Evaluate the lamination machine at FSC. How effectively is it being used?
Lamination Machine
The results in the chart below are made up from Exhibit 5 & 6, which can be found in the appendix.
From the table on page 5 results the efficiency of the Laminator can be calculated. The efficiency calculations are:
From the efficiency calculation it can be determined that the Laminator machine set-up and the output is 53% and 58% respectively. Therefore the Lamination machine is running at approximately half of its achievable output.
From the Evidence it can also be seen that at 58% the laminator still is not being utilized in the most effective markets as some of the jobs that where completed over the last 3 months were produced at a loss. If this was to gain some extremely profitable business then there may be a case to keep this but if not then these non-profitable products should be dropped. The evidence to support this can be found in appendix 2.
If the Laminator is looked at in sectors, the profitability of some sectors is lower than others and it would therefore be a more effective use of the laminator if the company were to concentrate on Food Beverage and Snack. This also can be supported by evidence found in Appendix 2.
What would you advise Dave Cullis?
After studying the various evidence I would recommend that Dave Cullis should carry out a complete analysis of both the Brannan Group and the FSC group. In the Analysis he should:
- Look into the actions required to improve the ordering process of the FSC Group.
- Look at each product and determine if they require solvent free lamination, if not and if possible move these products the Brannan group so that full utilization of the solvent free process can be achieved.
- Look at the orders completed by other plants and remove any poor profit products if they have no effect on other orders.
- Look for more Opportunities in the Solvent free Markets
- Look at ways to introduce a third shift for the solvent free lamination process as there is little additional cost. This will maximise the capacity of the FSC group.
- Discontinue the non-food sector, as this is a low profit activity.
- Look for more orders of H618 type as this is the best profit per hour job
- Look at the set-up procedure for the Lamination machine, as the standard set-up time is no being achieved. Make improvements and set the standard set-up time at the achieved time.
- Look at the metres per hour achieved by the laminator machine as the current rate is below the standard throughput speed. Make improvements and set the standard throughput speed at the achieved level.
- Look at direct cost and try to reduce the total cost & variation between different products.
- Look for ways to increase run times of the laminator, therefore reducing the number of changeovers.
Once this analysis is completed I would introduce improvements based on these findings as the evidence that is available at present only points in the direction of the above areas being a problem, a complete analysis would determine the best root of the actions required to improve each of the problem areas.
Where is the market for the laminator? Solvent free or low cost justify.
The market for solvent free is a better option for the laminator as the rest of the Brannan group could concentrate on the low cost end of the market. This allows the company to obtain a whole new customer base for applications, where solvent-free is a must. This would increase the market available to the Brannan Group. The productivity of the Solvent-free lamination is much great that solvent based. This is show in exhibit 7 as stated below.
Exhibit 7 - shows that the solvent-free Lamination has the best running speed and also states there are similar running costs for each of the different lamination processes. Also expressed in this exhibit is the fact that there is drying time required for the solvent based processes and this will cost more due to the energy consumed by the drying facility. This drying facility will also reduce the throughput speeds of the Lamination processes that use solvent.
The Brannan group main reason for purchasing FSC was due to the opportunities seen in the solvent-free market. This statement I supported in the case in the book.
Appendix
Exhibit 2
An overview of the manufacturing process
Exhibit 3
Exhibit 6
Exhibit 7
Technical review of alternative Lamination Processes
Appendix 2
