Sks Manufacutring - Deloitte & Touche Case
Introduction
SKS Manufacturing has recently hired Deloitte & Touche as they are in a critical cash position with various internal inefficiencies in their procurement and production processes. Deloitte & Touche and SKS Manufacturing will need to work together in order to solve the issues present at SKS Manufacturing so they can be successful within the automotive parts industry.
Issues & Analysis
There are three key issues that are present at SKS Manufacturing that need to be systematically tackled in order for stabilization of the business to occur and the long-term redesigning process to be effective. The key issues facing SKS Manufacturing are: (1) cash flow shortage (2) weak alignment and integration within the value chain and (3) lack of synchronization between production and procurement affecting customer satisfaction levels. The issues listed above have caused SKS Manufacturing to produce inefficient amounts of products and not meet delivery dates due to the weak internal alignment and poor control systems in place (A1).
Cashflow Shortage
SKS Manufacturing needs to resolve its current cash flow issue immediately as poor industry analysis and lack of information for adequate forecasting has led them to having high inventory levels. Additionally there is a second warehouse location that is not efficient and is taking up cash reserves, thus decisions need to be made regarding downsizing and better forecasting methods to stabilize the current environment. Additionally there is $112 million tied up in accounts receivables that accounts for 30 percent of total assets that can help the current situation. The cost structure also seems to have red flags as the sales increased by 31 million dollars last year, but the profit for SKS Manufacturing decreased by 2 million dollars, which shows inefficiencies within their current cost structure. SKS Manufacturing needs to resolve this cash shortfall immediately as this a roadblock in their path to successfully
SKS Manufacturing has recently hired Deloitte & Touche as they are in a critical cash position with various internal inefficiencies in their procurement and production processes. Deloitte & Touche and SKS Manufacturing will need to work together in order to solve the issues present at SKS Manufacturing so they can be successful within the automotive parts industry.
Issues & Analysis
There are three key issues that are present at SKS Manufacturing that need to be systematically tackled in order for stabilization of the business to occur and the long-term redesigning process to be effective. The key issues facing SKS Manufacturing are: (1) cash flow shortage (2) weak alignment and integration within the value chain and (3) lack of synchronization between production and procurement affecting customer satisfaction levels. The issues listed above have caused SKS Manufacturing to produce inefficient amounts of products and not meet delivery dates due to the weak internal alignment and poor control systems in place (A1).
Cashflow Shortage
SKS Manufacturing needs to resolve its current cash flow issue immediately as poor industry analysis and lack of information for adequate forecasting has led them to having high inventory levels. Additionally there is a second warehouse location that is not efficient and is taking up cash reserves, thus decisions need to be made regarding downsizing and better forecasting methods to stabilize the current environment. Additionally there is $112 million tied up in accounts receivables that accounts for 30 percent of total assets that can help the current situation. The cost structure also seems to have red flags as the sales increased by 31 million dollars last year, but the profit for SKS Manufacturing decreased by 2 million dollars, which shows inefficiencies within their current cost structure. SKS Manufacturing needs to resolve this cash shortfall immediately as this a roadblock in their path to successfully