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Pride Industries Case Solution
The main problem faced by Pride is that it has to upgrade its production technology in order to compete with the market. Like any other investment, this investment has its own risk. Pride primarily produces Printed Chip Boards for Electronics Company. The problem faced by the company can be understood by a simple analogy of how desktop or personal computers are replaced by laptops and tablets; they are more efficient than laptops and weigh less, but their prices are extremely high. The company has to make an investment of USD 2.6 million in order to acquire new technology. It does not have another way to save itself in an extremely competitive market, but the risk of not utilizing the opportunities provided by the technology is also very high.
Following questions are answered in this case study solution
Define the main problem/problems from the case and articulate them
Define the SMT operation and discuss its characteristics
Discuss what could be the appropriate operation strategy for SMT
Based on your assessment, discuss whether the company should go ahead with the SMT proposal
Define the SMT process type and layout design. Discuss the appropriateness of SMT process type and layout in the light of the SMT operation characteristics and strategy
Discuss whether the company should consider outsourcing some of its future operation capacity as an alternative?
Case Analysis for Pride Industries
In order to understand the context of the problem, the company’s nature must be understood. Pride is a social enterprise that aims at hiring a maximum number of disables people. However, being a social enterprise poses a different kind of challenge for the company; it has to ensure a stable and growing triple-bottom-line that includes financial profits, social contribution, and environmental contribution. The three aspects of being a social enterprise must be aligned, which was the main concern of Pride’s chief financial officer, Yamauchi.
So, the main problem faced by the company is that it has to acquire a fairly expensive technology or else it will start losing customers. Moreover, there is a high risk attached to the technology as the company might not be able to exploit its potential fully.
Define the SMT operation and discuss its characteristics.
A circuit board provides land on which various electronic components like capacitors and resistors are planted. Pride, currently, uses technology that uses drilled printed circuit boards and small wires are used attached capacitors and resistors to the board and enable connectivity and transmission of electronic signals. Most importantly, the current system of Pride costs them high per-unit cost due to old machinery. The company acquired 20 years old machinery, which performed quite well even in a recessionary period, but now, due to the advent of new technology, these machines were discarded at a rapid rate.
SMT (Surface Mount Technology) is a technology that is used for making printed circuit boards. The difference between the technology used by Pride and SMT is that the latter one does not need to be drilled circuit boards; it simply mounts the electronic components on the board. The overall average of producing one circuit board is reduced as the total output is increased due to low wattage. Furthermore, with the use of SMT technology, more electronic components could be mounted on a circuit board than traditional technology. The backside of the circuit board was completely made useless due to the use of traditional technology, but with the use of SMT, both sides of circuits can be used. So, the circuit board would be able to perform more functions in the same period of time. So, the main characteristics of SMT are that it makes the printed circuit board in a short period of time with reduced per-unit cost, and with enhanced functionality.
Discuss what could be the appropriate operation strategy for SMT.
Like any given business, the operational strategy of the company should be aligned with the corporate level strategy or the overall strategy of the company; the importance of strategic alignment cannot be denied in today’s competitive world. The main aim of the company is of societal nature as it wants to employ disabled people and make them able to contribute back to society. In order to make sure that the maximum numbers of disabled people are employed at the company, it should start the SMT based production line by making it labor-intensive.
The conundrum faced by Twitchell lies in this strategy. The SMT production line is fast, automated, efficient, and effective. However, it demands a minimum number of workers i.e. two to four for operating it. The acquisition of SMT will make the company financially sound, but it might hinder the societal contribution aspect of the company. In order to solve this conundrum, the company must acquire a flexible SMT production line that can employ a maximum number of employees. This would strike a constrained optimization balance between the two conflicting factors.
The operational strategy would be to make sure that the contribution of labor is significant in the production facility. This would not only satisfy customers who are demanding the latest printed circuit board. As per the company’s corporate strategy, the company does not want to take high volume orders from customers like Apple places orders to Foxconn in China.
Based on your assessment, discuss whether the company should go ahead with the SMT proposal.
Clearly, the company should go ahead with the SMT proposal due to a large number of factors mentioned below:
SMT production line would provide fast production and at a low production cost. Moreover, the demands of the customers will be easily met as they are demanding efficient printed circuit boards that can accommodate a large number of electronic components.
The recent order received from the government can be easily fulfilled with the use of the SMT production line and it has become a necessity for Pride to acquire this technology.
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