This report aims to increase the current capacity at S�ve so that it can continue to supply Volvo with floor-lids. It will also look at implementing a JIT delivery system to Volvo and within the S�ve plant it’s self so that it can reduce its inventory levels and hence increase profitability. If the system is successful Sunwind will be Volvo’s first Swedish JIT supplier and it would also guarantee jobs at S�ve.

Yours Sincerely

Manufacturing Manager

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Executive summary

This report investigated S�ve’s capability to supply Volvo with floor-lids in a JIT manner. The report revealed that Save was under capacitated in relation to Volvo’s needs. However listed below are adjustments made to the S�ve’s manufacturing process. Implementing these changes will put the S�ve Plant not only in a situation to meet Volvo requirements but also to increase profitability.

Implementation steps involve:

* Hiring new employees

* Increasing shifts on certain operations

* New factory floor layout which will enable smooth transition of kanbans from work station to work station.

* Reducing the batch sizes we deliver to Volvo and eliminating batches between operations 1 to 7 at S�ve.

With these changes in place we are confident we can deliver to Volvo’s standards and requirements thus jobs can be guaranteed and profitability increased.

Current Capacity at Save

Process 1: The plywood pieces are shaped on a CNC milling machine.

Process 2: The shaped plywood pieces are painted.

Process 3: Wooden battens are attached to front panel.

Process 4: Metal studs and rivets are attached to the front and rear panels. It is assumed that the 4.95 minutes given to attach the rivets and studs to the front panel includes the time taken to attach the wooden battens (Process 3), as attaching the same rivets to the rear panel requires only 1.9 minutes. In all calculations, Operations 3 and 4 are taken as one process.

Process 5: The front and rear panels are hinged.

Process 6: The carpeting is glued onto the panels.

Process 7: The front and rear panels are assembled. It is assumed that this process takes the form of an assembly line.

A 50% reduction in set up times will have no overall effect as the process that takes the greatest amount of time has a set up time of zero all other processes are dependent on this

Layout changes

Old Layout

New Layout

Assumptions

Quality Control

There are theoretical quality control measures in place at S�ve; though these theoretical measures that have been demanded by Volvo have not been executed in practice. As a result data on rejected specimens has not been recorded this has to change in order to improve overall quality in the factory which in turn will lead to better service, less waste, reduced demand pressure to make up for rejected stock and in turn save Sunwind money.

To take quality control from the present theoretical level it is recommended that all appropriate employees receive training not only in the inspection of raw materials coming in but also in the inspection of finished floor-lid as they leave the factory floor. The new recommended factory floor layout would facilitate this with operation 1 and operation 7 in close vicinity.

Under the new training floor-lids that are flawed will be required to be recorded in Sunwind’s quality manual. A description of the rejected floor-lid will be noted with the intension of establishing a statistical summary of all the errors incurred during a given manufacturing period, which will also highlight problem areas where greater quality is required.

This should demonstrate to Volvo how serious we are about maintaining high levels of quality in our product and address there understandable concerns with receiving flawed floor-lids.

Volvo’s requirements

* It is forecasted that Volvo will need 1400 floor-lids per week.

* Volvo requires Floor-lids six hours into their production process.

* Volvo insists that its suppliers use their transport company.

Just in time

Just In time is a manufacturing strategy to reduce costs by reducing the in-process inventory level. It is driven by a series of signals or kanbans that tells the production line to make the next piece of the product when it is required.

One of the largest hurdles to moving from a batch oriented shop floor to just in time is the setup times required at various operations. Long setup times amortized over small lot sizes will drag down labor efficiencies. This often leads manufacturing managers to manage the situation by building large runs of material. Due to the costs of maintaining inventories, it is imperative that Sunwind look at ways to reduce the amount of material held in stock.

Batch Size

A reduction in batch size would enable the company to move form a supply to buffer stock attitude towards a just in time approach. By doing this the company would increase flexibility in products such as colour material, would be able to meet smaller orders quicker, better lead-time leading to less idle operators or gaps between operation starts, also avoiding accumulation of work in progress and finished goods, which in turn would avoid possible damage to goods while being left around which could contribute to return of goods

A key area affecting a reduction in batch size is the setup times while a reduction in all setup times might not be practical.

Safety stock policy

Though the company should aim not to have any buffer stock a small amount would be advisable to help alleviate pressure on unexpected large orders, machine breakdowns or absent staff.

It might also be advisable to purchase a new gluing as there are reports of the machine breaking down.

Possible changes to Operations

Increase Operators

Increase shifts

Reduce set-up times

Get rid of batches and use kanbans as direct link for operations with a minimum amount being transferred at one time. This will reduce any waiting time for the later operations and making J.I.T possible.

Keep the operation times in a close range so waiting time between operations is kept to a miniscule level and a fluid system is achieved.

Produce just one floor lid, Change to even smaller batch sizes if required in other to deliver on time

More machines

Implement JIT

Get rid of pallet storage system

One delivery a day of 280 floor-lids

Specific recommended changes

Operation 1 is running above required capacity as it is on a three shift basis. Operation 1 will need to be kept running by one operator but can be reduced to a two shift basis.

Operation 2 is running sufficiently as it is. It can be left as a two shift basis with room to be moved to a three shift basis if delays occur, while it should be sufficient to remain with two operators.

Operation 3 is not running at a sufficient pace so it is recommended to increase the number of operators from one to two, therefore doubling the production speed. Also the operation should be run on a two shift basis.

Operation 4 is also not running at sufficient capacity for the required demand. The number of operators needs to be doubled and it also needs to be run on a two shift basis.

Operation 5

Operation 6 currently isn’t working at a high enough capacity so the number of shifts will need to be increased form one and a half to three. With the increased shifts two operators will be sufficient.

Operation 7 is currently

Current relationship with Volvo

Currently Sunwind’s provides Volvo using a supply to buffer to stock

Volvo’s transport company

Volvo not satisfied with the quality of goods

Order Placing

Recommended changes in Sunwind Volvo relationship

Buffer to stock strategy is the key area where change is required

Transport of goods

It is recommended that to aid in moving towards a just in time approach that Sunwind switch from Volvos transport company to one of their own to implement changes in the size of kanbans and to improve flexibility in delivery frequency.

Kanban system

1. From S�ve to Volvo

The idea of the kanban works on the principle that work is only carried out when needed. A kanban is either some sort of containers, card or visual cue use to trigger the production and movement of goods through the supply chain. This makes it a perfect tool through which JIT can be implemented. Kanbans directly control the amount of inventory within a company so the number of kanbans cycling between two stations is a key factor.

The greater number of kanbans in circulation means that there is more chance flaws will go undiscovered, as high inventory levels can hide problems, while low inventory levels help to expose problems. The idea is that there should be a certain number of kanbans circulating between two stations, so that if there is a problem with manufactured materials the station receiving the full kanbans can work of a buffer stock until the problem is rectified.

The forecasted floor-lid figures given by Volvo for the New Year are 1400 units per week. There is the option of delivering 1500 floor-lids a week to Volvo to insure their production is not jeopardised, time wise. This would provide a buffer stock which can be used in the event of floor-lids being rejected due to flaws and would theatrically mean Volvo’s requirements would be 300 floor-lids daily. However in our calculations and we have not include this safety stock factor and have chosen to only deliver what they need.

Once a car has been placed on the assembly line at both the Ghent and Torslanda plants it takes six hours for the floor-lid to be actually fitted. The floor-lids are picked from a buffer stock located on racks beside the assembly line. This stock is enough to last Volvo’s production requirements for three hours. Following this they then replenished this buffer stock from a large central stock within plant. It is our goal to eliminate this large central stock and deliver straight to the buffer within Volvo. This will greatly reduce holding cost for Volvo.

Given that Volvo operate on a single shift bases (8hrs) and assuming that floor-lids are fitted by works for eight hours daily, in theory the buffer will need to be replenished 2.6 times, so effectively we are looking at 3 deliveries a day. This would therefore mean that we would have to deliver in sizes of approximately 93 floor-lids per kanban.

With regard to the number of kanbans in circulation we decided that four would be sufficient. This would mean there would always be two kanbans at each plant which would allow for empty kanbans(which contain the floor-lid specifications e.g. carpet type, colour etc) to be sent back without a pause in Volvo’s production and vice-versa, full kanbans to be sent to Volvo without a pause in the production at S�ve.

2. Within the S�ve factory

The new factory layout allows kanbans to be manoeuvred between operations 1-7 with ease. There are a total of six kanban systems in operation on the factory floor, one between every two operations. These kanbans will hold no more than two sub assembled floor-lids. This will eliminate large quantities of material building up at each work station and hence allow each operation to continually work to full capacity.

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