UNIVERSITY OF KWAZULU-NATAL: PIETERMARITZBURG 1

SCHOOL OF MANAGEMENT

EXAMINATIONS: JUNE 2008

COURSE AND CODE: SUPPLY CHAIN MANAGEMENT 301 (SCMA301)

INFORMATION & INSTRUCTIONS:

DURATION: THREE (3) HOURS TOTAL MARKS: 100

INTERNAL EXAMINER : MR RH SALISBURY

EXTERNAL EXAMINER: MR JD NEL

NB:
STUDENTS ARE REQUESTED IN THEIR OWN INTERESTS TO WRITE
LEGIBLY AND IN INK.

THIS EXAMINATION IS MADE UP OF TWO (2) SECTIONS.

SECTION A IS COMPULSORY
PLEASE ANSWER TWO (2) QUESTIONS FROM SECTION B

THIS EXAMINATION PAPER CONSISTS OF 5 PAGES. PLEASE ENSURE THAT YOU

HAVE THEM ALL.
 UNIVERSITY OF KWAZULU-NATAL: PIETERMARITZBURG 2
SCHOOL OF MANAGEMENT

EXAMINATIONS: JUNE 2008

COURSE AND CODE: SUPPLY CHAIN MANAGEMENT 301 (SCMA301)

CASE STUDY:
FLEISCHMANN CLOCKS

Otto Fleischmann is a clockmaker from Switzerland who emigrated to South Africa twenty years
ago. Shortly after arrival he settled on a smallholding in the KZN midlands and started a clock
making business. The area has become popular as the Midlands Meander with a large number of
arts, crafts and hospitality enterprises now attracting both local and international visitors.

For Otto the art of clock making has changed dramatically. Traditionally the most time consuming
process in clock making was the exacting task of manufacturing and assembling the mechanical
parts or movement that turns the hands on the face of the clock. The Japanese were the first to
realise that electronic clock movements could be mass produced far cheaper than mechanical
movements and could also keep accurate time.

Clock making now focuses on building attractive and distinctive cabinets housing imported
electronic movements. Indigenous hardwoods are purchased from a supplier in Pietermaritzburg
who guarantees that the timber is only sourced from forests managed on a sustainable basis. Ottos
meticulous attention to detail and quality has resulted in a much expanded market for his clocks. To
meet the rising demand he has expanded his workforce to include over 30 staff drawn from local
communities. Although initially unskilled, through careful training, Otto has developed a team of
highly competent specialists.

There are three types of Fleischmann Clocks; smaller carriage clocks to be placed on a shelf or
cupboard, larger cabinet clocks for a larger surface and wall clocks to be hung on the wall. The
basic cabinet shape remains the same for each of the three types of clock, but each type can be
produced in one of eight different styles that differ in terms of the decoration added to the clock e.g.
gothic style, modern, Victorian, Alpine, old brass, etc. These eight styles are available in a choice of
ten different local hardwoods to give a total selection of 240 possible type/ style/ wood clock
combinations. Delighted customers consider they have purchased a unique product when they leave
the showroom.
 UNIVERSITY OF KWAZULU-NATAL: PIETERMARITZBURG 3
SCHOOL OF MANAGEMENT

EXAMINATIONS: JUNE 2008

COURSE AND CODE: SUPPLY CHAIN MANAGEMENT 301 (SCMA301)

With his success have also come some major headaches. Production is scattered about various
outbuildings on the small holding. The wooden components for the three types of cabinet are made
in the old dairy. The eight different styles of decoration are crafted in the old implement shed and
the final clocks are assembled and the movements installed in the old packaging shed. Otto
complains that he spends his working day running from one part of the smallholding to the other
with frequent stoppages as they keep on discovering that stocks of a critical component have
finished or is made from the wrong wood. At times the scroll saws in the cabinet shop struggle to
keep up with demand, yet the identical saws in the decorations shop are standing idle and the
operators are wondering what to do. Many of the operators are also starting to complain about the
repetitive and tedious nature of their jobs. Increasing absenteeism contributes to further production
bottlenecks.

Quality of both the components and the appearance of the finished clocks are also starting to slip
and careless mistakes are being made. For example three different clock movements are used in the
three different types of clock, but the movements are the same size and shape. Once they are
removed from their shipping box, if they are mixed, the only way to tell them apart is to read the
serial number written in small numerals on the back of the movement. A few dissatisfied customers
have returned complaining of clocks that dont keep accurate time. The fault was traced to the
installation of the wrong movement.

After serious consideration and a review of his operation, Otto has decided to invest in a large, new,
purpose built, production facility that will accommodate all areas of the clock making operation
under one roof. He still has two major areas of concern though. Firstly, he is not yet certain what the
best layout and process strategy will be, and secondly he is uncertain how to proceed with the mail
order side of his business. Initially he only sold clocks to passing visitors to his showroom on the
Meander. These sales led to telephonic enquiries from friends of happy customers which in turn
encouraged him to develop Fleischmann Custom Clocks Direct Online web page. Visitors to his site
can admire his clocks, select a type, style and wood that appeals and order online.
 UNIVERSITY OF KWAZULU-NATAL: PIETERMARITZBURG 4
SCHOOL OF MANAGEMENT

EXAMINATIONS: JUNE 2008

COURSE AND CODE: SUPPLY CHAIN MANAGEMENT 301 (SCMA301)

In theory, a clock only takes four hours to make the components, assemble, polish, install the
movement and pack ready for despatch. In practice, his lead times ranged between 3 and 6 weeks.
Furthermore, he found he was committing more and more resources to work-in-process which was
starting to impact his bottom line. He began to wonder whether it wouldnt just be simpler to return
to selling already made clocks displayed in his showroom on the Meander.

R.H. Salisbury 2008

SECTION A (40 MARKS)

COMPULSORY QUESTION

QUESTION 1 (40 Marks)

Provide recommendations and give a practical description of how Otto should design, operate and
manage his new production facility in order to overcome all the problems he is currently
experiencing and to enable him to maintain a competitive advantage in the future.
 UNIVERSITY OF KWAZULU-NATAL: PIETERMARITZBURG 5
SCHOOL OF MANAGEMENT

EXAMINATIONS: JUNE 2008

COURSE AND CODE: SUPPLY CHAIN MANAGEMENT 301 (SCMA301)

SECTION B (60 MARKS)

Answer any TWO of the following questions (30 marks each).

QUESTION 2 (30 Marks)

Give an account of how a firm should implement JIT and lean production systems and how this
may contribute to a firm gaining a competitive advantage. You may use the case study to provide
examples that illustrate your answer.

QUESTION 3 (30 Marks)

Ensuring that the right raw materials and component parts of the right quality are in the right place,
in the right quantities at the right time is a major concern in operations management. Indicate when
a MRP system is an appropriate management tool, how you would go about implementing an MRP
system, what sort of system is required under different circumstances and what advantages you
would hope to gain. You may answer this question in the context of the case study.

QUESTION 4 (30 Marks)

Human resources are widely considered to be a firms most valuable resource. On the one hand
operations managers are required to maximise human resource productivity, on the other, they are
responsible for the safety, well being and motivation of a firms human resources. Elaborate on the
constraints of human resource strategy and describe potential techniques of increasing HR
productivity. You may answer this question in the context of the case study.

QUESTION 5 (30 Marks)

Operations management decisions make a substantial contribution to a firms ability to gain a

competitive advantage. Provide examples of OM decisions that may be used by marketing to
promote a firm and its products. You may use the case study to provide examples.