Operations Management Of Customs Molds Commerce Essay

Operations Management Of Customs Molds Commerce Essay Custom Molds, Inc., manufactures custom-designed molds for plastic parts and produces custom-made plastic connectors for the electronics industry. Located in Tucson, Arizona, Custom Molds was founded by the father and son team of Tom and Mason Miller in 1975. Tom Miller, a mechanical engineer, had more than 20 years of experience in the connector industry with AMP, Inc., a large multinational producer of electronic connectors. Mason Miller had graduated from the University of Arizona in 1974 with joint degrees in chemistry and chemical engineering. The company was originally formed to provide manufacturers of electronic connectors with a source of high-quality, custom-designed molds for producing plastic parts. The market consisted mainly of the product design and development divisions of those manufacturers. Custom Molds worked closely with each customer to design and develop molds to be used in the customers product development processes. Thus, virtually every mold had to meet exacting standards and was somewhat unique. Orders for multiple molds would arrive when customers moved from the design and pilot-run stage of development to large-scale production of newly designed parts. As the years went by, Custom Molds reputation grew as a designer and fabricator of precision molds. Building on this reputation, the Millers decided to expand into the limited manufacture of plastic parts. Ingredient-mixing facilities and injection-molding equipment were added, and by the mid-1980s Custom Molds developed its reputation to include being a supplier of high-quality plastic parts. Because of limited capacity, the company concentrated its sales efforts on supplying parts that were used in limited quantities for research and development efforts and in pre-production pilot runs. Figure 3.13 Plant Layout PRODUCTION PROCESSES By 1985, operations at Custom Molds involved two distinct processes: one for fabricating molds and one for producing plastic parts. Although different, in many instances these two processes were linked, as when a customer would have Custom Molds both fabricate a mold and produce the necessary parts to support the customers RD efforts. All fabrication and production operations were housed in a single facility. The layout was characteristic of a typical job shop, with like processes and similar equipment grouped in various places in the plant. Figure 3.13 shows a schematic of the plant floor. Multiple pieces of various/ types of high-precision machinery, including milling, turning, cutting, and drilling equipment, were located in the mold-fabrication area. Fabricating molds is a skill-oriented, craftsman-driven process. When an order is received, a design team, comprising a design engineer and one of 13 master machinists, reviews the design specifications. Working closely with the customer, the team establishes the final specifications for the mold and gives them to the master machinist for fabrication. It is always the same machinist who was assigned to the design team. At the same time, the purchasing department is given a copy of the design specifications, from which it orders the appropriate raw materials and special tooling. The time needed to receive the ordered materials is usually three to four weeks. When the materials are received for a particular mold, the plant master scheduler reviews the workload of the assigned master machinist and schedules the mold for fabrication. Fabricating a mold takes from two to four weeks, depending on the amount of work the machinist already has scheduled. The fabrication process itself takes only three to five days. Upon completion, the mold is sent to the testing and inspection area, where it is used to produce a small number of parts on one of the injection molding machines. If the parts meet the design specifications established by the design team, the mold is passed on to be cleaned and polished. It is then packed and shipped to the customer. One day is spent inspecting and testing the mold and a second day cleaning, polishing, packing, and shipping it to the customer. If the parts made by the mold do not meet design specifications, the mold is returned to the master machinist for retooling and the process starts over. Currently, Custom Molds has a published lead time of nine weeks for delivery of custom-fabricated molds. The manufacturing process for plastic parts is somewhat different from that for mold fabrication. An order for parts may be received in conjunction with an order for a mold to be fabricated. ln instances where Custom Molds has previously fabricated the mold and maintains it in inventory, an order may be just for parts. If the mold is already available, the order is reviewed by a design engineer, who verifies the part and raw material specifications. If the design engineer has any questions concerning the specifications, the customer is contacted and any revisions to specifications are mutually worked out and agreed upon. Upon acceptance of the part and raw material specifications, raw material orders are placed and production is scheduled for the order. Chemicals and compounds that support plastic-parts manufacturing are typically ordered and received within one week. Upon receipt, the com- pounds are first dry-mixed and blended to achieve the correct composition. Then the mixture is wet-mixed to the desired consistency (called slurry) for injection into molding machines. When ready, the slurry is transferred to the injection molding area by an overhead pipeline and deposited in holding tanks adjacent to the injection machines. The entire mixing process takes only one day. When the slurry is staged and ready, the proper molds are secured from inventory or from the clean and polish operation if new molds were fabricated for the order and the parts are manufactured. Although different parts require different temperature and pressure settings, the time to produce a part is relatively constant. Custom Molds has the capacity to produce 5,000 parts per day in the injection-molding department; historically, however, the lead time for handling orders in this department has averaged one week. Upon completion of molding, the parts are taken to the cut and trim operation, where they are disconnected and leftover flashing is removed. After being inspected, the parts may be taken to assembly or transferred to the packing and shipping area for shipment to the customer. If assembly of the final parts is not required, the parts can be on their way to the customer two days after being molded. Sometimes the final product requires some assembly. Typically, this entails attaching metal leads to plastic connectors. If assembly is necessary, an additional three days is needed before the order can be shipped. Custom Molds is currently quoting a three-week lead time for parts not requiring fabricated molds. THE CHANGING ENVIRONMENT ln early 1991, Tom and Mason Miller began to realize that the electronics industry they supplied, along with their own business, was changing. Electronics manufacturers had traditionally used vertical integration into component-parts manufacturing to reduce costs and ensure a timely supply of parts. By the late 1980s, this trend had changed. Manufacturers were developing strategic partnerships with parts suppliers to ensure the timely delivery of high-quality, cost-effective parts. This approach allowed funds to be diverted to other uses that could provide a larger return on investment. The impact on Custom Molds could be seen in sales figures over the past three years. The sales mix was changing. Although the number of orders per year for mold fabrication remained virtually constant, orders for multiple, molds were declining, as shown in the following table: Number of orders Order size Molds 1988 Molds 1989 Molds 1990 1 80 74 72 2 60 70 75 3 40 51 55 4 5 6 5 5 3 5 4 6 4 8 5 7 2 0 1 8 10 6 4 9 11 8 5 10 15 10 5 TOTAL ORDERS 230 238 231 The reverse was true for plastic parts, for which the number of orders per year had declined but for which the order sizes were becoming larger, as illustrated in the following table: Number of orders Order size Parts 1988 Parts 1989 Parts 1990 50 100 93 70 100 70 72 65 150 40 30 35 200 36 34 38 250 25 27 25 500 10 12 14 750 1 3 5 1000 2 2 8 3000 1 4 9 5000 1 3 8 TOTAL ORDERS 286 280 277 During this same period Custom Molds began having delivery problems. Customers were complaining that parts orders were taking four to five weeks instead of the stated three weeks and that the delays were disrupting production schedules. When asked about the situation, the master scheduler said that determining when a particular order could be promised for delivery was very difficult. Bottlenecks were occurring during the production process, but where or when they would occur could not be predicted. They always seemed to be moving from one operation to another. Tom Miller thought that he had excess labor capacity in the mold-fabrication area. So, to help push through those orders that were behind schedule, he assigned one of the master machinists the job of identifying and expediting those late orders. However, that tactic did not seem to help much. Complaints about late deliveries were still being received. To add to the problems, two orders had been returned recently because of the number of defective parts. The Millers knew that something had to be done. The question was What? Questions 1. What are the major issues facing Tom and Mason Miller? 2. Identify the individual processes on a flow diagram. What are the competitive priorities for these processes and the changing nature of the industry? 3. What alternatives might the Millers pursue? What key factors should they consider as they evaluate these alternatives? Source: Krajewski Ritzman, Operations Management, 6th Edition Summary Custom Molds was founded by a father and son team in 1987 to provide high quality, custom-designed molds for manufacturers of electronic connectors, but later expanded into the production of plastic parts for the industry. In recent years, the changing environment of the electronics industry had a profound impact on the way Custom Molds conducts its business and manufacturing processes. The changing sales mix, coupled with delivery and quality problems, prompted the company to revise its business strategies to address the following issues: 1) Changing trends in the electronics manufacturing industry that caused changes in customer order needs 2) Unpredictable bottlenecks in the production environment 3) Quality issues resulting in defective parts 4) Delivery times 1. Major Issues Question 1 What are the major issues facing Tom and Mason Miller? 1.1 Changing Trends There were several issues facing the owners of the company. Firstly, the major issue is the electronics industry was changing in that manufacturers were developing strategic partnerships that allowed the delivery of high quality and cost effective parts. Also, the nature of their business had shifted in that the mix of sales had changed with the number of multiple orders declining and the demand for plastic parts increasing (Krajewski Ritzman, 2007). In comparing with mold fabrication and plastic part (see appendix), it is clear that plastic parts has a higher potential sales than mold fabrication on a larger order size. This will allow Tom and Mason to think whether it is best to eliminate mold fabrication and focus on more towards plastic parts because of the changing environment. 1.2 Production Process Issues faced by Custom Molds Inc.: à ¢Ã¢â€š ¬Ã‚ ¢ The delivery times on parts order were taking four to five weeks instead of the stated three weeks. à ¢Ã¢â€š ¬Ã‚ ¢ Number of defective products was on the rise. à ¢Ã¢â€š ¬Ã‚ ¢ Bottlenecks increased in the production process. à ¢Ã¢â€š ¬Ã‚ ¢ Changing strategies within their clients business needs changed order needs in an unexpected way. There are two distinct processes taking place in the same facility and each process serves different customer needs. Below is the analysis of each the processes (Mold Fabrication and Parts Manufacturing) along with recommendations for the same. 1. MOLD FABRICATION PROCESS: Mold fabrication is the core business of Custom Mold Inc., and the recommended process is shown in Exhibit 1. Mold Fabrication requires flexibility and quality; hence concept of Job Shop must be applied to streamline the process. Following are the Recommendations to do the same. à ¢Ã¢â€š ¬Ã‚ ¢ LAYOUT: Similar equipment or function must be grouped together and the layout of the equipment must be designed so as to minimize the material handling, cost and work in process inventories. Digital numerically controlled equipment should be used as it gives flexibility to change set-ups on the various machines quickly. This will allow Custom Mold Inc. to compete on quality, speed, customization and new product introduction. à ¢Ã¢â€š ¬Ã‚ ¢ STANDARDIZATION: To identify and eliminate bottlenecks, Custom Mold Inc must standardize all processes. This means that every task, every job, every event must be approached the same way each time it occurs. This includes a standard way of engineering, workholding, manufacturing and shipping. With standard processes, it will become easier to identify which areas are profitable and which are not. This will enable Custom Molds Inc to look t areas, which have the most variables and make them less variables. For example Fixturing / Workinholding is one of the biggest variables in every shop. In a year that has 8,760 hours, we spend 2,200 to provide high quality, custom-designed molds for manufacturers of electronic connectors, but later expanded into the production of plastic parts for the industry. In recent years, the changing environment of the electronics industry had a profound impact on the way Custom Molds conducts its business and manufacturing processes. The changing sales mix, coupled with delivery and quality problems, prompted the company to revise its business strategies to address to following issues: Custom Molds, Inc. was founded by a father and son team in 1987 to provide high à Ã‚ µÃƒâ€˜Ã¢â‚¬ ° to provide quality, custom-designed molds for manufacturers of electronic connectors, but later expanded into the production of plastic parts for the industry. In recent years, the changing environment of the electronics industry had a profound impact on the way Custom Molds conducts its business and manufacturing processes. The changing sales mix, coupled with delivery and quality problems, prompted the company to revise its business strategies to address to following issues: 1) Changing trends in the electronics manufacturing industry that caused changes in clients order needs 2) Unpredictable bottlenecks in the production environment 3) Quality issues resulting in defective parts 4) Delivery times promised to clients were not met Analysis 1) Process Inefficiencies Some of the issues presented above resulted from inefficiencies in the two distinct processes taking place in the same production facility at Custom Molds, namely the Molds Fabrication process and the Parts Production process (Exhibit 1a and b). The two processes serve different customer needs. Mold fabrication, a skill oriented and craftsman-driven process, requires flexibility and quality. Parts manufacturing, on the other hand, involves a more standardized process that competes on delivery and low cost. The margin for parts is also much smaller. In the mold fabrication process, the time needed to receive the ordered materials for each fabrication is usually 3-4 weeks. Only after the materials are received does the plant master scheduler review the workload of the assigned master machinist and schedule the mold for fabrication. The idle time between these two steps in the process significantly affects the lead time for delivery of custom-fabricated molds. The fabrication of a mold takes two to four weeks, depending on the amount of work the machinist already has scheduled,