Kelpies Furniture Company Assignment 1 Case (1)

1 MANU9DA Business Analytics Assignment 1 Autumn 2023 Division of Management, Work and Organisation Quality Diagnosis at The Kelpies Furniture Scotland IntroducƟon The Kelpies Furniture Scotland (KFS) is a family-run business that started in 2007 from a workshop near Stirling with only 5 staff producing innovative products from recycled wood and locally sourced fabrics. It has evolved into a business with over 200 staff focusing on serving niche market segments for upmarket customised contemporary furniture with strong ethical credentials. It also maintains a full design and manufacturing capability inhouse. When the company’s demand driven steady growth required an expansion of workshop space a second site, about 20 miles away at Saline in Fife was chosen. Compared to available Stirling facilities, the new site offered the right workspace for a much lower rental cost. Both locations run the same production processes and can make any of the furniture products in the range. The company’s CEO however still anticipates eventually being in one location for all operational activities in Stirling by 2025. The Fife expansion

2 increased production capacity by 200%. Workstations were added for each process in the production lines, increasing from the 2 initial workstation per process to 6. The new facility also provided a much bigger warehouse area to store finished product, providing flexibility in production planning. The CEO and the management team were initially concerned about the scale of the expansion and the future robustness of the demand to justify this growth investment. Now, they also experiencing what the production manager calls “growing pains”, with issues of staff wellbeing including absenteeism, quality problems as well as persistent demand concerns. Product characterisƟc and demand The special made-to-order products are popular among customers in the UK, Europe, and emerging markets in the Asia region. There are 4 product lines in its current catalogue with high levels of customisation of fit and finish for each of the 4 model types, including sub-frames made from a range of wood or metal materials. The demand has improved post-Covid19, with all models showing a strong market attraction with the modern design utilising innovative materials that emphasises sustainable production methods and high environment standards. All designs have a copyrights and patents registered in UK and Europe. In early April this year, KFS won a “Made in Scotland Award” for the category “Manufacturer of the Year” in recognition for the most outstanding business for ethical supply chain practices in Scotland. This commitment to excellence was instrumental in a sales surge and increased profitability between November 2021 and December 2022. Since winning the award, the company has experienced increase sales enquiries and higher awareness of the brand internationally through the positive publicity across social media. The most popular and expensive furniture is Model 1 which uses sustainable cushion filling with recycled materials including wool and feathers, plus hand-stitched upholstery before it is carefully completed in the finishing station. The lowest cost range is Model 4, since it does not require any use of wood materials or creative work at the upholstery’s station. Other options of the models as presented in Table 1. Model Material - Wood Material -Metal Cushion & Upholstery Metal Work 1 Yes Yes Yes Yes 2 Yes Yes Yes - 3 Yes - Yes - 4 - Yes - Yes Table 1: Available models and specifications

4 Manpower and Work PaƩern The company has a diverse range of manpower needs, each with specialized skills and responsibilities. The majority are employed in the production processes. Key categories of production staff: Upholsterers are considered the key craŌ-workers in the company. Responsible for covering and padding furniture frames with materials like fabric, leather, foam, and baƫng. They sew, staple, and glue upholstery materials to achieve the desired look and comfort specified by customers. Assemblers put together various furniture components, including frames, legs, and hardware, to create the final product. Finishers apply stains, paints, and protecƟve coaƟngs to the furniture to enhance its appearance and durability. Quality control inspectors examine finished furniture to ensure it meets design and quality standards. They idenƟfy defects, imperfecƟons, or misalignments and may perform minor adjustments or repairs. Designers and engineers are responsible for creaƟng furniture designs and prototypes. They use computer- aided design (CAD) to develop detailed plans and specificaƟons. Most designers are also effecƟvely ProducƟon Managers when overseeing the manufacturing process, coordinate workflow, and manage producƟon schedules for their designs. This involves evaluaƟng the iniƟal treatment of the materials to ensure they are appropriately and accurately applied in accordance to the company sustainability policies (non-polluƟng) and workforce safety. Their role is supported by Supervisors , who provide direct supervision to producƟon workers, ensuring tasks are completed efficiently and safely, and dealing with any issues affecƟng producƟon flow. Currently both locations have a similar working pattern with morning and afternoon shifts from Monday to Friday. This may change in the future, since the CEO has asked the HR Director to look at the possibility of introducing new working hours to improve actual production while maintaining the work-life balance ethos of KFS. The company shuts down during festive periods such as Christmas, New Year and Easter. The three new proposed shifts are shown in Table 2. Current New Shifts Option 1 New Shifts Option 2 New Shifts Option 3 Operating Day Monday - Friday Monday - Friday Monday - Sunday Monday - Saturday Operating Time Morning shift: 7am – 2pm Morning shift: 7am – 3pm Morning shift: 7am – 3pm Day shift: 9am-5pm Afternoon shift: 2pm -9pm Afternoon shift: 3pm -11pm Afternoon shift: 3pm -9pm Night shifts: 11pm – 7am Table 2: Current and proposed new work pattern. A survey was launched to get feedback from staff on the preference of new shifts arrangement (see KFS data.xlsx).

5 ProducƟon, quality, and space concerns The value proposition of the business is aligned with the KFS mission in providing high quality product and services that place environment and social impacts as its core principle. Therefore, inspection is carried out to check for any defects, imperfections, or misalignments. Quality control measures are vital to ensure the furniture meets both design specification and high safety standards. The data provided by the production manager (see KFS data.xlsx) details the production of 1021 furniture orders between 2021 and 2022. As advised by the quality control inspectors, the quality score of furniture produced should reach 70 and over to avoid rework regardless of model or type of materials used. Any small defaults can be rectified or fixed at the quality check or finishing section. The latest mean quality score is 81 but there is much variability around this score. All major defaults will be labelled ‘Reject’ and send back to “Rework”, which will cause disruption to the production plans and dispatch time as the same process will be repeated. It’s has been accepted as basic feature of working with natural materials, and rework rates of up to 5% have been accounted for in the pricing of the products, but recent data suggests this reworking has more than doubled. This is worrying data from the quality perspective. The data also revealed the scale of the customer complaints - categorised into 5 types (table 3). Code Complaint Type Action 1 No Complaint - 2 Less Complaint No action required 3 Slightly High Complaint Minor fixing at finishing station 4 High Complaint Significant but not major fixing at finishing station 5 Very High Complaint Major rework and repeat production process Table 3: Category of complaints It’s also noted that the space problems are becoming an issue when the demand is growing. The storage units are limited and currently sharing storage spaces between Fife and Stirling. This has increased operational cost. Furthermore, the lease at Fife premises is coming to run out in 2025. Each station has a capacity of 2 workstations except for quality check and packaging which only have one.

7 OpƟons The latest productivity report highlighted on possible measures for quality improvement. a) SXL-2 CuƩer is a new laser machine that can be used for wood and metal. Laser treatment for wood allows for versatile and precise methods for a range of applications, including engraving, cutting, marking, and surface treatment. The use of a laser in woodworking offers significant advantages over traditional techniques, such as high-precision, speed, and greatly reduced material waste. The latest version can also be used for cutting and scribing metals. The machine is expected to reduce up to 4 hours of average work-time for each of the first three production processes, reduce 2 hours from inspection time and improving the quality average score up to 90. b) A recent customer survey provides critical feedback, highlight the volume and nature of customer complaints. By opting to discontinue Model 3 and 4, production line space could be freed up to potentially allow an increase of 40% sales on Models 1 and 2; and reduce the amount of complaints. c) It’s estimated that the 24-hours shifts will provide a production increase of 22% but create challenging conditions to staff who have caring responsibilities.

8 Assignment Tasks KFS management has asked a group of analysts to explore the current state of the business operation and develop some proposals for change, with particular focus on the issues related to staff absenteeism, quality and demand. They have provided company data in the file “ KFS data.xlxs ”. Advice You may want to consider forming some basic queries from a read through of the case, such as:  Do the issues of absenteeism depend on staff characteristics?  Does demand and quality dependent on product characteristics?  Does facility location contribute to quality issue or more? In developing your report, you are asked to demonstrate a range of statistical tests, including at least one each of:  a parametric test  a t-test  a non-parametric test Submission and Notes  This assignment accounts for 50% of the module marks.  A Management Report is due by 12 noon, Tuesday 7th November 2023  Your assignment must be submitted electronically via Canvas by only one person from each group.  Word limit: 1500 (+/- 10%) of Management Report (format style). You will be shown over the course of the module how to structure a management report. You will be expected to follow the layout provided.  All reports go through Turnitin on submission. It is imperative that the work you submit is your own. If there is any proof of copying or plagiarism this is a serious academic matter, and you may be called to an academic integrity meeting.  It is the individual responsibility of each student/group to ensure that there is a low similarity index score. A high similarity index score must be investigated and rectified by the student/group prior to final submission of the assignment. Information on how to use TurnItIn can be found at: http://www.plagiarism.stir.ac.uk/moreinfo.php