The primary problem, as identified in the case, relates to the changing nature of the industry. The suppliers such as Custom Molds now had to be on their toes to serve their customers (electronics equipment manufacturers). This is due to the changing business requirement of establishing strategic alliances and partnerships with parts suppliers. Such demands by the customers require quick action on the part of parts suppliers such as Custom Molds. The primary issue is how capable Custom Molds is in satisfying customer order requirements as currently; there are a large number of complaints. The complaints regarding late deliveries, which Custom Molds claims are due to bottlenecks in its production process. In this scenario, quick rectifications need to be made to smooth out the production process and flow, and ultimately, to provide timely delivery of parts to customers.
Secondly, the number of defective parts was increasing in the orders supplied to the customers. Two shipments had been sent back to Custom Molds due to defective parts. Hence, the reputation of the company as a quality supplier was also at stake in this scenario. While the main issue identified above has been the lack of preparedness of the company to respond to a changing market environment, the linked issues are those of immediately satisfying the customer requirements and build up trust. Although the significant employees of the company, such as master machinists are committed to the task of orderly supplies to the customer, they have not been able to assure timely supplies even after utilizing the excess labor capacity. Hence, the issues need to be resolved at some other level rather than relating them to excess capacity.
It is also important to identify the competitive priorities for Custom Molds’ processes. The company needs to focus on its competitive strengths, that is, the areas where they have an edge as opposed to the competitors. Firstly, the company has excess labor capacity available which can be exploited in the best interests of the company. Secondly, Custom Molds has been supplying a reliable base of customers since 1987. Hence, with a small amount of trust in the abilities of Custom Molds, the customer can be won back. The company also needs to consider whether its current plant layout, as presented in Figure 3.18, can be modified to improve the processing time to the customer.
The flow chart presented below is part of the recommendation for separating the shop floors for fabricating molds and plastic manufacturing and will be explained in the Recommendation section. The sequence of activities can be tailor made as per the requirements of molding or plastic manufacturing process:
As per the analysis of the situation presented above, it is recommended that Custom Molds go with the alternative of separating the shop floors for molds and plastic manufacturing, and tailoring each department to its customer requirements.
For this alternative to materialize, the bottlenecks in each function have to be realized and removed first. To remove the bottlenecks, the engineers, top management of the company, and master machinists need to sit together and discuss the problems with shop floor workers (the laborers). It is expected that with the passage of time, each function/process will be more different, and customer requirements will continue to alter. Hence, it makes sense to separate the two processes and allocate shop floor space accordingly in the same plant.
To implement this alternative, excess labor and machine hours need to be calculated. The excess labor and machinery then needs to be allocated as per the customer preferences. For example, small ordering requirements of the customer for fabricating molds require more precision in tools and equipment, as well as in the labor force. Hence, more skilled labor needs to be hired for catering to customers of fabricating molds. Molds fabrication, therefore, is a more skill-oriented process for the company.
On the other hand, plastic manufacturing needs to be made more mechanized and machine-oriented as large quantities per order need to be supplied to the customer in a short span of time. Hence, the involvement of labor is less significant here.