Evaluate and critique the existing operation and management
Managerial Economics
J. Galt Lock Ltd., located in Sydney, Australia, produces a line of door locksets and hardware for the residential, light commercial, and retail markets. The company’s single plant is just over 200,000 square feet and is organized into the following functional departments: screw ma- chines, presses, machining, maintenance, tool and dies, latches, plating, buffing, subassembly, and final assembly. The company employs approximately 375 people, 290 of whom are hourly workers. The largest category of employees-assemblers-accounts for two-thirds of the workforce.
The company uses a proprietary planning and scheduling system that uses both an AS/400 minicomputer and spreadsheet analysis performed on a microcomputer to determine produc- tion and purchasing requirements. At any given time, there are 1500 to 3000 open work orders on the shop floor. The average lot size is 50,000 parts, but for some products the size is as high as 250,000 parts.
The planning system creates work orders for each part number in the bills of materials, which are delivered to the various departments. Department supervisors determine the order in which to process the jobs, since the system does not prioritize the work orders. A variety of scheduling methods are used throughout the plant, including kanbans, work orders, and expe- diters; however, the use of these different methods often creates problems. For example, one production manager commented that although a “kanban pull scheduling system is being used between subassembly and final assembly, frequently the right card is not used at the right time, the correct quantity is not always produced, and there are no predetermined schedules and paths for the pickup and delivery of parts.” In fact, it was discovered that work orders were often being superseded by expediters and supervisors, large lag times existed between the decision to produce a batch and the start of actual production, and suppliers were not being included in the “information pipeline.” One production supervisor commented:
We routinely abort the plans generated by our formal planning system because we figure out other ways of pushing product. Although we use kanban systems in two areas of the plant, in reality everything here is a push system. Everything is based on inventory levels and/or incoming customer orders. We push not just the customer order but all the raw materials and everything that is associated with the product being assembled.
In an effort to improve its operations, Galt Lock hired a consulting company. The consultant determined that 36 percent of the floor space was being used to hold inventory, 25 percent was for work centers, 14 percent for aisles, 7 percent for offices, and 18 percent for non-value- adding activities. The production manager commented:
We have an entire department that is dedicated to inventory storage consisting of 10 to 11 aisles of parts. What is bad is that we have all these parts, and none of them are the right ones. Lots of parts, and we still can’t build.
The consultant also determined that the upstream “supplying” work centers were often far from the downstream “using” work centers, material flows were discontinuous because the parts were picked up and set down numerous times, and workers and supervisors often spent a considerable amount of time hunting for parts. The production manager commented:
Work-in-process is everywhere. You can find work-in-process at every one of the stations on the shop floor. It is extremely difficult to find materials on the shop floor because of the tremendous amount of inventory on the shop floor. It is also very difficult to tell what state a customer order is in or the material necessary to make that customer order, because we have such long runs of components and subassemblies.
The plant manager commented:
My biggest concern is consistent delivery to customers. We just started monitoring on-time delivery performance, and it was the first time that measurement had ever been used at this operation. We found out how poorly we are actually doing. It is a matter of routinely trying to chase things down in the factory that will complete customer orders. The challenge of more consistent delivery is compounded by the fact that we have to respond much faster. Our customers used to give us three to six weeks of lead time, but now the big retailers we are starting to deal with give us only two or three days. And if we don’t get it out in that short period of time, we lose the customer.
Answer the below questions in around 150-200 words each with proper CITATION.
1. Evaluate and critique the existing operation and the management of J. Galt Lock.
2. How applicable is JIT to a situation like this? Would converting from a functional layout to a cellular layout facilitate the implementation of JIT?
3. Where could the principle of lean production be of value to J. Galt Lock?
