D079 Task 2 Operations and Change Analysis Example

Late, Expensive and Hard to Fix Without the People on the Dock: An Operations and Logistics Analysis of a Composite Outdoor Furniture Maker, With a Change Plan Built on Kotter's Steps

Student Name

School of Business, Western Governors University

D079: Business Environment Applications II: Process, Logistics, and Operations, Task 2

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Month Day, Year

Late, Expensive and Hard to Fix Without the People on the Dock: An Operations and Logistics Analysis of a Composite Outdoor Furniture Maker, With a Change Plan Built on Kotter's Steps

The Problems

Lakeshore Outdoor Living, a composite patio furniture maker in Grand Rapids, Michigan, supplies about 140 garden and home retailers, most of them independent. Its products are well regarded, but its operations are hurting retailer relationships. Last season, 27% of retailer orders shipped late, and in April and May, the peak weeks, the figure reached 41%. Freight costs rose from 7.8% to 11.2% of sales in two years. Retailers complain that partial shipments arrive in several pieces over several weeks, and two of the company's ten largest accounts reduced their orders this year, citing unreliable delivery. Warehouse overtime has doubled, and turnover among warehouse staff reached 38%.

Analyzing the Causes

Operations analysis looks past the symptoms to the processes that produce them. Three causes stand out.

Large production batches: to minimize changeover time, the plant produces each product in batches of about eight weeks of expected demand. When a product sells faster than forecast, retailers wait for the next batch; when it sells slower, inventory fills the warehouse. Large batches make the plant slow to respond to actual demand.

A crowded warehouse and manual picking: the warehouse was designed for one-third of today's volume. Because slow-selling inventory occupies prime space, pickers walk long distances and search for items, and orders are often shipped partially because some items cannot be found or have not been produced yet.

Individual, reactive shipping: each retailer order ships separately as soon as any part of it is ready, often by less-than-truckload carriers at high rates, and partial shipments multiply freight costs.

These causes interact with demand swings. Retailers order heavily in late winter and again when a warm spell drives sales, and the company responds by expediting. Research on supply chains has shown how small changes in end-customer demand can be amplified as orders move upstream, a pattern known as the bullwhip effect, driven partly by batch ordering and demand forecast updating (Lee et al., 1997). Lakeshore's large batches and reactive responses contribute to exactly this pattern.

Recommended Improvements

Smaller, more frequent production runs: reduce batch sizes to about three weeks of demand for top-selling products by cutting changeover time with standardized fixtures and preparing the next job while the current one runs. Operations management texts note that reducing setup time is what makes smaller batches economical (Heizer et al., 2020).

Reorganize the warehouse: place the fastest-moving products closest to shipping doors, move slow-moving inventory to overflow storage, label every location and introduce scanning so that pickers know exactly where each item is.

Consolidated shipping schedule: ship to each region on fixed days each week, consolidating orders into full truckloads where possible, and ship orders complete rather than in parts unless a retailer requests otherwise. Share the schedule with retailers so they can plan.

Better demand information: ask the 20 largest retailers to share weekly sales data, and use it to adjust production rather than relying only on orders.

Together, these changes target a late shipment rate below 10% and freight costs below 8.5% of sales within a year.

Why Change Management Is Needed

These improvements change how people work every day. Plant supervisors used to long runs will change setups more often. Warehouse staff must learn new locations and scanning. Sales representatives must tell retailers about fixed shipping days, which may feel like less responsive service. Without attention to the people involved, the changes are likely to stall. A structured change model helps.

Change Plan Using Kotter's Steps

Kotter (1995), drawing on many companies' failed transformations, set out eight steps that successful change efforts tend to follow, and the plan uses them in order.

Establish urgency: share the late-shipment data and the lost orders from two large retailers with all staff, showing that jobs depend on keeping customers.

Form a guiding coalition: the operations director, plant manager, warehouse supervisor, a lead picker, a sales manager and the logistics coordinator.

Create a vision: every order shipped complete and on the promised day.

Communicate the vision: weekly huddles on the plant floor and in the warehouse, a simple dashboard showing on-time shipping, and a letter to retailers explaining the new schedule and its benefits.

Empower others to act: let warehouse staff design the new layout with the supervisor, and train plant crews in quick changeovers.

Generate short-term wins: start with the warehouse reorganization, which can show faster picking within a month, and celebrate the first month under 15% late shipments.

Consolidate gains: extend smaller batches from the top five products to all top-selling items, and adjust bonuses to reward on-time complete shipments rather than volume produced.

Anchor the changes in the culture: make on-time complete shipping part of performance reviews and new employee training.

Costs and Trade-Offs

The improvements are not free. Faster changeovers require about $40,000 in standardized fixtures and training, warehouse scanning and relabeling about $65,000, and consolidated shipping may lengthen delivery by a day or two for retailers who previously received partial shipments immediately. Smaller batches also mean more changeovers, so the plant will lose some production time until crews become faster at them. Against these costs, the company expects to save about $300,000 a year in freight by reaching its target, reduce overtime by half and, most importantly, protect relationships with large retailers whose orders are worth several million dollars a year. The trade-off of fixed shipping days will be explained to retailers as a promise of complete, predictable deliveries, which retailers surveyed last year said they value more than speed.

Measuring Results

Lakeshore will track on-time and complete shipment rates, freight cost as a share of sales, warehouse picking time per order, inventory levels of slow-moving products, overtime hours and warehouse turnover each month, and survey its 20 largest retailers after the season.

Conclusion

Lakeshore's late deliveries and rising freight costs result from large production batches, a crowded warehouse and reactive, fragmented shipping, amplified by demand swings. Smaller batches, a reorganized warehouse, consolidated shipping and shared demand data address those causes. Because each change asks people to work differently, a plan built on Kotter's steps, with urgency, a coalition that includes frontline staff, visible early wins and new incentives, gives the improvements the best chance of lasting.

References

Heizer, J., Render, B., & Munson, C. (2020). Operations management: Sustainability and supply chain management (13th ed.). Pearson.

Kotter, J. P. (1995). Leading change: Why transformation efforts fail. Harvard Business Review, 73(2), 59-67.

Lee, H. L., Padmanabhan, V., & Whang, S. (1997). The bullwhip effect in supply chains. Sloan Management Review, 38(3), 93-102.