Empiece Desde La Niñez Con Valores

This chapter presents the five cases studied, focusing on a detailed description of the ordering process per case. Each case concerns a manufacturing company in the Netherlands. The five production companies studied are selected on the basis of some main criteria (as justified in Chapter 5), namely size, characteristics of demand and production system and the availability of an order processing information system. The companies selected have about one hundred employees. Demand at these companies is mainly customer specific combined with an order-driven production. The production system of each company is characterized by a relatively high degree of capacity complexity and some material complexity. The five companies differed for the extent of use of order processing information system(s).

The aim of this chapter is to describe the characteristics of each company, related to the variables of the conceptual model. In describing the characteristics we are limited by the data gathered through multiple case study research. The most important limitation is that we were often not able to gather ‘hard data’ on the performance of the companies. But, all relevant information gathered is used to be able to characterize as accurately as possible the variables. The resulting characteristics per case are the basis for the analysis, which is presented in Chapter 7.

In describing the cases we use a standard format. The basis for this standard format is the conceptual model of our study. The values related to the variables of the conceptual model will be described per company, based on the operationalizations of the variables as elaborated in Chapters 3 and 4. Each section starts with some general characteristics of the company and the characteristics of demand and production system. The next step is to describe in detail the ordering process by providing an overview of the activities and actors involved using an Actor Activity Diagram (AAD) and discussing the complexity of the ordering process. Then, the formalization of the ordering process is described per dimension: the logistical decision-making, the information processing and the organizational setting. Each case description ends with addressing the performance related to the ordering process; that is the contribution both to the responsiveness of the company and to the efficiency of production and the efficiency of the ordering process. The companies studied prefer to remain anonymous, so they are referred to as company A, B, C, D, and E. The sequence of discussing these five companies is completely arbitrary. Each company is described in a separate section of this chapter.

6.2

Company A

Company A is part of a holding with two other companies. The holding has a turnover of about 32 million Euros. The three companies supply the market for office furniture, but they have their own specialties. Company A mainly produces steel-based furniture and is especially strong in delivering medium-sized orders, up till about 100 workplaces. The company offers three different lines of furniture for this market. Within these three lines they produce four main product groups based on steel, namely filing cabinets, chests of drawers, office tables and desks. The products are modularized and some parts can be exchanged between the different lines of furniture. The tabletops for office tables, but also for desks, can be made of materials other than steel. Non-steel tabletops are purchased at one of the sister companies.

The company is known for the quality of their products, especially the service life of the products. The quality of the product is acknowledged as an order-winning performance objective. The second important performance objective is the ability of reacting flexibly on customer demand, especially mix flexibility and delivery flexibility. A further distinguishing performance objective is to offer a set of supportive services to their customers, such as instructions to the customers, drawings of the products and a service to install the products. The customers are always dealers, in total about 140.

Originally, company A produced large batches of different products in a cycle of 16 weeks. In the worst case, the customer had to wait 16 weeks for his products to be delivered. Heavy competition forced the company to change their production pattern, to be able to deliver more quickly and to deliver a greater variety of products. An important change has been positioning the customer order de-coupling point at the stock of unsprayed semi-finished products (see Figure 6.2). In fact, company A mainly assembles to order. For the customer specific products the company produces on order.

Company A has a functional organizational structure, as visualized in Figure 6.1. Managing

Director

Sales Finance Operations

Secretariat Sales field service Inside sales desk Product development Planning/ engineering Production Purchasing

Company A has in total 95 employees, of which 65 are working in the production. The sales department is split up in three regions and every region has its own sales representative, linked to an employee at the sales desk. The planning department consists of 2 employees and is part of the production department.

About one year ago the company has introduced an ERP-system that is only implemented for support of the administrative order processing. This means that the order can be transacted by the ERP-system from the moment that a customer order enters the company, resulting in the necessary documents for production and for the customer. But the modules for production control, purchasing and inventory control are not yet implemented. Besides the ERP-system, company A uses Intranet for communication between departments, especially communication between the sales desk and the planner and between the planner and the production is regulated by email.

Characteristics of Demand

Company A has a season dependent demand; before the construction industry holiday and before the Christmas holiday there is a peak demand due to the pattern of decision- making in the market for office furniture. The company works with a limited number (140) of regular customers, but they do not have long-term contracts with these customers. Via the sales budget a yearly forecast is made of demand. The sales manager has introduced a ‘project planning’ to get a better insight in demand. The ‘project planning’ provides an overview of projects on hand (orders for 10-15 workplaces) and their chances to score. The chance of scoring is dependent on the phase of the quotation of the project. This project planning offers the production an instrument to estimate the necessary production capacity for a certain period. But, in daily practice quotations often stand out for a long time and when a quotation becomes an order, the customer wants a quick delivery.

There are four main product groups produced at the company and per product group a limited number of specifications is offered. According to the sales manager, the variety in end products is not very large. Compared to the competitors, company A offers only little variety in types and colors. By combining different standard parts a customer specific end product is created. The number of order lines per customer order can vary from 1 till 100.

Although company A produces about 70% of their products on order, these orders are mostly based on a prefixed catalogue. Only 5% of the products are specials for which a new design or construction is necessary. The specials have, for example, a different size in tabletop, a different height or a different color. Company A produces mainly standard products with customer specific variations.

Characteristics of the production system

Production consists of four main operations: a sheet metal unit, a welding unit, a spray unit and an assembly unit (see Figure 6.2). In every unit different operations are conducted on various machines. Per unit some of the machines are interchangeable. Especially the sheet metal unit and the welding unit can be characterized as job shops. The product is composed of various parts.

CODP

Figure 6.2 Goods flow at company A

Set-up times for the sheet metal and welding unit can be very high and, thus, these operating units produce mostly on program (planning). That is also why the CODP for most products is used to de-couple these units from the spraying and assembling units that customize the products. This CODP-position results in an ATO-structure (see figure 6.2). Set-up times for operations after the CODP are low and most operations are manual. For the products produced on stock (fast delivery) the CODP is positioned at the stock of finished products (3). Specials are completely produced on customer order and these specials have a CODP-position at stock 1.

Materials or parts for the end products that need to be delivered within the delivery time of the supplier are kept on stock. For slow movers and for specials the parts need to be purchased on customer order, but these products fall within a longer delivery period and are as such registered in the price-list. Stock control is not automated and information on actual stock is recorded manually and kept in a card-index box. Therefore, information on material availability is not always up-to-date and reliable. Production is not hindered by machine breakdowns.

The change over from production on stock to an assemble-to-order situation is not yet completely accepted among the operators in the production system. According to the operations manager, the operators find it hard to produce flexibly, resulting mainly in producing larger batches than necessary. The operators lack a proper training to work according to the new production structure and they are not yet multi-skilled. Company A has enough capacity to deal with demand and, if necessary, overtime can be used to account for extra capacity to meet demand.

Sheet metal unit Welding unit Assembly 1 Purchased parts 2 Spray 3 unit

The ordering process

About 30 orders per day are treated in the ordering process. Every order is a new order, because a customer never orders the same combination of products twice. But, because the product specifications are limited and because there is a database of regular customers, we could say that the company treats mainly modified re-buy orders. Per day about 5 rush orders are treated; these rush orders mostly affect prioritizing in the assembly unit and in shipping the products.

The order flow

Figure 6.3 presents the AAD of the ordering process of company A. Following the AAD, we discuss the order flow.

The customer places an order that is mostly sent by fax to company A. The administrative assistant order entry distributes the received orders per region to the responsible employee at the sales desk. The employee sales desk checks the clarity of specifications, the terms of payments and of delivery and he3 checks if the delivery time fits in the fixed delivery time of the product ordered. In cases of delivery times that deviate from the fixed delivery period the employee sales desk consults the planner by email or by phone and the planner, in turn, consults the unit leader production. When the requested delivery time is not realizable the employee sales desk contacts the customer. After finishing the checking of orders, the employee sales desk puts the orders in a post bin.

The assistant order entry takes the orders out of the post bin and enters the order data in the information system. If there still is some uncertainty about the order specifications he asks the responsible employee sales desk to further clarify the order. He can only enter an exceptional delivery time when this is marked with the initials of the planner. After order entry the information system automatically gives the orders status 20.

Every afternoon the employee sales desk prints a list of all orders with status 20 and checks by using this list if all specifications of the original customer order are entered into the system without mistakes. He marks mistakes on this list and returns the list to the assistant order entry, who modifies the mistakes in the system and then gives all these orders status 30.

Every morning the planner prints a list of all orders with status 30 to check if the delivery time per order is realisable. The planner uses the price-list, the stock situation of the shipping department and emails with information of special arrangements on delivery time for a specific customer. Orders that are not accepted by the planner are registered and the planner consults with the employee of the sales desk. All accepted orders are put through to status 40.

Customer Assistant_{Order Entry} Planner Unit Leader Production fax Place order Information System Check order Employee Sales Desk Check order entry Check delivery time Print order confirmation Engineering Enter order data Enter mutations ERP-system ERP-system ERP-system Consult about del.time

Consult aboutdel.time

ERP-system

Prod.orders

Figure 6.3 The Actor Activity Diagram of the ordering process at company A4.

Once a day the assistant order entry prints order confirmations of all orders with status 40 and sent these to the customers, then the order status automatically leaps to status 50.

The engineering varies per type of product. For products that have to be assembled to order, stickers have to be printed per part. All these stickers are brought to the production department. For products that are completely made on customer order, a production planning for the sheet metal unit and the welding unit have to be made. This planning consists of preparing the documents that production needs, like work cards and drawings. The work cards are put in a plan board that serves as a production planning. Complexity of the ordering process

The sales desk has a rather routine task: the employees have to accept customer orders within fixed agreements concerning delivery times and prices, and they do not have the authority to autonomously take a deviating decision. The task of the planner is less routine; he is dependent on information of the production units about stock levels and capacity availability and he needs to know the necessary sequence of operations to produce a certain product. The planner is responsible for deciding on rush orders and special requests. To be able to manage the daily recurring rush orders, the planner keeps his own administration of all the special requests and the promises made to Sales. Because the company does not have an automated system for stock and production control every special request of a customer needs to be checked at the production units involved to list the actual production possibilities (actual material and capacity availability). So, the planner has a non-routine task.

Sales is dependent on planning for delivery time promising when a customer asks for a faster delivery then accounted for within the standard delivery period. The planner will consult the manager production unit to check the actual capacity possibilities. The planner has an intermediate function between Sales and Production. He is authorized to assign due dates and he is also authorized to determine batch sizes.

There is some difference of interests between Sales, Planning and Production. Sales is primarily concerned with meeting all customer wishes and strives for a more customer- oriented production. That means primarily producing in smaller batches and delivering faster. But, the production plant is not yet equipped to produce efficiently in small batches and the operators are not yet acquainted with working and thinking in small batches. The agreed upon delivery periods are pushing the organization to produce more customer-oriented and these agreements should not be overruled by Sales. According to Planning and Production, Sales is still too willing to place rush orders to fulfill customer wishes.

In daily practice, employees at the sales desk ask the planner to react quickly on special requests, but they are not authorized to overrule the decisions of the planner. Sometimes the sales manager can overrule decisions. The sales manager and the operations manager both strive for a more responsive order processing and in taking

decisions on special requests the importance of the order and of the customer are taken into account. The extra costs of, for example, overtime are not really weighed in the appraisal. According to the operations manager, these extra costs are part of the commercial decision. It seems that Sales has the most power, because ‘being flexible towards the customer’ is the new mission of the company, supported by the managing director.

Formalization of the ordering process

Logistical decision-making

The logistical operational decisions are mainly based on the establishment of fixed delivery periods per product (see table 6.1). Sales ranks the various products in consultation with Production on a scale of three different delivery periods, namely 1-3 weeks, 3-5 weeks and 5-8 weeks. Products from the fast-delivery package are partly held on stock or are being assembled out of stock. For complete customized products a delivery time of 8 weeks is given, because these products need to go through a construction phase, parts need to be produced or purchased on order. Purchased parts needed to customize products (for instance, wooden table tops) have a delivery time of 6 weeks, as agreed upon with the suppliers.

The order accepting is based on specified product modules and fixed prices. The allocating of materials and capacities is based on drawings per product that specify the product structure (see table 6.1).

Table 6.1 Ways of formalizing logistical decision-making at company A

Operational decision Ways of formalizing Accepting customer order Specified products modules

Fixed prices per product

Delivery time promising Fixed delivery periods per product group Agreed upon slack

Allocating materials Agreed upon slack in stock levels Agreements on delivery time of suppliers Allocating capacities Product structure via drawings per product Prioritizing customer orders -

Slack is used by Sales as well as by Production. Sales uses slack in delivery time quotation to the customer because they always give the latest week of a delivery period as the delivery time for a product. For example, a customer requires a product that falls within the second delivery period, 3-5 weeks; the delivery time given by the inside sales desk will be 5 weeks. This form of slack is agreed upon in the ordering process to account for the lack of an adequate production control. It results in many questions of

customers after receipt of the order confirmation; the customers want the product