Problem:
You have been temporarily assigned to the Copier rehabilitation facility near Charleston, SC. During your first two days on site, you discover that the copiers that need to be rehabilitated arrive at irregular intervals in varying quantities from distributors throughout the country.
Your first analysis indicates that the distributors (not Canbide employees) are accumulating copiers at their locations until they physically run out of room then ship the entire quantity. You also discover that the repair parts that are controlled by the Charleston facility is out of control. The purchasing department is double checking (indicating lack of trust) and validating every single purchase request which comes from this inventory department. You find that the purchasing department is operating using five year old EOQs (Economic Order Quantities). Finally, you find that the personnel department, tired of obtaining trained (or trainable) temporary workers on short notice, has decided to set permanent staffing levels to handle the periodic surges in workload.
Develop a cohesive plan for correcting the problems which have been explicitly and implicitly identified. Your report should have a detailed analysis of each problem area and a discussion of the issues with recommended solutions.
Scenario:
You are a junior analyst in the Distribution Engineering, Maintenance, and Productions Management group of the central engineering department of the Canbide Corporation, located near Torrance, CA.
The Canbide Corporation is a multi-national, publicly traded (NYSE), US - based, manufacturing company with annual sales nearing $10 Billion. Canbide is one of the pioneers of the petrochemical industry and is the acknowledged technology leader in several market sectors and benefits from large licensing royalty fees for those technologies. Canbide is the low cost producer for a number of commodity products. Canbide's current marketing approach is based on providing a wider selection of products at a single location than do any of their competitors.
Two years ago, in a surprising move, Canbide purchased a leading Korean electronics company. As a result, Canbide is now in the PC printer, toner cartridge, copier, and electronic imaging business as well. The PC printer and cartridge product lines are closely aligned and often share facilities. The copier and electronic imaging facilities are, for the most part, free standing facilities. The chemicals and electronics businesses have, until now, been run separately.
In a suburb of Tulsa, Oklahoma, Canbide operates a Central Research & Development / Central Engineering Department for the chemicals business. A similar facility for the electronics business is situated in Torrance, CA. The divisional research and engineering departments are also located at these facilities. The divisional research and engineering groups are the experts on the specific reactions or production processes and equipment associated with that division's products. The central research and engineering groups are focused on providing experts in specific subjects who cross divisional boundaries and generally work as internal consultants for the divisional research and engineering groups and often work on plant level issues.
Mr. Iwami, president of the electronics business group, is pressing his divisional VPs to solve several problems. There is internal pressure for a new distribution facility in the Pacific Northwest. There are quality problems at a facility in Nebraska. There are customer service problems at most distribution locations, but they are especially bad at the facility located near Denver, CO. There are inventory / materials handling problems at the Newark, NJ facility.
Your supervisor has alerted you to three potential projects for the coming year.
Customer Service problems at the Denver facility: This facility has been in existence since the 1930s. It has slowly grown physically since then. New production units have repeatedly been added on the periphery of the facility, leading to widely scattered production units within the facility that currently measures about 2km by 1km. The customer service issues arise from several sources. First, customers desiring to pickup multiple products must now drive from point to point within the plant to pick up each product. There are often waiting lines at each loading point. A second problem is the arrival pattern of trucks to pick up products that materially contributes to gridlock within the facility.
Production Facilities in the Pacific Northwest: For the past few years, the performances of thethree production facilities in the state of Oregon have been declining. Inventory levels are up, on-time shipments are slipping. Costs are rising. Scrap rates are increasing. Delivered quality still remains strong.
Copier rehab facility near Charleston, SC: The copier rehab facility near Charleston, SC receives "trade-in" copiers from distributors across the country and restores them to "good as new" condition. The facility stocks certain parts that are always replaced and others that are often replaced, based on wear and condition. Moreover, sometimes, copiers require parts that are not stocked, leading to a delay in the repair of that copier. They have a target (imposed by the copier division VP) that copiers spend no more than seven days at the facility before being released for re-sale. Since the facility has no visibility of incoming copiers and has no precise knowledge of what parts may be required, materials and labor planning is difficult.
As the junior analyst you will be in charge of analyzing various operations management issues concerning Canbide Corporation ranging from customer service to location to operations for all three facilities. You will be making recommendations on changes, improvements and the possible use of Operations Management (OM) tools.