Part 1
2,250–2,500 words plus chart form section 1
You have just
been hired as the director of process improvement, a new position, by the VP of
Operations for the ABC Manufacturing Company. ABC has been plagued by both
internal and external vendor issues; the vendor issues involved repeated late
deliveries and poor quality, while internally poor deliveries to customers
resulted from both vendor issues, as well as quality and scheduling issues. The
CEO’s instinct is that the factory could benefit from some wide-reaching
process improvements.
The VP of Operations has decided that a far greater
focus on vendor quality and internal process improvements must be taken. The VP
of Procurement, prior to your coming on board, had already met with the CEO’s
of ABC’s 4 major vendors and alerted them that he expected them to begin
turning around their quality performance. About a month prior, he had sent each
a letter suggesting several formal overall quality programs that they may
embark upon, which included the following:
TQM
Juran’s Trilogy
Crosby’s program
Deming’s program
Six Sigma
The VP has already received the following responses
from each of the main vendors, and he asked you, in coming months, to work with
each vendor as they implement their quality initiatives.
Company A had written back that it was planning to
implement the Juran program but had not yet begun, hoping you could visit and
shed some light on the overall concept, methodology, pros, and cons.
Company B had written back that it was planning to
implement the Crosby program but had not yet begun, hoping you could visit and
shed some light on the overall concept, methodology, pros, and cons.
Company C had written back that it was planning to
implement the Deming program but had not yet begun, hoping you could visit and
shed some light on the overall concept, methodology, pros, and cons.
Company D had written back that it was planning to
implement a TQM program but had not yet begun, hoping you could visit and shed
some light on the overall concept, methodology, pros, and cons.
Company E had written back that it was planning to
implement the Six Sigma program but had not yet begun, hoping you could visit
and shed some light on the overall concept, methodology, pros, and cons.
In addition,
you know that as far as internal processes and overall supply chain management
goes, that there may be opportunities for improvement. Currently, the following
internal opportunities exist for possible process improvement:
Supply Chain
Management
The company communicates separately with each
vendor; usually when a forecast or production change is made, not every vendor
finds out the same day. This leads to confusion, excess inventories, and stock
outs.
Demand Planning
The primary method to establish the master
production schedule is to use a forecast that is created prior to the beginning
of the year and updated monthly using salesmen’s inputs. Invariably, the
company ends up producing too much of the wrong items (not demanded) and too
few of what is in demand (real customer orders).
Multistage Inventory
To create ABC’s final finished product requires a
multiple-step supply chain, which looks something like the following:
Raw material to vendor’s factory
Vendor processes raw materials to make their parts
Those parts are shipped to ABC’s factory
ABC processes purchased parts through a succession
of departments, each one adding more and more vale
Finally, all finished components are assembled into
a finished product.
o
Currently, every step in this entire supply chain is scheduled,
monitored through some kind of MRP system, reported throughout the day, and
seems to take an inordinate amount of system updating.
·
Transportation Planning
o ABC
continues to use its own fleet to deliver finished goods all over the country
and to have common carriers deliver parts from its vendors, also located all
over the country.
·
Process Control, Performance, and Variability
o ABC’s own
internal process seem to all of a sudden go in and out of quality
specifications; the company always seems to find out too late to avoid massive
amounts of scrap, rejected parts, or labor costs to rework parts.
·
Negative and Positive Cash Flow
o The
company goes through frequent swings from positive to negative cash flows as
inventory purchases for large lots create negative cash flows, but then using
up these materials occur at a slower rate, and with less outgoing, cash flow
becomes positive. The CFO really struggles with managing these cash flow
swings.
Before you begin to put together a vendor visitation
schedule together, your boss, the VP of Procurement, advised you that the CEO
expects a comprehensive report, in about a month, covering the following
specific topics:
The key characteristics and requirements and the
pros and cons of each of the following overarching quality programs should be
put into a chart format. The chart should have columns for an overall
1-sentence description of each program, its pros, and its cons.
TQM
Juran’s Trilogy
Deming
Crosby
Six Sigma
Provide your view on how a formal process
improvement program could help at both vendor locations and inside ABC’s own
factory.
Specifically, in the areas of vendor quality and
delivery performance, what are the benefits of creating a vendor certification
program, and what does it involve?
Specifically, in the area of ABC’s own internal
workings, what opportunities for continuous improvement exist, and what exactly
would you do?
How do you get ABC itself to adopt a more continuous
improvement mentality?
Finally, and most importantly, all these operational
improvements could create a strategic advantage for ABC because most of its
competitors have similar internal and vendor quality challenges, as well as
internal operational challenges.
Part 2
Make a detailed outline including all the
information above so other students can view it.
