| Power Unlimited Inc. The Next level | | | | The system provides continuous responses around |
| Power Unlimited Inc. (PUI) supplies power stability | | | | the internal business processes along with external |
| solutions to manufacturing, commercial, and business | | | | vendors, suppliers, and customers in order to |
| sectors. To date, PUI operates as a custom | | | | promote and improve strategic performance with |
| manufacturer and serves the needs of local | | | | results (The Balanced Scorecard Institute, p. 1). |
| businesses. Recently, PUI has realized the opportunity | | | | Currently, financial issues continue to be a primary |
| to expand operations by diversification of processes. | | | | hurdle for the future growth of the company. After |
| In order to make this transition; PUI will develop from | | | | covering all expenses related to the manufacture of |
| a job shop to a full-scale manufacturing facility. In | | | | each custom job, the limited profits are reserved for |
| addition, PUI will continue marketing custom solutions | | | | supporting current R&D projects. Due to |
| for its clients. | | | | non-disclosure agreements, these projects cannot be |
| PUI, located near Houston, Texas, operates as a | | | | discussed in this paper. This process has created a |
| distributor, wholesaler, retailer, and service provider | | | | limited cash flow situation for PUI, causing the |
| for power protection systems around the world. The | | | | decision to explore seeking outside investors. |
| current product line includes UPS (Uninterruptible | | | | However, the owner is aggressively pursuing |
| Power Supply), surge and transient protection, power | | | | additional capital by interested and qualified investors. |
| conditioners, battery chargers and monitors, and | | | | Since accounting maintains records via the "shoe box |
| power monitors. In addition, power surveys are | | | | method" by stuffing financial and accounting data and |
| available to determine power disturbances, harmonics, | | | | records into a filing cabinet, a workable database |
| power factors, power consumption, and thermal | | | | should be developed employing Microsoft Access. |
| imaging. Likewise, custom battery cabinets and | | | | Currently, the company's finance perspective is |
| maintenance bypass switches are available (Think | | | | unbalanced in relation to the other parts of the |
| Energy p. 1). | | | | balanced scorecard. Consequently, management |
| PUI faces the challenge of moving from its current | | | | should endeavor to centralized and automate |
| one-man operation to a full-scale manufacturing | | | | accounting and record keeping thereby leading the |
| facility. Power Unlimited, Inc. faces constraints in | | | | company into a more productive and balanced |
| finance, logistics, operations, human resources, and | | | | information situation. |
| customer satisfaction. To direct PUI growth plans, | | | | In regards to the business perspective, this is in |
| the team used the balanced score approach to | | | | reference to the internal processes of the company. |
| designs an operational structure. This real time | | | | In the scorecard approach, established metrics allows |
| solution will aid this company in this transition phase. | | | | managers to track the overall health of the company. |
| PUI currently operates on a to-order basis. This | | | | For instance, the metrics tracks the products and |
| well-defined process is attached as a flow diagram | | | | services performance, to how well they conform to |
| (attachment 1). | | | | customer expectations requirements in relation to the |
| Currently, a customer places an order with PUI for | | | | company's mission. Consequently, these metrics need |
| their specific product. Following this order request, | | | | to be carefully designed by individuals who know the |
| PUI places orders for all required components. Once | | | | company's processes intimately, like the owner of |
| all of the parts are received, the assembly process | | | | the company (p. 1). |
| begins by workers laying such mounting points and | | | | For instance, PUI has already acquired all required |
| panel openings required for the specific component | | | | manufacturing equipment and has existing facilities in |
| to manufacture. This requires the use of templates, | | | | place. The equipment consists of test and monitor |
| which are on file and match the requirements of the | | | | equipment, machine shop tools, required hand and |
| collection of components. Part of the process includes | | | | power tools, and moving assistance equipment. The |
| cutting and installing all required wiring and | | | | current space is sufficient for up to eight |
| interconnections. Likewise, testing before shipping | | | | manufacturing work areas. In turn, the projected |
| ensures the component performs as designed. | | | | capacity will allow for the manufacturing capacity of |
| If the customer completes his or her own installation, | | | | up to twenty-five units per day. On average, each |
| the process is complete, initiating the billing process | | | | team member produces 3.25 units each day with |
| for the product. If PUI completes the installation, | | | | minimal overtime expected. This allows for payroll |
| travel arrangements are confirmed to ensure support | | | | control what the company continues to grow over |
| staff availability on the sight when the components | | | | the next year. |
| arrive to complete the installation process. On | | | | However, no documentation exists for these |
| completion of installation of the system to the | | | | processes meaning that flowcharts and metrics do |
| satisfaction of the customer, and in compliance with | | | | not exist. Normally when an order received, the |
| local wiring codes, support staff returns to the | | | | customer customizes the order to meet its |
| company to prepare for the next order causing bill | | | | specifications; however, since PUI does not have |
| generation for the completed project. | | | | existing metrics in place, it takes the company about |
| As PUI adds stock items to the mix, new procedures | | | | four months of trial and error to complete the |
| implementation is required. Based on initial forecasts | | | | project. If PUI has multiple components of the same |
| provided from a partner company located in Canada, | | | | specification, the company can complete the |
| PUI will set minimum stock maintenance levels in a | | | | following components in three-week increments. The |
| limited warehousing operation. Such minimum stocking | | | | metrics should include the Just-In-Time (JIT) concept. |
| will ensure that finished goods are shipped as orders | | | | Having only one large supplier for a short period of |
| are received, causing the tracking or monitoring | | | | time could increase profits although this can be risky |
| system to be created to ensure stock is available to | | | | for the company (Conrad, A. (1999), p.1). Therefore, |
| fill the order. This system will also prevent excess | | | | management hopes to implement establish metrics |
| inventory from being created. | | | | that the company can follow. |
| Using the new process, when an order is received | | | | Furthermore, the next issue to address under |
| from a customer, personnel must decide whether the | | | | business processes is logistics. Currently, PUI uses |
| order is for a custom or stock item. If it is for a | | | | FedEx and its subsidiaries exclusively. Although this is |
| custom item, the traditional flow will be maintained; | | | | a long-term relationship, it is important to evaluate |
| however, if a stock order is received an initial check | | | | other options for transportation of finished goods, |
| will be conducted to verify the item is currently in | | | | particularly as the business continues to grow. With |
| stock. If the item requested is not currently in stock | | | | the addition of standardized stock items to the |
| an order is placed with the factory floor to complete | | | | company's offerings, there may be benefits to |
| processing of sufficient product to replenish stock. In | | | | developing a mixture of resources for shipping, |
| the case of an out of stock item, the generated | | | | including FedEx, UPS, and other long-haul carriers. |
| order matches the established minimum level, and | | | | Likewise, with the continuation of custom projects, it |
| causes delay of the order for 72 hours. However, | | | | is important to maintain solid relationships with current |
| the established minimum level lies within the ability of | | | | carriers. |
| the manufacturing facility to produce within 48 hours. | | | | In the learning and growth perspective, this area of |
| After 48 hours, the order is reviewed to ensure | | | | the scorecard concerned with employee training and |
| available stock. Once the item shows in stock, a | | | | corporate cultural attitudes as it relates to both the |
| review to verify sufficient material is available to fill | | | | employees as individuals and the company |
| the current order is completed. Again, if the quantity | | | | self-improvement. In a knowledge-worker company, |
| is not sufficient, an order to build to the minimum is | | | | people are the company's main resource (p.1). |
| created causing another 48-hour delay in filling the | | | | Consequently, PUI needs to address Human |
| order. Each order is handled in a first-in first-out | | | | Resource (HR) management issues. As the company |
| fashion for all stock purchases. | | | | continues to grow, clearly defined roles and additional |
| Once sufficient quantity is in place to fill the order, | | | | headcount is inevitable and training is essential to the |
| the stock is pulled in full to complete the order. If | | | | success of the company. For instance, HR's must find |
| pulling this order creates a below minimum condition | | | | the right people to work within the culture and |
| to occur, a new minimum order is created. Filling and | | | | educational requirement of the company. With |
| shipping the order according to established processes | | | | metrics in place, managers are responsible for ongoing |
| completes the order. As each order is pulled from | | | | training to improve further the organizational |
| stock, the next order enters the fulfillment process. | | | | processes. |
| The Supply Chain Manager will control the minimum | | | | For example, in the current process two individuals |
| levels of inventory. In addition, the SCM adjusts the | | | | handle all activities. One is primarily responsible for all |
| minimum level to prevent out of stock conditions | | | | administrative functions, while the other handles all |
| from occurring. With this process in place, the | | | | manufacturing, installation and field support for the |
| quantity of stock on hand should not be excessive, | | | | current customer base. With significant growth |
| while allowing customers orders to ship in a timely | | | | projected, manufacturing, operations, field support, |
| fashion. | | | | engineering and R&D management roles will |
| By tracking the order fulfillment process, with | | | | result. |
| emphasis placed upon on-time order shipping, the | | | | Consequently, the company needs to identify an |
| success of stocking items is measured. Due to the | | | | operations manager (OM) to complement the |
| nature of the product, a reasonable level of stock | | | | engineering manager currently operating the entire |
| must be maintained. However, once this product is | | | | business. The operations manager responsibilities |
| created it must not remain in stock indefinitely. | | | | include all aspects of production and supply chain |
| Therefore, the need to adjust the minimum level is | | | | management. In addition, the OM will assist in |
| required. The decision to change an established level | | | | expanding the current customer base and adding |
| requires sound business decisions to be implemented, | | | | new clients as well. The operations manager will take |
| based on current and projected demand. Without | | | | over the day-to-day activities of the business, |
| proper review, this system can become | | | | allowing the engineering manager to focus on product |
| unmanageable. With careful monitoring, all parties will | | | | development and field support activities. |
| be satisfied. The customer receives their standard | | | | In addition, the current individual who is managing the |
| order without delay. The company minimizes | | | | administrative activities needs to develop an |
| inventory holdings. Cash flow is maximized. Increased | | | | accounting division. The issues of accounts receivable |
| demand for products from satisfied customers and | | | | and payable will be delegated to new staff members, |
| the acquisition of new clients drives future growth | | | | allowing the current individual to focus more efforts |
| opportunities. | | | | on customer relations, further increasing the potential |
| Along with maintaining an available inventory for | | | | customer base for the company. |
| shipping customers orders, it is important to develop | | | | The creation of a separate customer service support |
| a forecasting tool that can be used to aid in ordering | | | | group is also needed. In addition, the company needs |
| raw materials in anticipation of building finished goods | | | | to hire sales staff to aid in the marketing of the |
| for shipment. As UPI enters an unknown market, | | | | company's products including several proprietary |
| completed probability studies indicate an existing | | | | offerings currently available. These individuals will be |
| market for the company's product line exists. | | | | responsible for marketing activities, which in turn, |
| According to Chase, the author of Operations | | | | leads to additional growth for the business. In any |
| Management for competitive advantage, several | | | | case, learning and growth constitute the essential |
| effective forecasting techniques could apply like: Time | | | | foundation for success in any organization fostering a |
| Series Analysis, Historical Analogy, and the Delphi | | | | knowledgeable worker company. Therefore, it is |
| Method (Chase pp.467-490). Trials indicated that the | | | | essential for PUI to implement this philosophy from |
| moving average method determined the closest | | | | start. |
| tracking results. Developing a modified formula | | | | The last component of the balanced scorecard |
| achieves a weighted moving average. PUI's first | | | | system is the customer's perspective. Recently, a |
| quarter operational simulation data helped in the | | | | trend in management philosophy reports an increasing |
| design of the formula used to predict future demand. | | | | realization of the importance of customer focus and |
| If the simulation and probability study are reliable and | | | | customer satisfaction for any business wanting to |
| accurate, PUI will outgrow its current capacity by the | | | | stay in business. Leading indicators shows when a |
| end of 12 months in operation. | | | | customer is not satisfied, he or she will find another |
| With this model in place, it is possible to develop a | | | | supplier that will meet his or hers needs. From this |
| functional raw material inventory. The first | | | | perspective, poor performance is a leading indicator |
| requirement involves determining lead times for each | | | | of future decline for a business, even if its current |
| critical component. In this case, all pre-fabricated | | | | financial picture is outstanding. |
| mechanical devices and power supplies fall into this | | | | In response, PUI delivers a quality product above |
| category. Other items such as nuts, bolts, wire, paint, | | | | standard norms; however, it is imperative that PUI |
| and other related hardware are bulk materials and | | | | continues to listens to the needs of the customer. In |
| managed using a min-max system, similar to the | | | | addition, metrics must be in place to insure |
| Finished Goods inventory (FGI) system. Bulk items | | | | compliance with all aspects of the balanced scorecard. |
| are those items consumed in the process of making | | | | Furthermore, along with delivering a quality product, |
| the finished goods and not cost effective when | | | | PUI needs to ensure cycle times are within |
| ordered in small quantities. Purchasing these items by | | | | acceptable standards for both the company and its |
| case or pallet quantities improves cost effectiveness. | | | | customers. With these components in place, |
| The level reaches a predetermined point causing | | | | combined with proper positioning and strategic |
| order generation for a new case or pallet. | | | | partnerships, the success of Power Unlimited Inc. is |
| All critical items require tracking as they are used. | | | | highly likely. This placement, along with the release of |
| When these items are pulled from inventory, they will | | | | new products and additional long-term contracts helps |
| be tabulated immediately. Following this process, the | | | | to ensure the long-term success of the company. |
| material pulled generates orders for replacement. | | | | In closing, as a company experiences growing pain, |
| Occasionally, a new min-max level may be established. | | | | the decisions that management makes directly |
| This action will also trigger an immediate order to | | | | impacts the company's position in the world market. |
| increase on-hand supply to the new level. | | | | Consequently, resolving these issues are essential to |
| Implementing these procedures for all critical and bulk | | | | the success of the company. Specifically, when a |
| materials ensures sufficient quantity on-hand to | | | | company reaches its maximum capacity within its |
| support manufacturing operations without process | | | | existing structure management needs to decide to |
| disruption. | | | | maintain the status quo or grow to the next level. |
| With basic supply plans implemented, it is essential to | | | | By maintaining the status quo, the company will |
| address the heart of the operation. This includes | | | | ultimately result in failure. By changing with the |
| implementing the balanced scorecard approach, which | | | | demands placed on it, the business will likely see |
| encompasses financial, business processes, learning | | | | continued growth into the future. Nevertheless, |
| and growth perspective, and customer service | | | | Power Unlimited Inc. is in flux. With the right people in |
| perspective. The balanced scorecard is a continuous | | | | place practicing the balanced scorecard system, and a |
| step in improving SCM to meet the needs of the | | | | strong integrated SCM communicating continuously |
| company, shareholders and customers (Chase, | | | | with vendors, customers, and the organization will |
| (2003), p. 467?). Furthermore, the balanced scorecard | | | | provide the foundation for PUI's success. Finally, PUI |
| is a management system not a just a measurement | | | | is such a company to implement and build this |
| system that enables companies to clarify their vision | | | | strategy for success. |
| and strategy but translates them into action. | | | | |