CASE STUDY - MANUFACTURING

Aashish who is the plant manager was perturbed. As a manufacturing manager, he was unable to come up with ideas to improve the productivity of his plant. He was presenting the annual operating plan at the recently concluded management meet and was questioned why his yield on Grade A foam was only 83% since inception. Over 3 years, he has not been able to exceed this 83% and had assumed that he was doing his best. His plant at Chittoor was located in a 2 acre plot. The plant was divided into 3 parts viz. Production, Storage and Cutting & Dispatch. The foam manufacturing process involves 24 hours curing and hence they were kept in a warehouse. Once they had cured, they were issued for cutting as per the indents and dispatched. He felt that his storage space is limited and hence, he couldn’t produce taking longer runs and store them for sales. Aashish decided to take it up as a challenge and he put down all the facts about foam manufacturing to explore how he could improve the yield. He wrote down the following.

1. The factory had a capacity to produce 250 blocks of foam daily. Each block can be 15M long X 2M wide and 2M height.

2. The foam was cut into cuboid of 2M each side, as they had storage issue. He wished that he had more storage space so that he could cut longer length and store more. When they were cut into cuboid of 2M each side. They were laid over plastic pallets on the floor area. Since the foam had to be cured for 24 hours, it was laid across the surface area of 100 Sq.M. storage space. The storage space had ample ventilation and was 20 ft. high.

3. There were 5 different density of foam. They were 50D, 40D, 32D, 28D and 22D.

4. There were 4 grades of foam viz. H, G, E and S.

5. In all there were 20 SKU of foam and each had a unique color.

6. Further, the foam was cut into different sizes as the dealer wanted. For. e.g., a dealer might ask 28D S in certain size and G 40D in a different size, since foam goes into the manufacturing of products like Spring Sofa, Wooden Sofa, mattress where the sizes vary.

7. The factory produces the foam as per the indent received for the day.

8. An indent could be any of the 20 SKU and can be in any size.

9. They consolidate all indents received for the day and produce.

10. When foam is produced, the sides of the foam were cut as the exothermic reaction leads to thick and dense sides. These had to be cut off and this was called the C grade foam.

11. While producing the foam, they start with 50D and sequentially produce desired quantity of 40D, 32D, 28D and 22D. The reverse is not possible.

12. Every time the density or the grade changed the color changes and it leads to 4M foam loss.

13. All indents were catered on the same day and hence they changed the color and grade often as required in one run. This led to 4M of production loss every time they had to switch grade or density.

14. The cutting of sides and changeover led foam loss led to an yield loss of 14%. This was disposed of as C grade.

15. Once they were cut along sides, the foam can have cracks or quality issues. These led to an yield loss of 3%. This was disposed off as B grade.

16. The remaining 83% was sold as A grade and that commanded the best rates.

17. The ratio of realization between A: B:C was 100: 60: 30. Hence the more the A, better the realization for the company.

18. While he can produce 250 blocks of 15M long foam, the sale averaged 70 blocks a day in all.

19. He was also wondering why sales needs many SKU while the price difference between 2 SKU was hardly 20Rs a k.g. in a few instances. Sometimes the run was so small for these one of these 2 SKU, that it was even lower than the 4M foam loss that he suffers due to changeover.

Given the above data points, he was wondering what should he do to take the yield to at least 90%.

Send an email to subbu@drawing-board.in to submit your solution to this challenge