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: Whistler Corporation" - Case Study Example

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Whistler Corporation was founded in 1970s and initially designed and manufactured electronic specialty products such as marine radars, voice scramblers and gas leak detectors in Westford, Massachusetts. The management of Whistler Corporation trying to evaluate how to attain cost…
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Case Study: Whistler Corporation"
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Case study Whistler Corporation was founded in 1970s and initially designed and manufactured electronic specialty productssuch as marine radars, voice scramblers and gas leak detectors in Westford, Massachusetts. The management of Whistler Corporation trying to evaluate how to attain cost competitiveness in order to attain market share growth and profitability. In this case, the options that are available include restructuring of the manufacturing process such as material handling, factory lay-out, inspections and packaging through implementation of just-in-time synchronized manufacturing model. The second option is concentrating on enhancing the existing good relationships with the Korean Electronic Company for the ‘low-end’ radar detectors suppliers in order to reduce costs and minimize capacity constrains in the domestic manufacturing. The third option is to move production offshore and shut the existing two domestic assembly plants. The best option for Whistler Corporation is to restructure the domestic manufacturing at Westford plant in order to ensure the factory layout creates floor space and manufacturing cycle is minimal. The company should implement the model just-in-time Competitive Edge Through Manufacturing Excellence (RACE-ME) model that will ensure changes in material handling, assembly process, factory layout, quality control and packaging in order to reduce the buffer stock and reduce the throughput time. The company will be capable of owning the design and engineering capabilities and fulfilling large and urgent orders while eliminating waste and ensuring the quality of the products.
Whistler Corporation
Introduction
The company attained high growth due to its engineering capabilities in the growing radar detectors that offered a riche market as the total number of radar detector sales in the US increased by 450 percent between 1982 to 1987 while annual market growth averaged 35.6 percent. However, the preceding years witnessed fundamental changes as the market was now dominated by mass consumers while distribution chain extended to mass merchandisers and mail-order catalogues. Another significant change was entry of 19 competitors in the market and products under manufacturing contracts in low-cost off-shore producers in Asia reduced the margins significantly (Pisano, p 257).
The manufacturing process was divided in to sub-assembly production and final assembly both located in different locations. The sub-assembly had three internal subassemblies that include microwave, radio frequency (RF) and control subassembly all which consisted of different processes that produced the components in batch sizes that could meet one month of final assembly. This technology requires the company to keep adequate raw materials and it may lead to lost business opportunities due to breakdown of production processes. The processes involved numerous test controls and entire batch went a final control audit to ensure good boards were sent for final assembly stockroom. The final assembly involved six steps with three critical internal subassemblies wired together. Defective units were sent for reworking. There was also a quality control process before the unit underwent packaging with instructions and finally storage as finished goods (Pisano, p 258).
The production control entailed a ‘batch-and-kit’ method while small electronic components were supplied by suppliers from Asia with a lead time of about ten weeks because of low-cost manufacturing in those countries. The manufacturing model requires large buffer stock of components thus increasing the raw material ordering and holding costs. The manufacturing model creates problems since it increases the overall total production costs due to higher number ordering and holding costs of the raw materials (Pisano, p 259). The increase in demand due to expanding defense spending meant that the company had to set up operations in Fitchburg, Massachusetts in order to benefit from increased factory space and abundant semi-skilled labor. The new system altered flow of RF boards, control boards and microwave assemblies thus creating quality problems to RF and control boards due to defects in components from various venders and new surface mount technology (SMT) that was desirable due to ability to reduce the size of detectors. The new system increases the labor costs, the factory flow space required and creates quality problems due to numerous inspection points. SMT technology yielded low and engineers made some adjustments. The 1985 pretax return on assets was 40 percent while the company controlled 21 percent of domestic market share for radar detector. However, the performance declined significantly in 1986 due to high manufacturing costs (Pisano, p 261).
A marketing analysis concluded that low cost Asian manufacturers were reputable, quality and their brand image could support Whistler’s only 10 percent price premium. The market share declined and a consultancy firm indicated that Far East manufacturing was cheaper compared to US manufacturing and suggested Restoring a Competitive Edge through Manufacturing Excellence (RACE-ME) that would reform material handling, process lay-out, quality control and production flow. The model production line (MPL) included small buffer stocks and similar processes in subassemblies with separate inspection points. MPL proved more effective since it reduced the need of large buffer stocks of materials and minimized time in assembly from 23 days to 1.5 days (Pisano, p 263).
Conclusion
Restructuring manufacturing processes allows the company to reduce costs, improve quality and enhance delivery timelines to the market. The new technology will enable the company concentrate on its design and engineering capabilities and reduce the required workforce by closing Fitchburg plant. Just-in-time model enables the company reduce throughput time significantly from 23 days to 1.5 days thus enabling the company easily respond to changes in market demand and reduce lost sales opportunities associated with large orders. Overhaul of manufacturing processes will reduce the defect rate and wastage of raw materials thus enhancing quality and improving efficiency. The growth in radar detectors is declining and thus it is essential to diversify operations to other product lines such as breath analyzers, emergency cameras, FM antenna boosters and anti-theft devices.
The second option which is expanding relationships with Korean suppliers for the ‘low-end’ radar detector market segment will not enable the company to attain cost competitiveness or control the quality of the products. The option will alleviate capacity problems, but can lead to significant decline in growth due to low quality or breakdown in the supply relationships.
The third option allows the company to avoid costs associated with high cost domestic manufacturing, but has more shortcomings since the company is not able to own the design and engineering capabilities.
Reference:
Pisano, Gary. (1990). ‘Whistler Corporation’, Harvard Business School case 690-011, pp 255- 266. Read More
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