MEAGAL STELPLAST

Steering a new path

 Meagal Stelplast: Steering a new path

Decision Criteria:

1. Whether to start supplying horns to OEMs as they provide a steady order for the whole year or
continue with the replacement market.

2. To expand the factory in the space available or a set up a new dedicated facility for OEMs supply
because it requires government accreditation and certificate to sell products to OEMs.

Current policies:
1) Made to order policy due to uneven demand.
2) New workers were paid on piece rate basis. Old workers were paid on fixed monthly basis.
3) Inventory on an average was maintained for 3000 horns. When the inventory fell below 500,
order of 3000 horns were placed.
4) One of the main components Copper wire was maintained as per requirements.
5) They offer a warranty period of three years.
6) 2 workers fixed for testing & rest 10 workers divided on 2 workbenches on rotation.
7) The plant works 26 days a month, nine hours per day. Lunch break for 30 minutes and 2 tea
breaks of 10 minutes each.
8) Initial testing as soon as the horn was assembled, final Testing will be after 4 hours of assembly.
9) Manual Maintenance of orders, invoices, inventory and BOM.

Product Observations:
There are 3 types of items in BOM:

1. Component items: - 31 types which all needs to be procured (Buy Type- Independent item)
2. Assembly items: - 3 types, of which 1 item needs to be procured (Buy Type- Independent item)
and 2 are Make Type (Dependent item )
3. Final Product: - 1 which is Make Type (Dependent item )

Buy type items needs capital requirement and become a source of inventory whereas Make type items
face bottleneck issues that are a closer look at the BOM for a horn of Classic Hero Honda model of 90 dia
illustrates 36 parts including the finished product i.e. Horn Hero Honda classic 90 dia. All the items in the
BOM can be sub-divided into 4 groups namely

1. Hardware
2. Electrical
3. Nuts & Bolts
4. Packing

Product process matrix

MSL operates in replacement market of horns. MSL horns produce different variants of horns based on
two–wheeler specifications and their sub-types in batches as per the orders received. The number of
processes in the company is high and the production is predominantly for 2 products which amount to
80% of production output. Hence the firm is primarily following batch process and is operating on the
diagonal path. However, with the introduction of high volume, the firm has moved slightly off diagonal
direction in the Product- Process matrix.
 General Observations:

1. The process is unorganized and not well laid out. Production is based on customer orders.
Demand & Forecasting tools are not being used
2. Manpower utilization is not optimal. Task specialization is not the buzzword here. Everybody
does everything
3. Material management as seen from the video was unorganized and cluttered. The assembly
parts were haphazardly laid out. This obviously leads to poor material management and
pilferage
4. Consistency in the quality of spares delivered by suppliers was highlighted as suspect. Working
on supplier management can lead to certain improvements
5. Workers need to be encouraged to try and adopt new technology. From the discussion, it was
clearly visible the workers are hesitant to change and are not very flexible. A lot of improvement
can be achieved, if they are made to see the other side of the coin and encouraged to adopt
change
6. Inventory management seems to be non-existent. Though there are no such space constraints
and a healthy demand for horns, inventory is not being effectively used to cater to this demand.
7. Supply of raw material is erratic and at times the suppliers run out of STOCK. This builds
pressure on MSL management and delays their production schedule. It also creates planning
and forecasting problems
8. There was a lot vacant land beside the plant which was unutilized

+ 2 min 3. Housing
1.2. Edge
1.1. Coil Assembly (5 min)
Cleaning 5. Final
Winding
Assembly
(2min)
(4 min)
2.2. Company 4. Diaphragm
2.1 Burr + Stamping Assembly (2 min)
Cleaning
min) 2 min
6. Stud and
Bracket
9. Packaging 8. Final Testing 7. Testing (4 min) Fitting
(5 min) (Delay 4 Hrs) (2 min)
(2 min)
 Calculations:

Bottleneck: Housing Assembly and Packaging (5 min)

Batch Size: 30 units

Working Time: 9 hrs in 1 day

Breaks: 30 min (Lunch), 20 min (2 tea breaks)

Effective Production time/Day: 490 mins

Final testing performed 4 hours (240 min) after the unit is test ready

Productive time of final test machine= 250 min

Parameter Batch line process

Assembly Line
Remarks
process
Productive time in a day (mins) 490 490 Working time - Lunch & tea breaks ( 9x60-30+20)
Time taken to producce 1st batch 264 264 Waiting time for testing + Cycle time + Packaging & Testing time (4x60+17+5+2)
No of batches produced in a day 14.29412 46.2 No of batches calculated based on Arithmatic progression
No. of batches produced in a month 371.6471 1201.2 No of working days (26x no of batches in a day
No. of horns produced in a month (Workbench 1) 11149.41 36036 Workbench consist of older employees
No. of horns produced in a month (Workbench 2) 12041.36 38918.88 Workbecnh 2 consist of younger employees (8% more efficient)
Total production capacity 23190.78 74954.88
Actual production in a month 15000 15000
Utilization 65% 20% Actual/ Ideal production capacity

Note:
mention assumption on 17 mins of cycle time through the diagram

Allocation of Workers:
Worker Codes
1
2
3
4
5
 No. of
Operation
workers
Coil Assembly 1
Housing Ready 1
Housing Assembly 1
Diaphragm Assembly 1
Final Assembly 1
Stud and bracket fitting 1

Batch process:
Cycle time: 17 minutes:: It takes 7 minutes before final assembly starts and 10 minutes for final
assembly + stud fitting + Initial testing

First batch comes out after packaging: Time till initial testing + waiting time + final testing + packaging

Second batch: First batch time + cycle time

Total batches in a day: [(effective production time-first batch time)/cycle time] +1

Total no. of batches: 26 days * total batches in a day

Total unit production (workbench1): Total no. of batches * Batch size

Total unit production (workbench2): Total no. of batches * Batch size * (1 + efficiency difference)

Total production capacity: workbench 1 + workbench 2

Capacity Utilization: 15000/total production capacity

MLT = 1*17 + (5 + 2) = 24 mins (1 batch)

Assembly line process:

Cycle time: 5 minutes:: It takes 5 minutes for final assembly & packaging

First batch comes out after packaging: Time till initial testing + waiting time + final testing + packaging

Second batch: First batch time + cycle time

Total batches in a day: [(effective production time-first batch time)/cycle time] +1

Total no. of batches: 26 days * total batches in a day

Total unit production (workbench1): Total no. of batches * Batch size

Total unit production (workbench2): Total no. of batches * Batch size * (1 + efficiency difference)
Total production capacity: workbench 1 + workbench 2

Capacity Utilization: 15000/total production capacity

This show even with batch process capacity utilization is very less. They should target 100% utilization in
batch process. If the plan is to expand, they can move to assembly line process for higher capacity.

Conclusion:
Bottlenecks have been identified as Housing Assembly & Packaging.

Since capacity utilization is low even for batch process. First identify the demand in market by OEMs and
Replacement market. If the demand is higher than total capacity of the plant running a batch process, it
should shift to Assembly line process to increase its capacity.

As for the Capacity Utilization, improvements on observations mentioned above will increase the
utilization of capacity.

Pneumatic tightening machines and other machines should be used to assemble the horns, since it will
save a lot of time. Manual work should be reduced and more standardization has to be brought in.

Hiring new workers and paying them on Piece per rate basis would also help in expansion.

Instead of rotating a person, fix them for particular work to improve on the learning curve hence
increasing the plant efficiency.

Recommendations:
The layout can be arranged in a C layout. This would not only improve efficiency but also lead to
reduction of travel time. This would also address the problem of disconnected worker system.

Training of employees: The workers need to be trained well on the new technology; this would help
increase the utilization of the system.

Utilizing the idle land for other purposes. The company can use this for expanding capacity if they
manage to get contracts from OEMs

The material management can be improved by giving each worker the no. of parts required for the
assembly. This would not only improve the material management but also reduce pilferage.

We would recommend it to go for OEMs without buying any land. If the demand
is high move to Assembly line process and expand it within the same plant.