Leagile Manufacturing - Essay Example

?Leagile Manufacturing Introduction: Leagile manufacturing implemented the concept of the Just in Time or the lean production system in order to gainefficiency in their productivity of the business. The concept of Just in time was introduced to reduce the cost of the overall production by reducing the waste in the process. The reduction in the waste associated with the production process decreased the unnecessary cost of storage and maintenance which also contributed in the overall decrease of the cost of the production, besides, concept of Just in Time was aimed to reduce the involvement of high proportion of its working capital towards the stock as Just in Time involves the ordering of stock only when required (Hutchins, 1999, p.4). Considering the advantages of the Just in Time technology, the vice president of the organization, Scott Murphy, decided to implement the system in order to provide the organization with an effective edge in respect of its competitors. However the implementation of the Just in Time environment emerged to be a failure for the organization, and problem was encountered in almost every aspect of the business. The paper analyzes the problem faced by Leagile management after the implementation of the just in time. The root cause of the problem has been analyzed and suggestions for the improvement have been provided with a focus on the aspect of the operation management. Identification of the problem faced by Leagile manufacturing: After the new system was implemented in the organization by Scott Murphy, the organization found out that instead of reaping benefit for the organization, the new system is causing hindrance in the productivity to a large extent and there have been complaints from every sector of the business, and also gave rise to the dissatisfaction among various section of the employee. The purchasing department of the organization was highly dissatisfied with the process. According to the words of the purchase manager, an increase in cost emerged after the new system was implemented in the organization. According to the just in Time framework, the process involves the ordering of material for the production at a time when it is required by the organization. The motive behind such concept is that organizations spend a huge amount of money towards the protection of the inventory and its maintenance, and also suffers a threat from the loss, if the inventories are not used due to economic fluctuations or due to the change in taste and preference of the customers. But Leagile manufacturing’s main problem arose with the start of the ordering for the material when on need. The costs associated with the purchase orders are significant and the overall cost of the purchase orders increased to a large extent as frequent orders were placed for the purchase of materials. Apart from the problem of the rise in cost of the purchase, the organization faced a significant problem with that of the frequent change in schedule for the order. As the stock of the inventory was calculated on a regular basis, so the schedule of orders were also changed accordingly and caused significant amount of trouble. However the problem associated with the process of production can be identified in the failure of the organization in determining the right amount of the inventory required for the production. If the process of the identification of the right amount of product would have been done in a proper way, then the case of shortage of material in the process of production would not have occurred and the production people would not have asked for the next day delivery of the material for the change in the schedule. As a result of the failure to deliver the right amount of raw material in time, the overall production process was hampered and even caused a lag in the production. The Just in Time incorporated in the organization was successful in reducing the inventory cost but the associated cost increased the overall cost of the production. The incorporation of the just in Time technology also provided a lot of hindrance to the prediction of the change in customer demands and as result the organization faced difficulty in meeting up the demand of the customers. The organization faced shortage of time in assimilating the raw materials to produce different parts. Even the supplier of the organization often runs out of stock to fulfill the demand of the organization. The cause of the organization received a further set back when the vice president ordered the production team for avoiding the finished goods. Theses strategy hampered the organization significantly as they were prevented from utilizing the resource to produce results which were under their capability. The overall failure in the production process endangered the cause of the supervisors working in the organizations. The supervisors in the organization were evaluated based on the productivity of the labors and the fall in the numbers was not doing any good for the reputations of the concerned persons. As a result of the decrease in the production, the salaries of most of the employees, both under the payment system of the piece rate, and the straight hour pay basis, were hampered and they were determined to leave the organization. The prime source of the problems can be traced back to the sudden implementation of the new system without taking any preventive measures or without analyzing the difficulty which the system would have evolved. The partial implementation of the JIT environment was made without the synchronization of the other process associated with the production which is one of the essential requirements of JIT (Raouf & Daya, 1995, p.311). The process of calculation of the inventory must have been done with errors and was probably done with a less proficient person. As the overall technology of Just in time depends on the supply of the right material in the right time, the failures in the aspect hindered the production significantly. The implementation of JIT also brought some change in the engineering design of the models, but the changes incorporated never provided the necessary warning regarding the change of parts of the production and landed the overall production in danger. Problem of the suppliers: The relation with the suppliers is one of the vital criteria required for the success of the Just in Time. The organization faced problem with the suppliers soon after JIT was put into practice. The supplier of the Leagile manufacturing repeatedly faced problems in meeting up the demands from the organization within a short period of time. Due to the problems in the operational implementation of the Just in time, the calculation of the inventory required by the organization was done in an improper way and often the organization was found to order the raw materials to the suppliers with sort time for delivery. The suppliers used to run out of stock and also did not have the necessary time to replenish and deliver to the organization. The frequent change in schedule hampered their cause significantly and the supplier’s complained of the increase in holding cost of the ordered inventory and the maintenance associated with it. Because of the rise in cost, the suppliers even demanded to increase the ordering price of the materials form the organization. Apart from the cost factor, the suppliers also complained of the time factor allocated for the delivery of the raw materials. In spite of the repeated requests from the supplier’s side, no change was incorporated in the organization and the purchase manger faced enormous difficulty in handling the suppliers. Considering the nature of the operation prevalent in the organization, the suppliers even questioned the credibility of the management in maintaining the organization. The organization should have evaluated the efficiency of the suppliers in meeting with the demands of the organizations. The organization should have forecasted the amount of difficulty which might have crept in the production department owing to the failure of the suppliers in an environment which is being operated by the JIT. Leagile manufacturing never did found out the efficiency and the effectiveness of the suppliers but was still continuing the business with them. Though the problems in the organization cannot be overlooked in matters of ordering of raw materials, but the organization never opted for other suppliers to meet their demands. Their faith on the supplier was also one of the prime causes for the overall failure of the process. During the implementation of the process, the vice president should have taken a close look at the role play of the suppliers in the success of the process and should have implemented his decisions accordingly. The organization though implemented a new set of tool, but never changed the suppliers or had a look at the efficiency of the other suppliers in the market. The organization never evaluated the ability of the supplier regarding the quality of the materials the delivered and also failed to study their efficiency in delivering frequently with small amounts (Cheng, et al, 1996, p.112). Careful analysis of the overall process was lacking from the viewpoint of the vice president and it caused tremendous difficulty in maintaining a good relation with the suppliers. Transport: Transport facility and the shipping activities of the materials also became much more chaotic due to the implementation of the Just in Time. The organization and the vice president made no plans from before, regarding the frequent delivery of the raw materials required for the production process. Before the implementation of the JIT, the shipping and delivery section of the organization was assisted by less number of people and was supervised by Dave. The truck bays in the terminals were less in number as most of the delivery of all the raw material used to happen together at a single time. However the system of Just in time involved the delivery of the raw materials only at the specific time needed. As a result, often the truck bays were overcrowded with more trucks coming to deliver various raw materials. The absence of safety stock in the inventory hampered the production, if any delay in the shipment of the raw materials occurred. As the raw materials were ordered based on the level of the production, each of the raw materials arriving for the shipment was of equal priority and the absence of more number of truck bays significantly delayed one or more shipment of the raw materials. The absence of additional staffs in the shipping section of the organization further delayed the process of shipment as sufficient amount of time was also spent in the recording of the materials which has arrived in the bays. Another problem was also evident in the organization regarding the transport of the raw materials. As frequent order of smaller quantities was made by the organization, the overall transportation cost for the delivery of the raw materials was increasing steadily. The truck companies were also charging higher amount for the delivery of the half filled trucks. As a result, the overall cost of the organization was increasing and the primary goal of the organization in reducing the cost by the implementation of the Just in Time technology took a major setback. The vice president of Leagile manufacturing was suggested by the supervisor of the shipping section to allocate more men for the fast shipping of the goods and also to increase the number of truck bays so that the trucks do not have to stay in the queue for a longer period of time (Fenn, 1998, p.218). However this process should have been done before hand so that the problems which the organization is facing presently could have been avoided totally. The vice president should have considered the issue of frequent delivery which the organization is facing before the implementation of the process and should have taken a deep insight into such problems. The overall planning process of the vice president lacked maturity and he failed to identify key areas in relation to the operation of the Just in time environment which significantly hampered the cause of the organization and proved to be a burden for the overall organization. Customers: The failure in the overall process of the Just in time caused an adverse effect on the customers of the organization. Just in Time technique incorporated by the organization had serious shortfalls which hindered the production process of the organization significantly. The most serious disadvantage which crept up during the process was the failure of the delivery of the products in time. As a result the customers of the organization were highly dissatisfied and even some threatened to carry on any further business activities with them. Though the dissatisfaction did not reflected in the sales figure of the organization, yet it proved to be threat full owing to the growing competition in the market. As any business thrives on the customers, and the organization in the present world looks for the satisfaction of the customers, such negligence of Leagile manufacturing would have seriously meant disaster to the organization in the long run. Due to the negligence in the overall delivery process even some of the customers demanded for the decrease in the price of the materials produced. Because of the failure of the organization to deliver the finished goods on time, some customers were forced to pileup the stocks in their own inventory which raises their cost of the inventory and as a result some customers even demanded a compensation for such price rise. The customers of Leagile manufacturing used the finished material coming from the organization as a part of the raw materials for their own production. However the change in demand of their customers arises the threat of obsolesce of the product and the loss suffered by them because of Leagile manufacturing raises discomfort in the organization. Further the cause of the customers was hit back as the vice president ordered for the elimination of the finished goods which even disrupted the delivery of the goods to the customers. The main source of the cause of the disappointment of the customers of the Leagile manufacturing could be traced to the overall strategic planning and not focusing on the aspect of the customer during the implementation of the Just in time. The vice president did no consideration of the customer in deciding to implement the process and never tried to analyze how the customers of the organization will be affected if the process appears to be a failure. The vice-president should have implemented precautionary measures in his effort to introduce the new system in the organization. In the conventional Just in Time systems the production process gets much improved and the rate of the output of the products increases significantly because of the reduction of the lead time and other wastage associated with the production. The production process happens on a continuous basis and brings profitability for the organization. However a complete set of contradictory results were noticed in the case of Leagile manufacturing which finally led to the dissatisfaction of the customers which are the primary units for running any business. The non cooperation from the aspect of the customers would lead to the decline of the overall business process of Legile manufacturing. Problems In the overall strategy of the organization in implementing Just in Time: Leagile limited opted for the implementation of the Just in time environment, but the overall strategy incorporated under the guidance of the vice president had serious limitations which resulted in the total failure of the process. The process of the implementation appeared to be done hastily, without the consideration of the critical factors. The analysis of the overall situation of the organization was not done before the implementation of the new technology was considered. The overall strategy adopted by the vice president lacked efficiency as he failed to highlight the areas which required simultaneous change for the incorporation of the Just in Time. No preventive measures were taken which is one of the prerequisite for implementing any changes in the organization. The vice president of the organization did not have any long term view regarding the application of the new system in the organization. The study conducted by the vice president lacked practical experience and it proved costly for the organization. The vice president of the organization incorporated the JIT environment after gaining the theoretical knowledge from the books and the practical difficulties were never considered by him. The vice president of the organization should have realized that as the process of JIT deals with the production of the goods, the failure of the process may directly affect the viewpoint of the customers and any dissatisfaction within them may prove threatening for the existence of the business. As a result of the failure of the strategy, the ultimate goals of JIT implementation were never reached and the overall cost of the business reached an all time high. The basic strategic error which was made by the vice president was that he never did realize that the associated factors of JIT are also equally important for the overall success of the system. As a result he never did pay any importance to the suppliers of the organization and or tried to evaluate their performance of delivering the goods frequently in small manner. The vice president should have checked the feasibility of the project and should have taken measures by which he could have forecasted the results of the JIT and the present system and compared the results before deciding to implement the process. The vice president should have analyzed the components of the JIT which involves a change in the cost structure and tried to compare the overall cost of the present system with it. No measures were also taken to reduce the cost which resulted from the implementation of JIT. As the organization received frequent supply of raw material, the transportation cost of the shipment of the materials was rising, and the organization could have entered into an agreement with any of the transportation companies for delivering the goods at a cheaper rate. Another drastic strategic error was made by the organization; in switching the whole of the production process to the JIT environment, as a result it also proved difficult for the employees to have a clear understanding of the process and the employees also had less amount of knowledge in handling with the problems that had given rise and were unable to reach any solution. The gradual adoption of the process could have eliminated the massive problems which Leagile manufacturing had to face. The vice president of the organization single handedly implemented the decision and should have consulted the other employees of the organization and particularly with those in the managerial position. He should have discussed the issues with all the related department of production and asked their views and ideas and have planned properly. Recommendation and the implementation of the plan: The overall success of an organization does not only depend on the implementation of the Just in time environment but also depends a lot on the strategies formulating the implementation and the careful analysis of the Just in Time. The success of the just in time depends on the acceptance of all level of the employees and their heartiest participation in order to make the change a success. The employees directly related to the production system should have a transparent knowledge about the system and they should be trained well to deal with the problems. In the case of the Leagile manufacturing one of the primary sources of the problem was that the calculation of the inventory system was not done in a proper fashion which often led to the stoppage of the production and crated a rush to receive the raw materials. Experienced professionals need to be deployed so that such problems never happen. The experienced professionals should also be aware of the efficiency level of the production process so that he may analyze the inventory level in a correct manner. In order to analyze the other problems with the Just in Time and find effective solutions to tackle it, without causing any harm to the overall production process, some part of the production should be considered under the new system instead of bringing the change throughout the process. Change in the suppliers for Leagile manufacturing should be done in an immediate basis after a careful evaluation of the supplier’s capability. The organization should maintain a good relation with the suppliers. An integration of the overall production process should be done and the necessary changes needs to be identified so that no further problem arises with the system. Suggestions from the various level of management need to be incorporated as well to revive the condition of Leagile manufacturing. The organization can also refer to the models followed by other organizations in their implementation of the JIT and incorporate their methods in the organizations accordingly or take necessary ideas which they feel suits theirs organization (Lai & Cheng, 2009, pp.160-164). Conclusion: Analysis of the Leagile manufacturing highlights the primary problems which the organization has faced in the implantation of the Just in Time. The vice president of the organization was inspired to incorporate the new system in the organization as he found out that the other organization that has brought in the new system has enhanced their profitability with the gradual passage of time. But the vice president overlooked many critical issues regarding the implementation and did not analyze the thorough position of the organization regarding the incorporation of the technology. The study of the overall infrastructure of the Leagile manufacturing was not done which proved the new system to be the curse of the company. The implementation of the Just in time started delaying production process, due to the failure of the suppliers to deliver the right quantity of material at the right time, followed by error in the determination of the right amount of inventory. The organizations also lacked necessary infrastructure for receiving the frequent delivery of material and it was accompanied by the high cost of transportation. The frequent change in schedule of the order by Leagile manufacturing also caused grievance among the suppliers and the whole production process was hampered significantly. As a result of the failure of the production process, the customers of the organization also got dissatisfied which raised the danger level for the organization. The problems highlighted with the organization and their reasons needs o be taken care of in the future days for gaining the maximum out of the JIT. Careful study of the JIT and the organization and the suggested change can yield success for the organization in the long run. REFERENCES: Cheng, T, C, E, et al, (1996), Just-in-time manufacturing: an introduction, New York: Springer Fenn, M (1998), Transportation Statistics Annual Report, Pennsylvania: DIANE Publishing Hutchins, D, C, (1999), Just in time, Farnham: Gower Publishing, Ltd Lai, K & Cheng, T, C, E, (2009), Just-in-time logistics, Farnham: Gower Publishing, Ltd Raouf, A & Daya, M, B, (1995), Flexible manufacturing systems, Amsterdam: Elsevier Read More