Written and prepared for Introduction to Operations Management - OPER1160, Conestoga College, 2012.

1. PRODUCTION IMPROVEMENT:
ANALYSIS OF NUT AND BOLT PRODUCTION PROCESS
Presented
to
K. Morgan Creditor
School of Business
OPER1160 Section 3
Conestoga College
Prepared
by
Sara Bechard
Student of Business Administration: Accounting
Conestoga College
October 24, 2012
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2. Table of Contents
Executive Summary ....................................................................................................................... iii
Introduction – Description of Activity ............................................................................................ 1
Responsibilities and Challenges ..................................................................................................... 1
Roles and Responsibilities .......................................................................................................... 1
Problems and Challenges ............................................................................................................ 1
Changes and Results ....................................................................................................................... 1
Recommended Actions ............................................................................................................... 1
Projected Results ......................................................................................................................... 2
Measurement of Effects of Changes ............................................................................................... 3
Analysis of Results ..................................................................................................................... 3
Measures for Continuous Improvement...................................................................................... 3
Conclusion ...................................................................................................................................... 3
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3. Executive Summary
A lack of proper work flow and the successful, quality production of nuts and bolts have led to
this report on the improvement of the supply chain management and product marketing
departments within the company, as well as the subsequent tracking of changes and analysis of
new developments. The purposes of this report are (1) to explain the problems and challenges
both departments are experiencing, as well as their roles in the development process, (2) to make
a recommendation of action to be taken by both departments in order to improve these processes,
and the projected results of such action, and (3) to outline the tools and techniques with which
the company could manage and analyze the results of the change.
The research reveals that both the Inventory Management and Customer Requirements
Management teams are experiencing difficulties in their departments due to lack of clear and
specific input from the customer, and the lack of the use of a bill of inventory when stock is used
or acquired. These departments are responsible for the management of production as it relates to
the customer’s requirements and standards, as well as how it is affected by the fluctuation of
available stock.
To improve these processes, the teams should employ the use of a Bill of Materials and process
maps, as well as ensure increased communication with the customer on a more regular and
frequent basis. If customer communication is impossible for any reason, manufacturing
employees should be empowered to make changes and develop solutions. The projected results
of these changes are that company inventory can be more closely monitored and more frugally
utilized, with a decrease in the amount of lost product or materials due to mistakes. Also, with an
increase in communication with the customer and employee empowerment, fewer mistakes will
be made in the initial design and manufacturing of the product, resulting in complete customer
satisfaction and therefore increased revenue.
In order to track the changes which will be made, the company should utilize benchmarking and
continuous improvement tools such as PDCA and frequently updated Pareto charts, as well as a
continued focus on design for manufacturability. The QFD process should be used for every new
product order to update each process and ensure continued customer satisfaction.
Overall, the most important fact to note is that the quality of the production line and each
department’s individual production capabilities must be improved in order to prevent further
mistakes and losses for the company. Total quality management strategies and new operational
management strategies must be employed for any positive change in the productivity of the
company to occur.
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4. Introduction – Description of Activity
During class time, a mock example of the production process at our company was performed. A
team of four students were given instructions to manufacture a product. One student was named
the quality control specialist, and one student was named the inventory manager. The first
activity was to make 6 copies of a prototype, using given inventory. The second was to collect
enough materials to make 10 copies of the product, without the prototype to rely on for assembly.
The third was to deal with a customer change to product specs, which were very vague, and the
fourth was to change the product based on an even vaguer request from the CEO’s wife to “make
the product pretty”.
Responsibilities and Challenges
Roles and Responsibilities
The two departments both play important roles in the development process. Supply Chain
Management (SCM) is involved in acquiring materials and managing inventory, as well as its use
within the company. They control how many nuts and bolts are required for each product,
purchase them, and distribute them according to the number of products to be made. The Product
Marketing (PM) Department is responsible for customer communications, and must identify the
customer’s requirements. They must relate changes to the product to other departments, such as
added or subtracted materials, or changes to the look or feel of the product.
Problems and Challenges
During the activity, both departments were challenged by the obstacles which were presented in
the simulation. It seems that the biggest setback for inventory management was when it was
given a large order for product, but there were no specifications, nor a list of how many items
each product would consume in production. Retrieving too much stock from inventory would
result in a cost for unused materials, while retrieving too little would result in a second trip
having to be made to the inventory stockpile – a loss of money through loss of time. The hurdle
for customer requirements management was when the customer announced a change which
needed to be made to the product… It was not specified exactly how to make the change, only
that and extra washer be added some distance up the screw. This was confusing and vague, and
demanded stronger customer communication methods.
Changes and Results
Recommended Actions
To improve the inventory control process, SCM should:
 Keep a record of the number of materials required to make each product
 Utilize a Bill of Materials to accurately indicate how material should be collected to
complete each order, and to keep track of how much is being drawn monthly from stock
 Use a process map to identify loops or stagnation points which might cause the timeliness
of the company to be restricted
 Eliminate these untimely and inadequate procedures and adapt a more streamlined and
efficient process
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5. An outline of the current process is depicted below:
Order received QCM delivers 2–6 IS retrieves
IS determines
40s mins
by Quality order to req’d # of materials from
Control Manager Inventory materials from stock, production
from customer Specialist memory (20s) begins
Many problems are evident in this process. The inventory manager should receive the order first,
to begin work sooner, and then they should not have to recall the required materials from
memory. These product specs could be written down on the order itself, as it is sent through
assembly. Then the manager could go directly to stock, and retrieve the exact number of
materials the first time, with no mistakes. These would be recorded on a Bill of Materials to
prevent confusion when inventory is to be counted at the end of the month.
To improve the customer requirements management process, PM should:
 Increase the frequency of communications with the customer
 Identify the customer’s needs at the start of the project, in order to prevent confusion
 Empower and train manufacturing employees to make decisions and collaborate with
other departments if customer communications should fail
Most importantly, product marketers should use quality function deployment graphs (QFD) such
as those developed in Japan in the 1970s. These will help production move from vague customer
requirements, to product characteristics and specifications, to process characteristics and
specifications.
Projected Results
The improvements will not only expedite production, but will also ensure customer satisfaction
and reduce internal costs. For example, the new inventory management process, as seen below:
Order received IS calculates # of IS retrieves exact Total cycle time
by Inventory req’d materials, 2 mins # of materials reduced by
Specialist from writes BoM from stock, 50 – 290
customer (10s) production begins seconds!
This new process will reduce total time as shown, but will also reduce costs as mistakes will no
longer be made with regards to drawings from inventory.
By increasing communications with the customer, PM teams can keep other departments up to
date on all changes the customer decided to make during product development. The use of this
method in combination with QFD in the product marketing process will not only clarify to
production teams the exact needs of the customer, but will also aid inventory managers in
collecting the exact materials required. Empowering and training company employees (like TRW
and their airbag manufacturers) to deal with lack of customer communication will not only
increase their happiness and sense of usefulness, but will also eliminate time consuming periods
of confusion when employees are forced to wait on an answer from upper management regarding
changes.
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6. Measurement of Effects of Changes
Analysis of Results
The company should utilize benchmarking and frequently updated Pareto charts to measure
process problems, compare them against industry standards, and attempt to improve processes.
The company can set benchmarks for production quality by, (for example,) comparing the
company’s operational standards to those of other, more efficient nuts and bolts manufacturers,
such as the company’s direct competitors in Vietnam (Bibimbap Nuts Corp.). This will help to
improve upon mistakes and errors in production which were pointed out in the previous section.
Pareto charts would also outline such mistakes, but when production is re-evaluated on a regular
basis after taking the recommended action, these charts could be updated. A visible change to the
productivity and accuracy of company operations may then be observed, and corrective action
may be taken sooner than before in order to rectify problem areas and frequent mistakes.
Measures for Continuous Improvement
Tools such as PDCA, as well as a continued focus on design for manufacturability should be
used to insure the continuous improvement of the company. By using the Pareto charts which
would regularly be created, the company could improve itself by taking action when certain
mistakes such as overdrawn inventory or communication failures with the customer become too
frequent. This prevents problem areas from getting out of hand. PDCA is a quality management
model developed by Shewhart which would drive managers in all departments to follow the 4
step process (Plan, DO, Check, Act) when developing and testing improvements. This would
ensure that improvements are well-organized and thoroughly investigated before put into place.
Finally, the company should continue to focus on design for manufacturability, and continue to
make improvements which would facilitate the production and design of products which can be
produced at high quality levels for low cost, using existing or less inventory. This would reduce
the overall costs incurred by mistakes, upsetting the customer, and scrap inventory which is
rendered useless.
Conclusion
The total quality management strategies and new operational management strategies outlined
above must be employed in the near future in order to create a positive change in the company’s
productivity. Each department must identify with these changes and alter their processes
accordingly, as shown with the Product Marketing and Supply Chain Management departments.
Following these necessary recommendations will result in the improvement of inventory records,
the expansion of customer relations capabilities, and the prevention of further mistakes and
losses for the company.
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