Manufacturing Strategy.

I would recommend the company to invest in CAD, as it is a Product with which almost all industrial companies deal with, given that the company will expand in the future, it is also useful because the draws of CAD are international accepted and known. I also would recommend introducing apprenticeships. Apprenticeships are very useful to train highly skilled staff from the young ages. The company will always need skilled persons, and flexible persons who are not necessarily elderly people. Young people will implicate motivation in work, fresh and dynamic atmosphere, creativity and they can also be a big help during the apprenticeship for the senior workers who are overloaded. Another good point is that apprentices are cheap.

Further on I would suggest Harpers to invest in future in Flexible Manufacturing Systems (FMS), which are not as difficult to operate as CNC Machines -Systems. FMS is system that consists of numerous programmable machine tools connected by an automated material handling system. This would not require highly skilled staff, because it is easier to handle and much more flexible than CNC.

PROCESS PLANING

Like in the Design department, the process planners have the similar problem with the short staff and rare skilled persons. Currently they cope the work-load, butt they will have big problems in case of increasing work. 60 % of work is process planning for manually operated machines. 40% is programming CNC machines. Programming Systems are not connected with CNC Machines as well as not with other computer based systems.

I would suggest to introduce apprenticeship or to increase the number of apprentices for avoiding short staff problems and for training high skilled staff. Investing in Flexible Systems is also required in this department as well as parts of CIM (Computer Integrated Manufacturing) modules like CAD, CAM. CIM allows the online and batch-related acquisition of process and quality data. The flow of material within a multi-stage production process can be planned at any time and monitored from the central station. Job and materials management permits job-controlled production. CIM enables paperless manufacturing and shop floor digitization. This would have the effect that the part programming systems would be linked to the Machines and computers, so that work can be done easier, much more efficiently and with less defects and failures.

PRODUCTION PLANNING:

This department is where the production and assembly areas are planned and scheduled. There are 30 employees, who are low grade staff. MRP (Material requirements planner) was installed 15 years ago, but is not successful. MRP is a planning system, with which you can plan exactly by single arithmetical calculations the size and timing of the requirements of the various lower-level work-in-progress items and raw-materials after the delivery schedule for the end-products is known. The problem is that the Senior Managers are unmotivated about using computers and they don't have expertise how to develop such a system. There was a separation within the Production Planning area, each of which looked on its own approach. At the beginnings, they lost their trust to these systems, due to the prediction of the pc's which were out of date.

As a result a complex system was installed, which involved a computer based system and a paperwork system. Mistakes are always common, causing many problems.

My opinion is that the problem why MRP didn't work as expected could have a few reasons.

In most instances, inner-environmental factors, where the users are not motivated for changes in the manufacturing are leading to failures of MRP Systems and other innovative technologies. Production managers are often not involved in corporate policy decisions, until these decisions have started to take shape. The result is that production executives have less opportunity to contribute to decisions on strategy alternatives and, as a consequence, always appear to be complaining about the unrealistic demands made of them and the problems that invariably ensue.

Therefore Production managers should be involved and users should be teached and it is necessarily important that all users and managers should understand the system. Once they know the system and its benefits, they would be more motivated to use it. Harpers should also think about its staff, old senior staff is technical unaware and their willingness to learn about Information Technologies and other high tech equipments are less than the willingness of younger staff. One solution would be to shift the senior staff in other departments, which are less high-tech concerned and where they can use their Know-How. Then the younger and high-tech interested staff could replace them.

Another reason, why MRP didn't work properly could be that to warrant successful operating, MRP must be operated with concomitant factors like JIT, CIM etc.

Factors like political factions causing conflict of interest which causes different company targets. Top-Down Management which sets the company aims and interests is required in such situations; thereby "own approaches" would be avoided. Other solution could be cross functional team of managers, who can help to simplify the business processes and restructure the organisation to better meet the company's goals.

GOODS INWARDS and RAW MATERIALS STORE

5 people are employed at the Goods Inwards area. All deliveries are passing this area. The work is done by paperwork system. To process the required materials to the several departments is challenging the staff and it takes a long time to forward them. Mostly of the deliveries are ending up in Stocks like Raw Material Stores or Finished Parts Stores.

Material which pass the Goods Inwards area lands mostly in the Raw Material Store.

Bar, castings, plastic granules etc. are examples of these materials. The work is done by 6 people and as in the Goods Inwards department, by paperwork system. Out of date of the stock, insufficiency of the stock and useless stock storage are the problems appearing here.

My opinion is that you can ally those two departments to solve the problem and reduce the staff. First of all, these departments have to abolish their paperwork system. Paper Work is obsolete, inefficient and unreliable. It has to be replaced by Computers equipped with Supply Chain Systems and JIT Systems. Then, all types of stocks must be considered as an absolute evil and should be minimised or abolished to save resources and overheads because they consume resources of finance, space and personnel in organisation. The simple rule for reducing inventory costs while maintaining good product variety and differentiation is to establish what components contribute least to product differentiation and to maximise their use across as many different products as possible. The following practices can reduce stock levels and inventory costs:

* Introduce JIT (Just-In-Time) procedures from suppliers direct to assembly line: work with suppliers to render goods-inwards inspection unnecessary and abolish goods-inward stocks. (The major leading manufacturers do not inspect incoming goods at all.)

* Introduce collaborative business solutions, like collaborative supply chain from providers like SAP, the world's third-largest independent software supplier overall. Its modules like MM (Material Management) supports all the phases of materials management: materials planning and control, purchasing, goods receiving, inventory management, and invoice verification. It is connected to all the other modules like Sales and Distribution, Warehouse Management, Production Planning, which you can also implement into the company.

* if various components have common roots, which may be at raw material, pre-form, final form or final assembly stages, hold stocks at the most convenient and preferably latest possible point of commonality, in order to minimise order-to-delivery lead-time

* standardise on raw materials; paradoxically, it is sometimes cheaper to use a more expensive material, though not strictly needed, rather than stock a less expensive one for perhaps only one per cent of the parts

* improve order anticipation, but bear in mind that the first law of forecasting is: all forecasts are wrong. (This is why stock is an absolute evil and must be avoided.)

* improve order picking and delivery, speed and accuracy. Any moves to reduce inventories must be full business decisions, taken in the light of all the facts. Reducing inventory in isolation is inviting disaster. Also dangerous is creating different products merely by changing the packaging. This is a short-term device and reduces the credibility of the company in the eyes of customers. Equally serious, it allows the new-product generating process and skills within the company to get out of practice and lose touch with the market.

* Investing in FMS will give benefits for the Good Inwards department, too. These are reduced inventory, due to the planning and programming precision of FMS.

PURCHASING:

Present situation in the purchase department is that a centralized purchasing is performed by 4 buyers. They buy all goods for the company, like raw materials, standard items, and special items.

The case, what makes trouble here, is that the various departments don't know what they need until the due time. After the purchasing department get the orders from the departments, the buyers can order the required orders very quickly.

I suggest Harpers to introduce a Supply Chain Management System, because within the SCM you need to implement Just-In-Time production, which requires the Material Requirement planning.

Materials requirement planning (MRP) is widely used in manufacturing and construction businesses. Once a manufacturer has established its production schedule, purchasing department can then order and schedule supplies. Quantity and timing requirements are 'dependent' upon the production schedule. Thousands of items, all with variable lead times, often are involved in a production process. The starting point is the master production schedule and certain forecasting, detailing what will be produced and when. This schedule is then 'exploded' into a bill of materials, a detailed recipe of parts and materials. Forecasting and scheduling are key information resources. They provide precise delivery dates and quantities for each component in the recipe. So sales forecasting is a vital ingredient. If customers insist on being volatile, sellers must adapt. Ideally an MRP system runs on a Just in Time basis with no buffer stock. Improvement of your own sales forecasts and, where appropriate, your production planning so that both purchasing and suppliers can be better informed about requirements. This would improve the situation in the Purchase department. Transport costs may rule out many small deliveries, and this would affect that optimum ordering quantity may remain above the quantities needed for Just in Time. However, by working away at improving these factors, Harpers can increase its stock turn and service level.

JIT hinges on planning and certainty and can only work where there is co-operation and trust. Effective information systems must be set up, so that suppliers are immediately aware of any changes to programmes. Through JIT, you can reach elimination of wasteful practices such as holding safety stocks, which is because the businesses are afraid of uncertainty, either about the future level of demand or about the lead time to manufacture or replenish stocks. Avoiding stocks bring certainty and smoothness to the flow of materials through the supply chain. By introducing Supply Chain Management, suppliers would corporate closer with Harpers, which means : "partners who can deliver the right quantity to the right place at the right time, every time" so that the purchasing issue would be solved and other departments like Raw Material Stores would have also benefits from SCM. However, working towards JIT and SCM will make the entire business more competitive, for its implications spread far beyond purchasing and stock management.

QUALITY ASSURANCE (Bought Out Items)

The situation in the Quality assurance department is that there are 3 people employed, who are checking paperwork and deliveries whether they are correct or not. The manager of this department likes to have more staff to guarantee zero defects.

My opinion is that nowadays there is no need for a "quality assurance" department. Companies have to be successful and efficient. Instead of engagement of new staff, Harpers should save the money for engaging TQM. Totally Quality Management is a systematic approach to quality improvement that marries product and service specifications to customer performance. TQM then aims to produce these specifications with zero defects. This creates a virtuous cycle of continuous improvement that boosts production, customer satisfaction, and profits. As I already discussed for prior departments, an introduction of JIT would be another benefit for the Quality Assurance Department, because JIT challenges the quality of the goods. Quality is the bedrock of JIT. As a result, companies which are integrated to Supply Chains or JIT Systems are obliged to produce the required quality. Therefore a method like TQM is very useful to fulfil quality obligations already in the production and other processing's and not after the processes. Your quality improvement process must be planned on a truly organisation-wide basis, i.e. it must embrace all locations and departments and must include customers, suppliers and sub-contractors. You cannot start in one department and hope that the programme will spread from there. Each department or group will be affected by what is happening in other parts of the company or organisation. So, through TQM you can eliminate goods-inward inspection: you can help your supplier to achieve the quality level you require this would implicate to achieve better internal quality and consistency to reduce inspection and stock levels. A quality assurance programme should appear as something, under which suppliers are accepting responsibility for quality, monitoring quality during rather than after production, and working towards zero defects. Implementing of FMS has also advantages for the Quality Assurance department such as consistent and better quality, due to the automated control and savings from the indirect labour, from reduced errors, rework, repairs and rejects.

PRODUCTION CONTROL:

The current situation at the Production Control Department is that it is staff-intensive with 20 employees and its tasks are to issue instructions to the Production Department in form of "shop packs, part drawings, route sheets, batch card and raw materials".

The problems here are similar to the other departments. Large Paperwork must be overcome and everything depends on the ability of its staff. That means dependency on human work in a very important area.

To solve these misgivings, I would recommend Harpers to introduce a Production Control System which is a shop floor event driven system that manages productivity, closely tracks and optimises work-in-progress, monitors time and attendance and optimises capacity and production scheduling in real time; i.e. as events on the shop floor are actually occurring.

The system is totally flexible allowing changes to production priorities to be made 'on the fly'.

This would implicate a less staff involvement, which means a staff reduction, therefore

Production Control Systems are generating business benefits that are providing a very short ROI. Typically, this system provides a pay-back on initial investment of a few months making it a must-have business management tool for most sizes of manufacturing operation".

It is also possible to implement it for supply chain solutions. That allows client companies to automate their in-house functional processes and to integrate these with systems in use at their customers, suppliers and business partners to improve service levels and reduce operating cost. Benefits are monitoring, recording and giving a feed back information to operatives and managers instantaneously (in real time) about shop floor manufacturing processes as they occur, enabling productivity to be substantially increased, work in progress to be optimised, production orders to be tracked and operating costs to be reduced.

Additional solutions like to give the employees more responsibility and to introduce group piece rate - work are also adequate. A team could be challenged but also motivated by piece-work when the requirement to produce good quality follows by benefits of more salary. Handing over the responsibility from the Production Control Department to the Production Department, where the employees are confronted directly, would lighten the tasks of the Production Control Department and would legitimate and give an additional reason to implement TQM System, which is also required in other Departments like Final Quality Assurance.

PRODUCTION:

The Production Department is the largest within the company, having 250 employees, who are good skilled by an apprenticeship and who are working in a 2 shift system which is from 8 am until 5 pm and 9 pm until 8 am. The production is done in small as well as large batches. Milling section and turning section are creating the machine shop, which is the main production area. 40% of the production is done by using CNC machines. But this did not avoid that the product is organised on traditional lines.

The size of this department entails big problems, too.

Some of the problems are detailed below:

· High levels of work-in-progress > difficulties with storing > time consuming

· Long throughout time > Delivery delays > inefficient manufacturing

· Labour intensive > requirement of many staff > expensive production > necessity of big HR department

· High machine breakdown time (up to 20% of operator time), high waiting time (up to 15 %)

· out-dated machines

· highly skilled workforce, recruitment problems.

To solve these problems, many changes have to be done! First of all, through the implementation of Just in Time process in conjunction with MRP, probably problems like high level of work-in-progress and long throughout time will be solved, because manufacturing will be planned more efficiently. But not only JIT and MRP can solve problems like long throughout times, high machine breakdown times and high waiting times. Harpers have to consider investing in new machines, as the existing machines must be replaced soon anyway, because of their worn-out-ness. I would recommend Harpers to invest in Flexible Manufacturing Systems (FMS) which are much more flexible than CNC machines and which don't require high skilled employees like CNC Systems. It would fit to the production options of Harpers, as the production is organised on traditional lines anyway Much of the Production problems would be solved by introducing JIT, MRP and changing the old machines into FMS machines. Furthermore, Harpers could reach much more advantages by investing in FMS which is necessary equipment for ensuring competitiveness. Additionally Harpers have to do change the times of the shifts. There are only 2 shifts, which are set from 8 am until 5 pm and from 9 pm until 8 am. As we can realize, there is a gap-time between 5 pm and 9 pm, where nobody is working. Usually nights shifts are expensive shifts for companies. If there is no need to produce in 3 shifts, you have to avoid introducing a night shift. Besides expensiveness, night shifts are not as efficient as morning or late shifts. And there is also no reason to set the night shift as the longest shift at the day, like Harpers have done it. I would recommend to set 2 shifts, the morning shift beginning from 6 am until 4 pm and the late shift from 4 pm until 1 am.

TOOL STORE:

The Tool Store Department is supplying the Production department by storing the tools for it. Biggest problem is the paperwork they have to overcome. Consequently, faults by tool records, excessive stock etc. are common. Problems of insufficient stock of items and wrong placed items are also existent.

By implementing FMS for the production department, Tools would get less; this would cause automatically less problems in the Tool Store department. I would also recommend to abolish the paperwork. Every company which wants to become competitive and efficient, shouldn't be engaged with paperwork. As I recommended before in the Goods Inwards and Raw Material Store department, investing in SAP Systems with which you have among other opportunities, the opportunity to record data, would be useful for the Tool Store department as well. By installing simple Computer, where you can use SAP, the department would have more overview about the tools.

FINAL QUALITY ASSUARANCE:

The present situation in the Final Quality Assurance Department is that 10 employees are involved to check out the produced items.

By introducing the TQM System and a Supply Chain System, due to the other departments, into this company, quality assurance, especially the granting of good quality for finished parts will get more important.

Due to the reason that the staff is overloaded, the QA manger has introduced a sampling inspection system, which causes some unexplored defectives.

My suggestion is to shift the employees from the Goods Inwards department to the Final Quality Assurance department, because after the Introduction of TQM, there is no need to have staff in the Good Inwards department. After gaining the new staff, Final Quality Assurance Department shouldn't be overloaded and should warrant good quality products.

FINISHED PARTS STORES:

This department stores ready parts for the assembly, which are "bought out" or "house made".

As many other departments, the FPS department have the same issue with the paperwork. The consequences are out of date records, excessive stock, insufficient stock etc.

There are 7 people who are working in this department.

In my point of view, 7 workers for such a small department are too excessive. I suggest to rationalise this department by introducing computer operated work and by signing off a few workers.

ASSEMBLY:

This is the department where 60 highly skilled people are employed. The work here is very important, as the "bottleneck" department, the manager is constantly under pressure. Problems like production of not required goods, defective goods, insufficient quantity of goods, defective goods are common, but in order to get out goods to the customer because of the demand- the production is being done very quickly and roughly , consequently the quality suffers of these circumstances.

Through Installing of MRP which is required for other departments as mentioned before, production of unnecessary goods can be avoided. Further on, through investing in FMS problems like "push through" - production could be eased, as the assembling with FMS is faster than CNC machines. TQM, SAP Systems and other investment suggestions I mentioned before will help also the Assembly department to improve its processing because they are all aimed to make the assembling easier.

TEST:

The Test Department has a similar concerning as the FQA department.

As I suggested before, Harpers must establish the TQM- System. The Test Department would profit from this, as a result a "Test Department" would be unnecessary due to the quality tests in the steps until it reaches the Test Department.

DESPATCH:

The task of the Despatch Department is to package and send the products to the customers, which they do with 6 employees. The biggest problem is the lack of information management. Sometimes the workers here don't know which products are required in what quantity and when. The information comes usually through on paperwork in an inaccurate way. Delivery delays are the consequences.

To avoid this kind of problems, I would suggest as I suggested before - to install the SAP System. SAP is the recognized leader in providing collaborative business solutions for all types of industries and for every major market, it delivered a business platform that unlocks valuable information resources, improves supply chain efficiencies, and builds strong customer relationships. You can generate your own set-up lists directly from our SAP system and as soon as you announce that an order is ready to go, invoice, packing list, export papers and so on, are in turn produced by the billing department within a very short time -most of it is automatically issued by your computer system. Customer orders can be received electronically by distribution centres. From there, the product can be picked from inventory, packaged according to specific order requirements and distributed by the most effective route. All of which helps to streamline the supply chain dramatically and provide you with a flexible product management system.

HARPERS AT A GLANCE:

I quoted many Proposals in my assignment above. For the purposes of consolidating my suggestions and to give an overall view, I want to itemise them below:

There are several tools to make a company very attractive, efficient and successful. But as money is not unlimited, opportunities to implement new tools and systems for a company are limited. First, every possibility to improve the situation of the company has to be taken into account. Then you have to assign priorities. As a result, you have to invest into the most cost effective opportunity. But arising from the present situation of Harpers, there are some essential investments, which have to be done!

FMS (Flexible Manufacturing Systems)

FMS is a system that consists of numerous programmable machine tools connected by an automated material handling system. FMS is something between CNC Systems and transfer lines. This System has many advantages concerning the flexibility, quality improvement, labour savings etc. but there are some disadvantages as expensiveness etc.

For main reasons, implementing a FMS System is inevitable. The CNC machines at Harpers are very old, i.e. new machines must be acquired. By reasons of flexibility, ease of use for the staff and quality, investing in FMS is very appropriate.

There are several departments, which would have a benefit of implementing of FMS as mentioned in above. For example the Design department, which needs easy manageable machines, due to the shortness of skilled staff. The Goods Inwards and Raw Material departments which would enjoy the benefits by having reduced inventory, due to the planning and programming precision of FMS. The Quality Assurance department would reap the benefits of FMS because of the high quality production. The Production department would reap the benefits of the FMS because of its flexibility by producing items. Tool Store department would be simplified due to the superabundance of too much tools. The Assembly department would profit of the fast production tempo and all departments would have the chance to decrease their staff amount. All these apparently benefits are leading to invest in FMS. It is an expensive investment but it is worth it and it is the right time to invest for it.

TQM (Totally Quality Management)

TQM is management and control activities based on the leadership of top management and based on the involvement of all employees and all departments from planning and development to sales and service. These management and control activities focus on quality assurance by which those qualities which satisfy the customer are built into products and services during the above processes and then offered to consumers.

Many departments of Harpers would have benefits of it. For example the Quality Assurance department, this would get an easier life, because after the implementing of TQM, every department, every production step would have to care about the quality necessities and so with the Production Control department. The Assembly department, where bad quality products are produced, because of the pressure of time, would be eased of the TQM implementation. The Final Quality Assurance department, which has to check the products whether they are in good status or not, would profit from the introduction of TQM as well.

CIM (Computer Integrated Manufacturing)

Stand alone computer systems provide enormous benefits to a company (much better than paperwork), but these alone are not enough to remain competitiveness. To ensure productivity, CIM is an inevitable tool to reach this. Harpers suffers of the predominant paperwork, it has to get rid of it. Investing in CIM by implementing connected computers would be a great opportunity, to solve these problems. Departments like Process Planning, Finished Part Store, Good Inwards where records of processing are done, need CIM or a similar Solution as soon as possible. CIM is a huge tool with many smaller modules like CAD, CAM etc. So, CIM doesn't have to be implemented as a whole system. It would be enough to implement only the essential tools. Like CAD in the Design department, which is inevitable, due to the general market situation (it is a standard tool for every company !).

SAP:

SAP is the recognized leader in providing collaborative business solutions for all types of industries and for every major market, it delivered a business platform that unlocks valuable information resources, improves supply chain efficiencies, and builds strong customer relationships. SAP is software, which can also cover the benefits of CIM. Therefore it has to be considered which benefits you would have what you wouldn't have with CIM. Implementing SAP implicates problem solution at the Good Inward department and Raw Material department, due to the opportunity to manage the storage in real time. SAP can also help the Production Control department by replacing a Production Control System, which is absolutely required for this department, due to effectiveness. Recording Tool data functions in the Tool Stores department are also manageable by SAP.

Because SAP is a real-time solution, you can use it for information management for example in the Despatch department, where you can process the information about orders into delivery reasons. SAP is a huge Software, with many modules. According to requirements, you can add new modules to your system. For financial reasons, you don't have to implement every module. SAP is a worldwide leader of business solution software and helped many companies to get modern and productive.

MRP (Material Requirement Planning):

The classic management tool for monitoring your material needs, the Manufacturing Series MRP module lets you view your entire manufacturing process over time, giving you the information you need to create purchase orders or manufacturing orders to meet open and/or released demand. It is a virtually paperless activity when using the spreadsheet-like view to analyze your inventory levels at any point in time. You can view material requirements in the way that best meets your needs-by days, weeks or months.

There is no need to dig through piles of papers or separate order files to find out more about the resource requirements. I think the last point justifies an implementation of the MRP.

Harpers has many departments, using paperwork and not knowing about the useless storage of some items in their department. It's very useful to optimize the MRP, which is already implemented. It could help to abolish the paperwork in the Production Planning, Good Inwards and Raw Material Stores department and would also involve advantages to the Production and Assembly department.

There are some interfaces between the SAP and MRP system. To avoid superfluous investment, things which could be done by the existing MRP shouldn't be added by SAP.

SUMMARY:

It is not easy to find the appropriate Manufacturing Strategy to ensure the success of a company. There are a lot of opportunities to make decisions about the future of a company. To get the right way, requires a lot of calculations and a good analytic expertise. For my opinion, investing in Systems I have detailed above, like FMS, TQM, CIM, SAP, MRP will make the live easier for Harpers. But due to monetary reasons, the Systems have to be implemented one after another; thereby FMS have to be the first investment followed by TQM, parts of CIM, then optimizing of MRP and if there is further need, you might invest in SAP- modules.

Note: I didn't separate Exercise a) and b). I mixed both Exercises and tried to answer to both tasks.