Shipper Manufacturing Company

Prepared by students: Prepared by students:

Yussupova Yana 20080408Yussupova Yana 20080408

Syzykov Ruslan 20072973Syzykov Ruslan 20072973

Beisikenov Timur 20051558Beisikenov Timur 20051558

Company’s Overview

* Started in the aerospace business in the 1960s.

* In the early years, development and production of the Echo weather satellites.

* Company is being successful completing 12 aerostats per year.

3 Divisions of Shipper Company

Shipper Manufacturing Company

Materials Division(DM)

Electrical ProductsDivision(EPD)

Advanced Products Divisions

(APD)

James Wallace, general manager of APD proposed new business strategy:

*APD will continue to respond to individual customer design requirements;

*To tailor new products to unique customer applications:

*Low volume, but sole-source products;

a) by customer funding for product development;

b) by large year-to-year variations in sales and profits.

Financial data for the past 5 years

Thousands of U.S.2002 2003 2004 2005 2006

Shipper Co.Shipper Co.Sales 34.884 41.029 46.824 41.914 47.85

7

Profits (after tax) 1.256 1.324 1.363 1.035 1.579

The APDSales 5.977 6.508 4.080 7.600 5.179

Profits (after tax) 703 597 223 1.139 150

Profitability gain in previous years (since 2002 – to 2006 )

0

2

4

6

8

10

12

14

16

2002 2003 2004 2005 2006

Shipper Co

APD

Main Objective

*Reduction of APD dependence on short-run customer-specified products.

*Bringing on stream new products with higher volume; continuously

*Fasten and shorten the process.

*Make the process and labor cost less, unless productivity and efficiency acquired shall be high.

Analysis of objectives

* Farther changes in business strategy are concerned about improving the manufactur ing toward higher volume and lower cost products. Temporary the products are custom-designed, that means the costs are passed through to the customer. But the plan is to convert system into producer-designed so that the cost costs will not necessarily be passed to the customer. There is have to be a change in the system since more intense competition, where cost becomes the most important objective.

Further Analysis..

* The quality will remain the same, and products are being same standard. That means the change in delivery should not re-arrange the typical data for the products. However that is not a main goal in adapting new business strategy. There could be another innovations in product line to satisfy the previous steps.

* The issue on delivery system would be changed toward shorter deliver times in order to be compatible.

* Since the product is not custom designed, customer who makes an order should not worry about product transactions. Customers may also insist for some products for being produced faster, if the product is possible for quick production.

Changes in process..

* The change in business and manufacturing strategy will directly cause changes in every part of operations.

* Below you can find an explanation for every part of a whole;

a) Process/equipment

b) Organization

c) Labor

d) Capacity and scheduling

e) Quality

Process

* The production process would definitely use more automated equipment, since we need lower the cost. This will accompany standardization of the product and less flexibility for product and volume changes. So that we need less labor power to complete work.

* After that, we face another change in process in line flow process and away from a job shop layout. . Line flow will be a more efficient form of layout since the process is fully automated and volumes would have grown. As a result the process shift would be changed from make-to-order, to make-to-stock! Little sharpen of vertical integration, however the company is already being integrated vertically, and it wouldn’t be dramatic advantage.

Organization

• After the company gets higher volumes of production, a production control will need additional manufacturing. While the industrial group has shared services in materials management, a separate department in APD manufacturing is needed to focus attention on the production and inventory control task.

* The APD department should think about moving quality of it’s product assurance under the manufacturing department. This will make quality standards higher, since now the quality became as a part of the production process.

Labor

* More automated equipment gained that will re-arrange the changes in force and labor. The successful installment of new automated equipment will cause the workers to be less skilled and less paid, these are advantages of direct production. Fewer people would be needed. As cost control becomes more important, there will be more emphasis on production standards. Internal inventory of laboratories would also be fully equipped with PIC, and such upgrade will fasten the process. As a result the whole process would appear more effective.

Capacity, Scheduling and Production and Inventory Control…

* The changes will came upon stocking policy to control the raw materials and finished goods to be carried in inventory. The changes would be needed to gain higher volume production and gain recognition among customers, upon reduction of time for manufacturing. As the result of stocking policy, some internal changes in production and inventory will appear.

* As the operation becomes more line oriented and make-to-stock, the possibility of higher are needed will grow. Therefore higher capacity will allow more production be completed in order. However, scheduling will become more complex.

Capacity, Scheduling and Production and Inventory Control ( continue )

* The top management like those of production and inventory control people will be asked to have more professional skills and tight knowledge in their sphere. So that some outside highly-experienced engineers will be attracted. Some inside training options would be created for native personal, in order to increase the professionalism.

Product Quality

* Production quality control would become more high-volume-production oriented rather than job-shop or project oriented. This process will need more quality control charts, more attention on during inspections and more qualified employees to attend. Since we increase the volume of production, we also need to avoid quality mistakes, whether the products will be scraped during delivery or faked during production, so to avoid the customers complains, and returns on products. In case to avoid such mistakes of mass production, some quality teams and total quality programs would be organized.