Schwinn manufactures a number of different bike styles, everything from kid’s bikes to mountain bikes. These bikes all have different uses and appeal to different types of consumers. The ability to provide these numerous styles of bikes is essential to the company. However, the variety of bikes that they provide is costly from an operational perspective. The variety of bikes can increase the number of production changeovers that the factory goes through. When Schwinn first began manufacturing bikes, they utilized a number of different parts for each bike they manufactured. The bikes had different styles of pedals, handlebars, and brakes. Through the years, the company has standardized many of the parts that go into making a bike. Over the years, as consumer preference has changed and technology has advanced, Schwinn has grown from a manufacturer of a single style of bike to several styles of bikes. They have built their business on their ability to provide the styles of bikes that consumers demand. In order to provide these bikes, the company has made part commonality a core of their business. They understand that a pedal used on a mountain bike can also be used on a hybrid bike or a street bike. There are a number of parts that are used on different bike styles. Handlebars, seats, chains, brakes, etc are used on every bike that Schwinn makes. The ability to use these parts on different bikes reduces the number of parts that are kept in inventory. In addition, the ability to use common parts increases the ability of the factory to produce bikes. There is less downtime associated with changeovers, less instances of out of stocks, and increased efficiency. The goal of parts commonality is the reduction of variety in the supply chain and is based on the idea that products in the same family have similar components. The supply chain can be streamlined with the reduction of the number of parts, and forecasting. Manufacturing organizations have traditionally relied on the knowledge of the management teams and the floor supervisors to develop their production plans and schedules. Technology has improved this process greatly, and the introduction of MRP systems has further increased manufacturing efficiencies. The use of an MRP system can benefit Schwinn, as it does other companies. The MRP system provides information that can be used by the company, both for planning and managing factory operations. This information includes order release notices for parts ordering. In order to benefit from an MRP system, the scheduling for production needs to be managed correctly in order to reduce workload. The use of the MRP can reduce the lead times associated with replacement parts, inventory turnover, and the number of people associated with the supply system. Based on the master production schedule, the MRP system creates a schedule that identifies the parts and material required to produce the bikes. The system further determines the number of parts needed, and also the date when those parts need to be reordered, based on lead times. The use of MRP means the organization does not have to carry excess inventory. These systems can be expensive, ranging from about $500,000 to over a million dollars, but the benefits far outweigh the costs. With proper implementation, an MRP can increase production, reduce costs, and help the organization manage resources more efficiently.

References:

Schwinn Bicycle Company - Home | Schwinn Bicycles. (n.d.). . Retrieved May 31, 2014, from http://www.schwinnbikes.com/
Sells, H. (2010, August 9). What are the Benefits of an MRP System?. eHow. Retrieved May 31, 2014, from http://www.ehow.com/list_6836956_benefits-mrp-system_.html
Krajewski, L. J., & Ritzman, L. P. (2013). Operations management: processes and supply chains (10th ed.). Upper Saddle River, N.J.: Pearson. | |