Optimisation of the Jojo Tanks manufacturing model

Abstract

Through this exercise, JoJo Tanks management wanted to understand the opportunities for improving efficiency in the manufacturing of their products. With over 35 ovens across the country, the optimisation of the manufacturing model was important in what is becoming a highly competitive roto-moulding industry. Furthermore, what was key for Executive Management was the ability to optimise the use of existing ovens and the ability to increase production in response to market demand. Three Operations Management theories were applied in the assignment i.e. Lean Thinking, Lean Manufacturing and the Theory of Constraints as well as the concept of Overall Equipment Effectiveness (OEE) was utilised to understand the effectiveness of each oven. Each of the oven’s production data was analysed to determine the OEE which was comprised of; throughput of the oven (categorised by size), the utilisation rate as well as the overall factory’s quality rate. The key conclusions from the analyses were (1) the manufacturing model was constrained by the limited number of oven moulds and as such, this led to (2) overproduction of non-stock items (in a bid to increase oven utilisation) and (3) this led to high inventory holdings and at times, affected (and stalled) production as there was no space to store products from the manufacturing line and (4) led to use of overtime to respond to customer demands (both in terms of product and within SLA timelines). The analyses also indicated that, ovens which focused on two or less products had higher throughputs. A closer inspection indicated that factories with a low number of ovens, had to manufacture a wide range of products and lost out on efficiencies irrespective of the oven size category. Furthermore, JoJo Tanks production pattern was cyclic, that is; the company has predictable peak and off peak period in which manufacturing modes could be adjusted however; the troughs were used to catch up to the production cycle. Financial analysis presented to JoJo Tanks Management indicated that some ovens required a high number of units to break even due to pricing and cost to manufacture. This was linked to the size of the product and as expected, the large products were profitable. 2 A five step upgrade path to address the above challenges is proposed: 1. Increase the number of stock product moulds in order not to ‘choke’ the operating model – this would provide opportunities to manufacture the right product at the right time; 2. Standardise cycle times and that would enable factory managers to optimise outputs / targets; 3. Reduce inventory holdings and operate on a 24/5 model. This would in turn provide the company with the ability to surge if sales / customer demands are high; 4. Centralise coordination of manufacturing and delivery based on customer location (vs. customer’s preferences) and based on capacity in a specific factory; and lastly 5. Optimisation of factory location based on Steps 1 – 4 above. The major impact of the above recommendations would be on the net pay the employees would receive, as the company would run less overtime schedules due to proper planning.