Saul Hudson was walking around the empty building that would soon house his guitar factory. Accompanying him were an architect and the recently hired vice president (VP) of manufacturing. A rock and roll virtuoso, Saul has been building custom guitars for his band for more than 20 years. On a break from those grinding world tours, Saul is launching a line of electric guitars. Rather than outsource production to Mexico or China, Saul has decided to hire his own team to produce the guitars. During the building tour, Saul and his team discuss ideas for facility layout, production methods, and technology requirements. “How we set it up is a function of volume, variety, and product pricing,” notes the VP. “We can go anywhere from master craftsmen making one guitar at a time to an automated production line cranking them out by the hundreds per day.” “We are in this to make money so I can’t sit in this huge space and make them one at a time,” Saul replies. “But, I don’t want to produce a $300 guitar for the mass market. We want a great product that customers will see as an investment in a quality guitar that will last for decades.” A brief discussion ensues in which Saul shares his vision for selling three models in five stock colors. ἀ ey will be sold through music stores. He also wants customers to have the option of configuring their own sound package and adding a custom paint job for a higher price. ἀ ese semi-custom guitars will be sold via the company’s website. “You also need to think about what part of the production will be done in-house versus outsourced,” noted the architect. “ἀ at will influence how I modify the building.” Saul adds “if we want to do it right, we need to do the major work in-house. Cutting the bodies and necks, painting, assembly and testing will happen right here. We can purchase the humbuckers, strings, knobs, jacks, and other components from trusted suppliers.” “Hmm, parts coming in from multiple suppliers, fifteen different combinations of guitars plus semi-custom orders, and serious manufacturing activity,” the VP recaps. “I think that we will need some technology support to keep everything coordinated.” “ἀ at’s why I hired you—to make those important decisions,” replies Saul. “Remember we’re here to deliver stunning guitars that will launch the career of the next B.B. King, Keith Richards, or that guy called Slash.” As he walked toward the door, Saul adds: “and, don’t forget that we need profits. Tell me how you are going to measure our success.”
Producing Goods and Services 203
1. Given the description of the product and the work that will occur in the guitar factory, which production process layouts could be considered? Which do you recommend? Explain.
2. What types of software should be used to help manage the scheduling and operations of the guitar factory? What benefits will they provide?
3. How should the VP evaluate performance of the factory? Discuss the metrics that must be balanced to achieve Saul’s goals.
4. What roles will packaging play in the success of Saul’s guitar company?
Source: Brian J. Gibson, Ph.D. Used with permission