The Hindustan Aeronautics limited is a national parastatal company venturing in industrial defense and aerospace. The company was founded in the early 1940s and has based itself in the city of Bangalore in India. The company majors in the manufacture, assembly, navigation of aircrafts and related equipment, and communication apparatus. Other than those main operations, the company has also ventured in delivering doors in windows through its supply chain management department. The business venture in the new supply departments was propelled by the establishment of the door manufacturing unit in the company's plant. The company operates under the motivation of its operational values, mission and vision statements depicting that its goals are to provide high-quality designs in aeronautic tools and cost-effective to all its customers.
Hindustan aeronautics Limited has achieved in its supply and production of automobile accessories but has also majored in the production of doors and windows of aircrafts. Its success is associated with the advanced and creative designs of the doors. The demand of manufacturing passenger doors on various aeronautics companies has increased, and for that effect, Hindustan engaged into the production and export to other customers venturing in the same industry. The company has had a high number of dedicated customers interested in the designed doors. Consequently, it has been entrusted with several contracts mostly from the customers stipulating the costs of purchase and delivery periods of the products.
The Hindustan Aeronautics Limited has made an immense push through when it comes to the door exports. It is a reliable conjunction of the assembly team and the supply chain. A production flow is strictly adhered to while conducting the effectual process of door delivery. Similarly, the delivery is done at window stages for each scheduled period. A purchase order is relayed by the customer, at which HAL comes up with procurement of the necessary materials, costs and labor. The period summed for in this stage adds up to 3 months. Receipt of the materials, costs and labor are then received in a timeframe of 8 months followed by a receipt of inspection of the assembly plant and the storage facility for the already manufactured doors. However, other parts incorporated in the assembly are necessitated and are delivered in a period of 3 months, followed by an 8-phase process of the door assembly.
HAL's supply chain management takes accountability immediately after assembly completion. The departmental sector of supplies oversees clearance from the customs office in ensuring that the products being dispatched are up to the standards. This takes a period of 2 days. Confirmation on the dispatched products is then supplemented by an airlift to the customer's assembly plants. The summed process is required to enable the supply chain to deliver the doors to customers at the stipulated windows.
The Hindustan Aeronautics Limited has addressed the challenges they face in the industry. It sums to a one time progress in time especially while meeting the demands in the opportunity window, resultant to inefficacy to the supply chain management. The main predicament has been the incapacity of management to deliver the assembled doors at the required window. The effects, consequently affect the customer's plants inconveniencing their production plans of airbuses, which cannot be completed without doors. Several unpredictable circumstances have been accredited to the challenge of keeping up with the contractual agreement.
Similarly, there have been management issues with time durations of assembling at each developmental stage. Currently, the company works under high inventory management costs that undermine the entire delivery of the doors on time. It has also been difficult to handle outsourcing of consumables and materials, and necessitated shelf life door parts. There has been less shelf life of the parts since the mode of transportation to the Bangalore plant is through the air; a risky method for hazardous goods. Consumption of the shelf life parts is not predictable since under certain circumstances leftovers of the parts lie under 4 to 5 months upon receipt of the shelf life. From this context, HAL tries to show-case its challenges in the door export project. The said contract not only had agreements on delivery, but also on the mode of being encrypted on the design and drawings doors.
Problems facing the company have been linked to lack of external input in the new assembly of doors. Addition of manpower, achievement of operational efficiency and high quality has been the main factors left out in the production of the doors. These factors have led to the far fetched effects such as problematic delivery of doors in windows. The delivery issue has been accredited to factual company culture of not wanting to incur additional costs out of the budget from external consumables, inventory management costs and additional safety units of stock.
From the statistical data recorded from 1992 to 2009, the company has failed in standardizing its deliveries in the set windows. Though the trend has been increasing, it has been with various inconsistencies. According to the data represented, the low economic order quantity was only attained in the month of January. Inconsistencies encountered were related to the high running costs from the total assemblies carried out. Besides, cascading effects from the subsequent delays in the sub-assembly phase has pulled down to resultant phases and eventually to the delivery process. It has been estimated to 34.4% of outside window deliveries.
Computational analysis from the company's statistical data depicts that 9.7% of the total delivered doors was from the assemblies that were scheduled on or before the stipulated time. Prior assembly of the doors before the declaration of the assembly dates in vital. It prepares the company to plan ahead about the skill and labor to be used. Early planning in such an assembly company is vital since there is ample time to dwell on design and drawing required by the importing customers. The probability of completion of door assembly of doors in 18.5 days is less than 0.5. However, from the crystal ball statistical analysis, the probability of completion of assembly in less than 10.0 days is more than 0.5. This computational analysis is dependent on the changes in economic order quality, input costs and labor inputs from the assembly team.
The estimated economic order quantity for the produced windows is estimated to be 63. Both estimated steady and actual states of the deliveries in 2009 are not up to the standard economic order quantity. During some months, the deliveries are slightly higher to the steady levels and exceedingly low. The months of September and December and April depict this respectively. Costs of running low EOQ are indirectly proportional to the inventory management costs. By incorporating the new EOQ of 63, the amount incurred in managing a new inventory will be relatively low, due to increased EOQ, compared to the one used in 2009.
Late delivery of door in the stipulated windows incurs penalty costs from the importing company. In accordance to the contract, HAL would be responsible by paying a 2% penalty from the total price of a single door. This amounts to $1,000. In the year 2009, the company had 78 late deliveries, out of the total 227. This cost the company a total of $78,000 in penalty.
Protagonists to the delivery problem have suggested reliable means that can be adopted by the door assembly plant. It is necessitated that the plant back in India to trounce variability in the manufacturing of the doors. Proper management strategies are to be drawn in running the maintenance of the parts and equipment for production of the doors. In the same way, inventories' costs of management should be designed to handle the door outsourcing by the external assembly plant and shelf life of HAL's door assembly.…