Blue Ridge Case Analysis
... Blue Ridge manufacturing is operating in a very competitive market and the company needs my help. Below is my evaluation and recommendations for Blue Ridge Manufacturing to meet the goals the company has set for themselves. ... PRODUCT PROFITABILITY An analysis was conducted to review two types of productivity: product line productivity and customer’s profitability. Product line productivity looks at the product lines offered by Blue Ridge. Blue Ridge offers two product lines, Line 1 and Line 2. ... Sales for this product indicate that all 3 customers of Blue Ridge, bought the highest quantity of hand towels. ... I needed to determine if it was still worthwhile for Blue Ridge Manufacturing to produce these types of towels. ... In the case of this company, the traditional method would mean that the total amount of $17,000 (overhead) would be allocated based on the # of depts. ... Blue Ridge can improve these costs by allocating using the ABC system. As for improving the product line profitability altogether, Blue Ridge can do the following: (1) change customer options, (2) reduce setup time, and (3) charge for all extras. ... My review looked at the three main customers of Blue Ridge. These customer groups consisted of Large, Medium and Small client bases and the groups incorporated 986 different customers for Blue Ridge Manufacturing. ... I recommend, once again, using the ABC costing system when looking at customer profitability at Blue Ridge. ... In most instances, Blue Ridge may decide to drop the customers associated with the medium customers. ... Instead, Blue Ridge should look at these unprofitable customers in the long and short run so that customers are not dropped just because their sales are down right now. ... Blue Ridge can increase profitability by changing order interfaces. ... Also, Blue Ridge may want to tell customers to order large orders as opposed to smaller orders. ... Blue Ridge needs a better system that determines which customers will grow, stay the same or drop off. ... One suggestion is to require salespeople for Blue Ridge to prepare budgeted sales figures for the next 3 years. ... A preferred customer wants lower prices and better customer service and if Blue Ridge can provide this better than their competitors, then they can preserve some of their customers. ... The medium customer is the least profitable at Blue Ridge. ... PLANS FOR EXPANSION Another aspect of my analysis involved a review of Blue Ridge Manufacturing’s opportunity to expand nationally. Currently, Blue Ridge is only in the southeastern cities. The key to expansion for Blue Ridge lies with upgrading the quality of the basic towel and improvement of “ink taking.” Blue Ridge recently came up with a new idea for “ink taking. ... My recommendation is for Blue Ridge to target the companies’ core competency and focus on this.