1: What is your assessment of the manufacturing operations at Noodle Tools Spa?
Apparently, the manufacturing operations at Noodle Tools Spa are planned and configured in a great manner. It is done in a way that provides maximum cost reduction along with maximum utilization of the production capacity.
If we look at the raw material warehouse, then it is maintained well. Different components are stored in a different department and only the same components are stored at a particular shelf. Although the management of the shelf using last in first out is also appropriately being the component as non-perishable. However, considering the fact that that the oldest components may not be used for years, there is a strong case to use first in first out method for inventory management.
The Machines Tools department is also well organized in an efficient manner. The department composed of three areas with its own machines serving one particular function with almost zero downtime. This makes the Machine tools department highly efficient.
The Material Treatment department is also organized according to two different functions it performs.
Although the assembling department is also well organized apparently it lacks the capacity to fulfill the demand for the year. This is also because it can only assemble 4 machines at a time which seems very low on the basis of the demand for the current year. The company apparently needs several more machines in order to increase consumption and production.
The logistic system of the plant is also great as it not only runs automatically at quite a fast pace but it can also be moved in any space within the facility.Hence, the company is overall doing great in managing its production process. The only problem is that some of its capacity is not sufficient to fulfill the production goals and the company has planned to outsource some of its production processes in order to fulfill demand and operate at maximum efficiency. The efficiency may also be lost due to the presence of buffer in the department which may be taking up a lot of time. The company may need to lookup this process.
2: What is your opinion about the use of outsourcing to guarantee the production to satisfy the forecasted demand for 2019? Should the company adopt other practices? Which one?
Apparently, the company does not have enough capacity to fulfill all the demands for the year 2019. That is why the company has planned to fulfill the excess demand through outsourcing.
Outsourcing is a method where a company gets its components or finished products manufactured from outside suppliers or facilities. It helps meeting the demand and efficiency targets as well as often helps to reduce the costs as well along with free resources that the company can focus on non-core activities. However, the company should avoid outsourcing core activities as the company may lose the necessary expertise and human resources required for that core activity or component due to outsourcing.
As far as the outsourcing practice of Noodle Tools Spa is concerned, the company outsources any activity that is causing the delay in production in order to speed up the production. This helps to maximize the efficiency and production at the maximum speed, utilizing the maximum capacity of the company. So this is a great strategic move in this regard as it would help fulfilling demand and thus will improve profitability. However, the company does not consider the fact that some of its activities in the manufacturing process may be a key source of competitive advantage and maybe core activities. Transferring such activities to the outsourcing partners or sometimes to the competitors may result in competitive and strategic disadvantages for the company. It may also result in losing key and core expertise as due to outsourcing, some key staff important and responsible for that activity may be lost as well and if the outsourcing did not go well, the company may face severing difficulty in getting that expertise again and hiring those expert people responsible for the activity. Moreover, the company may lose competitive strength due to losing out production secrets about the particular components.
However, the problem would be less severe if the company also keeps manufacturing inside. Moreover, the company builds a buffer zone with the outsourcing components and only gets that much quantity manufactured from outsourcing partners as necessary.
There could be other possible solutions to that problem as well. The company can install additional capacity to the department or departments that are proving bottleneck and bring total production to the required level. Apparently, the company has enough capacity in its building to make the way for a few new machines. Another way is to run a second shift for such processes and build inventory for the next procedure. By using these two methods, the company may be able to fulfill the desired production requirement.
However, if the ocmapny does not enough demand that it runs the second shift, then it can use the existing employees for overtime in a particular department.
3: Which improvements would you propose to implement a lean production approach at Noodle Spa?
Lean approach is highly useful for the production process. It insures that the production process is as fast as possible which is imperative for the Noodle Tools Spa in order to ensure that the company can make all the components by completing all the products in-house and any outsourcing may not be required as a result.
If we look at the production process, we see buffers at all processing places. These buffers may take time and hold inventory. First of all, the company should ensure that there is no time taken in buffer zone. No product should stay idle during production process.
The company seems to have internal constraints and that is why it has planned for outsourcing production. Before outsourcing production, the company needs to ensure that it gets the highest utilization of the constrained resource or process. When the company will do so, it would reduce the requirement for outsourcing. Moreover, it is also possible that the need for outsourcing remains no more.
First of all, the company should make the layout of the production in a way that the movement of the material between the departments as it also takes time and slows down the production. The basic aim of the lean process should be to eliminate all wastes and maximize the efficiency of each procedure.
In order to implement lean, the company is also advised to use overall equipment effectiveness indicator. It is a comprehensive tool to gauge the production system productivity. It would lead to continuous improvement. Through this process, the company would be able to quickly compare the expected standard production and the actual one that is achieved in a certain time frame. This exercise should also be done in order to reduce the offline time for the machines due to failure, breakdown, repair and maintenance.
The part of improving efficiency, the company may also need to install additional machinery which may boost up the production process and saving the firm from outsourcing.
4: Which specific changes would you propose to improve NoodleTool Spa Operations?
First of all, the company needs to reduce the waiting time and minimize the movement in different demands. This is because the movement and the waiting time wastes the resources in terms of time and that reduces the efficiency of the process. Therefore, waiting times at every process point needs to be reduced to the minimum possible level.
Then, the company needs to increase its production capacity. At the moment, it appears that the company does not have enough capacity to produce all the required production for the 2019. The company is thus has planned for outsourcing so that it can fulfill all its demand.
However, it is recommended that the company should add more capacity. For that purpose, the company should evaluate the resources or processes which does not match with the fastest phase with regard to production. This would ensure that the company has all the required production produced in-house without any outsourcing. This is because it is quite possible that the production processes of the company or any of its processes it is outsourced or of the nature that forms the core capability of the firm. Outsourcing may end up losing important expertise and valuable human resource due to downsizing. Even if the company does not need to completely shut down the production of a particular component or the processing of a particular component, it may still lose a competitive edge. Moreover, as explained earlier, in order to implement lean, the company is also advised to use the overall equipment effectiveness indicator. It is a comprehensive tool to gauge production system productivity. It would lead to continuous improvement. Through this process, the company would be able to quickly compare the expected standard production and the actual one that is achieved in a certain time frame. This exercise should also be done in order to reduce the offline time for the machines due to failure, breakdown, repair and maintenance.
Although, the company is managing its operations well there is still a lot of room for improvement. Particularly, as it is expanding, the company may need additional production. For that matter, the company can even run a second shift for ensuring the maximum utilization of the company’s resources without going for outsourcing or installing new machines. Particularly, installing new machines will take time and would be a costly setup. On the other hand, running a second shift may result in an increase in direct costs only and thus highly beneficial for the company.