Albatross Anchor is facing a tough time in managing its operations due to use of obsolete technology and management practices. The company has a very high changeover time. Its prices are comparable to its competitors but the margins are pretty low. The company deals only with wholesale customers and distributors…
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The changeover time required from one anchor type to another is as large as 36 hours. This implies that the company may be spending more time in set-up rather than manufacturing. No doubt the lead time of the products manufactured by the company for bulk orders is 3-4 weeks. These inefficiencies in time management have a huge impact on its profit margins and customer satisfaction.
The most obvious and the best way of time management is to reduce set-up time. It is recommended that Albatross Anchor uses SMED (Single Minute Exchange of Dyes) methodology. The idea behind this methodology is to reduce set-up time to less than a minute (which was later modified to single digit). It may not be possible to literally reduce the set-up time to a single digit. The aim should be reduce the set-up time realistically to as low as possible.
SMED can be applied by Albatross Anchor by identifying the activities which can be performed externally i.e. not within the machine set up. These activities need to be performed before the changeover is required. This means deploying certain resources for performing these external activities in parallel while the other resources are working on the machine for current operation. All the wastes should be eliminated and each operation should be optimized. If Albatross can afford to make capital investment, it needs to go for equipment which has the same basic parts and requires only a change of few parts (dyes) while changing over from one anchor to another. By following such steps, Albatross Anchor should be able to reduce its set up time from 36 hours to less than an hour. Challenge #2: Technology Adoption One of the biggest challenges in front of Albatross Anchor is the use of obsolete technology. Moreover technology is not being used for several operations. This leads to safety issues, poor quality, long lead times, long set-up times, efficiency losses and customer dissatisfaction. The biggest need at the moment is to adopt latest manufacturing technology. A changeover time of 36 hours causes a huge opportunity cost to the company. While the capital investment may seem large at the moment, long-term gains of the same vis-a-vis the current situation must be analyzed using financial techniques such as Net Present Value and Discounted Cash Flows. The second need is in terms of information technology. The best companies in the world use Enterprise Planning tools such as SCM, CRM and ERP to manage their operations. This enables them to communicate well with their supply chain partners. This also ensures visibility and velocity in the supply chain. The use of information systems enables a company to procure centrally. It also helps in remaining in touch with distributors and customers. The data accuracy improves enormously. Albatross Anchor is at a low level of business maturity at current stage. While the investment in manufacturing technology is a must, the investment in information technology can be deferred to a later period when the other improvements have been made. Challenge #3: Quality Management Quality Management at Albatross Anchor is a big challenge. In current scenario, it appears to be totally out of focus. The antiquated plant, obsolete technology and concerns over safety measures add to the quality woes for
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