Another threat to the company which has always an influence in companies’ efficiency is political and economic climate of the world. Some significant factors which influence the companies’ productivity are: petrol price, car demand and regulatory changes (external threats).
Bottlenecks
Which of the processes’ efficiency is more dominant on meeting the customers’ needs? What are the bottlenecks in assembly line? The figure below illustrates the main processes with their allocated times.
A-Raw material purchase
B-Blanking process
C-Pressing
D-Assembly
E-paint
F- Final Assembly
G-H-Dispatch
Figure 1. Configuration of key processes with time allocation with assumption of batches of 15 for a process
From figure 1 bottlenecks of the assembly line can be extracted. After sourcing of raw materials (primarily steel) from steel service centre, they are uncoiled and cut into blanks. This process has changeover time of around 15 minutes and cycle time of 10 pieces every 2 seconds. Assume the batch size of 15. So for fifteen parts to be blanked it takes 3 seconds. Next process is pressing. Pressing shop has 10 presses including one progression press and three inline presses. On a single press the cycle time is two seconds per part with a changeover of 30 minutes but only two changeovers per shift. For batches of 15 it takes 30 seconds (15 x 2=30sec) for each press to blank the whole batch. There are three in line presses (3 x 30 =90 sec) and after this six parallel presses (90secs+30secs = 120secs = 2minutes) and then all are sent to progression press (2 minutes + 30 sec=2.5minutes). So the whole process takes 2.5 minutes without changeover. Both blanking and pressing have some deficiencies in lubrication. This stoppages account for 10 minutes per batch. Assembly process has thirteen cells with approximately 5 operations per cell in which two to four pressed parts plus some ‘brought-in’ parts are assembled together. Cycle time varies between 12 seconds and 1.5 minutes and Changeover time is 5 minutes. For a batch of 15 parts 5 cells are used in parallel (take the average of 4 parts and 2 parts = 3 parts input for each cell). It takes in average 51 seconds (12secs+1.5min/2) for each operation and there are typically 5 operations in each cell. So it takes 4.25 minutes for the whole assembly process. The painting (>3mins) and final assembly (>1minutes+0changeover time) are well- flow processes. Although the painting process is successful it takes 90 minutes for the unhooking operation after painting which is high in relation to the actual painting. Dispatch timing depends pretty much on scheduling.
The bottlenecks in this case are blanking, pressing, assembly and dispatch processes. The graph below illustrates the three processes in terms of wasted time in relative to their actual process timing.
Figure 2. Wasted time compare to actual process time
It can be seen from figure 2 pressing has the most wasted time and blanking has the least wasted time. Aylesbury pressing should focus on reducing the pressing, blanking and assembly lines’ time and try to make balance between their actual time and changeover times. For dispatching Aylesbury should concentrate on finding the most efficient implementation plan and stick to it.
2. Future Strategy
Now that all the weaknesses, strengths and bottlenecks are sorted out its time to decide on the strategic management of the company. Four primary characteristics of demand effect the way of managing processes: volume, variety, variation and visibility. Aylesbury’s position in the Vs analysis chart is demonstrated in figure 3.
Low High
High Low
High Low
High Low
Figure 3. Four V’s analysis for Aylesbury pressing(Slack N.,2006)
Aylesbury position in figure 3 depicts that the characteristics of the demand in its business is: high volume, high variety, low variation in demand and high visibility. In order to control high volume of product Aylesbury should have high degree of repeatability, specialization, and systemisation, capital intensive. The variety nature of demand requires flexibility, complex system of processes, high unit cost and it has to meet the customers’ needs in order to be successful. As the MBA student said demand is approximately constant so they can have some sort of routines in the processes and be in touch with the customers because sometimes due to external pressures the demand may be changed. Variety in demand also requires precise forecasting scheme. The visibility is high means that Aylesbury has the permanent customers so the first thing that has to be considered is high degree of communication skills. So the main problem is to cope with high variety and high volume of products which necessitates cost analysis in each step of the process.
From Hays and Wheelwright’s four stages in figure 4 it can be seen that Aylesbury is in the first stage and the future strategy should be implemented in order to contribute to the company to move from stage 1 to stage 2.The company should first correct the worst problems and becoming internally neutral. Then by implementing solutions choose the ‘best practice’ become ‘up to speed’ and externally neutral.
Redefine
Industry
expectations
Clearly the best
in the industry
as good as
competitors
Holding the
organization
back
Internally Externally Internally Externally
neutral neutral supportive supportive
Figure 4. Hays and Wheelwright’s four stages(Slack N.,2006)
To find the worst problems first the objectives of the operation strategy should be pointed out. The main purpose of Aylesbury is to meet customers’ needs. Five aspects of operations performance should be considered in satisfying customers’ needs.
- Quality- Customers expect all the products to be delivered without any deficiencies. They ignore any product with defect and count it as zero products. Absolute specification of products needs to be checked. Huge volume of products makes it difficult to manage inventory and causes wrong products to be delivered. Scrap rate should decrease to minimum.
- Speed- Customers want the product on-time. Aylesbury changeover time in some operations and stoppages according to the old machines are barriers for achieving high speed.
- Dependability- Customers’ deliveries should be on time and Aylesbury have to inform them of the exact date and time of delivery and provide them a schedule.
- Flexibility-Because of different customers with different expectations Aylesbury should be flexible with various products. This makes scheduling more complex and necessitates right expertises in each operation to prevent any mistakes. Company have to be able of adapting itself to changes in quantity and timing of different orders.
- Cost- In the current position of Aylesbury cost is the most important objective. Cost analysis should be one in each operation. Wastes have to reduce to minimum. Machines should work in efficient way without any stoppages. Inventory level should be balanced and organized.
The main aim of the company is to have efficient lines in order to increase the quality, flexibility, dependability, and speed and decrease the cost.
Figure 5 shows the strategic decision with top-down and bottom up perspectives.
Figure 5.Top-down and bottom-up influence of the strategy on Aylesbury pressing
(Slack N.,2006)
Now with a clear strategy and by knowing that the strategy has to move the company from stage 1 to stage 2 improvement strategies can be set and prioritised.
2. Prioritising Improvement Focus
To meet the strategy objective Aylesbury pressing needs improvement in its performance. Improvement means to fill the gap between what the current and desired performances closing the gap by assessing the current performance set the performance objectives and compare the current position of the company with its desired position on the graphic and strategic way to make the needs for improvement clear.
From SWOT analysis the factors that need to improve are derived below.
- Quality - Reduce defects and scrap rate and right stock delivered to the customers.
- Speed- The purpose is to decrease the lead time by decreasing the changeover time and improve the machines performance. Use all the man power efficiently.
- Cost reduction-to reduce the cost and waste of products. Bear in mind that the company has to satisfy the customers who want discount for the product.
- Control the great volume - They have to control the huge volume and make a balance between inventories’ quantities and required quantities to prevent part shortage.
- High efficiency of staff - lack of expertise and staff, lack of training and commitment of staff.
- Forecasting- in ad-hoc way not scheduled way. The forecasting does not match the actual delivery.
- Delivery of products is not always on time because of stock congestion in warehouse.
To close the gap between the actual and desired performance the current position of company has to be indicated in the importance-performance matrix. To achieve this rating of the present performance of the company have to be positioned in a graph.
Figure 6 shows the rating of performance for Aylesbury.
Rating of relative importance
(1= very important)
Quality of products
Delivery speed
Cost of waste
Efficiency of staff
Product line efficiency
Forecasting
Rating of current performance
(1=very good)
Figure 6. Rating of the relative importance and current performance at Aylesbury(Slack N.,2006)
From figure 6 it is understood that all the objectives have to shift at least two places to the left. Figure 7 demonstrates the importance-performance matrix for Aylesbury.
F
1
2
3
E B Quality
4
D
5
6
A
7 production efficiency
8 Forecasting
9
9 8 7 C 6 5 4 3 2 1
Figure 7. The importance-performance matrix(Slack N.,2006)
As it was expected, most of the performances are in urgent area so all of the above improvements should be considered in Aylesbury’s management plan. Although the matrix above show the estimated location of objectives in improvement but according to sandcone theory for the stable position in sandcone pyramid company needs a stable foundation of quality on which dependability, speed, flexibility and cost can then be built. So quality should be the main focus in current situation.
Cost
Flexibility
Speed
Dependability
Quality
Quality Quality + dependability +speed +flexibility
Quality + dependability Quality + dependability +speed +flexibility +cost
Quality + dependability speed
Figure 8. The sandcone model of improvement (Slack N.,2006)
Kaizen is an approach to improve the performance continuously. In this approach it is important to make improvement and doesn’t matter how much. This method that Aylesbury pressing chose to control the improvement has long-term but unromantic influence on the performance of the company. This approach is really a wise choice compare to breakthrough improvement that is more expensive. Six sigma is an approach that combines these two approaches. It is a broad and flexible system for approaching, nourishing and maximising business success. It mainly includes process design and redesign, balanced scorecard measure, ongoing process planning, control continuous improvement, statistical process control. Six sigma reduces process variation and it is customised to customers’ needs to fit individual companies’ circumstances. Apart from its benefits six sigma is complicated to implement. It is easier to apply it to high volume, low variety and low visibility operations. Full implementation of six sigma is source hungry and needs dedication of resource and budget. Nevertheless the investment makes a lot of profit that compensates the high cost. The best approach is to pilot six sigma and choose failing processes for the pilot. So Aylesbury should piloting six sigma.
3. Implementation Plan
Now that all problems are sorted out how the company should cope with them and what the solutions are. To implement a plan first the solutions should be clearly defined.
- Quality- In order to get the best quality it is best to implement six sigma and set sufficient training for quality control group. Aylesbury have to recruit more employers for quality control. It has currently four staff for four different sections. One interface between these group needed and a leader. Quality group have to get feedback from different processes’ quality. Aylesbury have to recruit some auditors as well as some expertise to make sure products have no deficiencies.
- Speed- A scheduling is needed to reduce changeover time in bottlenecks: blanking, pressing and assembly line. Among all types of scheduling Toyota heijanka system is the best for high variety of products with high change overtime. Heijanka motto is “just make what customer wants and when they want it”. Various demands of customers cause uneven production scheduling. Heijanka system (reordering system proposed by an MBA student) by levelling out production in both volume and production mix cause the same amount and mix being made each day (it solves the problem of inventory’s unbalances). However it requires regular feedback from customers.
- Efficient lines- In order to have efficient line Aylesbury pressing needs to add a new production line. Some degree of staff training can increase the efficiency. The machines have to work perfectly without any fault. So machines have to be checked regularly specially in times that they are not in use and if necessary they have to replace some dies and even machines.
- Forecasting- They have to prepare six month to annual forecast reports with all the influential factors on the industry by applying both quantitative and qualitative methods. This can reduce the pressure dramatically. It also helps delivery to be on-time.
- Cost reduction- By reducing changeover time and consequently waste results in cost reduction. However cost analysis and management should be done in buying and selling the products as well as implementing the plan in each step.
Now these tasks should be allocated to right groups and prepare a timetable according to expertise assumptions in each group.
Resources
Books
Slack N., Chambers S., Johnston R.,Betts A.,ch 2,”operations strategy”,Operations and process management,2006,pp33-63
Slack N., Chambers S., Johnston R.,Betts A.,ch 13,”operations strategy”,Operations and process management,2006,pp413-451
