B-5 MOM Assignment 1

8/19/2019 B-5 MOM Assignment 1

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Hub Manufacturing Cell: Jet Engine Hubs

Submitted in partial fulfillment of the requirement of the course

Manufacturing Operations Management

Instructor: Prof. Prahalad

Submitted on March 7 th, 2016 by

Study roup ! "#

$arandeep Singh

$umar %bhi&eet

'amrata (ada)

Sa&al Jain

*aibha) arg


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Background

The aviation industry is currently in the midst of a severe downturn. A majority ofthe companies are seeing red in their bottomlines as they struggle to maximize

pro t. n such a situation! the supply chain in the aviation industry is facing severecost cutting measures and decreasing tra"c. As the aircraft manufacturers try togain an edge over their competitors in this market! they need to o#er on$timedelivery and high ll rates. %arts distributors are the bedrock of this supply chain.Avionics rms produce a forecast of what parts are needed and whichevermanufacturer is capable of delivering that order within the forecast period areaccepted by the company in order to drive the risk closer to zero.

&et 'ngine (ubs has been facing ine"ciencies in the system which has compelledthem to change from a product line manufacturing system to a cellularmanufacturing system. The ine"ciencies largely exist because of large lead times.

The initial implementation of the proposal had lead times that were still very high $hovering in between )* to +* days. The targeted delivery time is ) days.

The problems associated with large lead time are as follows,

- The need of large net working capital to maintain the huge work in processinventory because of the large lead times. /ost cutting measures in the industrymean that manufacturers who use lesser working capital would remain competitive.

0 (igher inventory holding costs

) (igh ine"ciencies in the manufacturing process since the current capacity is notbeing utilised properly.

Analysis Approach

Objective: Reduce the lead time of the four hubs to the optimal 3 days.

1e use the 2%3 simulation software based on 4apid 2odelling. The advantage ofusing this software is that the analysis process is highly intuitive. t provides a singlepoint of control software for the entire system. t also provides numerous tools andcon gurations to easily meet the dynamic needs and environments for the factoryin consideration. The basic idea behind the software for the current problem is thatevery analytical performance results can be achieved by thinking of the entiresystem being made up of di#erent 5ueues and the relationship between these5ueues and its operators will generate optimal results. The model incorporatesprocess variability and can generate lead times! 1 % and throughputinstantaneously and also provide an intuitive view of when and where to utilize theresources in the best way.


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4epair ) * -*

Action 8tep, As the ;tilization for 6athe and 2ill is =>


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Optimizin the !abor:

6abor Time

7o working8imultaneou

sly

9vertime :

: time;navaila

blenspect

or+ * <

2achinst

* <

%rep + * <4epair ) * -*

By cross training the labor from rework to 2achinst! though we have been able tobring utilization below >


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"lterin the !ot #ize:

Crom the %roduct manufacturing /ritical$path Time graph! we notice that ?1ait forrest of lot@ is a major component in the lead time. To reduce this! we alter the lotsize so as to reach an optimum point for ?'5uipment 8etup@ and ?1ait for 6ot@.(ence! altering the lot size as shown in the table below

nitial 6ot8ize

7ew lot 8ize

(ub - +* D(ub 0 )* -*(ub ) ++ -*(ub + )* -*


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"ddin !athe $achine:

As the '5uipment ;tilization : for 6athe 2achine is above >


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$achine Overtime:

'ven after adding a 6athe machine! the utilization of 6athe 2achine is still wellabove the permissible limit. 'ven if we add labor! the utilization would still be above>


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!abor Overtime:

Adding overtime for '5uipment has drastically brought the utilization of 6athemachine. (owever! still utilization is above >


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9n retrospection of the above case! we analyzed on how the lead time could befurther brought down. Collowing are the additional recommendations that wesuggest.

-. Euring our interactions with people who have worked in factories! we came to

know that overtime in blue collar jobs are usually done for half the shift.(ence! instead of having -*: overtime for all labors! we recommendovertime by 2achinst by


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nvestment in 6abor$ 1e plan to invest capital to employ two machinists! oneperson for preparation and one for repair. This will amount to additionalmonthly labor cost of 4s +****.Cost of overtime&2achine, 1e plan to increase the machine overtime expenditure byapproximately 4s 0*!*** per month. This will take into consideration themachine repair and maintenance cost because of additional machineoperation time.6abor, The increased overtime cost will amount to approximately 4s ) !***!taking into assumption that we have used the entire workforce for overtime.Cost to reduce coe%cient of variation and mean time to failure&1e plan to improve the inspection of machines by implementing timelyinspections. This system will lead to additional monthly expenditures of 4s-*!***.Reduction of batch size

The reduction of batch size will result into increase in setup costs.(rainin cost&1e plan to develop the cross functional skills in our organization which willhelp us in meeting the increased labor re5uirement in lathe and millingdepartments by using captive labor. This will help us in dealing withcontingencies where labor demand in lathe and milling operations can be metfrom other departments.

Bene)t from the above mentioned cost implications&By implementing the aforementioned recommendations we will be able to

reduce manufacturing critical path time by ve times from )* days to days.

Through improved recommendations as mentioned above we will manage tobring this gure down to three days. This will translate into cost bene ts as wewill be able to ful ll many more customer orders. The increased customerservice level will help compensating the increased capital expenditures. Thisshows that targeting low lead times is not really a trade o# as far as costs isconcerned as it will lead to nancial bene ts.

Assuming that the industry pro t margin is )$+:! we envisage that through

this reduction in the lead time! we would be able to charge a premium of ):to our customers. Also! such a low lead time would give us a competitiveadvantage to us over our competitors. Through this addition orders! we wouldbe able to reduce our expenses because of economies of scales.

• Assuming a yearly turnover of -* crore of company• ncrease in 9rders due to reduction in lead time -*:


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• 'stimated 4evenue for the next nancial year G -- crore• %remium for low lead time G )) lakhs• Total /ost of all the 4ecommendations, -< lakhs• Additional %ro t G - lakhs.


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Appendices for recommendations, 9ptimizationClowchart


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7o

Ies

7o


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Recommendations "ppendi*:

The < Action points optimization points as suggested part of a dynamic process asshown in above Fowchart. As it is a trend in the aircraft manufacturing industry to

levy huge penalties for ring the timeline! therefore our prime objective is to reducethe 2/T of operations by undertaking these < action points. 9ur action points aredynamic because we have to optimize both machine and labor utilizationsimultaneously. Addition of additional capacity will reduce the utilization of machines but will increase the utilization of labor sometimes to more than -**:which will result in accumulation of 1 % at various locations due to labor shortage.

n contrast! just increasing the labor will only

"ction +oint ,: !abor optimization

1e plan to undertake by implementing this by providing cross$training of personnelat 4epair on machining processes as a short term action plan. The Training modesuggested is primarily 9&T H9n job training at the shop Foor by a trained 2achining%ersonnel. Also! addition to the existing workforce at shop Foor is re5uired.

6ong term action %lan prescribed id a separate training schedule for all the workersprior to join actual production. Also! 8kill matrix of all the labors should be


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constantly updated with new trainings and periodic evaluation of skills is to beperformed. Training and evaluation of labor on additional processes should be linkedto 2anagerJs and 6aborJs performance to create a checking mechanism in thesystem for proper implementation.

"ction +oint -: Batch #ize "lterin9ur suggestion is to implement time base performance measure for batch sizealtering as our labor and machine time is primarily constrained. By analysis of historical records of procurement! batch sizes and 24%! an alteration on all theseneeds to be implemented considering the time based approach heuristics. Also! weneed to map the current and future 2/T maps for evaluation of heuristic. Also!periodic audits should be planned to ensure proper implementation andperformance evaluation.

"ction +oint3: +urchase of "dditional $achines

Addition of additional 6athe and 2illing machines will decrease the utilization of machines. (owever! it will add to additional /apex. Also! the machine timeoptimization needs to be done to sync labor and machine utilization.

"ction +oint : !abor (ime

The short term action is to initiate work overtime at shop Foor to meet the existingdemand.

The long term action plan is to increase the shift of production per day. 8o this canbe implemented only after addition of su"cient workforce.

"ction +oint /: $achine Overtime

As the current utilization is capped at >

B-5 MOM Assignment 1

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