Production Planning and Control Strategy This is a story about manufacturing performance at one plant of a large company. It begins with Kristen Reynolds, a relatively new plant manager, coming to visit Bryan Simpkins, the plant’s head of manufacturing. Kristen and Bryan work for ITR Incorporated, a manufacturer of lighting fixtures with plants located in six countries and worldwide sales. The plant that Kristen and Bryan manage is located in Canada near Hamilton, Ontario. It is the one plant in ITR’s system that focuses on custom orders that require special materials, setup, and assembly. The other five plants supply ITR’s high-volume, standardized products. Because of changes in the residential and commercial construction industries, the demand for custom orders at the Ontario plant has been increasing steadily. Unfortunately, the plant has not been filling these orders as quickly as Kristen would like. Many solid customers are waiting days or weeks longer for their orders than they did a year ago; moreover, some ITR salespeople have begun to be evasive when customers ask how soon their orders can be filled. Kristen does not know how this is affecting sales or customer goodwill
Kristen: Hi, Bryan. It’s good to see you. I hope all is well with you and the family.
Bryan: Going great—though I just learned that Jimmy will have to have braces on his teeth.I don’t even want to think of how much that will cost.
Kristen: Hey, I’ve been through that too. No fun. (pause) Bryan, I haven’t visited the plant operations in some time. Would you take me for a quick tour?
Bryan: Let’s go.
Bryan and Kristen first visit an operation where a skilled worker is operating a machine that molds a metal frame on which multiple light fixtures will later be installed. They watch as the worker (his name badge says Ed) completes the last of a batch of 15 frames. Kristen asks how long this batch took him, and he says 82 minutes. “I know this exactly because I have productivity standards to meet, and I must record my time on all jobs. My standard is 6 minutes per item, so I beat my goal.” Ed then examines each frame and finds that one has a bad twist and must be rejected; this takes about 10 minutes. He then pushes a button near the machine that calls another worker to remove the defective frame. Meanwhile, Ed loads the 14 good ones on a cart and moves them to the next manufacturing station. Bryan and Kristen note that many frames are already waiting at the next station. The worker who was called to remove the defective frame tags it, writes up the potential cause(s) for the defect, and then moves the frame to the area of the plant designated for scrap and rework. Kristen and Bryan look at the defect report and note that it indicates two possibilities, which will be studied further by another worker assigned to the scrap and rework area. The two possibilities are poor-quality materials, as determined by apparent weaknesses in portions of the framing material, and poor work quality (Ed could have damaged the frame accidentally by banging it against one of the roof support beams located next to his work area). Kristen and Bryan note that Ed’s workstation area is indeed pretty cramped. They move to another workstation, which has no operator. By asking a worker at the adjacent station, they determine that the station is down because the machine needs repair. “Joe usually works that station, but he is helping out in the shipping department until his machine is repaired.” They move to another workstation that looks very busy. An order marked “urgent” is waiting at this station, while Dan, the operator, quickly finishes another order. Bryan asks Dan why he has not started the urgent order, and Dan explains that he cannot afford to stop the machine and set it up for another order. This would cost him some time that would lower his productivity on the current job. Dan explains that it is important that he get the items done in the current order quickly, within a standard level of productivity, or production supervisors will be coming to call. Dan says he sees the urgent sign and is working quickly to get to it. He says he might even delay lunch to start it. To investigate some of the things they observed, Kristen and Bryan next visit the purchasing department. Here they find that the frame material Ed used was purchased from a relatively new vendor at an unbelievably low price. The purchasing department manager approved the purchase because other purchases in the month had gone over budget and this was a way to help meet the budget. The budget is a predetermined amount that the purchasing department is expected to spend each month. Plant policy requires an investigation of any large variances from the budget. Next, Kristen and Bryan inquire about Joe’s machine. A check at the job scheduler’s desk shows that the workstation had been in use constantly for the last few weeks. Joe said that he noticed a funny noise but had not reported it because he had some jobs to finish and his productivity was measured by how quickly he finished them. His time between jobs is not measured, but doing jobs quickly is important. Bryan asks the job scheduler why Ed’s work area is so crowded since there appears to be plenty of room elsewhere in the plant. The job scheduler says that he is not sure, but that it probably has to do with the fact that each production department is charged a certain amount of plant overhead based on the amount of square feet of space that department occupies. Thus, the department manager for whom Ed works is likely to have reduced the space as much as possible to reduce these overhead charges. As the story ends, Bryan and Kristen are looking for an answer to how urgent orders are scheduled and moved through the plant.
Required Consider the manufacturing processes observed in ITR’s Ontario plant. What recommendations do you think Bryan and Kristen should make?