Reference no: EM132119908

The Pilton Motor Car Company is re-designing its luxury car line. It has chosen the London Assembly Plant as the site of its “Launch Program” for the company’s redesigned luxury cars. London had been chosen because of its superior quality control and closeness to suppliers and support facilities. London is producing the luxury line prior to scheduled production in another plant and is responsible for finalizing all engineering and production details for the massive redesign.

In executing the launch, one of the most complicated tasks is stocking the new parts inventory. Changes in ordering and delivery of parts for the line are more complex than in an ordinary model year.

Inventory building has engaged the staff for almost two months and is now at its height So far the most annoying and costly problem has been expediting the orders for parts which are undergoing changes and substitutions. Because of the fury in the Parts Control and Traffic Departments, morale is low and tension is building.

Similar to the agitation in those offices is the frenzy at the receiving docks. New parts are arriving by truck, railcar and even aircraft. Extra personnel have been temporary relocated from other assembly sites to ease the hurried receipt of parts. Even with the extra personnel, the receivers are starting to show signs of an inability to cope with the burgeoning workload, they are complaining about the task of deciphering bills of lading and packing slips. Because there is no universal standard, the receivers are often confused about part numbers, indicated quantities, and other information on bills of lading and packing slips.

In this turmoil, they are disregarding mandatory routines for receipt of goods and are themselves using dissimilar markings and exception symbols.

The receiving department sends it notated packing slips to the data processing department. There the keypunchers input the information into a Materials Requirement Planning System (MRP). Due to the current confusion over the receiving documents, the keypunchers are dubious about the accuracy of the resulting records. Feeling incapable of dealing with this problem, they have come to rely on the Engineering Specifications & Inventory Audit Department (Spec & Audit) to detect and correct any inventory errors.

Spec and Audit has the critical job of ultimate verification of inventory data. Each day personnel receive and audit computerized error lists that are output from systems programs designed to detect inventory discrepancies. For example –

duplicate inputs

quantities varying from invoiced quantities

etc.

They have access to all the documents which can be used to trace discrepancies. Unfortunately, their source documents include the notated packing slips forwarded from data processing. At the time of error recognition, authorized audit personnel may input the necessary information and/or back out erroneous input. Any audit person can enter information into the system.

In an attempt to gain more control over the large influx of materials, the audit staff has temporarily changed the cycle count procedure. Because the staff suspects a high error rate, the number of full-time cycle-counters has been increased. With the additional staff, incoming parts are counted more frequently. Furthermore, there is rechecking of questionable counts to help identify errors and to evaluate the transferred personnel.

The most spectacular part of the “Launch” is the presence and participation of engineers from company headquarters. The large, imported staff is redesigning and substituting parts daily. Some inventory personnel are working nearly fulltime keeping track of the part substitutions and the paperwork associated with the changes. Keeping track of part numbers and inputting revised information into the computer so the system can function properly is arduous.

Amid all the commotion, production has begun. It is already plagued with shortages, poor productivity and rescheduling. The production supervisor wants to issue a general statement to vindicate himself, he wants it known that he is not responsible for a “cripple” rate of 1 out of three cars produced. He intends to shift the blame to two culprits – an inadequate inventory system and the new hires in the “launch”.

Questions for Consideration:

What inventory problems are occurring? (List at least 5)

What could be contributing to the production problems? (List at least 5)

What goals should be set? (List at least 5)