Operations Management Shuzworld, Inc., Mr. Edward Crownshield

From: John Doe, Operations Consultant

Ms. Cynthia Crownshield, Strategic Planning

Case Recommendations

In order to remain competitive in the global marketplace, Shuzworld must find ways to become more efficient in their production process. Several areas need to be addressed in order to accomplish these goals. The first is the reorganization of the assembly line at the Shanghai plant. The second is the introduction of a new product. Current estimates are that the Shanghai plant will have to produce batches of 10,000 in order to meet the immediate anticipated demand for the Maui sandal. At present, the plant cannot possibly keep up with demand for the new product with out major change in the production process.

Shuzworld is currently facing several problems in the production of the casual deck shoes. The process utilizes three different machines, any of which can fail and halt the production process. Lowering production costs is another concern that needs to be addressed. Inventory inefficiencies are another problem that needs to be overcome. Customer service and staffing issues must also be addressed in conjunction with the new store launches. This memo will recommend solutions to these problems based on analytics and information provided. Although other issues exist, this memo will be limited to three primary problems, workflow on the steel toed shoe line in Shanghai, costs associated with introduction of the new sandal line, and staffing considerations in the new retail stores.

Improving Current Workflow in the Plant

Workflow analysis will be utilized for improvement of the workflow on the steel-toed show line at the Shanghai plant. The analysis utilized workflow mapping and analysis to detect redundancy in the current manufacturing processes on the line. Workflow mapping and analysis is the most efficient manner to design a workflow that reflects the greatest efficiency in the design process (Kmetz, 2010). The initial analysis was performed by Mr. Pang. According to this analysis, it is not clear whether two different boots are being produced on the same line.

Upon asking for clarification it was explained that the two different processes reflect the right and left boots. Both the right and left boots have the same process, and they have several steps in the process that are common to both boots. However, at first, it is not clear why the left and right boots have different processing times in the same step. The right shoe involves steps A, C, D, F, G, and H. The left Shoe involves steps A, B, D, E, G, and H. To clarify this mater a time-study analysis was performed through observation of the processes and interviews with the workers. The analysis involved timing both the right and left boot processes. The following results were obtained.

Right Shoe Step

Time In/Time Out

Left shoe Step

Time In/Time Out

Notes

A

1:00/1:10

A

1:00/1:10

A has sufficient capacity to supply both B & C. without delay

C

1:10/1:13

B

1:10/1:16

The additional 3 minutes on this side of the line were accounted for by waiting for D. To finish production on C

D

1:13/1:21

D

1:21/1:29

Line D. could not begin production on output from Assembly B. until it completes output from Assembly C

F

1:21/1:24

E

1:29/1:32

G

1:24/1:27

G

1:32/1:36

H

1:27/1:36

H

1:37/1:46

Output from the Left shoe assembly has to wait for production from the right shoe assembly to finish before it can begin.

Total Time

36 minutes

46 minutes

This time study analysis demonstrates that the production of the right shoe takes 10 minutes less than production of the left shoe. This was due to several bottlenecks in the system where production of the left shoe was held up by the right shoe. Although many of the steps in the process are the same, bottlenecks occur when two lines feed into a single assembly process. These junctures occur at D, G, and H. The end of the process is a completed set of shoes at assembly H. Mr. Pang indicated that they are budgeted to produce 6 pairs of work boots an hour.

Although adding workstations would appear to add redundancy in many cases, in this case, it would reduce bottlenecks in the process. This would allow both the right and left lines to produce a completed pair of boots in 36 minutes instead of 46 minutes. This would create a new workflow diagram that would be as follows.

The new production schedule would be as follows:

Right Shoe

Performance Time (minutes)

Left Shoe

Performance Time (minutes)

A

10

A

10

B

3

C

3

D

8

D

8

E

3

F

3

G

3

G

3

H

9

H

9

Total

36

36

The addition of two extra work stations at D. And G. will increase productivity and throughput, allowing for the production of 8 workboot pairs an hour due to the reduction of bottlenecks in the production process.

Labor Costs of the Maui Sandal Line

The second issue to be addressed is the costs associated with the new sandal line being utilized. Cost...

The addition of the new sandal line has great sales potential. The addition of the new line will depend on the returns that can be expected, therefore, cost analysis is the appropriate tool to be used in this decision.
The Maui Sandal is the newest line from the research and development project. Its primary target audience is expected to be in he Southwestern United States and California. The current proposed production schedule is aggressive and wrought with many challenges. The first is profitability of the new shoe production line. The current schedule intends to produce 500,000 sandals in four months in preparation for the rollout. The current labor costs for each batch of 10,000 is $1.08 per hour and takes 1000 man hours to produce. This equals a total labor cost of $54,000 at the Shanghai plant. Considering that the employees typically have an 80% learning curve, the production schedule will not realistically look like the proposed schedule. A more realistic model would be as follows.

Actual production during the first four months will only produce 292,000 shoes, as opposed to the projected 500,000. However, the labor costs will remain the same, due to the inefficiency of the workers as they learn their new jobs. Labor costs of the line will remain at $54,000 but the total loss in production over the first four months will equate a 58.4% loss in anticipated inventory.

Using the assumption that at the end of the first four months, workers will have learned their jobs and be at full capacity, it will take an additional 1 month to reach 492,000 shoes. It will take an additional 6 days to reach the full 500,000 shoes needed for production. The deficit in production at the end of the first four months will be 208,000. Assuming the same labor cost of $1.08 per hour and 1,000 labor hours per 10,000 shoes, this will equate an additional 20.8 batches. The cost for these additional batches will be $22,464. This brings the total labor costs for producing the number of sandals needed to launch to $76,464, rather than the $54,000 that was anticipated at the beginning of the project. The planned rollout of Maui sandals will take a little over one additional month than anticipated and will cost $22,464 over the original estimates. These costs are more realistic than the anticipated costs associated with the new line.

Staffing Plan for the Assignment of Machine Operators

The next problem to be addressed involves lines that manufacture women's shoes. This line requires specialized skill on the part of the line workers. Currently, the plant has four workers who can work these specialized lines. It was found that they can run similar jobs, and can interchange stations, but they complete these functions at different times. The firm has been asked to determine the most efficient job configuration for the production of shoes on this line, utilizing the four workers currently assigned to this task. This analysis will utilize spreadsheet analysis to determine the best configuration.

Optimum Proposed Worker Configuration

Current Worker Configuration

A

B

C

D

1

$10

$12

$10

$11

2

11

9

11

11

3

9

8

11

9

4

11

8

9

10

Units produced

31

25

31

30

Total Costs

$310

$300

$310

$330

$1,250

Optimum Worker Configuration

D

C

B

A

1

$11

$10

$12

$10

2

11

9

11

11

3

9

8

11

9

4

11

8

9

10

Units produced

31

25

31

30

Total Costs

$341

$250

$372

$300

$1,263

Short-Term Scheduling Techniques and Rules

The goal of the work analysis for Shuzworld is to achieve the most efficient movement of units through the production systems. Short-term scheduling can create greater returns per dollar invested. This results in faster delivery to customers, better customer service, and lower operating costs. This efficiency can have a significant impact on profit and sustainability of the company. Short-term scheduling results in increased competitive advantage through improved customer relations.

Short-term scheduling has to do with the daily timing of operations with an hourly, daily, and weekly focus. Managers must schedule employees so that there is sufficient manpower for all of the assembly stations. Employees must be scheduled so that employees are placed in locations where they are most efficient at their jobs. This manufacturing plant utilizes a push system where products are produced and then held in inventory until sold. Pressure is on the sales staff to move product. Production is based on producing a certain number of units per shift, rather than units based on customer orders placed. The following rules will assist managers in achieving the most efficient use of labor as possible.

1. Managers shall schedule production to produce as few bottlenecks in the system as possible. This will reduce throughput times and increase efficiency.

2. Schedules will be completed two weeks in advance of the intended…