...Lead Time Management at Littlefield Labs Background Littlefield Laboratories has opened a new blood testing lab. This laboratory uses the same process as the lab encountered in your prior assignment, Capacity Management at Littlefield Labs—neither the process sequence nor the process time distributions have changed. The lab began operations with a raw materials inventory of 160 kits and $1,000,000 cash. Customer demand continues to be random, but the expected daily demand will not change during the lab’s life span. Expert advisors know that demand will end abruptly on Day 268 and the lab will no longer be necessary. Any remaining machinery or inventory will be useless after Day 268, and thus have no residual value. Management would like to increase revenue and decrease costs. They believe a more responsive laboratory will increase revenue and they understand well-balanced inventory policies ought to minimize costs. Operations Policies at Littlefield In appreciation of your prior recommendations and contributions, Littlefield has once again retained your services on their 50th day of operations. This time, they would like your help with further lead time improvements and optimizing their inventory policy. Management has used process time estimates from your first report to calculate a stable capacity configuration. They have purchased the recommended machinery, but are not entirely pleased with the lead time performance. Management trusts you will be able to effectively...
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...Restaurant - Total Lead Time Management Discussion Board Assignment You are a consultant, and have been retained by a restaurant to reduce average customer wait time on orders. You use the "Total Lead Time" timeline tool discussed in class, with it's four main time milestones--- 1) Order Received; 2) Order Started 3) Order Completed/Shipped and 4) Order Received by Customer. The basic process is as follows: 1) Guests are seated promptly upon arrival. 2) A Server greets them at their table in a timely manner. 3) The Server then takes the order, and writes it on the paper order sheet/pad, along with the current time. 4) The Server then enters the order into a computer located at a Server station in the Dining Room. The time on the order sheet/pad is entered in the “Order Received” field. The Server then hits “Enter”. 5) When the order is so entered, it appears on a computer screen in the Kitchen. 6) When the Cook begins the order, he/she hits a button that populates the time in the “Order Started” field on the screen. 7) When the order is finished and dressed, the Cook hits another button on the screen to populate the “Order Completed/Ready” field on the screen. This also sends an alert that appears on the Servers computer screen in the Dining Room. 8) The Server goes to the Kitchen, takes the order to the table, and hits the computer screen button that enters the time in the “Order Received by Customer” field as he/she places the tray on a stand near the Server...
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...C. Stark Inc. Case 1. Why are the lead times so long? H. C. Stark Inc. invested in the SAP R/3 Enterprise Resource Planning software for the company but, only the finance dept. uses the software while the production, scheduling, shop floor scheduling and raw material orders and are still processed manually. These departments still believe in using the paper method of processing the transmittal of the sales orders from customers to the operations department. This process is longer than incorporating the software to accomplish the same tasks. Starck doesn't make full use of the functions in SAP R/3. In fact, schedule misses were mostly due to equipment failure. Mike from the sales dept stated there was an "informational black hole" where orders go to the mill, but the demand data doesn’t seem to make it back upstream to the melt shop. Production is a 3 step process where scheduling needs to be on point for the final product to be ready and the next batch in line. The sales department enters the customer order date into SAP because the software require it. Sometimes the Sales dept. estimates the order date which can cause inaccurate times that are too far out and then the order is ignored by Operations. 2. How might Starck reduce or affect the lead times? Starck will have to implement the use of SAP software for scheduling, production planning, and more accurate data collection for forecasting to save lead time and resources. The availability of informative...
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...PETRI KÄRKI The Impact of Customer Order Lead Time-Based Decisions on the Firm's Ability to Make Money Case Study: Build to Order Manufacturing of Electrical Equipment and Appliances ACTA WASAENSIA NO 257 ________________________________ INDUSTRIAL MANAGEMENT 25 UNIVERSITAS WASAENSIS 2012 Reviewers Professor Olli-Pekka Hilmola Lappeenranta University of Technology Department of Industrial Management Prikaatintie 9 FI–45100 Kouvola Finland Doctor Yongjiang Shi University of Cambridge Centre for International Manufacturing Institute for Manufacturing 17 Charles Babbage Road Cambridge, CB3 0FS, UK England III Julkaisija Vaasan yliopisto Tekijä(t) Petri Kärki Yhteystiedot Vaasan yliopisto Teknillinen tiedekunta Tuotantotalouden yksikkö PL 700 65101 Vaasa Julkaisupäivämäärä Maaliskuu 2012 Julkaisun tyyppi Monografia Julkaisusarjan nimi, osan numero Acta Wasaensia, 257 ISBN 978–951–476–385–1 ISSN 0355–2667, 1456–3738 Sivumäärä Kieli 194 Englanti Julkaisun nimike Asiakastoimitusaikaa koskevien päätösten vaikutus yrityksen kannattavuuteen. Tapaustutkimus: Tilaukselle valmistettavat sähkölaitteet ja -kojeet. Tiivistelmä Vuosikymmenten ajan tieteellisissä julkaisuissa on käsitelty toimitusnopeuden ja -joustavuuden tärkeyttä kilpailukyvyn ylläpitämisessä ja parantamisessa. Näiden tutkimusten ulkopuolelle ovat kuitenkin monesti jääneet toimialat, joissa valmistetaan tuotteita asiakastilauksille. Tästä syystä monilta...
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...EXECUTIVE SUMMARY Barilla SpA, world’s largest manufacturer of pasta based in Italy is experiencing extreme demand variability resulting to operational inefficiency and increased cost. To combat the key issues stated my decision is to implement the Just In Time Distribution (JITD). This new system, contrary to current system Barilla has will eliminate Bullwhip effect and stock outs by having centralized information, there will be data transparency between Barilla and distributors. Distributors will provide actual sales data which will be the basis of forecasting and production thus increasing in efficiency in operation and alleviating stock out among distributors. JITD will lead to improved supplier-customer relationship which in the long run can be perceived as a win-win situation. Internal resistance coming from Sales and Marketing will be resolved by involving the top management and by presenting the benefits of the JITD in figures and by emphasizing that role of Sales team in JITD is of paramount to the implementation. External resistance will be combated by thorough discussion presenting the long term benefits of all parties involved. Implementation of JITD as soon as possible will position Barilla on even stronger pasta producer and will potentially increase growth rate of the company resulting from increased business efficiencies and reduced cost. Barilla can have a pilot run on the DO (Distribuzione Organizzata) where sales representatives functions are dominant, sales...
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...require the same machines it’s a constant balancing act. Chad also takes his employee hours into consideration because his employees are all specialized in different aspects of the manufacturing process. Chad preforms supplier relationship process duties because he need’s to order specific materials for the customized pieces from his suppliers. In order to Chad to be effective over the long run he must reduce the lead times on both the custom and standard line of furniture. With the increase in volume, Chad finds it difficult to meet the promised delivery dates for both custom and standard line. Increased lead times has had a ripple effect throughout the company. Increased lead times results in added costs such as storage and inapt use of raw materials. Training employees to become more flexible can improve long-term effectiveness. Currently, each employee is specialized at one stations, this could cause a backlog of work incase of high volume in one area or if an employee is out sick. Allowing different employees to work in different areas will reduce lead times. Chad must also worry about expansion in the long run....
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...variability are as follows: i. ii. iii. iv. Forecasting of the demand due to the non-usage of forecasting techniques for demand. Batch ordering due to transportation volume discounts and irregular demands Average lead time lead to variability and decreased service levels Fluctuation of the price: volume discount with different discount rates causes variations in demand including the incentives provided for sales representative on achieving the sales goal. v. vi. Shortage of order quantity range and large number of stock keeping units Non provision of quality information and data at each level of supply chain in the process, therefore the bullwhip effect is noticed ad there is unnecessary inventory for distributors and retailers. 2. The firm can cope with increase in variability by: i. Supervision of order lead and information time which involves utilizing better production, planning, scheduling and transportation methods (using cross-docking and in the other hand exchanging information in the supply chain for instance using electronic data exchange). ii. Concentration on constant low competitive price or everyday low pricing (EDLP) strategies for reaching stable demand. iii. Counting on actual customer demand data and information thereafter, implementing the Just In Time Distribution (JITD) program. In addition with considering the Min and Max order quantity, variation in demand will decrease in whole supply chain. iv. Barilla can contemplate on execution of Vendor Management Inventory...
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...than the average estimated demand. After we analyzed the results of the first couple years, we noticed that the average demand was generally more accurate. This led us to the conclusion that the dynamics of the forecasting team were likely distorting the estimates for the consensus number. There were strong personalities within the team that seemed to sway the opinion of the team members to agree with them, thus lowering the accuracy of the estimation. For the final two years we spent more time looking at the individual opinions of the team and tried to exclude estimates that were exceedingly high or low compared to the rest of the team. This gave us a number that was close to the average estimate of the team and allowed us to make a more accurate forecast. Overall, the consensus forecast was a good tool to use to quickly see whether demand was expected to be high or low. The biggest downside is the lack of accuracy. The average demand was a more accurate tool as long as we took the time to check each individual opinion to see how the number was made up. Our most successful forecasts seemed to come out of a combination of both the consensus and average. Options In general we tried to look at the overall benefits the option...
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... Obermeyer Retailers 3 4 Planning Cycle Planning Cycle Cont. • Design begins in February of the year before the garments will appear in stores. • As soon as designs are finalized, samples are produced and shown to retailers during the Las Vegas show. The show is usually held in March. • Concurrently, materials and components are ordered for the initial production order. • Usually receive 80% of the annual order volume the week after Las Vegas show. • During June and July the garments are transported to Obermeyer’s Denver warehouse. This takes approximately six weeks. • Around the end of August, Obermeyer ships orders to retailers. • Products go on sale during September. Peak times are December through January. 5 6 1 Time Line Production Planning (See Table 2-14, p. 68) • Annual production is approximately 200,000 units. • Maximum production capacity available for cutting and sewing is 30,000 units a month. • The minimum...
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...responsible for fabric and component sourcing for Sport Obermeyer’s production. Materials sourced were cut and sewn either in Raymond Tse’s own “Alpine” factories or in independent subcontractors located in Hong Kong, Macau, and China. Raymond was owner and president of Alpine Ltd., which included skiwear manufacturing plants in Hong Kong as well as a recently established facility in China. Obermeyer would cover 80% of Raymond Tse business. For this case, we will focusing on the skiwear part of the Obermeyer business. It has a current cycle time of 27 months. Considering that what we are selling is short life cycle product with very variable demand. The numbers that practically drives the business mostly comes from the Las Vegas show. Out the 27 months cycle, Obersport has only has 6 months to purchase, produce and deliver the products for winter selling in North America. Obersport is located in the Far East and currently his supplier lead-times is are really long and minimum orders is quite high....
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...1. Original Wire quote: • Unit price = $30 • Packing costs = $.75 per unit • Tooling = $6,000 one time fixed charge • Freight cost = $5.20 per hundred pounds The per unit cost (based on an annual supply) Yearly Unit Cost= (annual demand *( unit cost + packaging cost )) + tooling charge ( 60000 *( 30 + .75 )) + 6000 (60,000 * 30.75+6,000=$1,851,000 Unit Cost = $1,851,000/6,000= 30.85 Yearly Freight Cost = #units * unit weight * freight cost 60000*10 *.0520 = $31,200 Unit Freight Cost = 31200/60000 = .52 Total Unit Cost = Unit cost + Freight Cost 30.85 + .52 = $31.87 2. HLA Quote: • Unit price = $19.50 • Shipping lead time = 8 weeks • Tooling = $3,000 The per unit cost (based on an annual supply) Yearly Unit Cost= (annual demand *( unit cost + packaging cost )) + Tooling charge (60000 *(19.50 + 0.00)) + 3000 = $1,173,000 Total Unit Cost = 1173000/60000 = $19.55 Monthly Freight Cost = $41,366 Unit Freight Cost = 41,366/5000 = 8.28 Total Unit Cost = Unit cost + Freight Cost 19.55 + 8.28 = $27.83 3. Sheila should recommend Happy Lucky Assemblies because it has a cheaper per unit cost than Original Wire. 4. There is a need to warehouse at least four weeks of inventory in Detroit at a warehousing cost of $1.00 per cubic ft per month. The costs associated with committing corporate capital for holding inventory must also be calculated. Corporate cost of capital...
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...1) Compare and contrast the pre-1995 Lucent supply chain to the 1996-2000 supply chain with respect to the focus and structure of each. Identify what you believe to be the key factors that necessitated the changes that Lucent made. Did the changes make sense from a strategic perspective? In the pre 1995 Lucent’s supply chain, most of the Asian production was manufactured in Oklahoma City. The focus was on USA customers and business from Asia was not significant, therefore there were no manufacturing facilities set up in Asia. Lucent formed joint ventures with telecommunications-related companies across Asia to facilitate market entry into Asian markets. The focus was on the market entry strategy and not manufacturing. These joint ventures performed only final assembly and testing for customers in the countries in which the joint venture is located. The joint ventures had little or no production capabilities. However, for the 96-2000 supply chain, as there was huge growth of communications infrastructures in Asia, the Lucent also had to focus on Asia customers due to the amount of business opportunities. The manufacturing structure was changed such that custom engineering and manufacturing of Asian orders would be done in Taiwan. In addition, the joint ventures also manufacture their own circuit pack and outsourced the production of low volume level circuit packs. The ordering process was also different. In pre-95 supply chain, countries with local joint ventures...
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...product variety and standardize the product line. There are various implications associated with this strategy; firstly, Spartan’s current product line is based on job shop manufacturing operation where individual parts are produced in several departments and finally assembled in assembly area. Secondly, Spartan has multiple vendors for raw material supply and the materials department is using approximately 350 vendors. Thirdly, in the existing strategy, Spartan is using unique skilled workers. Finally, poor inventory management which reflects Spartan manufacturing operations are facing material shortage and stock outs. In order to opt for new strategy, Spartan has to make many changes and this process will certainly require time and efforts. For example, Spartan has to shift the manufacturing from batch process to assembly process. This will eventually require process reengineering; the reengineering will modify the existing department structure of manufacturing process. On the other side, Spartan has to reduce the number of suppliers; selection of the suppliers would be tedious task. In the assembly line manufacturing, Spartan will need skilled employees and hence, spend on the training on existing employees. Finally, the Spartan will have to improve their inventory management in order to avoid stock out or material shortage. 2. The job shop is more suitable to specialized equipment as each order specific requirement changes individually. In the...
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...traditional practice of delivering products to distributors based on the basis of whatever order was placed on the company. This resulted in difference or variation of production price, as well as piled up inventory at the distributor’s depot. My decision is to implement the Just in time Distribution (JITD) concepts based on the fact that production and manufacturing is determined by the consumer’s needs and controlled by barilla being able to achieve this by eliminating huge variation for manufacturing and distributors. Furthermore Just In timed Distribution will also avoid the accumulation of inventory at the distributor’s depot. Barilla SPA is a vertical integrated organization, the rise and fall in demand will affect the other arms of the organization since they don’t only manufacture only pasta, its affects transportation, flour mills, sales etc. However, JITD faced some problems which include the fact that the customers were not co-operating with barilla by not sharing detailed sales with the company in order not to lose their control over placing orders. In addition to this, the employees in the sales and marketing department felt that their positions would be threaten if the Just In Time Distribution was Implemented. I recommend that barilla SPA be...
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...manufacturer and distributor and even with an attractive piece of the market (35% in Italy, 22% in Europe) and diversifying product lines, they are experiencing inefficiencies and rising costs due to irregular and ever changing demand from their distributors. Giorgio Magialli, the Director of Logisitics, has been tasked with resolving these issues by gaining control over their fluctuating demand. Barilla currently has in place, a very complex distribution network and has been experiencing increasing variable changes which is not only hitting operations for their inefficiency but increasing costs across the board for inventory, distribution and manufacturing. After much backlash the first time of trying to implement a Just-In-Time Distribution (JITD), the plan is to regroup and decide whether this time of program can be implemented successfully and if so, which customers they should target with this type of system. The first attempt at implementing the JITD strategy was done by Brando Vitali, the former Director of Logistics, he had proposed that a JITD system would put an end to demand variation and enable their distributors to reduce their inventory on hand, therefore reducing costs, thereby giving them additional service tools at no additional cost. The only thing required would be that the distributors would need to share their sales data, on hand inventory, etc with Barilla who would then be able...
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