The company manufactures water storage products with pressure heating systems. The product range of the firms comprises of five models that has low variation in design such as the storage capacity and dimensions. The company employs a current process of batching production orders in a layout that is jumbled and disarranged.
The production engineering head has made a proposal to the top management to change the process into a one-piece flow approach, redesign the facilities layout into a U-shaped assembly line, and transform the orientation into a make-to-order process.
The benefits of the proposed changes will make the company achieve its goal of cost advantage, process simplification and inventory management. Also, the implementation of the changes will free up space in the shop floor which would create an opportunity for the company to extend the product line or expand the capacity of the production.
Holmgren Engineering is a manufacturing company with core competencies in developing, manufacturing, and selling of water storage systems that include main pressure heating system. The products are marketed and sold under Hetvatten Plus trademark. The product range includes five models with different storage capacities, dimensions and dwelling type usage.
Holmgren Engineering has evolved from a humble heating engineering firm, started by its founder Benny Holmgren, into a full service manufacturing company under the umbrella of Karlsson Invest conglomerate. The current CEO is John Svensson. Peter Wiklund is the production engineering head who made proposals and recommendations for changes in the current operations process.
This report will initially examine the current operations process used by Holmgren Engineering. The key features of the current process will be discussed and evaluated according to their advantages and disadvantages. It will then examine the key changes of the proposal made by Wiklund. His proposal is the re-engineering of the process which would create a U-shaped production layout employing a one-piece flow orientation. Introduction of make-to-order approach was recommended by Wiklund alongside the new process. The costs on new investments and benefits that the company will gain from the proposal will be analysed.
Several factors are identified that would be carefully managed in order to successfully implement the changes and will be discussed in the latter part of the report. Conclusions and recommendations in the last part will summarise the report in a nutshell.
Discussion/Analysis of Case Questions
1. Examine the current operations process used by Holmgren Engineering. Explain the key features of this way of making products.
The current process of producing boilers in Holmgren Engineering is called batch process. Batching is the approach of producing goods in groups or lots of similar products made on the same equipment. Batching method is efficient for medium volume products with medium variability. The method utilises specialised equipment and skilled people. Holmgren Engineering's products, which have small deviation in designs of five models and medium amount of demand, more fit the requirements of the batching process. The operations process involves four principal sub-assemblies of copper body, top tank, galvanised casing and the electrical unit. These sub-assemblies are produced in various tasks, systems and equipments.