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coursework精密钢管Plc的战略分析
这部分报告涉及该公司当前定位的全面战略性分析，以及实现这些目标的三大业务选择和生产的战略性建议。首先，是在各种情况下的公司背景分析。其次进行了新的营销举措分析。报告中不同的战略问题在后半部分得到解决以及重点战略任务的决心。最后，报告提出了采用t山方法论的营销策略和战略建议。
精密钢管主要涉及三个不同的市场，即电机、钢材库存商和定制部分的片段。表1号（1）给出了案例研究，进行比较分析十年前在不同的市场上销售的吨量。目前公司销售每年销售50400吨的电动马达，29700吨钢材库存商和20400吨定制的部分，市场共计100500吨。因此，目前电动马达，钢铁库存商和定制部分分别贡献50.14％，29.54％和20.32％。而十年前，每年售出总量98900吨的电动马达碎片
Strategic Analysis Of Precision Steel Plc Economics Essay
This section of the report deals with thorough strategic analysis of the company’s current position as well as the three business options and producing a strategic proposal to achieve the objectives. Firstly company’s background in various contexts in analysed. Then the new marketing initiatives are analysed. In latter part of report different strategic issues are addressed and key strategic task’s are determined. Finally the report presents the marketing strategy and strategic proposal using T hill methodology.
Precision steel mainly deals with three different segments of market namely electric motors, steel stockist and customised section. Table number 1 (1) of case study gives a comparative analysis of tonnes of volume sold in different markets between current years and ten year ago. Currently company sell’s 50400 tonnes to electric motors, 29700 tonnes to steel stockist and 20400 tonnes to customised section market totalling 100500 tonnes is the volume sold per year. Hence currently electric motor, steel stockist and customised section contribute 50.14%, 29.54% and 20.32% respectively. Whereas ten years ago out of the total volume sold per year (98900 tonnes) the fragmentation in electric motor, steel stockist and customised section markets were 79600 tonnes, 15100 tonnes and 4200 tonnes respectively. Hence ten years ago 80.5% of volume was sold in electric motors whereas steel stockist and customised section contributed only 15.25% and 4.25% respectively. Hence in ten years time sell in electric motor market is decreased by 30% and on other hand sell in stockist steel market in increased almost double by 15% and in customised section market by four times that is 16% (TN1 (1); case study, 2010).
The average quantity per size is very critical from manufacturing point of view. Example: a 100 ton order in 20 different sizes is like 20 orders of 5 ton each from manufacturing perspective. In case of PS as per table no. 1 section 2; except stockist steel market in which order quantity per size is slightly increased from 4.94 to 5.34 tonnes, the overall trend from ten years data is decreasing order quality per size. The average order quality per size for electric motors in decreased from 14.3 to 7.31 tonnes and for customised section it is decreased from 16.64 ton to 9.38 ton per size. Hence this decreasing trend of average order quantity per size affect manufacturing cost and time both adversely; therefore it is crucial strategically (TN 1 (2)).
From infrastructure point of view PS have two hot mills; Mill C is 15 years old and Mill D is 10 years old. However the market circumstances have changes drastically in last ten years as discussed above the maximum average order quality per size is decreased from 14.3 ton to 9.38 ton in last ten years. Also the maximum processing time per size change ratio is decreased from 7.1 to 4.6. Hence in last ten years the changes with respect to hot milling have negative impact on cost and time for PS (TN 5 and Exhibit 6, case study 2010).
Reliability in Delivery Performance:
According to T Hill (1993) “the ability of an organisation to meet the order specification with respect to time and quantity is delivery performance”. Hence delivery performance has two aspects of time and quantity. When delivery performance is judged from perspective of quantity it’s called reliability in delivery performance.
Brian Finn suggests the delivery reliability of PS is satisfactory as it delivers 95% of order quantity on or before time (case study, 2010).
However the strategic analysis of PS’s reliability in delivery shows a different picture. In case of stockist steel market 28.5% orders were delivered late whereas electric motors 27% orders were late. And in customised section market 43.3% orders were delivered late which is maximum. Overall in context of delivery performance at 37% instances PS delivered 26% tonnes of material late. Hence actually at 63% instances only PS delivery performance is reliable (TN 2, Case study 2010).
Speed in Delivery Performance:
It is second aspect of delivery performance where the criterion of judging is on time delivery and it is referred as delivery speed.
Strategically delivery speed is very crucial it can be one of the order winners. And if delivery speed is an order winner there can be two possible reasons the company can’t deliver on time:
If the given lead time with order is less than the standard lead time.
If the lead time is equal to standard lead time still gets late due to existing backlog in order execution as the earlier orders are getting executed.
If delivery speed is not an order winner generally the lead time is more than standard lead time and hence it can be delivered on specified time (Anderson, 2010).
Analysis of New Marketing Initiatives:
Gambert Fabrique (GF):
The major objective of the marketing initiative regarding GF is to increase sales volume as the principle market of electric motors is falling down so Precision Steel was looking for new options for future to maintain the business. From data in case we can see that the contribution of stockist steel market was between 15 to 20% and after entry of GF it increased to 30%. So GF has more than 10% (France) and 3% (UK and Denmark) share in total sales volume of PS which is very significant and as Precision Steel gets individual GF depots that will increase the sales volume also. (ref: Exhibit 2).
The overall increase in stockist steel market over last ten years was 100% as the sales almost doubled and the major uplift came last years when PS got the Gambert Fabrique contract. (ref: TN3).
Over last the average order quantity per size is increased from 4.94 tonnes to 5.34 tonnes for stockist steel market and it is favourable for manufacturing and hot milling process as well as procedure of cumulating different sizes as more the volume per size less the change over time and hence less cost. (ref: Exhibit 2).
The average order quantity per size for stockist steel section is 4.92 tonnes (Exhibit 2) and for the UK stockist the tonnage per size is 10 tonnes which gives high contribution of 34% but affects the manufacturing efficiency as to meet the required 10 ton target accumulation of orders for same size is needed which increases process cycle time and hence lead time. On other hand GF (France) orders 670 tonnes per month in 34 standard sizes so the average tonnage per size is 19 tonnes with a minimum of 10 tonnes per size and required tonnage to execute the order is 20 tonnes so it makes the manufacturing efficient and there is less need for accumulating orders but the average contribution of GF (France) is just 9%. (ref: Exhibit 2 and TN4).
The average margin given by GF(France) is 9% and by GF(UK) it is 14% on an average. So by capturing individual depots of GF margin is improving. (ref: TN4).
Customised Sections:
Customised section market deals with the orders that cater for specific need of different manufacturing businesses like oil industry, automobile industry etc. It is a growing market and in last ten years it grown by 385%. There are two types of material required for this market namely standard steel and special steel out of which standard steel is kept in stock whereas special steel is ordered whenever required. The average order quantity per size for last ten years is 11.8 tonnes. In this market segment the shape and size are specified by the customer but there are many repeat orders for the same product. And this market also have some special characteristics like most of the orders are for one size only and maximum there are up to four different sizes and also this market has call-offs or scheduled requirements by the customers. (ref: Exhibit 5).
The margin in customised section is on an average is 24.5% is comparatively high. And order quantity per size is also relatively high so this market has lots of opportunity for future. (ref: TN4).
Strategic Paradigm:
Volumes (tonnes):
After analysing the data regarding hot rolling mills we find that the output rate of Mill C is 13.5 tonnes/gross hour and for Mill D it is 20.3 tonnes/gross hour, which means Mill D can process 6.8 tonnes more per hour compared to Mill C. Also the size change time in a programmed range is maximum 10 minutes for both mills but the change over time from one range to other is 1.75 hours for Mill C and 2.15 hours for Mill D if the ranges are sequential means are in an increasing or decreasing order and if not sequential it increases by a factor of 1.5, which means range change over on mill d takes more time than on mill C. Now considering small order quantities Mill D is more suitable because it has a better output rate so the excess change over time can be compensated by the quicker output. Also as discussed above Mill D has higher capacity to process steel than Mill C and the cost is dependent on output rate so higher the output lesser the cost hence Mill D is cheaper. (ref: Exhibit 6).#p#分页标题#e#
The company policy is to process minimum 5 tonnes per size. Now if the individual order quantity per size decrease production planning department have to wait till they get more orders to reach the required level of 5 tonnes this will increase the manufacturing lead time as well as due to inadequate order quantity per size the sequencing of orders is difficult which increases time and cost both. (ref: Exhibit 6)
So in conclusion individual small order quantities will require more change over across the range which will result in more time and higher cost of manufacturing.
Market and Volume Fragmentation:
Market fragmentation is helpful in competitive situation, but over market fragmentation leads to increase in trading cost and in case of PS, it is currently in near monopoly position. Also the volume fragmentation is important for better customer relation and increasing sell but at the same time it increases manufacturing cost. (Ref: Ya- Shan Wong et all, 2007).
The basis of GF contract is to maintain the sales volume as the electric motor market is falling down. With regards to order size GF orders 670 tonnes per month which is almost 28% of the monthly sales of PS and also GF gives 6-8 weeks to deliver the order which is higher than standard lead time of 5 weeks hence the schedules are stable but the price for GF is comparatively low than the other steel stockist hence low profit.
Now with GF the only trade-off is price to over come it PS took the marketing initiative to direct supply to some of the GF depots according to John Breen this will reduce the distribution cost for GF and increase the price for PS. But actually the order quantity from other GF depots were less and the delivery time was also 4-6 weeks hence this decision affected the cost and schedule both.
Affect of Marketing Initiative on other parts of Business:
Expected improved Contribution:
Contribution can be mathematically defined as:
Contribution= Sells price – Variable cost.
Also, Profit = Sells price – Total cost.
And Total cost= Variable cost + Fixed cost.
Hence Contribution = Fixed cost + Profit.
Therefore, Contribution α Profit (Contribution is directly proportional to the Profit).
The average contribution for all sizes from GF (France) is 8.667% on the other hand from GF (UK) it is 13.5%, which is almost 5% higher than GF (France). The average order size used for variable cost is 20 tonnes for GF (France) and the actual order quantity per size is 19.7 tonnes which very close to 20 tonnes and the variation is just of 1.5% and hence it does not affect the estimated variable cost and hence the estimated contribution. For GF (UK) the average order quantity per size used to calculate variable cost is 5 tonnes and the actual average order quantity per size is 3.88 tonnes and the variation in actual and expected is of 22.4% which is quite big and going to affect the variable cost and this will increase the cost and hence reduced contribution than the expected one. As well as the actual order quantity (3.88 tonnes) is less than the required quantity (5 tonnes) therefore manufacturing will have to wait to execute order till they can accumulate more orders for same size to make manufacturing profitable which will increase the lead time. (ref: Exhibit 2 and TN2).
Market and volume Fragmentation:
Market and volume fragmentation are already explained above. Now PS is planning to fragment the market as well as volumes but by analysing the data we can see due to increase in number of depots of GF to which PS is directly supplying the overall average order quantity per size decreased by 41% from 19.7 tonnes pre size to 11.6 tonnes per size and the variable cost and time both are directly associated with average order quantity per size because as the quantity per size manufactured decreases the number of change over increases and due to this the cost and time both increases. At the same time the prizes for GF depots are fixed and comparatively less so end of the day the contribution (profit) is decreasing.(Ref: TN6).
The future plan of PS is to start the supply to Brazil, Italy and Germany GF depots also. As we have seen above as the number of depots increased the quantity to be manufactured per size decreased and as the depots will increase the same trend will go on due to this manufacturing have to wait for more orders of same size to start the execution of the order so that the manufacturing becomes cost effective. But this will affect the delivery performance of PS and they won’t be able to meet the required delivery dates. And to maintain the delivery performance is manufacturing executes the order with small volume, this will increase the cost and will reduce the profit. So we can say the trade-offs can be both delivery performance and cost as explained above.
Stable Schedules:
The Market and Volume fragmentation policy of PS is going to disturb the schedule and will make it unstable because as the market and volume will fragment the production planning department have to wait till they get order of adequate volume for specific size and due to this waiting the planned schedule will have to change to keep the manufacturing going and hence making the schedule unstable. Due to unstable schedule the sequencing of orders on mills won’t be possible and which will increase the size changes and change over resulting in increased variable cost.
Prices:
Due to the depot initiative the localised competition between the depots will increase because all depots will have there own individual targets given by GF management and to meet those profit target they will put pressure on PSL to decrease prices and to maintain business with all the depots PSL will have to decrease prices but the analysis done above shows that the depot initiative is going to increase cost and hence ultimately this will result in reduced profits. And the major objective behind depot initiative was to get high prices so, the depot initiative can lead to exactly opposite of this objective.
As the increase in number of depots may cause reduction in prices, so to maintain the profit the key strategic task that manufacturing need to address now is decreasing the cost.
Marketing Strategy:
As from above analysis we can see the increased number of small volume orders will increase the cost and also the competitive situation between the depots will lead to keep the prices low, so the contribution will decrease.
The marketing initiative of depots is leading to low profits hence marketing needs to change the strategy regarding depots.
The change in marketing strategy is, PSL should accept only those orders of GF depots which are of high volume per size and can make manufacturing cost effective.
PSL should increase there sell in UK stockist market as this market gives maximum contribution of average 35% and also PSL have only five major stockist of UK so there is an opportunity to explore. So PSL should find more customers in UK stockist market which will lead to high profits.
PSL should increase there sell in customised section market as it gives average contribution of 24.5%.
Delivery Performance:
As discussed earlier the delivery performance of PSL was not as expected by the management of PSL. Precision Steel was reliable only on 63% instances and was a failure in delivery at 37% instances. Specially in Customised steel market the delivery performance was very poor and also in case GF (UK) and GF (Denmark) the delivery performance was bad.
Delivery Speed- Electric Motors and Steel Stockist Market:
For Electric motor market and steel stockist market the time given by the customer for delivery was higher than the standard lead time for electric motor and steel stockist market which is 5 weeks consisting of four weeks for hot milling and one week for heat treatment and finishing work. As the time provided by the customer was higher than standard lead time hence delivery speed was not the order winning criterion for Electric Motor market and Stockist Steel market. (Ref: Exhibit 7).
Now analysing GF for GF (France) the delivery speed was not an order winning criterion as the time provided for delivery was more than the standard lead time of 5 weeks. For GF (UK) out of the seven orders for three orders delivery speed was order winning criterion and out of these three orders where delivery speed was order winning criterion only one order was delivered on time rest two were delivered late. And finally for GF (Denmark) in all seven orders delivery speed was order winning criterion and out of these seven orders only three were delivered on time. So in conclusion for GF overall out of 30 orders, in 10 orders delivery speed was order winning criterion and out of these ten orders only four were delivered on time. (Ref: Exhibit 8).
b) Delivery Speed- Customised Sections Market Segment:
In customised steel sections market there are two types of steel delivered in the market the special steel and the standard steel the standard lead time for special steel is 15 weeks as addition ten weeks are taken for material procurement and for standard steel the standard lead time is five weeks. Now analysing the data given in the case regarding the customised sections market, we find that out of 14 orders of standard steel for 5 orders delivery speed is the order winner and out of these 5 orders 3 were delivered late. And in case of special steel out of 16 orders of special steel for 7 orders delivery speed is order winning criterion from which 5 were delivered late. (Ref: Exhibit 9).#p#分页标题#e#
Key Strategic Task for Manufacturing:
Key strategic task can be defined as the task which must be addressed to make the strategy a success.
In the light of the whole discussion we come to know that there are two key strategic tasks which manufacturing needs to address and they are:
Decreasing Cost.
Improving Delivery performance.
Decreasing Cost:
As from the analysis it is known that the market of electric motors in falling down so to maintain the sells volume, improving in other market segments namely stockist steel market and customised steel market is very important. Now in the stockist steel market price is an order winning criterion in majority cases so to maintain the high profit margin the cost should be decreased.
The cost can be decreased by efficient, economical and optimal scheduling of orders for hot milling process by the production planning department.
The cost can be decreased by not accepting the orders with small volume per size, so that the same operational set up can produce a large volume of product without change over which will save time and will decrease the cost.
Cost can reduced again to a lower level in future by implementing the software package for production planning and control which will make production highly economical and also reduce the cost associated with the manual production planning.
Improving Delivery performance:
Now considering Customised Section, in this section for majority of the cases delivery performance is the order winner, so to increase sell and make profit out of this market delivery performance should be improved. Presently the reliability to deliver the appropriate volume of product is very poor in case of special steel (out of 16 orders 6 delivered over quantity and 3 delivered less quantity) and the major cause of this is the principle supplier of PSL who out of 16 orders supplied 7 order over quantity and 7 orders under quantity. (Ref: TN 8).
Also considering delivery speed of the English Billets is not good. It is on time only at 38% instances for standard steel and at 58% instances for special steel. (Ref: TN7).
So to improve delivery performance PSL have to find new reliable suppliers which are on time with appropriate quantity.
Also with reference to the Exhibit 12 and 13 and it’s notes it can be found out that the delays are the result of the communication gap between the metallurgy and estimating departments and production planning department which affects the delivery performance and which can be avoided by establishing better communication between the departments.
Time can also be saved by increasing the capacity of the crane which is currently 5 tonnes to up to 20 tonnes, due to this the wastage of time in separating the order before craning and assembling the order after craning will be saved.
Marketing Strategy regarding Special steel:
With reference to the data in TN9 for special steel out of 16 orders, 7 orders were such where delivery speed was order winner and out of these 7 orders only 2 are satisfied rest 5 failed. Such performance will harm the customer relationship and ultimately the company may loose the customer. And loosing a customer is unacceptable, to avoid it marketing should accept only those orders which have minimum standard lead time.
Strategic Proposal:
Company Objective
Marketing Strategy
Order Winners
Manufacturing Strategy
Key Strategic Task
A. Maintaining the Business position to the current level.
B.Maintaining the volume sold per year at current level.
C. Maintaining the profit to the current level.
A)In Customised section market:
A. Increasing sells in standard steel market.
B. Increasing sells in special steel market but accepting the order with standard lead time.
B) In case of GF depots:
A. Increasing sell to the GF(France).
B. Increasing sell to the other GF depots but accepting the orders only with the high volume per size.
C) Increasing the sell in the UK stockist market.
Price.
Delivery Performance:
Delivery speed.
Delivery reliability.
A. Provide low cost manufacturing.
B. Reduce lead time.
C. Improve the delivery speed.
D. Producing the product in permissible quantity and good quality.
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