The Rock Solid patio furniture company has a manufacturing plant and distributio
ID: 428076 • Letter: T
Question
The Rock Solid patio furniture company has a manufacturing plant and distribution center located in Smalltown, USA. The patio furniture is produced using a MTS strategy to ensure that
the products are made in advance of the seasonal demand. Once the season begins, historically the shipping volume goes from a couple of truck loads a day to 55 - 60 truckloads a day.
The historical practice has been that as orders come in, they are sorted based on the customer requested ship date. The Traffic department determines the appropriate carriers, based on destinations, and coordinates with all carriers two days in advance to have their trucks on site on the requested ship date.
Historically, during the busy season, the On Time Ship rate drops to an average of 60 percent and the overtime hours and pay for the warehouse workers increase to an average of 14 - 15 hours a day, six or seven days a week. The loading process is further complicated by the fact that Small Town is in a rural area, located approximately 1 to 2 hours from the closest Metropolitian areas in any direction.
Operating Characteristics
- The warehouse has 12 dock doors for outbound loads.
- All product is brought into the warehouse via conveyor from the plant so there are no inbound shipments, but 2 lanes (doors) need to be free to "receive product".
- Historically, the warehouse has operated with one shift that starts at 7:00 am, given that the real busy season only runs 4 - 5 months a year. There is a smaller 2nd shift, that starts at 3:30 pm, and is mainly involved with replenishing product to the shipping lanes to get ready for the next shipping day.
- As most of the shipments are full truck load, a large percent of the trucks scheduled to pick up loads at Rock Solid are delivering loads to the surrounding areas before they come to Small Town to pick up our outbound shipments. They often get delayed during unloading and also often get lost on the way to Small Town. The result is that there are very few trucks available to load in the morning at 7:00 am and then they all start showing up around lunch time, which often results in traffic jams on the yard and on the two lane road leading into the plant facility.
- The warehouse has to maintain a workforce early in the morning as the plant starts running new product into the warehouse at 7:00 am and it has to be stocked.
- To increase the difficulty of on time shipping, it is not uncommon for the trucks to arrive for loading and then it is discovered that the warehouse doesn't have all the required product for the order. This results in trailers being brought to the doors late and/or trucks being partially loaded and then pulled out of the door until the remaining product is available so that other trucks can be loaded. Occasionally, this results in the truck having to stay overnight, which results in Detention charges.
You have recently been hired as the Logistics Manager, just before the start of the busy season. You have to determine what needs to be done to improve On Time Shipment results, reduce the excessive overtime, and transform your operation into a World Class Operation. No Pressure, but your biggest customer, Home Depot, accounts for 60% of your total sales.
They have threatened your VP of Sales saying that if service doesn't improve quickly, they will be looking for a new furniture supplier.
Your Task, whether or not you choose to accept it, is to work with the other members of your team to review your current processes, determine possible root causes for your poor on time shipping performance and tremendous inefficiencies (labor OT), and recommend process improvements to improve your service levels.
On the "Current Shipments" tab you have a list of the currently available orders. Today's date is 12/18/2017.
As a general rule, a full truck load of your product averages about $40,000 in value. Some of your customers are bad about entering single orders which are actually multiple truckloads.
For planning purposes and distinguishng between LTL & TL shipments, you can use 34% or less of a TL quantity to classify a shipment as an LTL shipment.
As you start the process improvement efforts, you can ask your local subject matter expert (ME) questions to clarify your understanding of Current processes.
You will need to determine root causes for your poor performance and identify specific steps to take to start on the path to improved performance. No Pressure, but Your three largest customers are meeting with your CEO in 4 weeks to determine if they are going to continue to use you as a supplier. Your CEO wants to review the presentation that you will give to these executives in 3 weeks.
Question 4
Develop a high level presentation based on your analyses and process improvement efforts to assure your largest customers that you have identified the causes of your problems and that you have action plans in place to quickly improve your delivery performance.Explanation / Answer
Introduction:-
The company named rock solid patio furniture company has been doing a very good business and has maintained a very satisfactory customer service for our clients. Every department was running effectively and carrying out the business smoothly.
Problems identified: -
Here are few problems that were identified in all departments are concerned.They are:-
1)Volume :-We have identified that there was problem in volume of finished goods.Before the season comes, it was too low but,as the season was near ,it looks difficult to manufacture them on time as the orders are being at peaks.
2)Drop in ship rate and increase in overtime payments:- It was identified that during busy season the on time ship rate drops to an average of 60 percent and the overtime pay for the workers was increased rapidly .And it was also far from the main city.
3)Trucks unavailability: - shipping the goods on time to the customer is the first priority but due to their late unloading and late arrival ,The shipment process was lagging so much.
4)Maintain early work force :-For early manufactured goods to be stocked there was no workforce
5)Detention charges:-Company has to pay because, it is not able to load the product on time as there was non availability of stock.
Solutions to the problems identified: -
1)The volume of the finished goods problem can be solved by :-
Average models production method - This means that as a manufacturer we will have some basic models and, taking the past data manufacturing inventory list we should prepare a Average models production number .This number assists us to manufacture the furniture of different models in average .This has to be done a month before the season begins.Then we can have the average goods of all kinds than the previous years low production rate.
2)The drop in the ship rate can be tackle down by:-we should maintain a very small warehouse in the city outskirts, so that the rent will be low .And we have to ship the goods to that warehouse one day before the shipment day .so that they can delivered in appropriate time to the clients.And regarding the overtime payments issue -This can be addressed by increasing the number of shifts to the workers .As we have to pay more than his normal pay/hour, it is better to employ some more workers at the same cost per hour.
3)The trucks unavailability problem can addressed by - Company has to make an differential payment process .Incentives makes the work.We have to say to the truck drivers that ,pay will be made according to their arrival time.The first arrived would get a little more than the others payment.
4)Maintaining early work force can be addressed by - As I have mentioned earlier it depends upon the shifts of the workers.we have to maintain an early morning 6 a.m shift workers to make the work done.Shift working increases the efficiency of the workers.
5)Detention charges problem would be addressed by- There was no detention charges can be paid because by Average models production number and by shifts that are created for the workers efficiency .This process will solve the issue.
Hence ,As a logistics manager i am suggesting these changes to make the process run smoothly and can have a good customer satisfaction.
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