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Cost management systems

ElectroMobile Company (EMC) manufactures electric golf carts, electric all terrain vehicles and electric senior-citizen mobility scooters. Each of the three products has two or three models. Because of the somewhat erratic product demand and the lead time needed for the setup for a model changeover, EMC has been increasing its raw material and finished goods inventories. Work in process inventories are relatively low and have consistent costs from one month to the next.

During the last five years, EMC has experienced increased inventory costs, decreasing profit margins and customer complaints concerning the long lead time to fill sales orders. EMC's president, Lou Watts, has been concerned about these problems, and has been discussing ways to change these deteriorating conditions with his production, marketing and accounting staff.

For the past few months, this top management group has been looking at how a just in time (JIT) manufacturing system utilizing a "Kanban" concept could be used in their company. The team as assembled data that indicates that EMC could change their production process from one of "production push" to "demand pull" by rearranging their production floor into manufacturing cells that would be dedicated to one of the three products produced. Slight modifications to the equipment in the cell would be needed for a changeover from one model to another. Cell production teams would be responsible for cell performance, maintenance on machines and equipment, solving their production problems and training.

The management team has reached a point where it needs an outside consultant and has hired Grant Withers EMC wants Withers to explain the procedures and issues involving in changing fro a "production push' to a 'demand pull' production process.

1. Discuss the effects on EMC's planning and operating processes if EMC implements a "demand pull" production system.

2. Identify and describe at least five benefits to EMC that should result form the demand pull" production operating approach

3. Discuss the behavior effects if the proposed change at EMC on team participation in planning and participation.

Solution Preview

ElectroMobile Company (EMC) manufactures electric golf carts, electric all terrain vehicles and electric senior-citizen mobility scooters. Each of the three products has two or three models. Because of the somewhat erratic product demand and the lead time needed for the setup for a model changeover, EMC has been increasing its raw material and finished goods inventories. Work in process inventories are relatively low and have consistent costs from one month to the next.

During the last five years, EMC has experienced increased inventory costs, decreasing profit margins and customer complaints concerning the long lead time to fill sales orders. EMC's president, Lou Watts, has been concerned about these problems, and has been discussing ways to change these deteriorating conditions with his production, marketing and accounting staff.

For the past few months, this top management group has been looking at how a just in time (JIT) manufacturing system utilizing a "Kanban" concept could be used in their company. The team has assembled data that indicates that EMC could change their production process from one of "production push" to "demand pull" by ...

Solution Summary

This solution is comprised of a detailed explanation to answer the request of the assignment of more than 700 words of text.

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