282924750 Quality Parts Case Study PDF

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Quality Parts Case Study Keller Graduate School of Management September 21, 2015

Quality Parts Case Study

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Quality Parts Company manufactures three different types of gizmos for a local computer manufacturer. The company produces two different models of gizmos and its production runs average between 100 and 300 units. According to the quarterly report, monthly demand for the company’s gizmos is averaging between 125 and 175 units per month and inventory for these components is increased early in the month to ensure that there is enough product to meet an unanticipated surge in demand.

Currently, 40 percent of the manufacturing costs of each gizmo

can be attributed to raw materials and purchased parts for subassemblies. “Scrap rates are at are about 10 percent each operation, inventory turns twice yearly, employees are paid on a day rate, employee turnover is 25 percent per year, and net profit from operation is steady at 5 percent per year” (Jacobs & Chase, 2013). Proposed Changes Currently, the manager of Quality Parts Company is considering making some changes at the plant. Some of the changes being considering are: 

installing an automated ordering system to help control inventory and keep the skids full;

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placing two days worth of work in front of each workers workstation;

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adding three inspectors to address the issues with product quality

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setting up a new rework line to speed repairs;

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Installing high-rise shelving to store the parts coming off machine 4.

By implementing these changes, the manager feels that it will increase production, provide much needed help managing inventory and eliminate the issues the company has been having with the quality of its gizmos. Lean Production Philosophy According to Jacobs and Chase (2013), lean production refers to integrated activities designed to achieve high-volume, high-quality production using minimal inventories of raw

Quality Parts Case Study

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materials, work-in-process, and finished goods. When using lean production principles, the key objectives are eliminating waste, unnecessary processing steps and excess inventory. The changes the manager of Quality Parts Company is proposing are not in-line with lean production philosophies. Instead of stockpiling inventory and keeping the skids full as the manager suggested, in a lean production environment, a JIT production strategy is used and the company only produces the inventory they need and no more. “Anything over the minimum amount necessary is viewed as waste because effort and material expended for something not needed cannot be utilized now” (Jacobs & Chase, 2013). Another change that the management of Quality Parts is considering is placing two days worth of work in front of each workstation and hiring three additional inspectors. “Lean requires the plant layout to be designed to ensure balanced work flow with a minimum of work-in process inventory” (Jacobs & Chase, 2013). Since companies that operate using a lean production philosophy do not produce inventory ahead of time, there is no point in placing the additional work in front of each workstation. It would be more beneficial to introduce the Quality at the Source concept that means doing it right first and when there is a problem, stop the assembly line immediately. In addition, the manager should consider empowering her employees and encourage them to “buy into” the process by making them accountable for the quality of their work, the maintenance of their machine and housekeeping. By concentrating on one part of their job at time, workers are able to take the time to focus better and problems are discovered much earlier in the process. As a result, hiring the three inspectors would be a waste of money. Pull System The following is a diagram of the pull system currently running Quality Parts Company’s operation. A pull system is based on produces goals that allow Quality Parts to meet the demand

Quality Parts Case Study of its customers. This process is based on the critical path method. For model X and Y, please note that the process begins at “Lathe”. Pull System Diagram for Quality Parts Company

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Introducing Lean at Quality Parts Company To introduce lean at Quality Parts Company, some changes would need to be made in the way the company operates. Some components of a lean supply chain that would need to be integrated are as follows: 

Partner with lean suppliers;

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Automate sourcing, bidding, and auctions Use web-based apps;

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Adopt lean manufacturing principles;

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Reduce excess inventory and adopt lean warehousing;

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Employ lean logistics methodology

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Build relationships with lean customers

References

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Quality Parts Case Study

Jacobs, F., & Chase, R. (2013). Chapter 4: Strategic Capacity Management. In Operations and supply chain management, the core (3rd ed.). New York: McGraw-Hill Irwin.

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