Harvard Case - Trouble at Tessei
"Trouble at Tessei" Harvard business case study is written by Ethan S. Bernstein, Ryan W. Buell. It deals with the challenges in the field of Operations Management. The case study is 16 page(s) long and it was first published on : Jan 5, 2015
At Fern Fort University, we recommend Tessei implement a comprehensive operational transformation strategy focused on improving supply chain management, enhancing manufacturing processes, and leveraging technology and analytics to address its current challenges and achieve sustainable growth. This strategy will involve a multi-pronged approach, encompassing process improvement, technology adoption, organizational change, and strategic partnerships.
2. Background
Tessei is a Japanese manufacturer of high-quality, custom-made kitchen knives, experiencing significant growth and facing challenges in managing its operations. The company's current operational model, characterized by manual processes, limited automation, and a decentralized supply chain, is struggling to keep up with increasing demand. This is leading to production delays, inventory inconsistencies, and quality control issues, impacting customer satisfaction and profitability.
The case study highlights the main protagonists:
- Mr. Tanaka: Tessei's CEO, seeking to address the operational challenges and ensure the company's long-term success.
- Mr. Sato: The production manager, responsible for overseeing the manufacturing process and grappling with the increasing pressure to meet demand.
- Ms. Ito: The head of sales and marketing, facing customer dissatisfaction due to delayed deliveries and inconsistent product quality.
3. Analysis of the Case Study
This case study can be analyzed through the lens of operations strategy, focusing on the interplay between supply chain management, manufacturing processes, and technology adoption.
Strategic Analysis:
- Competitive Advantage: Tessei's competitive advantage lies in its high-quality, custom-made knives, catering to a niche market. However, its current operational model is hindering its ability to leverage this advantage effectively.
- Growth Strategy: Tessei's growth strategy is based on increasing production and expanding its customer base. However, its operational inefficiencies are limiting its ability to scale efficiently.
- Operations Strategy: Tessei's current operations strategy is reactive and lacks a clear vision for long-term sustainability. It needs to shift towards a proactive, data-driven approach.
Operational Analysis:
- Supply Chain Management: Tessei's supply chain is fragmented and lacks visibility, leading to delays and inconsistencies.
- Manufacturing Processes: The manufacturing process is heavily manual and lacks automation, contributing to production bottlenecks and quality issues.
- Technology Adoption: Tessei's technology infrastructure is outdated and does not support its growth ambitions.
Financial Analysis:
- Cost Management: Tessei's operational inefficiencies are driving up costs, impacting profitability.
- Inventory Management: Excess inventory and stockouts are creating financial strain.
- Capacity Planning: Tessei's current capacity is insufficient to meet growing demand, leading to missed opportunities.
4. Recommendations
1. Implement a Robust Supply Chain Management System:
- Centralize Supply Chain Operations: Establish a centralized supply chain management system with increased visibility and control over all stages of the supply chain.
- Optimize Supplier Network: Conduct a thorough supplier evaluation and selection process, focusing on quality, reliability, and cost-effectiveness.
- Implement Inventory Control Strategies: Implement a robust inventory management system, incorporating Just-in-Time (JIT) production principles, Kanban systems, and Materials Requirements Planning (MRP) to optimize inventory levels and minimize waste.
- Leverage Technology: Implement an Enterprise Resource Planning (ERP) system to streamline supply chain operations, improve data accuracy, and facilitate real-time decision making.
2. Modernize Manufacturing Processes:
- Automate Production Processes: Invest in automation technologies to improve efficiency, reduce labor costs, and enhance product quality.
- Implement Lean Manufacturing Principles: Implement Lean manufacturing principles, such as Value Stream Mapping and Theory of Constraints, to eliminate waste, optimize production flow, and reduce cycle time.
- Adopt Six Sigma Methodology: Implement Six Sigma methodology to improve product quality, reduce defects, and enhance customer satisfaction.
- Invest in Quality Control Systems: Implement robust quality control systems, including Statistical Process Control (SPC), to ensure consistent product quality and minimize defects.
3. Leverage Technology and Analytics:
- Develop a Data-Driven Culture: Foster a data-driven culture within the organization, utilizing data analytics to inform decision-making and drive continuous improvement.
- Implement Predictive Analytics: Utilize predictive analytics tools to forecast demand, optimize inventory levels, and anticipate potential supply chain disruptions.
- Invest in Advanced Analytics: Implement advanced analytics techniques, such as operations research and queueing theory, to optimize production schedules, resource allocation, and facility layout.
- Embrace Digital Transformation: Embrace digital transformation in operations, leveraging technologies such as the Internet of Things (IoT) and cloud computing to enhance operational efficiency and visibility.
4. Foster Organizational Change:
- Implement Change Management Strategies: Implement effective change management strategies to ensure smooth adoption of new processes, technologies, and organizational structures.
- Empower Employees: Empower employees to participate in the change process, providing training and support to ensure successful implementation.
- Foster a Culture of Continuous Improvement: Create a culture of continuous improvement, encouraging employees to identify and implement improvements across all areas of operations.
- Develop a Strong Leadership Team: Develop a strong leadership team committed to driving operational excellence and supporting the change process.
5. Basis of Recommendations
These recommendations are based on a thorough analysis of Tessei's current operations, considering the following factors:
- Core Competencies and Consistency with Mission: The recommendations align with Tessei's core competency of producing high-quality, custom-made knives, while supporting its mission of providing exceptional customer experiences.
- External Customers and Internal Clients: The recommendations address the concerns of both external customers, seeking improved product quality and delivery times, and internal clients, seeking a more efficient and streamlined work environment.
- Competitors: The recommendations aim to enhance Tessei's competitiveness by improving its operational efficiency and responsiveness to market demands.
- Attractiveness: The recommendations are expected to generate significant financial returns through cost savings, increased efficiency, and improved customer satisfaction.
6. Conclusion
By implementing these recommendations, Tessei can transform its operations, achieving significant improvements in efficiency, productivity, and customer satisfaction. This will enable the company to leverage its competitive advantage, achieve sustainable growth, and solidify its position as a leading manufacturer of high-quality, custom-made kitchen knives.
7. Discussion
Alternatives Not Selected:
- Outsourcing Production: While outsourcing production could potentially reduce costs, it could also compromise quality control and brand reputation.
- Maintaining the Status Quo: Continuing with the current operational model would result in continued inefficiencies, leading to further decline in customer satisfaction and profitability.
Risks and Key Assumptions:
- Technology Adoption: The successful implementation of technology solutions requires significant investment and a commitment to ongoing training and support.
- Organizational Change: Resistance to change can hinder the implementation of new processes and technologies.
- Market Volatility: The recommendations assume a stable market environment; however, unforeseen market fluctuations could impact the effectiveness of the implementation.
8. Next Steps
Timeline with Key Milestones:
- Phase 1 (Months 1-6): Conduct a comprehensive operational assessment, develop a detailed implementation plan, and secure necessary resources.
- Phase 2 (Months 7-12): Implement key initiatives, including supply chain optimization, process automation, and technology adoption.
- Phase 3 (Months 13-18): Monitor progress, refine implementation strategies, and address any emerging challenges.
- Phase 4 (Months 19-24): Achieve full operational transformation, achieving targeted performance improvements and establishing a sustainable foundation for future growth.
By following these recommendations and implementing the proposed timeline, Tessei can successfully navigate its current challenges and achieve its ambitious growth goals.
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Case Description
In 2005, Teruo Yabe is asked to revive Tessei, the 669-person JR-East subsidiary responsible for cleaning its Shinkansen (""bullet"") trains. Operational mistakes, customer complaints, safety issues, and employee turnover are at or near all-time highs, even as the demands on Tessei continued to grow. Given previous leaders' failed attempts to fix Tessei's problems with increased managerial monitoring and controls, Yabe seeks a creative approach to overcome the motivation, capability, and coordination challenges facing his organization. Like many contemporary leaders, he selects transparency as his tool. He is, however, unique in adopting a highly nuanced approach to implementing transparency. In the process, he not only leads a fantastic organizational turnaround but even helps to make otherwise ""dirty"" work more meaningful for Tessei front-line employees. The case therefore presents students, particularly in leadership, organizational behavior, operations management, and service operations courses, with an opportunity to think through how a well-crafted transparency strategy can act as a powerful leadership tool.
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