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
The JIT approach to manufacturing involves timing the delivery of resources so that they arrive just when needed. Inventory optimization models help the firm determine how many of which items in which sizes should be delivered to each specific store during twice-weekly shipments, ensuring that each store is stocked with just what it needs. Trucks serve destinations that can be reached
The timing of capacity changes also needs to be taken into consideration to achieve maximum efficenty given that demands of their products varies with seasonal changes. The ability to react to market demand changes quickly will determine manufacturers flexibility in keeping up with these demands. Manufacturers needs facilities to produce, whether warehouses to store its raw materials or finished goods, or manufacturing plants to produce their products. Services facilities are needed by certain manufacturing industries such as consumer electronics to cater for returns. Distribution centres also determine the efficenty of production distribution and un-nesessary inventory holding will result in higher holding cost. Such facilities require large investments and are integral of the manufacturer’s supply chain strategy and thus proper planning is needed when making these decisions regardong the size, location which affect the overall operations. How manufacturers run their productions also determine how successful will they be in terms of productivity and quality levels. Different types of equipment and processes also affect the cost and output of the manufacturing plant. Information systems that flow both upstream and downstream affects the forecasting, planning, inventory and production levels, they must be robust to ensure the manufacturing firm is able to react accordingly to changing demands and variations. In addition to their internal environment,
Lastly, the just-in-time (JIT) approach is an operating philosophy that requires that all resources, including materials, personnel, and facilities, be acquired and used only as needed (Mazumder, 2007). The JIT approach works great for manufacturing companies because of their common classes of material that they use which are raw materials, work-in-process, and finished goods (Mazumber, 2007). According to JIT concept raw materials are received just in time to go into production, manufactured parts are completed just in time to be assembled into products, and products are completed just in time to be shipped to customers (Mazumber, 2007). The
Using ABC also allows the company to use the Just in Time (JIT) system. This system allows ensures materials are purchased just in time to produce the products, and products are completed just in time for delivery. JIT uses the demand-pull system to receive the order, schedule production, delivered materials, and finished product delivered to the customer. This lessens the amount of excess parts and inventory saving the company money as well.
“In an age of increasing specialization, it is rare for one person to be knowledgeable in all aspects of a complex task” (Thompson, 2015, p. 88). In this case, the first step was to understand our incoming demand. For this, I relied on information technology to generate numerous reports as well as the expertise of our sales team. It was at that point that the data was analyzed in conjunction with an inventory specialist. After we had the knowledge of what current product to inventory, we then needed to establish a set of guidelines of how to qualify products in the future. Inventory control management processes were instituted as well as a supply an auditing system. These steps included information from organizational members from our manufacturing group, planning department, and procurement department. Finally, we needed to understand and facilitate the storage and shipping of the product. We enlisted the help of our warehouse employees as well as our transportation department. This type of project included various levels of the organization and required a tremendous amount of communication. The project workload was enormous and also had a substantial financial investment associated with it. Instrumental in the project’s success was the team’s cohesion, diversity, and strategies deployed
4) Exploring the possibility of implementing JIT (Just in Time) system that can reduce the finished goods inventory at
Recommendation:1. Improve Just-in-time systemSpartan Plastic Limited need to improve Just-in-time system, it is control aims to maintain inventory level at zero, with an immediate objective of reducing the capital tied to the inventories. It is an important principle that able to eliminating waste throughout the production system. The waste can occur, through excess inventories and overly large lot sizes, both of which can cause unnecessarily long customer lead times. Let's explain the role of the core JIT practices in enhancing manufacturing performance. JIT manufacturing requires the establishment of JIT supplier relationships with suppliers; Spartan in this case, that is able and willing to deliver the needed quantities of parts as the needs arise and without any defects.
A more targeted approach to implementing the JITD system will increase the likelihood of success. Due to the high number of SKU’s we move through our supply chain, the project is considerably more complex than necessary. We should use a Pareto analysis to select a smaller number of SKU’s that account for 80% of our throughput. This will maximize the impact of our efforts, while keeping them achievable.
Employing new merchandising tools aid the company in realizing lean production measures with its supply chain. Forecasting capabilities substantiated through “The combined efforts of our supply chain, merchandising, operations and finance teams, we reduced inventory by almost half a billion dollars in 2009, while at the same time improving our in-stock position” (Datamonitor 360, 2010).
Based on Service Request SR-rm-001, the processes of inventory management and control at Riordan Manufacturing were evaluated. Four aspects of Riordan Manufacturing’s inventory management and control require improvements. These aspects of business are improvements to automation, inventory control and error reduction in the inventory management, as well as an overall inventory storage cost reductions. Furthermore, each part of the inventory management and control process requires a single unifying method to deliver a solution using computer systems.
A third disadvantage of applying JIC manufacturing operations is having lower quality assurance methods and even further, lower customer satisfaction (“Just-in-case and just-in-time…”). While the just-in-case system is beneficial in
As argued by Lubben (1988), JIT allows businesses to have better management since this ensures that there is no loss as there is sufficient number of clients requiring the equipment. This reduces her to deal with huge deliveries when the clients’ numbers are not increasing. (Lubben, 1988, p.4) also suggested the idea of JIT that “... major elements of manufacturing – capital, equipment and labour are made available only in the amount required and at the time required to do the job.” So it is a good practice by utilising JIT approach as it reduces wastes and ensure the correct amount of equipment is available (Lubben,
Tasks: What should Alison do? o Develop plans to improve the inventory management o Develop time-based supply strategies to bring competitive advantages to the organization Identify the functions and forms of inventory What are alternatives for inventory management? o ABC classification o Supplier-managed inventories (SMI) o Just-on-time or Just-in-time (JIT) o Enhance the forecasting system (factor correlated with inventory variation) Provide training programs for current and new hiring employees 1
There more management methods of inventory of how to optimize inventory. Dell uses already the Just-In-Time inventory. If the optimization of the JIT processes should be done then “the whole supply chain” has to be observed. The dependency form supply get higher and the shortages problems can happen. As the result would be a disappointed
According to [5], Just-in-Time (JIT) inventory management enables an organization to gain competitive advantage by not having a large or excessive amount of inventory in warehouse. The organization only needs to order the parts when they are actually needed and new materials are produced only when old materials have finished. One advantage of adopting this strategy is that there will be no excess of inventory that needs to be stored and hence the inventory levels will be reduced as well as the cost of carrying and storing goods. One major disadvantage of this is that the organization will expose it in the risk of ordering problems for example a supplier is not able to provide parts on time. The result of this is that the organization cannot fulfill the order and contributes to customer dissatisfaction.