OM Group Assignment

SUNWIND

Submitted to:
Prof. Sanjay
Choudhari

Submitted by:
Ajinkya Bhagurkar 2016PGP007
Devendra Baghel 2016PGP009
Ankur Arunashish Ghosh
2016PGP013
Kirthi Bandi 2016PGP017
Md Minhazuddin 2016PGP020
Sambit Patra 2016PGP031
1. What are the challenges facing Sunwind? Do they need a change in strategy by Sunwind? Why?

Sunwind is unable to meet its client Volvos requirement regarding quantity and quality. Volvos
requirements were increasing at a very fast rate. Sunwinds products were also being rejected by
Volvo.
A Belgian manufacturer was emerging as a potential competitor to supply for Volvos Ghent plant.
Sunwind is under presser to implement just-in-time technique delivery in order to be at par with
its major customer, Volvo. Sunwind requires a change in strategy. The need to change strategy can
be explained by the following reasons:
They have inadequate labour who arent skilled enough. Many of their products have been
rejected by their main customer because of off-spec plywood, glue works and differences in size
of floor lids, which were part of their major responsibility.
They have a batch size as that of two weeks of production.
The quality control actually done is less than that as mentioned in the quality control manual.
They lack just-in-time delivery and are not in sync with Volvo's demand rate.
They have a very high inventory.

2. What are the benefits to implement JIT for Sunwind? How Volvo will get benefited if
Sunwind goes for JIT production and delivery?

Sunwind should implement Just-in-time delivery due to the following reasons:

It will help them to increase the quantity produced and meet the demands of their main customer,
Volvo. It will create a synergy between them and their clients.
JIT will also reduce the chance of rejection of the product. Batch size will reduce and hence inventory
will also decrease. This will lead to low inventory cost.
If Sunwind implements just-in-time distribution this will lead to their higher productivity and lower
lead time.

Higher productivity from a major supplier like Sunwind will result in better production from Volvo.
Since, Volvo will get products at short time intervals it will lead them to produce more at the same
interval of time. This will benefit Volvo greatly as profit will increase and will make an efficient
delivery system for Volvo.

3.Do this analysis only from Operation 1 to Operation 7.

Draw the process flow diagram of Sunwind operations. Perform capacity analysis
Sunwinds operations. 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). What is the
Manufacturing Lead time? 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? Do this analysis
Operati Operati Operatio Operatio Operatio Operatio
on 1 on 2 n 3&4 n4 n5 n6
Operators 1 2 1 3 2 10
Run time 2.8 2.3 6.85 2.85 8.5 22
(min)
Run 2.8 1.15 6.85 0.95 4.25 2.2
time/operat
or
only from Operation 1 to Operation 7.

The capacity of Sunwind due to equipment failure= 1250 units/week

Number of working weeks = 45 per year
Total capacity per year= 1250*45=56,250 units
Demands in the year 1985 were 17,050, 4,525 and 12,090 for the three plants Torslanda, Kalmar,
Ghent of Volvo which was 50.64%,13.44%, 35.91% respectively for the overall sales of 33,665.
The overall demand given for the year 1987 is 65,000. So according to the percentage of demand for
the three plants, the demands are 32920, 8736.82, 23343.23 for Torslanda, Kalmar, Ghent plants of
Volvo.
Current demand = 1300units/week
It is expected that demand = 1400 units/week

Bottleneck of operation is operation 3 and 4 i.e. cycle time for process= 6.85 min
The working time per week = 40.7 hours
No of working days per week=5
So average working hours per day =40.7/5=8.14
Total units produced per day= 8.14*60/6.85=71 units/day approx.
So total capacity per week=71*5=355 units/week
So total capacity per month=355*4=1420units/month
In July 1985, demand for three plants per month = 1115units
Sunwind was able to fulfil the demand till July 1985
But demand in august 1985 was 4000units by three plants combined
So demand expanded rapidly and Sunwind will not able to fulfil the demand of Volvo.
Assuming the batch size of 500units
Mean lead-time(MLT)= WIP*cycle time of process
= (2500+1500+1000+1500+500+500) *6.85=51375 minutes
 = 856 hours=21 weeks (considering working hours/week 40.7)

The lead time is very high and the primary cause for this is large batch size. For just-in-time, high
manufacturing time is not preferred as just-in-time works only if lead time is low. For JIT the
manufacturing lead time should be low to provide timely delivery.

4.Should Lars Olav were to design a JIT programme at Sunwind, what should be its elements? 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.

If Lars Olav is planning to create a JIT schedule for Sunwind then he should consider the following
points:

1. The JIT works to fulfil demands on time not to create unnecessary stock. This is used to prevent
over production and maintain low inventory.
2. JIT aims at setting up plants which minimize the distance between the place of warehouse and the
place where goods are supplied.
3. To maintain lower manufacturing lead time so that production can be done in lesser time.

The current condition of Sunwind is such that they have very high inventory, high batch sizes for
production, very high manufacturing lead time and production capacity is less than the current
situation of demand. High batch size also leads to difficulty in identifying the problem. Few control
measures were not applied but were mentioned in the quality booklets provided by them to their
clients. Many of the products were rejected by Volvo because of defective products due to damaged
equipment.

In order to go for JIT, Sunwind needs to reduce their inventory level, thus, reducing their inventory
cost. They also need to reduce lead time and reduce the batch size so as to be able to identify defects
in products. The demands are increasing rapidly and to meet the demand cycle, time taken needs to be
reduced. Therefore, they require low manufacturing lead time and hence they need to change their
current strategy to JIT. The workstation load at different operations is non-uniform that leads to
variable cycle times and results into inventory pile up at workstations with high cycle time.

In 1987, Volvo needs 65000 units. To meet this demand, Sunwind needs to produce =65000/52= 1250
units/week.
At current capacity Sunwind can only produce 350units/week.
 To meet the demand Sunwind needs to produce=1250 /5=250 units/day.

To overcome this problem, change in number of workers and number of shifts will help. Also,
operation 6 has got maximum set up time and Sunwind is producing 32 combinations of
part/colour/carpet. If we assume Japanese concept of heijunka for a JIT and reduce setup time by
15min/batch, then overall setup time will become 2. 83+0. 47= 3. 3 mins. Also, we will make
operation 6 operate for 2 shifts, so now capacity will become=2*8*60/3.Since, operation 7 which has
a lower cycle time becomes the bottleneck, as the process is run for 1 shift only. Number of units
produced /day = 8*60/1.83=262 units. This will become a bottleneck for overall JIT process.

Each batch of JIT consists of 32 units, so, number of batches produced will be =250/32= 7.
JIT will reduce manufacturing lead time, resulting into reduced inventory level, thereby, increasing
the efficiency of the process as well as the supplier. So, MLT for JIT=WIP*cycle time
=32*6*1.83=351 min = 5.85 hours.

5. How KANBAN, facilitator of JIT inventory Design be used for Sunwind operations?
Stock outs or overproduction can be avoided if Kanban is used as a facilitator of JIT system.
According to Kanban system, there is a card which contains requirement or supply of units, written on
it. In this system, once the card reaches the supplier, depending on the requirements and the desired
date, the supplier manufactures the goods and after production, they are put in the same box with the
card in place. The same process is followed when the units reach the ordered company. The company
will crosscheck the number of units in the box with the required in the card, once, it matches it will
then proceed to the operations. This is used when the process has a variety of operations having
different cycle times, lead times and batch size. Sunwind has 7 operations with different batch sizes.
We can send the Kanban cards according to the lead time of the operations and whenever the clients
demand for the supplies.

Kanban demand = (expected demand during lead time + safety stock)/size of container

The expected demand is 1250 units/week and works for 5 days.

Therefore, daily demand = 250units/day. Lets assume safety stock to be 10% of overall quantity.

Container quantity given = 20.

Assuming that the production starts after 2 week, thus, lead time taken = 14 days.
Hence, Kanban demand = (250+1.1*14)/20 = 13.2 Kanban

6. Provides details of some critical characteristics of one of the Volvo operations (Customer
interface point) between Volvo and Sunwind. How does may this information be helpful to
get advance intimation to prepare the next JIT delivery?

Sunwinds interface with Volvo, parts at the order placement. In every 4 weeks, Volvo sends
an order form indicating the requirement over a 60-week planning horizon.

This is broken into seven 4 week periods and one 32-week period. The next interface is at the
loading stage of the shipping process. Volvo has mandated that its suppliers use Volvos
wholly owned transport company, use standard containers and ship one part per container.
Sunwind ordered transportation and empty containers as required. Post shipping, the next
interface would be at the inspection point, upon receipt of parts by Volvo. If the randomly
chosen container is not able to pass the stringent quality control criteria, the entire shipment
would be rejected and the supplier would be called.

Sunwind could then either replace the entire shipment or come to Torslanda to check the
rejected shipments and replace the defective parts. Rejected parts were either scrapped or sent
back to the supplier at the suppliers expense. The fault would be officially notified and the
next shipment would be subjected to 100% inspection. The interface points are at various
stages in the part procurement process. Continuous communication between supplier and
vendor enables updating the records on both ends and real time flow of information.

The 4-week periodical order placement can help Sunwind plan its production such that they
complete production just in time for shipment and the shipment occurs just in time for
assembling at Volvo. Shipping is done through Volvos own transportation system.
Knowledge of the production schedules of Volvo in advance will enable Sunwind to request
transportation and containers in advance, so that they arrive just in time for loading. This
results in an efficient operation as the production can then be planned to meet the shipment
schedule.

Inspection procedure is well defined and knowledge of this can help Sunwind optimize its
production to avoid rejection upon shipment. Rejection of shipments can be costly and they
run the risk of not being able to meet the just in time production schedule.