Operations Management II: Group Assignment

Case Analysis:
Sunwind A B

Submitted by
Group No.3, Section D
PGP-I (2015-17)
IIM Indore

Amit Bhardwaj | Apoorva Mall | Avinaash VA | Chetan Patil | Deepak Kumar | Harjot Kaur |
Monica | Praveen Bhukya

Challenges facing Sunwind are:

Average demand is expected to reach 1400 units/week in 1986

whereas effective capacity is less than 1250 units per week due to
equipment failures.

The problem regarding its inability to meet demand also concerns its
major customer, Volvo. Volvo's requirements for floor lids has increased
from 250/week in January to 1300/week in November.

Quality control procedures in manufacturing are lax. Procedures are not

monitored formally and there is a tendency to rely on workers' ability
to recognize and react to glaring faults.

The present trend in the automobile industry to rely on fewer suppliers

can pose problems ahead as Volvo currently depends upon 600
suppliers in contrast to Toyota's 320.

The above situation is exacerbated by the competition a Belgian

manufacturer poses as it supplies floor lids just-in-time to Volvo's
Ghent plant where the 700 series 5-door model is being produced.

Information regarding the appropriate color/carpet combination from

Volvo has to be obtained quickly in order to launch orders into
production.

In view of the above problems, a change of strategy at Sunwind is essential.

Sunwind needs to focus on improving its capacity and quality problems first.
Presently, it is unable to meet its customers' demands and is also unable to
conform to the standards of quality required by them. Both are major causes
for concern, even more so given the competitor already supplying just-intime to the Ghent plant.
Moreover, the company's Managing Director, Lars Olov, believes the present
operations to be neither effective not efficient, suggesting that Sunwind
needs improvements in technological and operational aspects as well.
The benefits of implementing JIT for Sunwind would be:

Sunwind's inventory costs would decrease substantially.

There would also be no idle inventory, hence improving their working

capital management and cash conversion cycle.

It can reduce the batch size and control the variation in the batch size.

Implementing JIT will enable ease of transportation.

Conformance to quality controls can be implemented more easily.

In case a batch is found to have a defect, the wastage would be

smaller due to the reduction in batch size under JIT.

JIT would foster collaboration with Volvo as well as suppliers, hence

ensuring better working relationships.

Analysis of process flow can be used to determine non-value adding

activities and eventually curtail them.

An integration of the various departments such as purchasing,

production and logistics would improve the organisation as a whole
and give it a competitive advantage.

The benefits for Volvo would be:

Improved conformance to the standards of quality it requires.

Reduction in delays as Sunwind would be able to meet its demand

requirements.

Improved coordination between Sunwind and Volvo would reduce nonvalue added activities and ensure a better working environment.

Sunwind's team would undertake the responsibility of overseeing

production schedules.

Key elements for JIT implementation in Sunwind:

1) Shift of focus from make to stock to make to order strategy. This would
reduce the lead time and over production.
2) Reduction of inventory level would help identify quality issues at the early
stages which would reduce rejections towards the end of assembly line.
3) Design the plantlayout to minimize the distance between adjacent
workstations which would reduce material handling cost and time. This would
also help reduce the damage caused to parts due to excessive movement.
4) Reduction of manufacturing lead time so as to start the production as
quickly as possible when an order is booked.
5) Building close ties with suppliers of various parts so as to ensure their
cooperation in smooth implementation of JIT.
Current status and required elements for adopting JIT in Sunwind:
1) High raw material and WIP inventory level
Current Status: Due to high batch size, problems do not surface immediately
which hinders quality check at source. Relativelyfew of the quality control
procedures were followed in practice. Quality control processes in

manufacturing were lax. There was a tendency to rely on workers to

recognize and react to faults. No summary statistics were available
pertaining to such rejects.
Required Changes: Sunwind should focus on reducingits inventory level and
manufacturing lead time so as to identify defects at source thus reducing
cost as rejection rate comes down.
2) High delivery lead-time of suppliers
Current Status: The purchasing department of Sunwind uses a 60-week
planning horizondue to extended delivery lead time of some items like
Carpeting. On the other hand, the production planning department focuses
on first four weeks of delivery schedule which was considered firm. Due to
this, raw material inventory unnecessarily goes up.
Required Changes: Sunwind should build close ties with its supplier and ask
them to reduce their delivery lead time.This can be achieved if its suppliers
also adopt JIT model. This would also reduce the inventory levels of Sunwind.
3)High batch size
Current Status: The batch size of Sunwind is high resulting in a very high
manufacturing lead time which is not acceptable for a JIT.
Required Changes: To meet the increased demand of Volvo, Sunwind needs
to improve its cycle time as well as reduce its manufacturing lead time by
reducing its batch size. Only operation 6 has a significant set-up time which
has to be reduced for going to JIT by enacting machine controls and
preparing for changeovers while a job currently in production is still being
processed.
Present Batch size = 2500 units
Current Production capacity = 1250 units/week and time taken= 2 weeks
Required delivery time for JIT= 6 hours
Required batch size = 2500*6/ (2*40.7)= 184.27 185 units/batch
4) Non-uniform workstation setup time
Current Status: In Sunwind, the workstation load of various operations is not
uniform. The cycle time of processes vary considerably. As a result there is a
high level of inventory at workstations with high cycle time.
Required Changes:Capacity planning and line balancing can be used to meet
the changed requirement of Volvo plant.
Taking the max setup time i.e., for gluing process = 100 minutes
The time spent on 500 units with run time 2 min = 100+500*2 = 1100 min

The setup time of the machines should be anything less than =1100/500 =
2.1 minutes for Just in time delivery