Harvard Case - New Balance: Managing Orders and Working Conditions
"New Balance: Managing Orders and Working Conditions" Harvard business case study is written by Michael W. Toffel, Eileen McNeely, Matthew Preble. It deals with the challenges in the field of Operations Management. The case study is 26 page(s) long and it was first published on : Jan 4, 2019
At Fern Fort University, we recommend that New Balance implement a comprehensive strategy to address its challenges in managing orders and working conditions. This strategy should focus on optimizing its supply chain, improving its manufacturing processes, and enhancing its workforce management practices. This will involve leveraging technology, data analytics, and lean principles to improve efficiency, reduce costs, and enhance customer satisfaction while fostering a more positive and sustainable work environment.
2. Background
This case study focuses on New Balance, a leading athletic footwear and apparel manufacturer, facing challenges related to managing order fulfillment and maintaining a positive working environment. The company is struggling to meet increasing demand while facing pressure from customers and stakeholders to improve its supply chain efficiency and ethical sourcing practices. The case highlights the tension between New Balance's commitment to domestic manufacturing and the need to adapt to global market demands.
The main protagonists are:
- Robert DeMartini: New Balance's CEO, grappling with the challenges of managing a complex supply chain and balancing customer expectations with production costs.
- The New Balance employees: Facing concerns about working conditions, particularly in the company's manufacturing facilities.
- Customers: Increasingly demanding faster delivery times and greater transparency regarding the ethical sourcing of products.
3. Analysis of the Case Study
This case study can be analyzed through the lens of several frameworks:
Operations Strategy: New Balance needs to adopt a flexible operations strategy that can adapt to fluctuating demand and customer preferences. This involves incorporating elements of lean manufacturing to minimize waste and maximize efficiency, agile manufacturing to respond quickly to changing market conditions, and mass customization to offer personalized products while maintaining economies of scale.
Supply Chain Management: New Balance's supply chain is complex and fragmented, leading to inefficiencies and delays. The company needs to focus on supply chain optimization, which involves:
- Inventory management: Implementing Just-in-Time (JIT) production to reduce inventory holding costs and improve responsiveness.
- Demand forecasting: Utilizing advanced forecasting methods and data analytics to predict demand fluctuations and optimize production planning.
- Logistics management: Streamlining product distribution through efficient transportation networks and warehouse management systems.
- Sourcing: Implementing a strategic sourcing strategy to ensure ethical and sustainable sourcing practices while maintaining cost-effectiveness.
Organizational Change: New Balance needs to implement organizational change management to foster a culture of continuous improvement and employee engagement. This involves:
- Empowering employees: Providing employees with the tools and training to contribute to process improvements and decision-making.
- Communication and transparency: Openly communicating strategic initiatives and performance metrics to employees, fostering trust and understanding.
- Employee feedback: Establishing mechanisms for gathering employee feedback and addressing concerns.
Competitive Strategy: New Balance needs to maintain its competitive advantage by focusing on its core competencies:
- Product quality: Maintaining its reputation for high-quality, durable products.
- Innovation: Continuously developing new and innovative products to meet evolving customer needs.
- Brand image: Maintaining its brand image as a responsible and ethical company.
4. Recommendations
- Optimize Supply Chain:
- Implement an Enterprise Resource Planning (ERP) system: To integrate information across departments and streamline operations, improving visibility and responsiveness.
- Leverage technology and analytics: Utilize operations analytics to gain insights into demand patterns, optimize inventory levels, and improve production planning.
- Adopt a hybrid manufacturing model: Combine domestic manufacturing with strategic outsourcing to balance cost and quality considerations.
- Optimize logistics: Implement advanced logistics management systems to improve efficiency and reduce delivery times.
- Improve Manufacturing Processes:
- Implement Lean Manufacturing principles: Eliminate waste, optimize workflows, and improve efficiency through value stream mapping, Kaizen, and Kanban systems.
- Invest in automation: Utilize robotics and automation to reduce manual labor, improve accuracy, and enhance productivity.
- Focus on quality control: Implement Six Sigma and Total Quality Management (TQM) principles to ensure high-quality products and minimize defects.
- Enhance Workforce Management:
- Invest in employee training and development: Provide employees with the skills and knowledge to perform their jobs effectively and contribute to continuous improvement.
- Foster a culture of collaboration and communication: Encourage open dialogue and feedback between management and employees to address concerns and improve working conditions.
- Implement fair and transparent compensation and benefits: Ensure employees are fairly compensated and receive competitive benefits packages.
- Promote diversity and inclusion: Create a welcoming and inclusive work environment that values diversity and provides equal opportunities for all employees.
5. Basis of Recommendations
These recommendations are grounded in the following considerations:
- Core competencies and consistency with mission: The recommendations align with New Balance's core competencies in product quality, innovation, and brand image. They also support the company's mission to provide high-quality products while maintaining ethical and sustainable practices.
- External customers and internal clients: The recommendations address customer demands for faster delivery times and greater transparency, while also improving employee morale and working conditions.
- Competitors: The recommendations help New Balance remain competitive by improving its efficiency, reducing costs, and enhancing its brand image.
- Attractiveness: The recommendations are expected to generate significant returns on investment through improved efficiency, reduced costs, and increased customer satisfaction.
6. Conclusion
By implementing these recommendations, New Balance can effectively address its challenges in managing orders and working conditions. This will lead to a more efficient and responsive supply chain, improved manufacturing processes, and a more positive and sustainable work environment. This will ultimately enhance customer satisfaction, strengthen the company's brand image, and ensure its long-term success.
7. Discussion
Other alternatives not selected include:
- Complete outsourcing of manufacturing: This would reduce costs and potentially improve efficiency but could compromise New Balance's commitment to domestic manufacturing and potentially damage its brand image.
- Maintaining the status quo: This would continue to lead to inefficiencies, delays, and potential customer dissatisfaction.
The key assumptions of the recommendations include:
- The availability of skilled labor and resources to implement the proposed changes.
- The willingness of employees to embrace new technologies and processes.
- The commitment of management to invest in the necessary infrastructure and training.
8. Next Steps
- Develop a detailed implementation plan: This should outline specific actions, timelines, and resource requirements for each recommendation.
- Pilot test key initiatives: Begin with pilot projects to test the effectiveness of proposed changes before implementing them on a larger scale.
- Communicate effectively with stakeholders: Keep employees, customers, and other stakeholders informed about progress and address any concerns.
- Monitor performance and adjust as needed: Continuously track key performance indicators (KPIs) and adjust the implementation plan as needed to ensure the desired outcomes are achieved.
By taking these steps, New Balance can successfully navigate its challenges and position itself for continued growth and success in the competitive athletic footwear and apparel market.
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Case Description
New Balance Athletics, Inc., a major U.S.-based athletic footwear and apparel brand, sources most of its footwear products from independent suppliers whose factories are located in China, Indonesia, and Vietnam. Monica Gorman, vice president of responsible leadership and global compliance, is seeking to combine data sets collected by different parts of the organization to see whether she and her colleagues in the company's order management function can make a clear connection between the corporate social responsibility (CSR) results that her function tracks at the supplier level, with New Balance's order placement practices.
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