How would you go about making the NovaPlast decision?
Nypro’s top management is facing dilemma regarding the use of NovaPlast. There are three distinct options available to the top-management as far as NovaPlast roll-out is considered. However, each of the option has distinctive benefits and trade-offs. The use of NovaPlast will enable Nypro to enjoy a number of advantages. First of all, it will allow them to target low-volume, high mix market. The features of NovaPlast will also provide benefits of quality and precision. It will also decrease lead time and cavitations. But, the biggest advantage will be in the form of cost-effectiveness. Using NovaPlast, Nypro can considerably decrease the capital costs and other overheads related to the production. It will also put Nypro in the category of early adopters in the product diffusion curve.
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With given options available, it will be most appropriate for Nypro to install two or three machines in each of its plant. This option will allow the company to enjoy a number of benefits. First of all, by distributing the installation all over the world, Nypro will considerably reduce the risk associated with the investment. Diversification of the investment will enable it to mitigate all the negative effects, which are usually associated with concentrated production. One of the biggest drawbacks associated with centralization is the increase in the lead time of production. This is due to the fact that centralized production creates loss of man-hours. Using decentralized production, Nypro will be able decrease lead time and will also eliminate bottlenecks and delays in production. In addition to this, decentralized production will also allow the management to overcome control and supervision problems related to the concentrated production unit. Centralized production also provides little incentive for subordinates to show initiative. This can be primarily attributed to excessive control exercised by the top-management in a centralized setting. Absence of chances to show imitative also creates dissatisfaction among the employees of the organization, who feel that there are not given adequate to show their potential. Feeling of ownership among the employees is also diminished, which creates communication barriers between shop floor workers and the top-management (Thompson & Martin, 2010, p.638).
On the other hand, Nypro can avail number of benefits by establishing decentralized setting of NovaPlast. First of all, such setting will facilitate efficient communication and coordination of organization’s pressure. It will also divide the pressure among all the plants unlike in centralized setting, where the entire workload associated with NovaPlast was on one plant. Decentralizing NovaPlast will also enable the top-management to inculcate the sense of leadership and responsibility among all the employees of the organization. It will also enable Nypro to achieve efficiency in its operations. Efficiency will manifests in the shape of quick and better decisions. Decision will be made near the point of action by those, who are closest to the ground realities. The communication costs associated with the operation will also be reduced. Moreover, overall communication will also be improved as there will be lower levels of authority. Similarly, the threat of red-tape will also be reduced. Likewise, this decision will also facilitate Nypro’s strategic decisions of growth and diversification. As each plant will be responsible for its designated target market, the response time to meet customers’ needs will be considerably reduced. Such advantage can go long-way in creating a loyal customer base for the company. Each plant can also bring changes in the production according to changes in demand from the consumers. Nypro will also be able to polish the credentials of its diverse workforce by delegating the authority of marketing and distributing of NovaPlast. As each plant will be responsible entirely for its territory, it will foster the spirit of imitative in the workers. It will also prepare future leaders from within the organization. It will also improve the skills of lower level executive as they will learn a lot by exercising delegated authority. Furthermore, it will also promote autonomy, initiative and creativity on the part of subordinate units of the organization. This will all lead to increase in the satisfaction, motivation and morale of subordinates. It will also increase the sense of belonging within the organization. By opting for the second option, Nypro’s top management can ensure birth of a productive relationship in its each plant. But, the biggest advantage will be in the shape of effective supervision and control. Likewise, it will also promote effective control through comparative evaluation and accountability. It will also increase the flexibility of the organization, which will equip it to conduct strategic maneuvering in order to sustain competitive advantage over the rivals in the market (Govindarajan & Natarajan, 2005, p.60).
Additionally, the second option will also provide Nypro an opportunity to penetrate the low-volume market. It was noted that, in the past, most of Nypro’s high-volume customers bought low-volume from other vendors. By installing machines in each of the plant, Nypro’s high-volume customers will have the option to meet their low-volume products from the same plant, which was earlier providing them with high-volume parts. Second option will also provide Nypro with an opportunity to increase collaborative effort in each of its plant. The engineers and marketers of each plant will put an effort to come with a solution, which will maximize the control and exploitation of NovaPlast. As each plant is placed in different competitive environment, each solution will be according to the indigenous requirements. This will allow Nypro to customize the usage of NovaPlast according to the needs and wants of the customers of different markets. It will also facilitate the process of improvement in the development of technology related to NovaPlast. Overall, it will enable the top-management of Nypro to optimize the roll out of NovaPlast through diversification (Sanchez & Heene, 2010, p.56).
However, second option also has certain drawbacks, which needs to be taken into account. Engineering efficiency is the biggest tradeoff as it only comes with a plant, which is specially built to manufacture one type of machinery. Secondly, all the information related to NovaPlast will be distributed in different locations, which may create problems related to coordination and collaboration. Thirdly, presently, all the Nypro’s plants are developed for dealing with high-volume products. The installation of low-volume machineries in these plants may create certain operational problems for each of the plants. The operational problems may be related to bidding, order entry, tool making and production scheduling. The solution to these operational problems can only be solved through stand-alone facility. In the same way, installation of machineries in each plant would also considerably decrease the top management’s oversight of the project, which may prove to be detrimental in the long-run. The option to install new machinery in each of Nypro’s plant has both advantages and disadvantages. However, it is still the most viable option on the table as it will provide the organization with a number of long-lasting advantages. More importantly, it will be less risky than other options, which will encourage the top management to go ahead with such project.
Govindarajan, M. & Natarajan, S., 2005. Principles of management. PHI Learning Pvt. Ltd.
Sanchez, R. & Heene, A., 2010. Enhancing competences for competitive advantage. Emerald Group Publishing.
Thompson, J. & Martin, F., 2010. Strategic management. 6th ed. Cengage Learning EMEA.
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