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design and analysis of lean maufacturing - Case Study Example
Design & Technology
Pages 3 (753 words)
Design and Analysis of Lean Manufacturing Table of Contents I. Summary of Findings 3 II. Background Information 4 III. Problem Statement 4 IV. Analysis of Alternatives 5 V. Detailed Recommendations 6 VI. Implementation and Evaluation 6 VII. Appendices 7 Works Cited 8 I…
The reputation for quality is what keeps Elba afloat with a select base of customers, albeit with those customers increasingly coming from remote areas relative to the location of the plant. It is the remoteness of the current remaining customer base that has caused the company to incur a growing cost base in inventory as well as in distribution. These two items have grown by 12 percent and 10 percent respectively over the past three years. In absolute terms too, distribution has come to almost equal labor costs and has come to account for the second largest share of costs after labor, and only marginally smaller than labor costs at $11.1 million. Inventory costs, meanwhile, have come to equal materials costs, and with the rate of growth of inventory costs is poised to overtake materials costs. On the other hand, the move to Southeast Asia would chop 30 percent from distribution costs, and 60 percent from labor costs. Assuming all other costs remain the same, that would translate to savings of about $7 million in labor costs yearly and $3.33 million in distribution costs per year. Given though that clients are distributed in equal measure by volume outside of Asia, there might be minimal to no savings in distribution costs. ...
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