3. Focus plastics originally made precision plastic components for the Aerospace sector, together with some basic (cheap) ‘homeware’ items such as buckets and dustpans. However, competition became intense in this market, so they decided to specialise in homewares;

not just the basic products it had made previously, but a higher-quality, attractively designed and fashionable range. Its original basic range was sold under the ‘Focus’ brand and the new ‘upmarket’ range under the ‘Concept’ brand. The main customers for the Focus products were large homeware and ‘do-it-yourself’ retailers. The company delivered these products, in bulk, to their customers’ fulfilment centres. By contrast, the Concept range was distributed to a newly developed network of exclusive stores, and kitchen equipment and speciality retailers. Within a year of launching the new Concept range, the company had over 3,000 retail outlets across Northern Europe with full point-of-sale display facilities and supported by press coverage. Within two years, Concept products were providing over 75 per cent of their revenue and 90 per cent of their profits. The Focus (basic) range continued to be produced, but as a drastically reduced range. The success of the Concept range enabled the company to replace their small injection-moulding machines with new larger ones that allowed them to use large multi-cavity moulds. This increased productivity by giving the capability to produce several products, or components, each machine cycle.

Although cumbersome and more difficult to change over, the moulds were very efficient and gave a very high-quality product. With the same labour, they could make three items per minute on the old machines, and 18 items per minute on the modern ones using multi moulds. They also achieved high dimensional accuracy, excellent surface finish and extreme consistency of colour. Also, by standardising on single large machines, any mould could fit any machine. This was an ideal situation from a planning perspective, as they often had to make small quantities of Concept products at short notice.

Notwithstanding the success of the Concept range, the company had problems with its scheduling process. Its operations controller explained: ‘We can change colours in 15 minutes, but because our moulds are large and technically complex, mould changes can take up to three hours. Good scheduling is important to maintain high plant utilisation. With a higher variety of complex products, batch sizes have reduced and it has brought down average utilisation. Often, we can’t stick to schedules. ????hort????term changes are inevitable in a fashion market. ????ertainly better forecasts would help. . . but even our own promotions are sometimes organised at such short notice that we often get caught with stockouts. Yet, our finished stock levels are also growing fast.’

Why might the company’s stock of finished products be increasing while they are also suffering stockouts?