That Guitar Co.A Facilities Planning Project

Presented to: Potential Investors IT 392 Facilities Planning

David WilliamsJune 16, 2013

Presented by:Aaron Dickerson- Drawings, Bill of MaterialAdam Funk- Site location, Demographics, Plot Plan, Activities Relationship chart, From-To chartChandler Hardin- Assembly Diagram, Operations Process chart, Machine Requirements, Support Functions, Flow Diagram, Facility LayoutJessica Noland-Material Handling, index, introduction, discussion, conclusion, appendix, bibliography, overall layout and format of report

Executive Summary

An exciting opportunity exists for affordable American made acoustic guitars

This plan provides the basic strategic business plan information necessary for initial establishment and operation of That Guitar Company

• Formed in South Saint Paul, Minnesota• Manufacture acoustic guitars

• Tailored to the novice, hobbyist, and semi-professional musician• High quality of wood and aesthetic detail• 100% American made

• The eco-friendly method in which the wood is gathered, takes place when previously fallen trees are found in the 58 forests of Minnesota• No clear cutting is involved• This not only benefits forests in the United States but also gives rain

forests the world over a well-deserved break

With a dedicated staff, excellent order procurement, and an effective management and marketing team we believe That Guitar Company will gain a reasonably large percentage of market share in a short period by immediately differentiating ourselves from our competitors. Our distribution markets will primarily be wholesalers and other intermediaries who often order in bulk for their customers.

Mission StatementGuitar building is an ongoing process of discovery. Here at That Guitar Co. we are devoted to the guitar's rich heritage while committed to new technologies that will enrich our products with uncompromised tone, playability and beauty. Our success depends on our ability to listen, implement positive change and continually refine our craft. Believing this, we strive to build the best guitars and guitar products possible and to serve our employees, customers, suppliers and community with distinction. We make a guitar for everyone. From beginners who are budget conscious to the highly accomplished musician who is looking for a dynamic, high performance guitar, we make a guitar that is perfect for you.

Introduction

Initial plans are to produce approximately 15 guitars per day for a 5 day work week, utilizing an 8 hour working day, enabling us to produce a total of 75 guitars per week.

• As time progresses and we become more efficient in their production this figure should rise to approximately 100 per week.

We realize the fact that for us to prosper in this market there is need to be flexible and responsive, to delight our customers by providing them with what they want, when they want it and in the exact quantity. Our primary goal will be to establish and strengthen our existence in the market, which will be bestowed by the business environment in which we function.

Marketing strategy

Ensure that customers know about our existence and the products we produce.

Intention is to make the right information available to the right target customers. This will be done through implementing a market penetration strategy that will ensure that we are well known and respected in the market. We will ensure that our products' prices are relatively less than our competitors and that our potential customers appreciate the quality of our products.

The prices we charge will also take into consideration the cost of production and distribution so as to ensure that we remain viable and operational.

We appreciate the fact that the majority of wholesalers and intermediaries that order our products perceive American made products to be of higher quality and reliability.

When feasible, That Guitar Company will buy its inventory directly from the manufacturer in order to obtain the lowest price possible.

We will frequently compare prices of these distributors to ensure we are getting the very best price possible per item.

That Guitar Company will always put the quality/value of the product we pass on to the consumer ahead of price.

We intend to buy our key, best-selling items in bulk, to obtain a pricing advantage over our direct competitors. *The majority of our competitors buy by the piece rather than by the box or case lot.

• Common discounts in the industry consist of free freight, repayment term incentives, additional free merchandise or incremental percentage discounts on quantity purchases.

Although we will buy key items in bulk when practical, we will also remind ourselves that sometimes a better deal for the sake of lower prices is not the best move for our bottom line.

We should not risk over-stocking new or unproven merchandise just to get a small advantage in price over competitors.

Organizational Structure

That Guitar Company will require its staff to be multi-skilled.

Each employee will likely oversee many aspects of the business on a given day.

Our main divisions will be Manufacturing, Sales and Marketing

A complete book of structures and policies, along with successful actions, will be created and maintained from the date of opening to streamline the process of adding new employees as they become necessary

Ongoing training for all employees will be necessary in order to keep our edge on the competition

Management Team

Director of Operations• COO level responsibility

Office Manager • Administration• Accounting• Human Resources• Marketing/Sales

Production Supervisor• Assembly• Operators• Machinists• Maintenance

Quality Manager• Quality Assurance• Shipping/receiving

Personnel Plan

That Guitar Company will initially maintain a small staff of over-achievers in order to take advantage of the higher overhead of our key competitors

We will operate with a staff of 30 full-time employees

It is our philosophy that each employee should be empowered to make crucial decisions on the spot where it benefits our approach to customer satisfaction

This staffing approach allows us the need for only one manager for day-to-day decisions needing a final word, keeping hierarchy to a minimum

That Guitar Company will be very selective in future hiring, and will reward employees as the company prospers in future years

It is crucial to our business that we keep employee turnover at a minimum, as consumers in this business like to develop long-term relationships with their sales representative

Our key employees will be experienced musicians

The personnel plan highlights our intent to hire as few employees as possible, in order to keep control over how our customers are treated during the crucial first stages of our business.

Option 1Facility in Winneconne, WI

Wisconsin Highway 116 is nearby for quick transportation to Interstate 45

Our business would move into the 50,000 SF section and lease the other half to another company.

Option 2Industrial complex in South Saint Paul, MN

The facility is located right next to Interstate 474, making easy access for trucking

The facility is within driving distance of both Minneapolis and Saint Paul• Minneapolis has 300,000 residents • Saint Paul has 285,000

Both cities share the Minneapolis-Saint Paul International AirportWe believe our manufacturing business would further compliment the sprouting industry in both of these cities which is why we choose Option 2

Demographics

Bill of Material

Exploded View

Drawings of Product

Plot Plan

Operations Process Chart

Machine Requirements

Machine Requirements

Material Movers

Activity Relationship Chart

The individual components are linked together in groups based on the assembly process. The top, back, side, and neck shaft are together as group 1. These items are cut out in the shop out of wood. The headpiece, truss rod, and fingerboard are insourced and put together at the first assembly table as group 2. The neckshaft, bridge, saddle, bridge pin, head block, and tail block are assembled at the next assembly table, called group 3. Group 4 includes the back brace, upper face brace, lower face brace, and x brace. The last group, group 5, includes the tuning machines and overall quality check

From-To Chart

Flow Diagram

Facility Layout Plan

Support Functions

• Restroom provisions for Men and Women. Restroom space will be provided within the shop floor. One unisex located in the shipping and receiving area. One Unisex restroom located in the office areas. Restroom cleaning services will be provided on a weekly basis by an outsourced company.

• Shop floor employees will be provided uniforms as well as a locker room for dressing and storage of personal items within restrooms.

• The dining facilities will provide an area for our employees to eat their lunch as well as vending services. There will not be food provided through cafeteria services.

• First aid provisions will be met with stations located on the shop floor and a small cabinet located in the office area. There will not be any full time nursing staff employed at this time.

Material Handling

• Assembly line organized by stations within walking distance to hand off material to the next station.

• From station to station, the product is placed in a specialized container in order to protect the product from damage. Product is stored in this container throughout the assembly process and storage/drying process until ready for shipment.

• To ship, the product is placed in a hard plastic container made from recycled materials that we obtain from an outside company. The company provides a pre-paid shipping label to return the container.

At That Guitar Company, our passion combines design, low prices, economical use of resources, and responsibility for people and the environment. The company's products, processes and systems all demonstrate its environmental stance. For example: clever use of packaging and design allows more items to fit into a crate, which means fewer delivery journeys. This in turn reduces our carbon footprint.

We believe there is no compromise between doing good business and being a good business. It aims to go beyond profitability and reputation. We are intent on becoming a leading business in American made acoustic guitars. This will create a better everyday life for its customers.

We personally thank you for reviewing this plan. Should you require any clarification on the information contained herein, we can be reached by the contact information below.  

adickerson@thatguitarco.comafunk@thatguitarco.comchardin@thatguitarco.comjnoland@thatguitarco.com

Conclusion