He was returning from a 10-day trip to Japan where he had visited factories of Ionians and Mazda as well as a number of their parts suppliers. This visit had reinforced his conviction that Sundown should initiate a proposal to Volvo, its major customer, that Just-Len-Time delivery of floor lids be made directly onto its 700 series automobile assembly lines at Translator, near Guttenberg,
Calmer, a port city on Swede’s east cost, and at Ghent in Belgium. Lars, a graduate engineer, had previous managerial experience with Volvo, Phillips and SEA. He had Joined Sundown in 1994, shortly after Operators had bought the company from Its founders. Sundown was part of Operators Components, one of nine Operators business groups. Operators Components comprised six companies manufacturing sophisticated wood, wood fiber, and plastic molded components for the automotive and engineering industries. In 1999, sales were Sir 521 million.
Major markets were in the USA and the Nordic countries. The Company – Sundown A. B. Sundown, with headquarters at Save, a small village in the Guttenberg metropolitan area is the second largest of the Operators Components companies with of Sir 102 million in 2000. Sundown was founded in 1953 and at the time of the acquisition by Operators In 1984 manufactured a line of Interior trim primarily for Volvo. Sundown does supply parts to Saab automobile Dillon, however, these sales represent only 5% of Sundown revenues. Products Included door panels, floor lids and rear shelves.
Lars not only felt pressure from corporate management to improve performance, but there was also increasing pressure from Volvo and from competition. He realized hat Sundown’s privileged relationship as the exclusive supplier to Volvo was threatened. Volvo had introduced its 700 series of automobiles to replace the popular 200 series, and it had proved to be more successful than even Volvo had anticipated (Production and forecasted volumes for the 200 and 700 series are given in Figure 2). Sundown is the only suppler of floor lids for the 700 series station wagon, a 5-door model which represented some 21% of the total 700 series production.
This percentage was expected to rise to 37%. 1 . A floor lid is fitted into the compartment behind the rear passenger seat in the Volvo 700 Series station wagon. It provides a rigid flat surface for carrying loads. See Figures 3 and 4. During the latter part of 2000, Sundown had difficulty meeting Vole’s requirements in terms of both quality and quantity. While Vole’s requirements for the 5-door floor lids for the 700 series averaged 750/week in 2000, weekly requirements had increased from 250 in early January to 1,300 by November.
Average weekly requirements in 2001 were expected to approach 1,400 units. Lars estimated Sundown’s current single shift capacity at approximately 1 ,250 units/week. To achieve this, he had hired an additional 20 people at the beginning of August and established three shift operations on a numerically controlled milling machine used to shape plywood parts. Effective capacity was actually less than 1 ,250 units/week due to equipment failures, e. G. The gluing machine had proved particularly troublesome and had increased rejects.
Recent causes of the rejects included seeping through the carpeting that covered the plywood forms. Volvo had also rejected a shipment of floor lids due to differences in the shade of carpeting covering the four separate pieces which made up a floor lid. Such difficulties could not have come a worse time, when Lars was already concerned y the world-wide trend of major manufacturers in the automobile industry to rely on fewer suppliers. He knew that Toyota, which industry observers continually cited for its productivity gains, relied on only 320 suppliers, while Volvo had over 600.
Headlines such as “Volvo will reduce number of suppliers; pressure on sub- contractors” in Adages-Neither, one of Swede’s major daily newspapers, did not help his peace of mind. Volvo group. Earlier that month he had read an article in Volitional, a company publication, describing the Just-Len-Time supply of automobile seats by a Belgian manufacturer to Vole’s plant in Ghent. This manufacturer was a potential competitor with the capability to supply 700 series floor lids to the Ghent plant where the 700 series 5-door model was being produced.
Indeed, Sundown was finding it difficult to meet the increased demand from Ghent for the 700 series floor lids. The Product Lars felt that the floor lid for Vole’s 700 series 5-door station wagon would be appropriate for demonstrating Sundown’s capability to be Vole’s first Swedish Just-Len- Time supplier. In 2000, the product had accounted for 17% of Sundown’s sales revenue. Forecasts for 2001 indicated that this figure could rise to 25%. Also Volvo was likely to be interested in such a proposal, since floor lids were bulky, easily soiled and offered in several carpet/color combinations (see Figures 3 and 4).
The floor lid fits into the compartment behind the rear passenger seat, providing a rigid plat surface for carrying loads, as well as covering the storage compartments for a foldaway rear-facing children’s seat and a spare tire. The lid is comprised of four separate units. The front unit is composed of two sections hinged in the centre. The uppermost section is split in two and can be opened when the back of either rear assenter seat is folded forward, which also increases the load carrying area. The rear unit is also hinged to gain access to the storage compartments.
Two removable panels which fit left and right of the rear wheels complete the lid. The floor lid is covered with carpeting that matches the interior decor. In 2000, Volvo offered its customers four different color choices (beige, blue, black and burgundy) and two different types of carpeting (needle felt and tufted). With four separate units making up a floor lid, 32 part numbers are needed to specify a particular part/color/ carpet combination. The Production Process. Material Requirements The material requirements for a complete floor lid are given in Figure 5. Each lid is manufactured from shaped plywood sections.
The three section comprising the front unit are hinged together as are the two sections comprising the rear unit. In addition plastic parts for the handle and vents, appropriate steel fasteners and fixtures, as well as carpeting are required. Most production operations are carried out at Save. The save Site The Save site is shown in Figure 6. After being received and inspected, plywood blanks, pre-cut carpeting, sweetmeats, fasteners and fixtures are stored as raw trial and parts inventory in two separate locations. The rectangular plywood blanks are obtained from a Finnish supplier.
Because of the length of time required to make tool, Gig and fixture changes, parts are manufactured in batches of approximately 2500. The shaped plywood section are stored on pallets before being painted (Operation 2). 2* Assembly Operation In Operation 3, the wooden battens are attached to the sections of the front unit, while in Operation 4 metal studs are placed in a series of specially drilled holes in the plywood pieces for both the front and rear units. These studs serve as anchors for the rivets used to attach the various fixtures in the final assembly operation.
Again, the sections are re-stacked on pallets and taken by forklift truck to the tent for storage. Ultimately, the pallets are removed from storage and, in Operation 5, the sections are hinged to form the front and rear units respectively. The left and right units of the lid have few components and are manufactured on a virtually continuous basis at three small dedicated workstations shown in Figure 8. The completed pieces are again stacked on pallets before moving to Operation 6. Operation 6, where the carpeting is glued and folded onto the plywood units, is carried out in batches of 500.
Once the glue has set, the forward and rear units are eddy for the final assembly operation (Operation 7) in which additional steel fixtures, plastic, rubber and leather components are added. The edges of the carpeting are trimmed and then stapled to the underside of the plywood. The completed units are stacked in special containers provided by Volvo. Each container holds 20 front or rear units of the same color and carpet type. Left and right units are stacked in similar containers, each holding 200 identical pieces.
The containers are taken by forklift truck to finished goods storage to await shipment to Volvo. Line Capacity Operations 1-7 on the 700 series floor lid line. The allocation of workers to each operations is shown in Figure 8. The milling machine operated on a three shift basis and the gluing machine operated an average of 1. 5 shifts/day. The personnel worked 40. 7 hours each week (excluding breaks and personal time) on a five day/week basis. Lars knew that the standard labor content (excluding machine set-up time) for a completed lid was 57. 9 minutes.
While he did not know the average time it took a batch of plywood forms to move from raw material inventory to finished goods inventory, he did know that raw material, work in progress (WIPE) and finished goods inventory were 6. 0%, 4. 6% and 1 . 1% of Save sales respectively Production Planning, Scheduling and Control Vole’s order forms, giving firm and planned requirements by part number for each part/color/carpet combination supplied by Sundown, provide sufficient information for the purchasing department to place orders with Sundown suppliers and for the production planning department to release production orders to the factory.
Production planning also develops the assembly schedules for the final assembly of the appropriate number of front, rear, left and right units to be manufactured in ACH required color/carpet combination. Given the extended delivery lead times of some items, e. G. Carpeting, the purchasing department uses a 3-6 month planning horizon to place orders with suppliers. In contrast, the production planning department focuses on the first four weeks of the delivery schedule. The demand for each front, rear, left and right unit is summed over the 8 color/carpet combinations and divided by the number of working days in the four week period.
This represents the average number of units, irrespective of color/carpet specification, which have o be produced each working day in order to meet the requirements for the four week period. It provides the production planning department with a quick check on capacity requirements and gross material requirements, I. E. For plywood blanks, hinges, fasteners and fixtures etc. , needed to fulfill the delivery schedule. Net requirements are then calculated to satisfy a “rule of thumb” that maintains the equivalent of one week of production in each of the raw material, work-in-progress and finished goods inventories.
When releasing orders to production, the planning department is guided by batch sizes (Figure 7). Typically the batch size chosen equals two weeks’ production, but this could be further modified in the factory where the foreman and machine operators can be guided by the capacity of the pallets. The four units comprising the floor lids are assembled from stock. Production planning provides an assembly schedule at the beginning of each week which indicates the quantity and color/carpet combination of each unit to be assembled and delivered to Volvo during the week.
The production foreman co-ordinates the flow of material between the various work trucks to move pallets of material from one place to another while a fourth person sees a manual trolley to maneuver pallets within the more confined areas of the plant. Quality Control As a supplier to Volvo, Sundown is obliged to document its quality control procedures. These procedures are summarizes in Sundown’s quality manual, which is available to Vole’s personnel on demand.
The manual details, for example, such procedures as inspection (both incoming and outgoing material), production quality control, the processing of engineering change notices and testing. It also specifies mandatory documentation procedures to satisfy legislative requirements facilitating vehicle call procedures and acceptance procedures for new or modified parts. Lars recognized, however, that relatively few of the procedures are followed in practice. While mandatory documentation requirements and acceptance procedures for new parts are stringently observed, quality control procedures in manufacturing are lax.
Processes are not monitored formally; rather, there is a tendency to rely on workers recognizing and reacting to more obvious faults. It parts are rejected after receipt and inspection at Volvo, Sundown replaces the defective material, identify the cause of the problem and eliminate it. No summary statistics are available to Lars concerning such rejects. The Customer – Volvo Car Company Assembly Operations – Translator and Ghent The Translator plant supplies the Scandinavian market and a portion of the American market.
The Ghent plant supplies continental Europe, the remainder of the American market and all the right-hand drive requirements. The manufacture of automobiles at both locations is similar. The production process is divided into four separate phases: metal forming, welding, painting and assembly. The assembly lines operate on a single shift, five days/week, 45 weeks/year basis. Painted car bodies are placed, in strict sequence, on a moving conveyor which snakes through a 500-meter long assembly shop. At 70 different workstations, parts, components and sub-assemblies are added, enabling each car to be built to a specific customer order.
Once the body is placed on the assembly line, it takes eight hours before it is transferred to final test and inspection. To the casual visitor, no car on the line resembles another. Each varies in terms of style, color and country specific requirements and options. In the assembly procedure, the floor lid is fitted exactly six hours after the car is added onto the line. As the 700 series 5-door model reaches the interior trim workstation where the floor lids are to be fitted, the assembly line worker removes the four separate units from a special container located beside the line.
The front and rear units are bolted into place while the right and left panels are snapped into place. There are sufficient containers to meet the production requirements for a inside the containers according to the customers specifications for each 700 series 5- door model on the line. The containers are prepared at one of several sub-assembly stations which serve a umber of assembly line workers with sequenced material. When a 700 series 5- door station wagon is loaded onto the line, the color/carpet combination for the floor lid is transmitted too printer at the sub-assembly station.
This information is accumulated in batches of eight. The parts, in appropriate color/carpet combinations, are picked from a buffer stock located in racks arranged along the walls of the assembly area. The buffer stock consists of one pallet box for each of the 32 part/color/carpet combinations. The containers are taken from the sub-assembly rear to the assembly line workstation by material handlers driving forklift trucks. The buffer stock is replenished from a large central stock on the basis of requests from the workers manning the sub-assembly station.
If an assembly worker discovers a defective part, he or she notifies the line inspector immediately. The defective part is placed in a “rejection box” and its replacement obtained as quickly as possible. As an interim measure, the assembly line worker can “borrow’ an identical part from another special container. Ultimately the defective part is replace from the buffer stock used by the sub-assembly station errors. Assembly Operations – Calmer When the Calmer plant came on stream in 1974, it represented a unique approach to assembly operations.
The traditional assembly line was replaced by “team zones” in which each team of workers had responsibility for assembling and entire sub-system within the vehicle, e. G. The electrical system, the instrumentation system, etc. The assembly task was divided into 20 team zones with the work divided so that it could be completed at 4-5 stations. Two assembly workers would move with the car from station to station carrying out all the work assigned to that team. When the work was employed on one car, they would return to the start of their zone to work on the next vehicle.
This system caused cycle time for an assembly worker to be increased to 16-40 minutes depending on the zone and whether or not the two workers interchanged Jobs. The cars were transferred through the plant on revolutionary computer controlled working platforms. The Calmer plant is supplied with painted car bodies produced at Translator. The car bodies are transported by rail and carried in a specific sequence. The train leaves Translator every day at 18:00 hours and arrives at Calmer in the early morning, prior o the start of the shift. Upon receipt, the bodies are unloaded, washed and dried.
Each body is them placed on a working platform and moved automatically through the various team zones. Is reached two hours after the body has been loaded onto the working platform. To fit a floor lid, a member of the team picks the required parts in the appropriate color/carpet combination from pallet boxes (32 in all) stored in the team zone. Supplying the Volvo Car Company Placing Orders Volvo places orders with Sundown and provides the company with information regarding its future material requirements in the following manner. Every fourth week, Volvo sends Sundown an order form which shows requirements over a 60-week planning horizon.
This is broken down into seven 4-week periods and a 32-week period as follows: 3* Requirements by week for the first 4-week period beginning two weeks from the date of receipt. These requirements are considered firm. 4* Requirements by week for the second 4-week period. These requirements are considered “half-frozen”, I. E. Subject to some change. 5* Forecasted aggregate requirements by period for the subsequent five 4-week periods. 6* Forecasted aggregate requirements for a subsequent 32-week period. The Volvo group of companies has a wholly-owned transport company which serves a number of its companies in the Guttenberg area.
Volvo insists that its suppliers use the transport company, use standard Volvo containers and ship one part number per container. This facilitates storage and material handling in the centralized warehouse in Translator and its other plants. The supplier orders transport and empty containers as required. Summary As the plane reached cruising altitude, Lars flipped down his tray table and started to work on a list of priorities for implementing Just-Len-Time deliveries from Sundown to Vole’s three plants. One example was the sequential delivery of floor lids from Save directly onto the assembly line at Translator.
After a 700 series 5-door station wagon is loaded onto the line, Sundown would have six hours to effect delivery of the floor He was convinced that Just-Len-Time delivery could and should be implemented. The system would guarantee Jobs at Save and increase profitability. However, he knew he would have to contend with some degree of skepticism. The existing operations were neither efficient nor effective and there was always likely to be someone asking endless “what if” questions. What if a machine breaks down? What happens if a truck goes off the road?
To implement Just-Len-Time deliveries, Lars felt he would have to tackle the capacity and quality problems first. Then there was the headache of getting the information from Volvo regarding the appropriate color/carpet combination soon enough to launch orders into production. New containers would be needed and he had doubts about relying on the Volvo transport company; it appeared to him that training his Then there was the Set-up reduction project. Before leaving he had asked his process engineer to look critically at set-up times thinking he needed the capacity. But now he was thinking of reduced batch sizes.
The Project You are a production engineer at the Save plant and Lars has asked you to develop a strategy for supplying floor lids to the three Volvo plants in a Just-Len-Time style addressing any unique consideration/requirements for each of the three plants. The report should include: A. Internal Manufacturing Analysis 1. Current capacity at Save. 7* Current capacity of each process for each of the four panels. 8* Capacity of each process for a complete floor lid. 9* Effect on each process of running 1,2 and 3 shifts. 2. Assessment of capacity assuming a 50% reduction of set-ups is possible .
Capacity assessment of ability to meet Volvo requirements. 4. Suggested ways of improving the operation at Save. 10* Batch size reduction? Increased capacity? 12* Layout changes? 13* Safety stock policy in finished goods? B. Relationship between Save and Volvo 1. Description of supply relationship 14* Direct line feeding? 15* Supply to buffer? 2. Material management 16* Quantity per Kanata 17* Number of Kansas cycling between plants 18* Frequency of delivery 19* Sequence of Kansas Prior to commencing work, your group must complete a Project Contract that must be submitted (in hard copy) to Proof. Kevin Kelly.
The report itself must be submitted to Lars complete with: 2. A single page executive summary at the beginning directed at the CEO and containing the main recommendations, the associated risks and the strategies for minimizing those risks. 3. The detailed report containing all assumptions, calculations and figures necessary to support your findings and inform the Production Manager on how to proceed. The complete report should be between 15 and 20 pages.