Presented by:

1.FildaRahmiati
2.Akmal Abdul Manap
3.Ahmad Hidayat bin Ahmad Ridzuan
Chad’s Creative Concepts designs and manufactures
wood furniture. Founded by Chad Thomas on the
banks of Lake Erie in Sandusky, Ohio, the company
began by producing custom-made wooden furniture
for vacation cabins located along the coast of Lake
Erie and on nearby Kelly’s Island Bass Island.
Chad’s Creative Concepts developed a solid
reputation (as they competitive advantage) for
creative designs and high-quality workmanship.
Traditionally, the company focused entirely on
custom made furniture, with the customer specifying
the kind of wood from which the piece would be
made. As the company’s reputation grew and sales
increased, led Chad’s Creative Concepts into the
production of a more standard of furniture.

Currently, the company operates a single

manufacturing process in Sandusky, where both
custom furniture and standard furniture are
manufactured. The equipment is mainly general
purpose in nature to provide the flexibility needed for
producing custom pieces of furniture.
The quality of the finished product reflects the quality
of the wood chosen and the craftsmanship of
individual workers. Both custom and standard
furniture compete for processing time on the same
equipment by the same craftspeople.

Chad Thomas noted that the company has grown.

Sales of custom furniture remain strong , and the
sales of standard pieces are steadily increasing.
Hence, company realize that problems occurred on
the company:
 Costs associated with the standard line is rising
 Expensive public warehouse space has to be rented to
accommodate the inventory volume
 Increased lead time for both custom and standard
orders
 Longer promise delivery times
 Capacity is being pushed, and no space is left in the
plant for expansion

• Thomas begins a careful assessment of the overall

impact that the new standard line is having on his
manufacturing process.
What types of decision must Chad Thomas make
daily for his company’s operations to run effectively?
Over the long run?
 Decision making is an essential aspects for all
management activity, including operation management.
There are two types of decision making: strategic and
practical.
 Strategic decision are less structured and have long-term
consequences. At this type, operation managers are:
 Involve in the development of new capabilities and the
maintenance of existing capabilities to best serve the firm’s
external customers.
 Design new process that have strategic implications
 Deeply involve in the development and organization of value
chains
 Responsible for the key performance measures such as cost
and quality
Tactical decision are more structured, routine, and
repetitive and have short-term consequences.
At this type, operation managers are:
 Involve in process improvement and performance
measurement
 Managing and planning projects
 Generating production and staffing plans
 Managing inventories
 Scheduling resources
How did sales and marketing affect operations when
they began to sell standard pieces to retails outlets?
As sales increase, more regular scheduling is
needed.
Costs associated with the standard line is rising,
both in raw materials and work in process
Expenses of rent public warehouse to
accommodate the inventory has increased.
Increased lead time
Longer promise delivery times
Capacity is being pushed, and no space is left in
the plant for expansion
Various stage of completion became
unstructured as the company given more
priority to the higher sales and profit margin
(custom furniture)
Equipment life time become shorter as it use
for both production and not specialize for
standard furniture.
Compete in processing time with the same
equipment as well as by the same craftspeople.
How was the move to producing standard furniture
affected the company’s financial structure?
Positive Impacts:
 The sales of standard furniture steadily increased.
 Market region became larger (entire Great Lakes)
 More choices available for customers

• Negative Impacts:
 Higher costs occurred for the production costs as well as non
production costs
 The equipment will be less life time, maintenance cost will be
higher
 Possibility of craftspeople ask for more salary or benefits which
is payable to what they do
What might Thomas have done differently to avoid
some of the problems he now faces?
In production process:
 Equipped more specialize machinery to process
standard furniture as well as custom made furniture
 Expand the inventory spaces, either by renting more
warehouse or by buying land for their assets
 Hiring more craftspeople for differentiating production
of standard and custom made furniture
 Re-manage of value chain in the company
 In non-production process:
– Create more marketing aids: internet advertisement,
brochures, etc.
– Do marketing research before implementing standard
furniture
– Hire more employees for sales and marketing department

As a conclusion, the company should create a nested

process which is broken down the process
production into sub processes. This process is
helpful to separate one part in the process from
another for several reason:
 Skill needed for producing custom made and standard
furniture is different
 Marketing strategy used is different