TITLE SLIDE

ANALYSIS OF PROBLEM
Orders
WIP
Shearing
Raw
materials

Punching

Welding

Painting

Similar orders Prepared in Batches

Packaging

Finished
goods
inventory

Delivery

fabrication
Outsourced

KEY ISSUES

Idle Raw
Material

Work In process
Inventory

Absence of complete parts of

order in paint shop

Absence of complete parts of

order for Packaging

High Finished
Goods Inventory

KEY OBSERVATIONS
Idle Raw Material & High WIP/FGI:
Orders are not processed as per
demand

Efforts for cost reduction by enabling

processing in batches leads to desynchronization
Waiting time in the final stages is
significantly high
Incomplete/missing parts occur in
the final stages lead to flowbacks in
the initial stages thereby disrupting
its flow and adversely effecting its
capacity

Process Problems

De-synchronization
of Process in the
Final Stages
Improper/inapprop
riate Batch orders
processed in initial
stages

Key Reasons for

problems

Local cost
reduction efforts
Local Efficiency
maximization

Supporting factors
Local processes can take any
order as available in
WIP(Based on availability of
raw material, shearing
process starts)
Orders not released according
to the delivery schedules

WORK FLOW MODIFICATIONS

PROPOSED
Batch Processing of
orders

Reduced costs
Increased Efficiency

Processing solely on
the basis of demand

High costs
Idle capacity
Decreased Efficiency

Operate Midway between the two extremes

Reduce the amount of work available to the shop processes based on the release date
Lesser WIP available to the initial stages would reduce the batch size and would put a cap on
the local cost reduction and efficiency maximization initiatives

Effects

Orders where batch size is not significant would also be taken up into the process and made
available to the final stages
Maintain a fixed level of inventory at the end of each process to avoid delays
Shearing

Punching
Inventory
For tile Punching: a units
For Fascia Punching: b units
For Frame Punching: c Units
The level of inventory to be decided based on the demand
As the inventory between the 2 processes reaches the fixed level, stop the preceding processes
As the inventory between the 2 processes falls below the fixed level, start the preceding processes to bridge the
gap
EFFECTS: Improvement in Flow line

STRATEGIC MODIFICATIONS PROPOSED

PROPOSAL WITH RESPECT TO STANDARDIZATION/CUSTOMIZATION
Purely Standardized Products
Target: Smaller Office spaces
Cost: Low cost, since standardized
items can help reduce costs
Contribution to Revenues: 35-40%
Product offering: The list of
standardized items would be based
on a market study of this segment
and product line of competitors

Customizable from a company

specified De-coupling Point

Customizable from a customer

specified De-coupling Point

Target: Medium size office spaces

Target: Large size office spaces

Decoupling Point: Before the welding

Process
Achieve standardization in raw
material procurement and initial
stages
Nearly all variations demanded by
customer lie after this process

Decoupling point: Demanded by the

user. A premium would be charges
based on its proximity to raw
materials

Cost: Blend of standardization and

customization would help reduce costs

Cost: High, since specialized products.

Only taken for large office spaces
Contribution to Revenues: 15-20%

Contribution to Revenues: 30-35%

BENEFITS OF LIMITED CUSTOMIZATION

The Business would be able to cater to small office spaces offering its standardized products
The revenue lost due to limited customization would be compensated by additional revenue from small office spaces

Efficiency lost in paint shops due to flow-backs and emergency orders would be reduced due to better synchronization between initial and final
stages. The variation in batches however would increase the setup time(non-value added) of the painting process and may increase the wastage
of paints. However better flow and reduced flow-backs would reduce the wastage of paints occurring due to priority orders.
Premium customers could be retained by offering a totally customizable solutions to loyal customers at a premium price. This would cater to only
large office spaces with a minimum batch size
The minimum work in progress inventory for each of the parts before each process could be effectively maintained in case of standardized
products.

Improvement in Inventory Management System

Manage Items sourced from vendors
Proposed Solution

Current Situation
Office Solutions Order
10% factory made

Office Solutions Order

10% factory made

90% sourced from vendors

Company warehouse

Packaged and sourced to site for assembling

Problems
1. 20 days of finished goods inventory at warehouse
2. Delay from vendors exacerbates when sent via
company ware house

Package and
deliver
directly to site
for assembling

90% sourced from vendors

Package and
deliver
directly to site
for assembling

Date of shipping
to decided in
coordination with
vendors

ADVANTAGES
1. Less inventory costs
2. Less probability of lost items
Inventory Control system to track items

The standardized product offering helps to reduce

inventory problems:
1. Items are stored part wise
2. Count maintained by use of a appropriate check
in/check out systems
3. Separate inventory data base for vendors(both
shipped and work-in-progress
4. Stamping

UNIT A
Finished Goods

Company warehouse

ADVANTAGES
1. Easy tracking of units when required
2. Less probability of lost items

UNIT B
UNIT C