Operations Thicketwood Ltd Problem Statement
The current production process that Thicketwood Ltd is utilizing can no longer keep with the demand for custom kitchen cabinets. Management must implement a new step to the production line to increase efficiency; however, they must also maintain quality as the customers that are purchasing these cabinets expect top quality for the amount of money they are paying.
In the Thicketwood Ltd case, there are a few problems and issues that need to be addressed immediately in order to keep up with demand. The current process that involves strictly human labor is no longer efficient as the demand for cabinets continues to increase. The current process has 5 steps which include cutting, drilling, routing, assembling, and finishing the cabinets. The third step in this process takes the longest amount of time to complete and also has the highest number of employees working on it.
This step causes a bottleneck and everything is becoming backed up at this stage. Management needs to implement a change in order to try to become more efficient and meet demand but also continue to make quality cabinets. The company has come across an option that they believe will eliminate the bottleneck and allow the supply to meet demand. The option the company believes would be the most beneficial is a Computer Numeric Controlled (CNC) router. The decision that must be made is either to purchase the new machine or the old machine.
Each machine has a different price and different life expectancy. By purchasing and implementing this machine to the production process it would also eliminate jobs on the production line, which may result in employees being transferred to different areas or may cause some layoffs which as a result can have a negative impact on the relationship between workers and management which is currently very good as a result of wages and benefits and there have been very few layoffs in the past. Analysis For Thicketwood Ltd, the quality of their cabinets is the most important aspect.
Their target market is individuals or families of higher income that are willing to spend more money on a specialty product which is the custom kitchen cabinets. When people are out shopping for custom products, price is generally not of big concern in comparison to quality and service. Thicketwood Ltd needs to ensure quality, ensure that their service is top-notch, ensure that the quantity of cabinets produced meets the forecasted demand for that, and lastly, price. As previously stated, the current system that the company uses includes five steps and all the steps are performed by hand.
Although performing by hand is a good way to ensure quality, human labor cannot keep up with the forecasted demand in all five steps.
The current process is as follows: (Per Cabinet)
Step 1: (1 employee) 4 cuts per part X 3feet per cut X 20 parts = 240/10ft per minute = 24min.
Step 2: (1 employee) 60 holes per cabinet X 1. 2 minutes per hole = 72min.
Step 3: (4 employees) 4 employees routing 1 part each of the 4 required parts = 96min.
Step 4: (1 employee) 1 worker assembling 1 cabinet = 90min.
Step 5: (2 employees) 2 employees finish the cabinet = 20min.
With this current process, Thicketwood Ltd cannot reach the forecasted demand of 2000 cabinets per year in all categories. Even if the company was operating at 100 percent efficiency, due to the bottleneck in step 3, the maximum amount of cabinets that can be produced in one year is
1250. 60/96 = 0. 625 X 8-hour shift X 5 days a week X 50 weeks a year = 1250 per year
However, we cannot make the assumption that the company is operating at 100 percent efficiency as the employees need time to walk around and set up. To keep things more realistic we will calculate at 90% efficiency as well.
Step 3 is not the only step that cannot produce 2000 cabinets a year. Here are the current numbers when the company is operating at 100 percent efficiency and 90 percent efficiency:
Table 1. 1
# of employees
Step 1(24 minutes)