Indian Institute of Management Indore

PGP 2011-13

Operations Management

Case: Doré Doré

Section B

Group4

Group Members:

AMARENDRA SAHOO PGP2011533BHAWNA GOKANI PGP2011595

CHATARKAR ANURAG MAHADE PGP2011600C.LALRUATSHNGA 2011 FPM06

RUPSA CHAKRAVARTY PGP2011837SAARANG K. MEHTA PGP2011841

UTKARSH SINGH PGP2011923

Introduction

Doré Doré was a French company, famous all over the world for fashionable knitted products. It had evolved from the 1800s Doré Society, which was founded by Jean Baptiste who suggested to his neighbours who like himself made hand-knit hosiery to pool their resources and produce together in order to earn better profits. Its Hosiery division produced socks and stockings for men, women and children; its knitwear division produced a line of children’s clothing knitwear such as playclothes, sweaters and nightclothes. The Hosiery division accounted for 88% of DD’s sales. Doré Doré focused on the high end of its markets with regard to both quality and fashion. It not only produced hose under its trademark DD but also for famous fashion houses like Yves St.Laurent, Nina Ricci, and Chantal de Thomas.

The differentiating factors of Doré Doré were its quality manifested in exclusive yarns like cotton lisle, silk and fine wool; stringent quality control; wide range of sizes; double reinforcement of heels and toes; invisible seams and impeccable fit. It differentiated also by making different calf sizes for men and women.

The high-end segment represented only 5% of the total French hosiery market but DD commanded about 30%-40% of this market. Overall it represented 4% - 5% of the French Hosiery market but only 0.5% of the children’s knitwear segment. Exports comprised 35% of the company’s total sales.

Doré Doré’s operation was divided among two main plants; Troyes produced the children’s knitwear and the Grès plant produced the Hosiery. One quarter of the total Hosiery was produced at the main Grès plant and the rest in 11 family-run knitting shops around the plant. Each season Doré Doré produced each of its hosiery style in two campaigns; the first batch was produced when hardly any retailers had placed any orders and after getting the initial market feedback the next batch was produced accordingly.

Even with the two campaign system the demand was uncertain and this led to high inventory costs as hosiery was produced before knowing the actual demands of the end-users. The demand forecasts which were primarily made by veteran sales representatives and production coordinators from their experience and intuition, was further complicated by Doré Doré’s fashion focus. This made the popularity of different styles highly unpredictable, even successful items enjoyed only short periods of popularity. The hosiery division’s experience during the previous two year had exemplified the problem of demand forecasting. While an unusually hot onset of spring and summer pushed the demand of the hosiery down, the thus adjusted production led to a shortage of hosiery due to a much cooler weather.

François Marguet, the newly appointed Director of Operations was asked by the company’s PDG to look into different problems and find a fresh perspective to deal with them. Some of the problems were: rising labour costs, ever-improving competitors etc. The PDG wanted to know a way to improve the operations of the company to strengthen their competitive position.

Marguet after an initial experiment with the children’s knitwear production system had zeroed in on two different manufacturing systems.

One was of course the traditional manufacturing process. The other one was the cellular arrangement.

Children’s Knitwear:

Sl. No. Process Avg Lead Time Throughput Time1 Yarn and Fabric Suppliers 2.5 months NA2 Knitting NA 80 hours (10 days)3 Dyeing 5 weeks NA4 Cutting NA 40 hours (5 days)5 Sewing and Finishing NA 120 hours (15 days)

From the above table we can observe that ‘Sewing and Finishing’ is the bottleneck process.

Traditional Method:

Number of units produced per day = 2000 units

Throughput Time = 15 days (3 weeks)

Work In Progress (WIP) = no. of units entering the system * throughput time= 2000 * 15= 30000

Cellular Method:

Number of units produced per day = 2000 units

Throughput Time = 1 day

Work In Progress (WIP) = no. of units entering the system * throughput time= 2000 * 1= 2000

Cycle Time = Total Available Time / Number of Units Required Per Day

Average Price of Sewing Machine = FF 55000 (varies from 30000 – 80000)

No. of units produced per year = 2000*52*5 = 520000 units

Traditional Operation Cellular OperationDesired Cycle Time 42*15*8*60 / 30000 42*1*8*60 / 2000 = 10.08 minutes = 10.08 minutesActual Cycle Time 10 minutes 10 minutesThroughput Time 15 days 1 day

1 WEEK

KNITTING

CLOSING THE TOE (SEAM)

IRONING

QUALITY CONTROL

No. of Sewing Machines Reqd 55 84Capital On Machines (FF) 3025000 4620000Work In Progress Inventory 30000 2000Defect Rate 5% 2.50%Flexibility of Workers Less Flexibility High FlexibilityNo. of Defective Units 26000 13000

From the above table, the number of defective units reduces by 13000 in the cellular approach. The traditional approach is suitable for large batch sizes whereas the cellular approach is more suitable for smaller batch sizes.

Output per worker and the time required to produce one unit remains the same.

Hosiery:

Following are the process flow diagrams of Hosiery production workflow for both Traditional Design and Cellular Management System:

Traditional Hosiery Production Workflow

1 WEEK

1 WEEK

2 WEEKS

CMS design for Hosiery Operation

Traditional Process

Sr. No. Process Throughput Time (per Batch)

Labour Content

Total No. of Labour Hours

Production/ Day

1 Knitting 1 week 6-8 min 2 Toe Closing 1 week 1 min 92 441603 Ironing 1week 15 sec 12 23040

4Quality control and Packaging 2-3 week 1-4 min 120 57600

From the above table we can observe that ‘Ironing’ is the bottleneck process.

Traditional Method:

TOE CLOSING

(7 PERSONS)

QUALITY CONTOL & PACKAGING

(8 PERSONS)

QUALITY CONTOL & PACKAGING

(8 PERSONS)

EMBROIDERY

(2 PERSONS)

IRONING

(1 PERSON)

IRONING

(1 PERSON)

LAUNDRY

(2 PERSONS)

TOE CLOSING

(7 PERSONS)

KNITTING

Number of Units Produced per day = 37000 units

Throughput Time = 30 days (6 weeks)

Work In Progress (WIP) = 30 * 37000

= 1110000

Cycle Time = Available Time / Number of Units Produced per day

= (42 * 480 * 30) / 37000

= 16.35 minutes

Cellular Method:

Number of Units Produced per day = 37000 units

Throughput Time = 1 day

Work In Progress (WIP) = 1 * 37000

= 37000

Cycle Time = Available Time / Number of Units Produced per day

= (42 * 480 * 1) / 37000

= 0.54 minutes

Stage I: Toe Closing

Production Time per pair = 1 min

Total number of cells = 6

Total number of sewing machines in 1 cell = 14

Capacity = 14*6*480 per day = 40320 pairs per day

Stage II : Ironing

Production Time per pair = 1 min

Labour Content = 15s

Total number of cells = 6

Total number of ironing machines in 1 cell = 2

Capacity = 2*6*(480/15/60) per day = 23040 pairs per day

Since this number is less than the required capacity, this is the bottleneck. Hence, we have to run the ironing machine for 5hrs

Therefore, total capacity = 23040 + (5/8)*23040 = 37440

Stage III: Quality Control and Packaging

Labour Content per pair = 1-4 mins

Average Labour Time = 2.5 mins

Average Production Time = 1.25 mins

Total number of cells = 6

Capacity = 6*(18*480/1.25) per day = 41472 pairs per day

General Recommendations for Cells in Hosiery

Teamwork is hampered in large cells, hence groups should be small Maximum advantage of the cellular framework can only be obtained when the

employees are cross trained. So proper trainings should be conducted at regular intervals.

Complexity should be reduced to increase flexibility, hence the steps should be cut out