Vershire Case Study
4AA3 Case: Vershire Company
Vershire - Introduction
Vershire Company is a diversified packaging company with several major divisions. The case puts its focus on Vershire’s aluminium can division. The division has plants throughout the United States, each serving its geographic region. Its customer ranges from soft drink bottlers to small and large breweries. The Vershire Company holds the largest share in aluminium beverage can market in US and they are growing faster than its industry average. The major issue that the company faces is that customers in the industry are not reluctant to switch to another supplier if certain standards in quality and service are not met. Vershire’s main problems are its planning, internal control, and placing responsibilities on the correct managers.
Planning System
The first issue in planning system is that initial sales forecast is not made by divisional managers who are responsible for the operation management of each division. Rather, the sale forecast uses assumptions derived entirely from corporate headquarters’ analyses. Such assumptions include inventory carryovers, packing trends, and etc.
The forecasting method also lacks a decentralized mindset which is vital when there are different markets and customer preference. By using a centralized system, the company’s decisions do not accommodate for these differences. This would greatly hinder the company’s performance in sensitive markets that require more attention to socially acceptable practices.
Lastly, the plant managers are responsible for the budgeted profits since their performance is evaluated based on their plants’ profit. However, they do not possess full control on those profit components. Sales budgets are made by the district sale managers who are less knowledgeable on the logistics of the plant than the plant managers do. This may result in unfairly budgeted profit numbers.
Plant managers should not be responsible for profits
One of the main tasks
Vershire - Introduction
Vershire Company is a diversified packaging company with several major divisions. The case puts its focus on Vershire’s aluminium can division. The division has plants throughout the United States, each serving its geographic region. Its customer ranges from soft drink bottlers to small and large breweries. The Vershire Company holds the largest share in aluminium beverage can market in US and they are growing faster than its industry average. The major issue that the company faces is that customers in the industry are not reluctant to switch to another supplier if certain standards in quality and service are not met. Vershire’s main problems are its planning, internal control, and placing responsibilities on the correct managers.
Planning System
The first issue in planning system is that initial sales forecast is not made by divisional managers who are responsible for the operation management of each division. Rather, the sale forecast uses assumptions derived entirely from corporate headquarters’ analyses. Such assumptions include inventory carryovers, packing trends, and etc.
The forecasting method also lacks a decentralized mindset which is vital when there are different markets and customer preference. By using a centralized system, the company’s decisions do not accommodate for these differences. This would greatly hinder the company’s performance in sensitive markets that require more attention to socially acceptable practices.
Lastly, the plant managers are responsible for the budgeted profits since their performance is evaluated based on their plants’ profit. However, they do not possess full control on those profit components. Sales budgets are made by the district sale managers who are less knowledgeable on the logistics of the plant than the plant managers do. This may result in unfairly budgeted profit numbers.
Plant managers should not be responsible for profits
One of the main tasks