who are in turn overseen by expatriate managers. Localization factors include a range of actors that operate at the place of a specific production unit. At this point, the company should define what field of entrepreneurship can be introduced to a specific customer sector. Due to the fact that location implies activities associated with the exchange, production, and consumption of services, goods and information, it is essential to align location with economic activity. Relocation should relate to the place of sourcing materials for first aid kits, which would make it easier for producers to exchange information.
Location decisions in value and supply chains rely on both economic and non-economic factors (Collier and Evans, 2017). Economic factors are more relevant for this case because they influence costs of insurance, maintenance, operating costs, and transportation – the major expenses that the company currently spends on the production and effective transport of assembly parts. However, the company should also take into consideration non-economic factors, which include the threat of new competitors in the geographic region in question. Nonetheless, it should be admitted that imiAID is located far from the original source of raw materials, which adds a significant amount of time to order delivery. Furthermore, there will be a higher degree of uncertainty regarding the actual time of delivery.
While considering whether to introduce a new facility, one should rely on four major decisions, if relevant. First of all, the company should consider global location. Judging from the case study, the company sells first aid kits at the local level, but it should still expand its production process and enter the global market. At this point, the company should consider time zone, international funds transfer, foreign languages, tariffs, and customers. Other trade limitations and packaging, along with cultural practices and monetary policies, are among factors affecting their decision. According to Collier and Evans (2017, p. 167), “the global location decision involves evaluating the product portfolio, new market opportunities, changes in regulatory laws and procedures, production and delivery economics, and the cost to locate in different countries”. Thus, the company should first determine whether it should remain in the domestic market or move beyond it. If it is the latter, then it should decide what countries can be included in the list of possible locations for expansion.
Further, the decision includes selection of a specific region within a country and should depend on the size of the target market, the location of sources of supply and materials, labor costs and availability, land and construction, and degree of unionization. Since the major materials are outsourced from the same location, the company should take these issues into consideration. However, the geographic region only shapes part of the decision process because there are also communication factors to consider, which rely on the community or city that is involved in the production and selling process. The company must consider managers’ preferences, transportation systems, environmental influences and banking services. Finally, the decision relies upon the specific location within the proposed social segment. Proximity, site cost, and transportation are influenced by zoning limitations. However, this factor is the least important because imiAID’s product range is significantly diversified and designed for different populations and customer segments.
Apart from the prioritization of location, imiAID should also employ the center-of-gravity method, which defines the X and Y coordinates of a specific facility. The method takes into consideration possible locations, transportation costs and marketing demands to determine the best solution for a facility. imiAID should define the best locations for service-providing and goods-producing facilities, as well as consider their customers, who can also define geographical position. However, distance should not be regarded as a major criterion because demands can differ from one location to another, depending on the prices and type of market segment involved. The first step includes prioritizing the variables involved and adjusting the scale of coordinates accordingly. For instance, the company depends largely on high-end suppliers to provide finished parts, which means that they should relocate the company closer to them to minimize the time and costs involved for transportation. At the same time, finished products distributed to end consumers should not be overlooked.
Coordinates, therefore, should definitely include these two major variables – clients and suppliers – to strike a balance and provide the optimal result. In general, the center-of-gravity method is applied to define service facilities, which implies that in placing an assembly facility, the location coordinates can be evaluated with the average amount of kits developed from industrial sites and residential headquarters. At the same time, to locate a new distribution site defines the relevant adjustments to the model.
Consumer behavior plays an important role in relocating the site and defining new suppliers because clients expect to have a variety of preferences and choices, which can differ in various market segments. Therefore, imiAID cannot rely on a product that sells best in one area and expect to see similar revenue in another area. Finally, relocation can largely be affected by two opposite factors – costs and flexibility. On the one hand, production costs could be minimized significantly by relocating the site closer to high-end suppliers. However, it can have negative consequences on the distribution of goods and services because the end-customers may differ significantly.
The Six Sigma method focuses on improving and eliminating gaps and errors in the production process with emphasis placed on output, which plays an important role in financial revenue. It also relies on statistical information, which detects multiple opportunities. The company that strives to adopt a Six Sigma ideology should own all critical processes, to achieve so-called near-zero defects. It has garnered a significant degree of credibility in recent years because of its use at multiple corporations, such as Motorola, General Electric, or Allied Signal (Collier & Evans, 2017). imiAID can also use this method to improve their quality management system. In order to enter the international market, it should also research quality standards at the global level and apply for more patents. Furthermore, to ensure the quality of products, the company should establish specific standards for production for the suppliers who are partners in redeveloping products and inventing new ones. By reducing delivery time, the company can invest more into research and development and provide a narrow-focused approach on the product with the highest demand.
Use of patents is a good approach for maintaining quality, but the initiative can also be enhanced by defining all of the production processes and establishing quality audits, which ensure consistent certification. The major purpose of the process is to reduce the differentiation and increase the effectiveness of box assembly. For instance, it is possible to carry out transparent reporting among suppliers to guarantee that the raw materials they deliver has passed through the certification process. The company should also redefine its mission and prioritize quality assurance because it builds clients’ trust in the safety and quality of the product.
The company managers should consider that quality at the source increases the likelihood of making the product right the first time, which can reduce the risk of waste. Employees should also be engaged in inspecting, evaluating, and monitoring their work to make sure that the goods are of the highest quality before they go to another level. Continuous improvements are essential in the supply chain and lean environment because they establish a fruitful partnership among all employees and managers. As a result, the application of Six Sigma is a helpful approach contributing to the effect of lean production, leading to Lean Six Sigma. In this respect, the company can apply lean methods to streamline the product entry process and find out that much work should be done due to mistakes and errors, shipping charges and number of clients, causing a high gap in the time spent on the manufacturing process. Hence, Six Sigma tools can provide useful for getting to the root cause of problems.
As soon as changes are introduced, it is essential to reduce cost on additional expenses and focus more on repairing and refurbishing options. Testing portable first aid kits can modernize the product and turn it into a more effective and professional tool for multiple organizations. Additionally, the company can also organize training and campaigns across potential business entities and buyers who can be persuaded that this specific tool is a good investment into the safety and welfare of their employees. All of these improvements will definitely narrow-down the mission and enhance the quality of the proposed parts. The suppliers should also be engaged in the production process and organization of campaigns because their involvement can have a positive influence on their image and competitiveness among other potential suppliers. Strengthening cooperation, therefore, can contribute to the quality of goods and services proposed by the company.
Colier, DA, & Evans, JR 2017, Operations management. Stanford, CN: Cengage Learning.