Question

CASE 13.1 Wash & Dry, lnc.

Wash & Dry (WD) is a small manufacturing company with annual revenues for 2015 reaching $10 million. Located in Bellefonte, PA, WD produces various types of laundry and personal soaps as well as an array of paper products, such as paper towels and napkins. The unique nature of WDs products have allowed it to grow from a start-up in 2010 with revenues of $1 million to where it is today. WDs products are totally sustainable and command a higher price than competitors in the markets they serve. Their products are sold through both mass merchandisers as well as specialty retailers. WD manufactures it products in two plants in Bellefonte: one dedicated to the soap line and one to paper products. From these two plants, finished products are transported to their distribution center located in Harrisburg, PA. From there, mixed shipments of soap and paper are sent to the retailer distribution centers where they are sorted and mixed with other products going to retail stores' As a relatively small company¡ WD had a very unsophisticated set of key performance indicators (KPIs). At the plant, the KPI was "did we make what we were scheduled to make today'' At the DC, the KPI was 'did we ship what we were supposed to ship today.” Although these two KPIs seemed to work in the past, WDs growth and pressure from its retail customers for better service made it necessary for WD to consider developing a more comprehensive set of KPIs.

CASE QUESTIONS

l. If you were hired as a consultant to develop these KPIs for WD, how would you assess what KPIs they should be measuring? In general, what areas of service and cost would these KPIs address? Be sure to include both internal and customer KPIs'

2. What KPIs would you recommend for the manufacturing facility? why?

3. What KPIs should be used at the distribution center? Why?

4. How would you measure the revenue and profit impacts of these new KPIs?

Answer 1

1- If I were hired as a consultant to develop these KPIs for WD, I would like to change KPI at the plant,it should not only focus on the quantity KPI also include effective rate of production time, waste calculation and reduction in waste, effective use of equipment, energy cost optimization as well most important in this case is standard quality achievement because as mentioned in the case price is not a hurdle as WD's prices are higher than it's competitors and customer are ready to pay.In general areas of services and costs which should be addressed by KPI are service time effectiveness, service quality, taking feedback as to improve customer satisfaction, optimization of service costs, delivering good quality service to customer, customer loyalty services, where as cost is considered it should be focus on effective use of resources technical as well as personnel.

2- KPI for manufacturing facility- For manufacturing facility there are many KPIs which should be considered like production cost and time optimization, efficient use of machinery and equipments, effective use of energy consumption, waste management and minimization of wastages, effective planning and comparison with actual result,prepare deviances and find out the reasons for deviances, try to improve and meet set goals.

3- At the distribution center the cost of distribution is very important as well as the proper allocation of goods to the right place withing the standard time. Hence KPI for distribution center should be Effective allocation of goods, minimization of distribution costs, effective use of transportation resources, Achievement of target delivery time, Optimization of delivery quality, manage pressure of goods delivery on time, Plan distribution by keeping in mind the Factors like requirement, urgency, loyalty, availability of resources etc.

4- To measure the revenue and profit impacts of these KPIs we should fist record revenue and profit before setting these KPI and then apply these KPI , record each activity in detail like production rate,time,machine per hour energy consumption and per hour production, final production cost per unit, selling and distribution cost per unit, profit per unit. Now we should compare these with prior figures and find out the deviations, if the deviations are showing positive results it means there is a increament in revenue and profit and vice versa.