You are a junior analyst in the Distribution Engineering, Maintenance, and Productions Management group of the central engineering department of the Canbide Corporation, located near Torrance, CA.
The Canbide Corporation is a multi-national, publicly traded (NYSE), US - based, manufacturing company with annual sales nearing $10 Billion. Canbide is one of the pioneers of the petrochemical industry and is the acknowledged technology leader in several market sectors and benefits from large licensing royalty fees for those technologies. Canbide is the low cost producer for a number of commodity products. Canbide's current marketing approach is based on providing a wider selection of products at a single location than do any of their competitors.
Two years ago, in a surprising move, Canbide purchased a leading Korean electronics company. As a result, Canbide is now in the PC printer, toner cartridge, copier, and electronic imaging business as well. The PC printer and cartridge product lines are closely aligned and often share facilities. The copier and electronic imaging facilities are, for the most part, free standing facilities. The chemicals and electronics businesses have, until now, been run separately.
In a suburb of Tulsa, Oklahoma, Canbide operates a Central Research & Development / Central Engineering Department for the chemicals business. A similar facility for the electronics business is situated in Torrance, CA. The divisional research and engineering departments are also located at these facilities. The divisional research and engineering groups are the experts on the specific reactions or production processes and equipment associated with that division's products. The central research and engineering groups are focused on providing experts in specific subjects who cross divisional boundaries and generally work as internal consultants for the divisional research and engineering groups and often work on plant level issues.
Mr. Iwami, president of the electronics business group, is pressing his divisional VPs to solve several problems. There is internal pressure for a new distribution facility in the Pacific Northwest. There are quality problems at a facility in Nebraska. There are customer service problems at most distribution locations, but they are especially bad at the facility located near Denver, CO. There are inventory / materials handling problems at the Newark, NJ facility.
Your supervisor has alerted you to three potential projects for the coming year.
Customer Service problems at the Denver facility: This facility has been in existence since the 1930s. It has slowly grown physically since then. New production units have repeatedly been added on the periphery of the facility, leading to widely scattered production units within the facility that currently measures about 2km by 1km. The customer service issues arise from several sources. First, customers desiring to pickup multiple products must now drive from point to point within the plant to pick up each product. There are often waiting lines at each loading point. A second problem is the arrival pattern of trucks to pick up products that materially contributes to gridlock within the facility.
Production Facilities in the Pacific Northwest: For the past few years, the performances of thethree production facilities in the state of Oregon have been declining. Inventory levels are up, on-time shipments are slipping. Costs are rising. Scrap rates are increasing. Delivered quality still remains strong.
Copier rehab facility near Charleston, SC: The copier rehab facility near Charleston, SC receives "trade-in" copiers from distributors across the country and restores them to "good as new" condition. The facility stocks certain parts that are always replaced and others that are often replaced, based on wear and condition. Moreover, sometimes, copiers require parts that are not stocked, leading to a delay in the repair of that copier. They have a target (imposed by the copier division VP) that copiers spend no more than seven days at the facility before being released for re-sale. Since the facility has no visibility of incoming copiers and has no precise knowledge of what parts may be required, materials and labor planning is difficult.
As the junior analyst you will be in charge of analyzing various operations management issues concerning Canbide Corporation ranging from customer service to location to operations for all three facilities. You will be making recommendations on changes, improvements and the possible use of Operations Management (OM) tools.
Your supervisor has assigned you to study Canbide's Denver location. This location handles an average of 52.7 trucks per day. On Tuesdays and Fridays, the count is usually over 75 trucks. About half of the shipments are set-up by Denver operations which has the ability to reschedule / adjust product pick-up times with a four -hour notice to the designated carrier. The remaining shipments are set-up by the customer either using their own or contracted equipment. These vehicles often just show up at the gate, sometimes with an unanticipated purchase order in hand.
Canbide's current contracts with their carriers allow drivers to wait up to 1 hour at any single loading facility without incurring demurrage. Canbide claims to achieve a 90% success in maintaining a 2-hour gate-to-gate service time with no truck spending more than 4 hours gate-to-gate. If customer owned trucks are made to wait, then "goodwill" suffers.
Regardless of whether the truck is scheduled by Canbide or contracted by customer, all trucks have to transit throughout the plant to pick-up their full complement of items. Sometimes, truck drivers will get impatient and "balk" to another, hopefully less busy, loading facility. This, of course, adds unnecessary traffic to through the plant, aggravating the union safety committee.
Develop a presentation (3 to 4 slides with notes) for your manager listing the changes / improvements you would recommend to plant, divisional, and corporate management regarding the Denver location. How would prioritize their needs? Be sure to include the customer service / competitive advantage aspects. Make sure your notes are place within the presentation as if your audience is not present.
Let us first identify the problems and then list down the solutions one by one:
1) Customer service problems arising due to poor layout of the distribution centre and scattered units, poor scheduling and arrival of pickup, chaos and unnecessary traffic in the facility.
2) Inefficiencies and wastages due to demurrage charges being paid to carriers on the account of increased service time.
3) Loss of goodwill and future business due to poor customer service.
4) Union safety committe related problems due to unnecessary traffic.
Suggestions to Corporate Management:
The Corporate Management should plan to install a comprehensive enterprise resource planning software along with an integrated supply chain management system throughout the organization. This will help in solving lot of problems with respect to scheduling and pick up of goods at the location, customer service problems with relation to scheduling and pickup and will significantly help in reducing inefficiencies and chaos in the facility. Further, it will help in accurate preparation of management information system(MIS) reports to assist in further improvements in the facility. The supply chain management system will ensure ...
Canbide Corporation-Recommendations for improvement at Denver