Operations Management: Custom Molds Case Study

What are the major issues facing Tom and Mason Miller?

Major issues facing the Miller family are:

1. The electronics industry to which they supply and their own business is changing. This is due to the fact that the electronics manufacturers have shifted their strategies; they are now developing strategic partnerships with their suppliers. Custom Molds has to adapt to these changes.

2. The demand for multiple molds is declining, contrary to the earlier days. Earlier they used to produce custom designed molds for producing plastic parts majorly and limited manufacture of plastic parts. Through the data provided in the case study we can conclude that during the last three years Custom Molds has been consistently getting more work in the mass production of plastic parts and the custom made molds have been decreasing.

3. The order sizes for plastic parts were increasing. The reason for this being an issue for Custom Molds is that traditionally they have concentrated on the custom molds. But since they are getting a lot more work to produce plastic parts, they probably need to change the job shop layout to something more suitable for mass production.

4. Delivery problems with plastic parts. The customers have been complaining about the late delivery of parts. Bottlenecks are springing during un-predictable production processes. If this goes on for too long, Custom Molds will lose credibility in front of their customers and some customers may decide to part ways. And the fact that they have still not been able to pin-point the cause is even more devastating.

5. In-efficient testing and inspection process resulting in orders being returned after delivery. The testing and inspection process has to be carried out as rigorously as possible. Sadly though, Custom Molds’ testing and inspection team has not been doing a good job. Two orders were recently returned to them because of the number of defective parts in the batches. The transportation, packing, shipping etc. costs have to be incurred by the company and could have been avoided if the testing and inspection been rigorous.

Identify the individual processes on a flow diagram. What are the competitive priorities for these processes and the changing nature of the industry?

Mold fabrication flow diagram

Figure 1

Flow diagram for manufacturing of plastic parts

Figure 2

Companies compete in the marketplace by virtue of one or more of the following competitive priorities (Hayes and Wheelwright, 1984):

1. Quality
2. Lead-time
3. Cost
4. Flexibility

Competitive Priorities of the fabrication process

• Quality
• Should be of top quality
• Should be consistent
• Lead-time
• Delivery should be on-time
• High development speed
• Cost
• Low cost
• Ability to reduce cost to at least competitor’s cost, if not lower.
• Flexibility
• Customization of the mould

Competitive Priorities of the parts manufacturing process

• Quality
• Should be consistent
• Lead-time
• On-time delivery
• Cost
• Low cost
• Flexibility
• Variable volumes without affecting the cost

As shown by the table provided in the case study, the industry now needs delivery of high quality parts with increased speed and low cost. This can be substantiated by the fact that electronics manufacturers were developing strategic partnerships with suppliers (The Changing Environment, Case Study, page 3). Customers today are increasingly moving towards a strategic supply chain management system, like the one used by Detroit based car companies.

What alternatives might the Millers pursue? What key factors should they consider as they evaluate these alternatives?

Short term alternatives

1. Hire consultants: Custom Molds needs to figure out the reason behind un-predictable bottlenecks popping up all over the production process and needs to do it quickly else they might lose some of their clients. Consultants have the advantage of looking at the bigger picture from outside and may be able to help Custom Molds figure out the reason behind the bottlenecks. Key factors: Cost of hire, consultants must be specialist in this field.

2. Change plant layout: Custom Molds also needs to change the plant layout from job shop to probably assembly line. This is due to the fact that they are getting more business in the plastic parts manufacture than the custom moulds and plastic parts are produced in large volumes. Key factors: Down time of the plant while changing the layout, cost of layout change, proper utilization of available space.

Medium term alternatives

1. Invest in a proper supply chain system: The Company needs a proper supply chain system which is agile, adaptable and aligned (Lee, 2004) to the interests of all firms involved. This will help them in managing expectations of the clients by knowing when they will be able to deliver the product. Key factors: Consent of all users/suppliers, cost of the SC system, reliability of the SC system, usage of the SC system.

2. Use of Information Technology in testing & inspection, and in calculating delivery times: Information Technology can help the company to automate the testing & inspection process thereby reducing the re-work. IT can also help Custom Molds to determine realistic delivery times. Key factors: Cost of the IT system, time frame of installation, inputs from the potential users of the IT system.

Long term alternatives

1. Prepare for a complete phase-out of custom moulds: It’s a long term alternative but is very much realistic. The company may start losing money producing custom moulds if their quantity reduces too much. The company would be better off in investing the same resources in producing plastic parts instead. Key factors: A proper market analysis of custom moulds, analysis of the return on investment and the minimum number of moulds to remain profitable, other avenues of diversification.

2. Invest in Research and Development: The Company would be better off to invest in R&D in order to stay ahead of its competition. R&D can often show ways to reduce costs by maintaining the same quality. Key factors: Cost involved, clear expected milestones

3. Start looking at expansion plans: As the company grows and starts taking orders for plastic parts exceeding 5000 order size, they will start feeling the need to expand, both in number of resources and space available. They are thereby advised to start looking at expansion plans, which can consume precious time. Key factors: Cost involved, thorough analysis of future/expected growth, type of growth (organic/inorganic), timeframe of growth, where to expand,

References

1. Hayes, Robert H., and Wheelwright, Steven C., Restoring Our Competitive Edge: Competing Through Manufacturing. New York: John Wiley, 1984

2. Lee, Hau L. “The triple-A supply chain.” Harvard Business Review 82.10 (2004) : 102-112, 157.