Evaluation of plant operations and supply chain of a manufacturing firm

Abstract

XYZ manufactures actuator and is one of the top three players in the industry. They also manufacture gearboxes. The company has a world-wide presence and has a factory in Bangalore. Almost 90% of the products of XYZ are sold to valve manufacturers. The study intents to learn about the operations and supply chain activities of XYZ and suggest improvements if required. A major part of the study is dedicated to the migration of the company from batch process to single piece flow. In order to study the process, the team had to learn about who organization process in terms of how the procurement happens, marketing, what is the rationale for demand estimation, the production planning and finally the actual production. Inventory management and the plant layout were also studied as a part of the process. The product of XYZ is supplied to typically project based companies like power plants setups, refineries etc. The demand is expected to be seasonal, but in case of XYZ, it is not. The marketing gives the estimation to the PPC department, who decides the production schedules and also send the procurement data. The procurement department gets the raw materials from suppliers both in India and abroad based on the production schedule. Currently XYZ has a batch process for assembly and they face almost 40% rework and high work-in-progress inventory. Hence, they are in the pilot testing of single-piece flow in which one person performs the assembly and testing. The team conducted a qualitative and quantitative study of the batch and SPF process based on the information provided by the company. The actual process time is lower for batch process, but adding the high rework rate and the non-value added activities, the total time for the batch process become higher than SPF. XYZ also faces problems in terms of huge inventory carrying cost and the study concludes that single piece flow is better than batch process for XYZ. The team also suggested improvement in the batch process. Considering the fact that the company is expanding the shop-floor size, the team has suggested a new layout and suggestions to continue with the batch process more efficiently. The team also studied the production scheduling of the company and based on the historical data, a sample forecast was prepared and compared with the actual data.