Race-Tuned Extractors Australia Operations Management

Race-Tuned Extractors, an Australia based automotive extractor, designer, and manufacturer in the motor racing industry having a huge market in Sydney as well. This business was developed in 1994 by two (2) part time motor racing drivers, Pierre Martel and John Gambini. As the business has grown more by the time, it is now considering and revising its growth patterns and moving towards development through modifying its Production and Operational Management.  The following essay will be identifying and discussing the issues with the production and operational strategies and management of Race Tuned and possible responses to the problems. The essay will be revolving around discussing and answering the following four (4) provided dimensions for the evaluation of the operating systems:

1. Current production processes used by Race-Tuned Extractors
2. The effect of the new contract with Oz Race Mart on Race-Tuned Extractor’s operations
3. The daily operational decisions required under current operating conditions for the company’s operations to run effectively
4. The effect that the move to producing off-the-shelf systems may have had on the company’s financial structure.

As the business moved from Home bush to Black town, the newly occupied premises are found to be bigger than the old, creating a huge spare capacity for the business to fill up. This spare capacity has been utilized by the business in the most effective manner and resulted in the expansion of operational activities and processes. In order to understand the Current Production Process used by Race Tuned Extractors in detail, the current production process has been triggered by some potential changes and events so it is necessary to know the chain of events that lead to current production abilities. Initially the Race tuned Extractors initially supported only car racing industry and was known as the best supplier of exhaust and extraction systems to that industry. As the time passed by, the fame and reliability of the products being manufactured by Race Tuned reached other markets as well and gradually after few years the local and private motor car manufacturing industry also started to demand from Race tuned for the supply of extraction systems for its local cars. The arrival of augmented demands increased the work pressure on the workforce, production processes, and the business on the whole. But, this demand has been successfully met by Race tuned extractors by the utilization of extra vacant space present. The business succeeded in maintaining the quality of its products and is now known as the supplier of systems to the motor racing cars and the street cars in Australia (Slack, Chambers and Johnston 2010).

In the initial days, the production process was tailor made and the company was a master in the production of two main systems only. Those systems were namely, Holden and Ford. The company initially produced V8 exhaust systems for Holden and Ford. The business planned to improve and introduce another production system. The custom system was grown by the owners to an “off the shelf” system.  Through off the shelf systems, more efficient and appreciated brand name has been developed by the company that appealed the customers to pay relatively higher prices. Side by side, the custom system did not lose its roots and developing off the shelf systems never meant to cease the production of Custom systems manufacturing and currently the company is producing both systems in its black town premises in a single manufacturing facility. Company is earning from the sales of both efficient systems of it and enjoying the highest revenues ever. As per the reported figures, the company has earned 70% of its revenue by custom and tailor made products and the production volumes comprises 60% on the custom and tailor made products (Shim and Siegel 1999).

The systems produced by the company are supported by high tech engineering equipment in a general purpose in order to facilitate the production of both the systems. To manage and maintain the work process and force, the factory has been segmented into various systems and sections, such as, tube cutters, tube benders, and welding section. The tuning and fitting of the tubes is facilitated by a dyno-equipped service bay. These sections are involved in specific tasks assigned. The labors that work in the factory and perform the processes are generally highly skilled and are tradespeople that are particular about the quality assurance and efficiency. Efficiency is measured in terms of quality and time both. There’s a healthy internal competition between the custom and off the shelf systems in order to keep the levels of performance high and motivating the employees. This may lead to performance related portions of wages and other performance based reward schemes as well. This healthy competitions enables the company to produce better results every time they manufactory a system (Mishra 2009).

The Oz Race Mart is an international car parts distributor and specialized in the car parts supply to general public and motor racing. Signing a contract with company changed the whole picture and condition of Race tuned Motors internally and externally. Race tuned extractors approached the Oz race Mart for the supply of exhausted systems of his cars namely, Boss 302 and Chevrolet. The businesses signed an agreement of providing mutual benefits to each other. Initially the effect of contract with Oz’s did not affect the performance of Race tuned Extractors, but the Oz itself faced some troubles with the overtime performance requirement from the staff and workers. The Oz expected the demand from Race tuned to be constant and the volume of the demanded items was also expected to be lower. The Oz’s initially met the demand of 500 systems but as the time passed by, the demand of the systems from Race tuned increased due to augmented sales of these efficient systems (Krishnaswamy and Mathirajan 2010). Due to increased demand the volume of productions got bigger, but the other side of real picture of business emphasized on the sale of Custom made systems first, due to its ability of generation of high profits and benefiting the business financially. In order to sale custom made systems first, the bulk production volume of Oz motors and off the shelf systems has to be stopped for a while to let the custom made products finish in the first place. The led the Oz and off the shelf systems to tie up in the work in progress and stocked in the finished goods. It is generally understandable that the each stored item costs the company. The same way, profits made by the sales of custom made products had to bear the costs of holding inventory and work in progress. This resulted in overall lowered profits than expected and forecasted by the accountants and financial controllers of the Race tuned Extractors. The rotation of money slowed down and the working capital cycle got disturbed. The cost of inventory, material, labor, and overheads increased from budgeted amounts and these two systems started to appear costly for the business. The increased stored volumes of inventory demanded a whole new separate ware house, so the business had a ware house on rent. The delivery times that are promised by Race tuned to its customers, prolonged due to mismanagement and poor lining up of production process. The business faced another practical trouble that generally arises when inventory is held for a longer period than planned, stock outs. The stock outs of the inventory started to worry the owners and the managers of the business. This was the time when off the shelf and Oz products were no more costly, they started to become expensive for the business. The plant could not be expanded by the business due to poor lay out of the space available (Young 2009).