Xen Inc is a Raleigh based manufacturing and marketing company that markets three product groups in Asia Europe and North America
Xen Inc is a Raleigh based manufacturing and marketing company that markets three product groups in Asia Europe and North America
Xen Inc. is a Raleigh based manufacturing and marketing company that markets three product groups in Asia, Europe and North America. The product groups are: washers, dryers, and ovens. Xen management is happy regarding the financial and quality performance for dryers and ovens, but is not satisfied with washers. Washer has been the bread and butter product line for the company and contributes over 50% of the company’s total revenue until 2017. 70% of washer sales have been in the US market which management thinks is not very profitable. The rest
of around 30% of washer sales which are overseas seems to be doing well.
Total number of washers sold has been down by 15% for 2018 and 12% for 2019, taking 2017 sales as the base line. Profit from washers has gone down by 16% in 2018 and 15% in 2019 compared to 2017 numbers. The reasons for these seem to be:
Prices had to be lowered three times during the last two years due to entry of cheap Korean and Chinese brands in the US market, Costs for production, distribution, and overall inventory maintenance have gone up compared to cost level of 2017, Several customer complaints have been received for Xen washers, Rejection rates at inspection stations in the company have been increasing, and On analysis, it has been found that the cost to manufacture the Korean washer is around 80% of Xen washer’s cost.
Assume that Xen management hired you on February 10, 2020 as the Director of Operations for their washer division to solve problems and improve the business based on your impressive background and expertise in Lean manufacturing, Lean Enterprise, quality assurance, technology project management, inventory planning, CIM, strategy formulation, investment and cost analysis.
The Xen board of directors and CEO are very impressed by your first progress report of April5, 2020 ( assume it is a normal business situation, COVID 19 epidemic is not there). Your report includes quality, productivity and cost improvement recommendations for the washer product division. You have clearly stated that the recommendations will solve most of the problems and substantially improve business. You have also mentioned that the recommendations will be fully implemented in 12 months, along with the conducting of a follow up study on performance indices. Further you have indicated that you would like to have the kickoff date for your recommendations as January 25, 2021. You have included various appendices on the various work elements of the project supported by relevant data that you have compiled based on one month study and analysis on various manufacturing, quality, procurement, distributions, customer complaint related documents. Based on the
above, prepare your report to answer the following questions:
1. List your recommendations for making improvements. Prepare a project activity relationship and flow chart, and create a critical path to complete the work within your planned time horizon.
2. Show costs (assume based on your experience or collect from outside by conducting some research) for each project work element. Include costs for training of personnel in Lean principles, emerging, and new technologies ( as relevant) .
3. Estimate total cost of implementing your recommendations with appropriate overhead and overruns.
4. Assume market price for a washer (you may collect from on line sources or estimate based on your experience) and assume a 15% profit in the price. Consider Xen manufactures and sells 750 washers /week. Show cost benefit analysis for implementing your recommendations with appropriate assumptions.
5. Conduct a value stream mapping analysis for the production steps based on the process flow diagram that you envisioned and given below. Estimate overall throughput, % rejection/scrap, reliability, %VAT, % employee efficiency, and other applicable metric as appropriate. In the diagram shown below: SM1, SM2, SM3 represent machines in the sheet metal line, OTH1, OTH2, etc., represent other items lines, and AS1,
AS2, etc., represent the assembly line. Consider production target quantity mentioned in question 4).
6. Prepare an envisioned future state value stream map. Assume working days, shift hours, and breaks to show and compute the value stream related measures.
7. Assume Xen wants to make and sell 900 units per week in 2021. Estimate steps and strategy that you will recommend to comply with the increased demand. Consider option of adding automated machinery (including FMS, automated conveyors, etc.) or sub-contracting manufacturing to Korea, China, or some local company.
8. To reduce cost of inputs you may decide your strategy from options of getting components from Korea, China or India, or you may decide to develop a Lean approach based on partnering relationships with your current suppliers to reduce costs. Show plans, steps, and justification for each strategy.
9. Describe your planned steps/action plans to improve production process quality to obtain 0% rejection from manufacturing (compared to current as may be obtainable from flow diagram below) and zero customer complaints. At present Xen Inc. have at least 5 complaints per month that you reported in an appendix of your April 5, 2020 report.
10. Assume that you plan to implement Statistical Process capability (SPC) and monitor process capability. Explain the steps that you will take to implement SPC using an example. Show your obtained SPC based on your assumed data and analysis for the example.
11. Prepare a comprehensive list for quality, productivity, and cost improvement steps that you included in steps 3-8. For each step include appropriate metric.
