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Arcadia University & Aventis School of Management

Subject Lecturer Batch Title (MBA) Operations & Technology Management Mr. Jeffrey Tan MBA3 University-Wide Assignment
Name of Student (full name as in the attendance file) Chua Boon Kiat , Roger Email address of student: Rogerchua5901@gmail.com
In case of any need to contact the student after submission, the lecturer will contact the student using the above email address. Students are expected to check their email account daily. In the event of nonreply, or the email being rejected etc, no further action will be taken to contact the student.


Serial No. in marksheet


Checklist: Submitted on Due Date?

YES/NO (Date submitted: dd mmm yyyy)

Submitted soft copy? YES/NO (Date submitted: dd mmm yyyy) The soft copy (in MS-Word 2007 or 2003) is to be sent to jefftanasgn@gmail.com Page length limit observed? YES/NO (No of pages: ___ pages)

Q1 Identify and analyze a technological innovation and/or management

information process or system that provides operational improvement within an organization or industry.

Company profile Denon and Marantz , Premium Sound Solution (in short PSS) is a professional company that designs , manufacture and sells OEM speakers. There are two main segments of the markets that PSS focus on, automotive business and electronic consumer business. Some of the key customers for automotive are : GM , BMW, Ford, Toyota and VW . Some of the key customers for electronics consumer business are Philips, Nokia, Creative, Dell and Lenovo. Introduction PSS China, a subsidiary of the D&M PSS which has its HQ in Belgium started manufacturing of OEM speakers for both Automotive and Consumer customers. As China is known for its cheap labour, the initial intention of setting up this subsidiary is low cost . However at the turn of the century, the competition of skilled labour and cost of labour has rise by 15% each year. Besides the cost factor, loss of skilled labour and resulting in poor quality products had become a critical issue for most companies. D&M PSS decided to form a WIT team to challenge the issues of under-performing quality since it has affect the company brand image and resulted in compensation to customer, especially automotive customers for failure to reach the quality expectation it demands. Initial situation - manual soldering operation In this assignment, the focus will be on the automation of the soldering station as recommended by the WIT team , the Pareto chart shows the highest number of rejects are caused by poor soldering. In year 2000, most of the speaker manufacturers were using labour for all the assembly of parts as the case of PSS China. However as the customer base grew, especially with automotive customers, quality level demand has increased and the requirement PPM(parts per million) has reduced from 100PPM (electronic consumer customer) to 10PPM (automotive customer). This result in very tight quality control at the outgoing quality check but since soldering failure can be a latent failure in the field, it is difficult to filter out all rejects. Though training and magnifying glass were given to soldering operators and line inspectors, there are still rejects that escaped through the inspecting gates. Failure rates of 1000 to 1500 PPM were still reported both in the factory and customers end. Since the quality requirement of automotive
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customer are at 10 PPM, monthly compensation to customer for not reaching the requirement is around USD 30,000 per month. Speakers manufacturing Process For speakers manufacturing, the soldering of the lead wire to the speakers wire is one of the critical process that will affect the quality of sound performance of the product. This step is difficult as the speaker wire is thin around 0.01 mm and the lead wire is around 0.5 mm. Even for a experience operator, this operation is extremely difficult as it entails a steady hand and soldering touch to ensure a good joint. As the turnover of experienced operators and cost of operators are rising in China, it is very difficult to achieve the target set by the company and therefore a WIT team from Engineering, Development, F&A, Operations and SCM was formed to look into this issue. WIT improvement plan A couple of brainstorming sessions was held and finally one of the ideas of automated soldering station to replace manual soldering was taken due to the following factors: 1) Consistent soldering quality 2) High soldering quality able to achieve less than 10 PPM 3) Fast changeover all data for new and existing models are keyed into the database. Any changeover of models is done via a on line terminal. 4) Replacing the operators no training needed and no fear of losing expertise 5) Removing of existing bottleneck - two robotics arms can replace about 5 operators per line. 6) ROI is at 12 months which is less than 18 months a rule for the company for any investment above 200K USD. Justification Process from the WIT team When the team came up with the idea of replacing operators with robotic soldering machine, a couple of questions were raised: 1) What are the competitive advantage to the firm1 2) Does it have a first mover advantage2 3) SWOT analysis of the Robotics versus manual operator
1 2

Porter 1980

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4) ROI for the project When D&M PSS started their business in China, the competitive strategy is derived from the firms development of its resources and capabilities.3 One of the D&M PSS capabilities was the R&D effort in producing car speakers with a short and smaller magnet system which reduces the overall material and protect the environment. Though there are other examples of strong capabilities such as lean manufacturing, short lead time to delivery , all these experiences are imported from HQ in Belgium and the local managers are train in these concepts. At the same time, D&M PSS also decides what positioning they choose to compete, along each of the five dimensions - cost, quality, availability, features/innovations and environmental performance.4 In this project, all the five elements are key drivers for replacing manual soldering with robotics soldering. However to justify the decision for the heavy investment a SWOT analysis was required. SWOT analysis5 A SWOT analysis was conducted to analyses the opportunities, threats, strengths and weakness of the proposal. Following are the excerpts of the SWOT analysis: SWOT comparison of Robotic soldering VS Manual soldering

High Quality<10ppm Ease of change-over< 30 mins Local service & maintenance available Spare parts availability Higher speed Long term= lower cost High repeatability Competitive advantage first in the market

Difficult to engage right level of technician First time programming accuracy High initial investment

First mover advantage attract automotive customer Competitive advantage Long term 1) Lower cost 2) Better quality 3) High flexibility 4) On time delivery

If breakdowns, deliveries will be affected Data back-up system to be in place Emergency recovery plan to be in place ROI heavily dependable on expand customer base.

Project implementation
3 4

Operation strategy ,Sarah L Beckman and Donald B. Rosenfield pg 8 Operation Strategy, Sarah L Beckman and Donald B Rosenfield pg 24 5 Porters competitive strategy

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Once the investment are approved, purchasing and engineering start the supplier selection process. Since Fanuc robots has been used in other factories, Fanuc was selected as the preferred choice. The other supplier , Panasonic was also selected for technical ,price and service comparison. Finally after comparison and careful consideration, Fanuc robots was chosen. During the trail of the Fanuc robots, a trail line was setup just for the testing of the robots performance in terms of repeatability, accuracy of pin point solder, recognition of different products, quality of the soldering joints and information of defects and good/bad product information stored in the database and accuracy of the data. After three months of intensive testing and trials together with our engineering crew and the supplier, the trail was classified successful and the project will be implemented on the production line. During the three months, technicians were also trained by the supplier for trouble-shooting skills, repair and maintenance and overhauling skills. Results During the trail, result show that the soldering quality result were at a range of 0-5 PPM which are lower than the target set by the company. At the same time, changeover time for different models reduced by 30 minutes for each model. As a result the initial cost reduction during the trail was estimated to be around 12% as compared to using operators. These cost includes warranty cost, cost of non quality, changeover cost and field return cost. With these successful result, the first line will be implemented immediately with 2 robots soldering station that will replace the operators. Future plan Once the first line is implemented, management will look at the actual result in terms of financial and operations to make decision for the rest of the 10 lines implementation. As these involves a hugh capital outlay, management is monitoring the result not from the factory alone but from customers feedback. In year 2007, all the 10 lines are implemented with Fanuc robotic soldering station and the company has grown to be the world third largest supplier of automotive speakers.

University Wide Asgn MBA3 Student Name, Student Number


University Wide Asgn MBA3 Student Name, Student Number