Yamamoto Recording Media - Essay Example

Yamamoto Recording Media: Nimes Plant from 7 Weeks to 7 Days Delivery Key Issue To improve the cash flow of Yamamoto Recording Media (YRM), Fazan decided to reduce the order-to-delivery cycle by up to 85%; which means a gradual decrease from 7 weeks to 7 days order-to-delivery cycle (Collins 2). In other words, there is a strong need to redesign the company’s existing order-to-delivery process. Upon analyzing the case, there seems to be a problem with regards to the company’s distribution network, purchasing department, the main role of Yamamoto logistics Europe, manufacturing department, product/sales (PS) department, and the National Sales Companies (NSC) ordering practices. For instance, Yamamoto’s supplier’s lead time is between 3 to 6 weeks ordering time in advance (Collins 7). Such a very long lead time can affect Fazan’s plan to redesign the company’s 7-day order-to-delivery process. Likewise, the inability of raw materials can also trigger some down-time in the company’s manufacturing schedule (7). Under the manufacturing department, capacity constraint combined with scheduled preventive maintenance and other unforeseen factors such as the absence of necessary raw materials can make the production department unable to meet its target schedule (Collins 7). Lack of support from manufacturing staff can also make it impossible for Fazer to meet his plan of cutting down the order-to-delivery cycle (9). With regards to its distribution network, shipping the final product to Yamato Logistics Europe (YLE) for warehousing and dispatching purposes can only add unnecessary expenses to the company. Therefore, YLE staff should be supportive of Fazan’s plan to change its role from warehousing and dispatching to a more responsive logistics and distribution hub in Europe (Collins 10). As a common business practice, the NSC department was made responsible in getting orders directly from customers or retailers which then will be submitted to P/S department for order scheduling and forecast (Collins 7, 9). Because of added work load, NSC staff has been skeptical to change the ordering plan from monthly period to weekly basis (9). On the other hand, unreliable demand forecast coming from the P/S department can also trigger some problems in the company’s inventory level and the company’s ability to fill the market demand (7). Case Analysis Product Life Cycle In product life cycle, manufacturing companies such as the case of Yamamoto should avoid products that are obsolete because of high levels of inventory. Basically, one of the best and most effective ways to avoid product obsolescence is to practice lean production which can be achieved using the ‘lean six sigma’. History and Philosophy of Lean One of the main reasons why it takes 7 weeks for Yamamoto Recording Media to deliver their finish products to the market is because of the presence of ‘waste’ or unnecessary downtime within its operational process from ordering down to purchasing, manufacturing, and the delivery of finish items. As explained by Meredith and Shafer (167), the concept of lean production is all about being able to reduce waste or operational downtime needed to improve the overall operational processes. Among the benefits of practicing lean production include: (1) cost savings; (2) higher revenues; (3) higher investment savings; (4) increased efficiency in the workforce; and (5) increased ability to solve problems (197). Lean production can help solve business problems. For example, in the process of changing the role of YLE from being a warehouse department or a dispatcher to becoming a responsive distribution hub and logistic (Collins 10), this particular company will not only be able to immediately respond to the needs of the customers but also benefit from increase in work efficiency and cost savings. All these is possible by reducing the risks wherein the end-products would become obsolete in the market. Instead of paying its staff to do repetitive works, this particular company can maximize the use of its available resources. As a result, Yamamoto can benefit from having a higher revenue and investment savings. With regards to the case of Yamamoto, the only way for Fazan to reach the goal of cutting down its order-to-delivery cycle from 7 weeks to 7 days is to implement and practice lean production method. Lean production is possible by improving the overall operational processes. In the process of practicing lean production, Yamamoto Recording Media can benefit a lot from all potential cost savings (196-197). Lean Six Sigma The ‘lean six sigma’ is actually a method which aims to remove operational wastes such as the unnecessary waiting time, failure to utilize the available talents, producing more than what is being ordered, and keeping a high level of inventory among others (Meredith and Shafer 197-202). For instance, in the process of changing the ordering and demand forecast practices of both NSC and P/S department from monthly to weekly basis (9), the top management group can immediately order the necessary raw materials from its accredited suppliers; and immediately schedule to purchase orders in the production line. As a result, this company will not require a long period of 4 to 7 weeks before they can deliver the goods directly to its retailing outlets (i.e. hypermarkets, supermarkets and non-food chain stores (3). The concept of ‘just-in-time’ (JIT) delivery practices is very much a part of maintaining a lean production line (Black 3). In the case of Yamamoto, it is possible to apply the concept of JIT delivery practices to its accredited suppliers and the delivery of finished goods directly to its retail distribution channel. For instance, requiring all of its accredited suppliers to practice JIT delivery could mean reducing the unnecessary manpower and warehousing costs when storing the raw materials for future use. This way, the purchasing department can reduce the risks wherein the stored raw materials could become obsolete. In the process of practicing JIT in its distribution system, this company can avoid business opportunity loss caused by insufficient or inadequate stocks in the market. This explains why Fazan wanted to change the role of YLE from being a warehouse/dispatcher to a more reliable distribution network (Collins 10). Kind of Transformation System Used in the Case Study Among the five types of transformation system includes: (1) cellular; (2) continuous process; (3) flow shop; (4) job shop; and (5) project (Meredith and Shafer 54). In the case of Yamamoto, is using ‘job shops’ due to the fact that this particular company is producing different kinds of audio and video cassettes with or without special packs, etc. (Collins 2, 8). It means that Yamamoto will have to produce a wide-range of cassette products per batches (i.e. E30 per brand type BDB, VC, VG, and HP or E60 per brand type BDB, VC, VG, and HP, etc.) (Collins 14; Meredith and Shafer 54). Three (3) Alternatives The three (3) alternative solutions that will be considered in the case study include: (1) requiring its accredited suppliers to practice JIT delivery and reduce the lead time in ordering process from 3 to 6 weeks down to 7 days; (2) changing NSC’s monthly ordering cycle to weekly basis; and (3) changing the role of YLE from warehousing/dispatching to a more reliable distribution hub and logistics. Since accredited suppliers play a significant role in enabling this company to practice lean production, the top management of Yamamoto should require its accredited suppliers to practice JIT delivery on top of shortening the lead time of 3 to 6 weeks down to 7 days. Doing so will reduce the risks of operational downtime caused by unavailable raw materials. Changing NSC’s monthly ordering cycle to weekly basis is also important in terms of reducing operational downtime. By practicing weekly ordering cycle, the purchasing department can have more time to purchase and prepare the needed raw materials. Changing the role of YLE from warehousing/dispatching to a more reliable distribution hub and logistics is equally important because it will have the company maximize the use of its available resources. By removing unnecessary work, this company can immediately respond to the needs of its target customers. Recommendations Even though these three alternative solutions seems to equally work well in terms of reducing Yamamoto’s order-to-delivery lead times, the computed figure below shows otherwise: Relative Criteria Weighted Factor Alternative Actions (1) Practice JIT Delivery and Reduce the Ordering Lead Time (2) Changing NSC’s Monthly Ordering Cycle to Weekly Basis (3) Changing the role of YLE Reduce operational downtime 40% 10 4 8 3.2 1 0.4 Increase efficiency in operations 30% 10 3 10 3 1 0.3 Reduce inventory level 10% 10 1 1 0.1 10 1 Improve product distribution 20% 6 1.2 6 1.2 10 2 Total 100% 9.2 7.5 3.4 Out of these three alternative solutions, the figure presented above shows that the practice of requiring Yamamoto’s accredited suppliers to practice JIT in the delivery of ordered items combined with the need to reduce the ordering lead time from 3 to 6 weeks down to 7 days will significantly help Fazan reduce the order-to-delivery lead time from 7 weeks to 7 days. Action Plan To require Yamamoto’s accredited suppliers to practice JIT in the delivery of ordered items and at the same time reduce the ordering lead time from 3 to 6 weeks to 7 days, it is necessary to consider the following time table: Tasks Week 1st 2nd 3rd 4th 5th 6th 7th 8th 9th 10th Meet-up with purchasing staff and all accredited suppliers; talk about the need for change. Discuss with purchasing and IT department on how to create a more efficient ordering system that will allow all accredited suppliers to meet the company’s material requirements. Allow the IT department to create a system that will be used between the purchasing department and its accredited suppliers. Create a policy that strictly requires all accredited suppliers to follow the 7 days ordering lead time and subsequently deliver the ordered materials on a timely schedule. Implement the policy that strictly requires all accredited suppliers to follow the 7 days ordering lead time and subsequently deliver the ordered materials on a timely schedule Record accredited supplier’s ability to deliver materials on a timely schedule. References Black, John R. Lean Production: Implementing a World-class System. 1st Edition. NY: Industrial Press, 2008. Print. Collins, Robert S. Operations management: Yamamoto recording media: Nimes Plant from 7 weeks to 7 days delivery. IMD International. IMD-6-0213 (POM 213) v. 18.11.2003. 1999. Print. Meredith, Jack R. and Scott M. Shafer. Operations Management for MBAs. 5th Edition. NJ: John Wiley & Sons, 2013. Print. Read More