Delta Synthetic Fibres

Case Report

Case Report Title:  Delta Synthetic Fibres (DSF)

The Issue:  Why are we here – What are the important Question(s)? Delta Synthetic Fibres (DSF) has identified that it is past time to introduce an additional product line. They have successfully developed Britlon as an advanced product offering over the current Britlene line. DSF is now faced with several options regarding optimal implementation and production of the new Britlon line. The questions I will analyze include, “How should DSF roll-out this product to market?” “Which facilities should produce the new material?” “Should all facilities be involved in production or should there be specialization at certain units?” “Should all facilities even remain in operation?”         

Option #1:  Convert some of the existing Britlene based lines over to Britlon or construct entirely new Britlon production lines

a. Description

As new technologies and product advancements occur, most companies will face this decision. Many factors must be considered and recommendations are given throughout the following. Both options are feasible financially and each possess its advantages and disadvantages which must be evaluated.

b. Pros 

Cost for the Conversion plan will be lower, but will offer more limited flexibility. As noted by the CEO, Mr. Mayer, “increasingly, it will be small product modifications that will win us extra business”. By developing entirely new production systems for Britlon, greater adaptability can be engineered into the system to allow for these needed modifications in the future. By retaining all of the current Britlene production and adding new Britlon production alongside, DSF will preserve all possible revenue streams and not sacrifice production capacity of Britlene. We are not told in the article how many lines DSF was considering converting from Britlene to Britlon, so full financial analysis cannot be conducted, but the maximum revenue potential from both product lines will be realized by constructing new lines for Britlon.

c. Cons

The move toward entirely new production systems will be more expensive and thus, a longer ROI period must be planned for as well as a slightly longer implementation period.

Option #2:  Close the Hamburg, Germany facility/Upgrade Teesside, UK

a. Description

The Hamburg, Germany location has been identified as the most expensive to operate due to higher labor rates, taxation and employment costs. By investing instead into upgrades at the Teesside facility, including the addition of a Britlon production line, it is possible that a better return on investment could be obtained.