Sunwind AB Case Study

Executive Post Graduate Programme Batch 2016-17 Operations Management Case Study – The Company – Sunwind A.B. Submitted By: OM EPGP Group 3 Name Saikat Hazra Santanu Dasmahapatra Tanmoy Bose Sreemoyee Saha

Roll No. 29 32 38 36

Questions and Answers

Q3 What are the challenges facing Sunwind? The challenges faced by Sunwind can be categorised into external and internal Internal (Process Oriented) Sunwind’s major customer was Volvo, however it was facing problem in its operation. This is because 1. Sunwind was facing difficulty in meeting both quality and quantity as required by Volvo. While Volvo’s expected requirement is 1400 units per week, the current production for the Sunwind in 1200 unit. 2. Sunwind was not being able to run at the expected capacity due to equipment failures. 3. Sunwind was facing rejections of shipment from Volvo. 4. Quality control was not being followed in Sunbeam as documented. External (Market Oriented) 1. Sunwind had two factories in Sweden at Hogsater and the other at Save. Hogsater had available space and the parent company of Sunwind, Perstorp had the opinion that it should close the Save factory. 2. Sunwind was facing increasing competition. One of the competitor could be the supplier of automobile seats to Volvo’s Ghent firm. 3. Volvo had implemented Just in Time and as per best practises rule of JIT the vendors also need to be working in JIT. 4. Implement of JIT also results into decrease in number of vendors, as practise as followed by automobile industry leader Toyota.

Do they need a change in strategy by Sunwind? Why? Yes Sunwind need to change its strategy    

It has a high batch size. Inadequate amount of labour in operation like riveting and gluing carpet and inadequate number of machine like in milling is causing high cycle time. It has a high inventory causing high MLT. As its major customer Volvo has already implemented JIT it has to implement JIT too to keep in sync with the requirement lead time.

Also refer to the attached the excel for value calculation “Sunwind Case Santanu,Saikat,Sreemoyee,Tanmoy”

Q4 What are the benefits to implement JIT for Sunwind? The benefits of Sunwind to implement JIT are. 1. This will enable it to increase its quantity produced and will be able to meet the demands of its customer Volvo. It will lead to improved quality, reduction of inventory, reduction in lead time and decrease of loss due to rejections. 2. This will enable Sunwind to reduce its inventory cost. 3. As the batch size will be reduced amount of wastages for defects will get reduced. 4. The Save plant due to its close proximity to Volvo plant can better utilizes JIT. 5. Sunwind can better demonstrate its capability by being the first Swedish Justin-Time supplier. How Volvo will get benefited if Sunwind goes for JIT production and delivery? If major vendors like Sunwind also implement JIT it will improve the lead time across the supply chain for Volvo and will eventually give Volvo major benefit.

Q5 Draw the process flow diagram of Sunwind operations. Perform capacity analysis Sunwind’s operations ?

Attached above is the screenshot. Please also refer to the attached the excel for more details “Sunwind Case Santanu,Saikat,Sreemoyee,Tanmoy”

Is the capacity at plant sufficient to meet the requirement (Demand and any other) of all VOLVO plants? How would you interpret the capacity calculations? (Consider a batch size and process time information in Exhibit 7). No, because the present capacity required to meet the Volvo production is 1300 unit per week. Expected capacity required is 1400/week. From the capacity analysis the milling or shaping machine can manufacture 1091 unit per week. The rest of the stations can be debottleneck by employing more number of workers like operation for riveting and gluing carpet. To increase the line capacity capital investment is required for milling operation.

What is the Manufacturing Lead time? The WIP is 4.6% of save sales (approximately) and this is product is account for 17% of the total sales revenue. So the average wip is calculated as 1346 approximately. The bottleneck cycle time of the present line (with the data given in the exhibit 5 and exhibit 7) is 18.65 min. So manufacturing lead time = 18.65X1346= 25106 min= 418 hour = 17.43 days. And now this operating cycle can be debottlenecked by employing more human resource. So the bottleneck will come in the milling or shaping machine whose cycle time is 6.6 min. So the manufacturing lead time will then be 6.6X1346= 8884 min= 148 hours= 6 days

Do you think it is right or a long MLT in line with JIT requirement? If it is short or long, what is cause of such short/Long MLT? No it is very long with respect to JIT requirement. Even after using more resources and without deploying any capital expenditure, MLT is 6 days. As per the present JIT requirement of Volvo, Sunwind has buffer of only 6 hours to meet the requirement of Volvo. The MLT is as high as 6 days. The cause of this high MLT is batch size, cycle time, setting time, improper utilization of resource.

Q7 Should Lars Olav were to design a JIT programme at Sunwind, what should be its elements? The elements of the JIT programme at Sunwind is improved MLT of 6 hours to meet the demands of Volvo. The weekly production rate is projected at 1400. So the daily production rate is 280. To reduce the MLT, Sunwind has to invest labour in all the labour intensive operations like riveting and gluing carpet and adding into machines like milling machine.

Give details about the current status and future requirement of few essential ingredients of JIT/Lean elements requiring improvement/change in Sunwind. Please suggest/show your improved/changed version of the Sunwind operations process to meet the requirement (Demand and any other) to all Volvo plants.

Attached above is the screenshot. Please also refer to attached “Sunwind Case Future projection Santanu,Saikat,Shreemoyee,Tanmoy”excel. The capacity has been increased by deploying another shipping or milling machine. On another working station the capacity has been increased by deploying more human resources to get a minimum production of the line 1500 per day. The batch size has been reduced to 210 to meet the JIT requirement of 6 hrs MLT.