Case Study Hawkesbury Cabinets Pty Ltd designs and manufactures custom-built kitchen cabinetry. The
company was founded in Mulgrave, Sydney in 2008 by siblings Fung and Mei Chen. Fung is a
master cabinetmaker and Mei is a qualified interior designer. The company had originally set out
to service the needs of the growing Chinese community in the Hawkesbury. As the reputation of
the company grew however, Fung and Mei found that their client base became more and more
diverse. Fung’s duties had evolved over time, and he now fulfilled the role of production and
operations manager. Mei, on the other hand, had found an interest in the financial and overall
management of the enterprise and so she had effectively taken on the role of general manager. So
while there was no formal identification of roles for the two owners, there was a fairly
comfortable distribution of managerial responsibilities.
Traditionally, Hawkesbury Cabinets had focused entirely on custom-made kitchens, with the
customer consulting with Mei to develop a unique kitchen designed specifically for the client’s
needs. As the company’s reputation grew and sales increased however, several low volume
contracts had been signed to supply small ‘spec’ builders1 with a range of high quality, but
standardised kitchen cabinetry. These contracts required Hawkesbury Cabinets to manufacture a
limited range of kitchen cabinets in small batches. Batch sizes ranged from a single kitchen up to
five kitchens of similar specifications. The client builders imposed more stringent delivery
requirements and were far more price sensitive than custom-made kitchen buyers. Whilst the
custom-designed cabinetry continued to account for the majority of the company’s sales, the
builders’ kitchens were becoming increasingly important. Currently, the standardised kitchens
accounted for 40 percent of factory volume and 25 percent of revenue.
Hawkesbury Cabinets operates a single manufacturing facility in Mulgrave, where both custom
and standard kitchen cabinets are manufactured. The cabinet-making equipment consists mainly
of high quality general purpose machines in order to provide the flexibility needed for producing
a wide variety of custom designed cabinets. The factory layout has various types of equipment
grouped together. Saws and cutting tables are in one section, routers and shapers in another,
whilst lathes and other less frequently used machines are kept away from the work area in their
own section. There are also several assembly areas located strategically throughout the factory.
Painting and finishing is done in an environmentally controlled section towards the rear of the
facility. The quality of Hawkesbury Cabinets’ finished products is held in high esteem, and
reflects the quality of the materials chosen and the craftsmanship of the individual cabinetmakers.
Both the custom and the standard cabinets had to compete for processing time on the same
equipment by the same craftspeople.
During the past few months, sales of the builders’ line of kitchens had steadily increased, leading
to more regular scheduling of this work. However, when scheduling trade-offs had to be made,
the custom kitchens were always given priority because of the higher sales and profit margins.
Thus scheduled lots of standard cabinet components were left sitting around the plant in various
stages of completion. This increase in the volume of work in process had changed the previously
spacious manufacturing area into a factory clogged up with partially completed work.
As she reviewed the progress of Hawkesbury Cabinets, Mei Chen was pleased to note that the
company has grown. Sales of custom kitchens remained strong, and sales of the builders’ line
were steadily increasing. However, the company accountant argued that profit margins were not
what they should be. Costs associated with the standard builders’ line were rising. An increasing
amount of capital was being tied up in raw materials inventory, work in process and finished
product. To accommodate the increased volume of inventory, nearby warehouse space was now
being rented. Mei Chen was also concerned with increasing lead times for both custom and
standard orders. This was resulting in longer promised delivery times. The current operations
systems were pushing manufacturing capacity to the limit, and with the current layout, no space
was left in the plant for expansion. Mei Chen decided that the time has come for her and her
brother to take a careful look at the overall impact that the new line of standard builders’ kitchens
was having on their operations.
Assessment Task
After you have carefully read and analysed the case study, write an essay discussing the
operational issues facing Hawkesbury Cabinets. The essay should identify and discuss the
operational aspects that are affecting the organisation, paying attention to both medium-term and
day-to-day implications. Your argument should address the following three issues with responses
integrated within the essay.
1. The current production systems and processes used by Hawkesbury Cabinets (a technical
analysis).
2. The effect of the new builders’ kitchen line on Hawkesbury Cabinets’ operations
(problem definition).
3. The effect the move to producing builders’ kitchens might have on the company’s
financial structure2.