DRAPER INSTRUMENTS Essay

4344 Words Nov 6th, 2013 18 Pages
DRAPER INSTRUMENTS
Individual Case

Table of Contents

Executive Summary 3
Introduction 4
Issues 5
Analysis 6
Performance Evaluation 6
Inventory Management 6
Considerations for Action 6
Performance Measurement 6
Inventory Management 7
Considerations in Transitioning to a (Total) JIT System 8
Recommendations 8
Short-term 8
Long-term 12
References 13
Appendix 17
Appendix A: A: Traditional Performance Measures (Financial Objectives) 17
Appendix B: Non-Traditional Performance Measures 18
EXECUTIVE SUMMARY
Introduction: Draper Instruments (DI) is adopting a JIT system. Currently, the company is facing inventory and quality control issues and employees are not acting in line with organizational goals.
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A strong emphasis on efficiency ratings has also encouraged foremen to bypass the production control system by producing resistors in excess. Again, the materials for resistors are unmonitored and easy to access. Suppliers also pose a problem where declining quality and reliability are concerns. As for inventory management, DI’s production control system is not fully integrated into operations. The system explodes backwards to determine raw materials needs and since production is planned on a monthly basis, workers are essentially building up four weeks of work-in-process inventory. Various issues prevent a weekly production schedule and one of DI’s most important customers contributes to scheduling volatility due to their resistance to commit to a preset schedule. Goods also often disappear from the stockroom without a trace. Materials control is also loose once materials leave the room as after this point, there is no further accounting of them until the yearly physical inventory. Loss factors have also been left unchecked and though yields improved dramatically over the years, loss factors have not been adjusted for purchases. To combat these issues, DI is implementing a JIT system. However, while DI would like to improve quality and reduce inventory, the intense pressure to meet output and shipment schedules poses concerns. This paper will examine the inventory and performance evaluation systems at DI and the proposed JIT

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