PulseForge is a mid-sized business that designs and assembles smart fitness bands in Australia. Demand has increased after a major retailer agreed to stock PulseForge nationally.
PulseForge currently:
- buys sensors from a local supplier at a higher cost but with reliable delivery
- uses a small assembly line that produces 5,000 units per month
- updates its product design once per year based mainly on customer reviews.
Management is considering an operations strategy to improve competitiveness over the next 18 months. The proposal includes:
- global sourcing of sensors and batteries from two overseas suppliers to reduce unit costs
- expanding the assembly line to produce 15,000 units per month
- setting up a small research and development (R&D) team to improve battery life and introduce a new health-tracking feature
- implementing a formal “scanning and learning” process that tracks competitor product releases, new component technologies, and changes to international shipping conditions.
Recent developments:
- international shipping times have become less predictable due to port congestion
- a competitor has released a new band with a longer battery life and a premium price
- PulseForge’s brand relies on “consistent quality and fast replacement for faulty units.”
PulseForge plans to triple monthly output from 5,000 to 15,000 units. Analyse how achieving economies of scale could affect BOTH (i) PulseForge’s cost per unit and (ii) at least one other operations objective (such as quality, speed, flexibility, or dependability) in this scenario.
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global factors – global sourcing, economies of scale, scanning and learning, research and development
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