Question

Sammy’s Sofas (SS) is a Charlotte, North Carolina-based company that manufactures and sells upholstered sofas. Due to competition from Asian manufacturers, five years ago SS moved almost all production to a new SS factory in Querétaro, Mexico so they could match the unit cost of their Asian competitors. They did not intend to undercut their competition’s price, partly because they were concerned that a lower price might impair their reputation for high quality. The only products manufactured in its legacy Charlotte plant are new products, which are introduced relatively infrequently. If demand for these products grows to sufficiently high volume, production is moved to Querétaro. If not, SS removes the products from its catalog. Once production starts in Querétaro, lead times run about eight weeks. This lead time includes manufacturing time (cutting the wood, assembling the sofa frame, cutting the upholstery fabric, and assembling and finishing the final product). The lead time also includes packaging and shipping the sofas to SS’s warehouse in Charlotte, which is housed in the same building as the factory.

Customers are primarily large department stores in the U.S., which sell large volumes of SS’s products and which hold SS to very tight delivery schedules. When a customer places an order, SS has 6 days to deliver to the customer’s distribution center. Furthermore, on the given delivery date, SS has a 2-hour window to be at the customer’s receiving dock. If SS has inventory in its Charlotte warehouse, it can easily meet these delivery requests, but if the warehouse has stocked out, shipments almost always will be late. Customers give SS a monthly report on late deliveries. It helps that there is almost no seasonality in the demand. Yet, the president of the company, Jon Dixon, has been quite frustrated recently by increasing reports of late deliveries. His factory manager in Querétaro, in turn, is getting frustrated by the pressure put on him by Jon and the team in Charlotte.

SS’s product line is limited, including only about 200 stock keeping units (SKUs) – a number that accounts for size, style, and fabric (upholstery) variations. For instance, one style, called SS-Q, comes in five different fabrics and two different sizes (love seat and full sofa). SS-Q-BL is a love seat with blue upholstery and is counted as one SKU. An SS-Q sofa in a different size or a different fabric is a different SKU. Jon Dixon will readily tell you that SS’s quality is superior to its many competitors, and the market seems to confirm that assessment. It discourages Jon that occasional defects in color, material or sewing cause delays in shipments from Querétaro to SS’s Charlotte warehouse, but his Quality Assurance manager likes to remind him that it was Jon himself who encouraged them to never ship a defective product.

1. To begin an audit of SS’s operations strategy, you would examine the four operations objectives. Using the limited information given above, provide your comments on these objectives for SS, using the table below. If there is no information about measures or definitions of one or more objectives, note that fact and make your best guess at what they might use. Briefly note why you ranked them as you did.

Objective	Definition – How does SS define each objective?	Measurements – How does, or could, SS measure the objective?	Rank – How would you rank each objective for SS?
Cost
Quality
Delivery
Flexibility

Answer 1

About Sammy's Sofa(SS)

Sammy’s Sofas (SS) is a Charlotte, North Carolina-based company that manufactures and sells upholstered sofas. Due to competition from Asian manufacturers, five years ago SS moved almost all production to a new SS factory in Queretaro, Mexico.Customers are primarily large department stores in the U.S., which sell large volumes of SS’s products.Jon Dixon(President of Company )will readily tell you that SS’s quality is superior to its many competitors, and the market seems to confirm that assessment.

Objective	Definition	Measurements	Rank
Cost	1.Cost is the amount that SS received for producing and delivering high quality products to customers. 2.SS products are of high quality & according to the quality of its product cost is determined.	1.Cost of SS sofas and furniture is high. 2.They did not intend to undercut their competition’s price, partly because they were concerned that a lower price might impair their reputation for high quality.	Third position for rank can be cost.
Quality	1.The word Quality simply means Standard. "The method of setting,reaching and satisfying the standard for any product is called Quality." 2.It is the degree to which customers are satisfied with the product. 3.SS focuses on delivering superior quality of product. Evidence from case: 1.Jon Dixon(President of the Company) will readily tell you that SS’s quality is superior to its many competitors, and the market seems to confirm that assessment. 2.Quality Assurance manager tells Jon that he himself encouraged them to never ship a defective product to customers.	1.SS delivers superior quality products which is evidenced and confirmed by the demand for product,customer satisfaction and market assessment. 2.Jon discourages occasional defects in color, material or sewing is not bearable because quality is their identity.	I will rank quality at topmost priority.
Delivery	Delivery is the measurement of on time reaching of products to stores and customers dock. And distance between the production unit and warehousing units make delay in SS delivery.	SS lags in delivering products on time. Evidence from case: 1.Customers give SS a monthly report on late deliveries. 2.SS has 6 days to deliver to the customer’s distribution center. Furthermore, on the given delivery date, SS has a 2-hour window to be at the customer’s receiving dock but SS has lead times run about eight weeks after production has been started results in little delay in delivery.	Second position can be hold by delivery.
Flexibility	Flexibility can be determined in terms of delivery,production,demand and seasonality,cost and quality, customer satisfaction,size, style, and fabric (upholstery) variations.	Evidence from case 1.SS’s product line is limited. 2.Customers segments of SS are primarily large department stores in the U.S., which sell large volumes of SS’s products. 3.There is almost no seasonality in the demand. 4.If demand for new products that SS has introduced grows to sufficiently high volume, production is moved to Queretaro, the new production factory . If not, SS removes the products from its catalog. 5.Cost and quality of product is high but customers are satisfied with the product.The only source of disappointment is delivery time.	Flexibility can be at bottom most.

Reason for ranking:

Quality :Since every customer wants a quality product and if the company is able to deliver a quality product to the customers then they will readily pay the high price for the product. So for any company quality should be the top most priority

Delivery: Timely delivery of product to the customer defines the efficiency of the distribution channel. Customers always want on time delivery of a product because it's a human psychology that after ordering a certain thing the customer always keeps an eye on the delivery of the product.So it ranks second.

Cost :If a company is able to deliver a high quality product at a proper time then the customer will readily pay the high price. Since SS has a high class customer segment therefore there will be no issue regarding price. If the above two qualities or characteristics can be achieved by the company then cost will no longer be an issue and hence I ranked it on third position.

Flexibility: Flexibility can be adjusted according to the company's strategy and according to demand therefore it can be ranked at the lowermost position.