MAPUA INSTITUTE OF TECHNOLOGY

MS in Engineering Management
CASE STUDY NO.5

Kiia Emerlene Dizon

EMG210

Beaver Engineering Group

I.

Problem Definition

In 1986, Beaver Engineering Group was faced with an expanding yet highly competitive
market. With this, they started to evaluate their products, computer systems and
production systems. They had problems not only in their manufacturing process but also in
their cash flow. Also, the decision making is centralized, even their Production director
doesnt have much influence. They were also having a hard time with their position in the
market.
II. Review of background information
Beaver Engineering Group plc was founded in 1951 in Norwhich. It was formed by
Victor Balding, an entrepreneur and his son Tony Balding which is the manager for
marketing, design and who spearheaded the growth in production. The company is
known for high technology and high performance machine tool in particular CNC
machines. Each machine is purpose built and made to customers order. They supply
throughout EU and many countries around the world. They have approximately 250
employees. Their product range consisted of 10 basic machines. All machines are made
to order and each customer requires special features.
They are known for customized machine and their after sales services. They emerged
as one of the world leaders in the field and are still continuing to develop their product
and design. They are expanding in a highly competitive market.
III. Analysis
In terms of the manufacturing process, each CNC machine took between 20 and 30
weeks to be manufacture. Though components were made in batches, the actual stock
turn is 3:1 compared to what they try to achieve at 6:1. They use NC machines that are
cheap and second-hand which are dedicated to one operation. They believe that price &
delivery are their qualifying criteria.
In terms of their position in the market, though in 1985 it has been reported that they
have exported 10% of their product, they were holding their growth around 40% because
of poor margin caused by intense competition for machine tools in United States. Market
lead times were typically 12 weeks but now it is down to 4 to get a sale. Their turnover had
been 7 they expect a 8 in 1986 and 11 for 1987. They have high customer loyalty and
that they are well known for their after sales services. They have 500 live customers 50 of
it is for invoicing new orders. Also, their delivery schedules were several weeks behind but
according to them its normal.
Beaver Engineering Group had about 150 suppliers and was chosen depending on price
and availability of large quantities of items. Even though their machine operatives are
flexible, theyre only limited to one type of machine.

MAPUA INSTITUTE OF TECHNOLOGY

Kiia Emerlene Dizon

EMG210

MS in Engineering Management
Cash flow was another issue in Beaver because of the amount of semi-finished products
tied up in the final assembly. They believe that the major factor limiting their profitability is
the constant changes in specification which had repercussions in production planning,
stores and ordering. Second factor is the cost of poor quality due to accumulation of
tolerance errors.
The decision making in the company is centralized and was dominated by
two
active owners. Directors and manager had few formal meeting. Also, the production
director had little authority and power to influence.
They have CAPM or computer aided production management system which link
production & planning. It controls mostly inventory & stock. Production control has a build
program which is responsible for parts required and states parts, cost, current stocks,
orders & average build. Design office and assembly superintendent work hand in hand
with product control, they also have route cards that monitors what has been done with the
machine and what are the specification it needed and due date. This process focuses
mostly costing. Their production control is like an independent unit in the organization. It
doesnt have coordination with other departments.
IV. Alternative courses of action that can be taken
They must make sure that they can supply the demand of the customer without being
delayed in their delivery. Also, they can create their 10 range product design without the
need for customer modification but still, they can opt with customized product but it
would be nice if every department work hand in hand for smooth sailing operations but
the problem with this is there are no communications with the department. Thats why
they should conduct meeting on how they can work hand in hand.
In addition to their current delivery procedure, they can try to export their product to
increase their sales.
They should also have qualification quality in their suppliers to limit their poor quality
problem.
They must conduct regular meetings at least once a month including the two owner,
together with the head of every department to know the current situation of the company.
V. Recommended course of action or conclusion and why?
The management should really push through with their monthly meeting to know the
situation of the company. Every department should have a say on their company. For
example, their production control team shouldnt be working as an independent unit.
Also, it is good that they could conduct survey on whats new in the market to make such
improvement on their product. Sales team may not have been discussed thoroughly in
this case but according to the data of 4/12 is a triggering point to know that theyre not
doing good in the market and that they should start planning ahead.
VI. Epilogue

MAPUA INSTITUTE OF TECHNOLOGY

Kiia Emerlene Dizon

EMG210

MS in Engineering Management
Aside from Price, Quality of a product is one of the major factors that may contribute to
your sales. Also, continuous improvement not only in your product or proces but also
inside your company or management should always be observed.