Johnson Controls, Automotive Systems Group- The Georgetown, Kentucky Plant Case Solution

2. Recommendations

It is recommended that the company should shift its operation to the new plant as there is considerable large space, which is not being used. The place can not only be used for expanding the foam operations, but it can also be used for expansion of the assembly line. The company will benefit from this shifting, even in the long-run. The company can shift some of its operation, which does not require much space, in the new plant. In this way, it can save opportunity cost of the idle space. The company can easily expand its foam moulding operation in the new plant as Beckwith’s colleagues also argue that a neat and clean space should be utilized. The new plant needs to be planned and organized in such a way that it allows flexibility of changing the moulds. The company will not have to do the tedious task of changing the whole facility’s infrastructure in case some variations are required from Toyota.

The company uses effective operations management, which suggests that the company prefers quick and robust operations instead of cheap and slow operations. So, expansion of MRP to the new facility should not be a problem for the company. Beckwith needs to make sure that internal MRP system is fully integrated with the external MRP, which is connected to Toyota directly. Secondly, Just-in-time operations help the company in saving storage cost, but in the case of discussed strategy, the company can either use the idle space in the new plant for storage purposes or expansion of small operations.

3. Implementation

As the new plant has a special dirt-free area, the idle space in the plant should be used as a storage facility. The company should not store large stack of inventories in this storage area only buffer inventory should be placed there. The size of Toyota’s order is substantial enough that such a large area would be fulfilled only by buffer inventory. The company needs to setup the whole MRP system in this facility, and there is no specific area for office or managerial team. The size of cafeteria needs to be shrunk to make room for offices. Extra space within the facility cannot be given for office purposes because the company will have to re-shape the infrastructure of the whole facility in case bulk orders are received. As the production process of automobile related industry is synthetic. The company can use computers to automate the process via MRP. In this way, the company will be able to reduce COGS significantly.

The company needs to expand its revenue base so that idle capacity of this new plant can be fully utilized. However, the new revenue base should be medium-termed because in case Toyota’s Camry demands increases, the company should be able to shift operations conveniently.