An adaptation of the WLC approach for a make-to-order company with long lead times

University essay from KTH/Industriell produktion; KTH/Industriell produktion

Author: Erika Ornstein; Carolina Josefsson; [2014]

Keywords: ;

Abstract:

Make-to-order and engineer-to-order companies often have few standard products and a demand that is hard to predict. To get orders the company gives quotations and competes for the customers. This thesis aims to identify the factors contribution to the lead time uncertainty at make-to-order companies and then to suggest a methodology to handle or eliminate some of these factors. A case study was conducted at a medium sized company with a combined make-to-order and engineer-to-order manual production system. The company has long lead times in the order process as well as the assembly process. The lead times for the case company are measured in weeks rather than minutes, hours or days. Information was collected during a three month period through interviews with the employees, attendance in meeting and observations at the shop floor. The information was structured and analyzed using for example anity diagrams, inter-relationship digraphs and a mini risk assessment. A solution was chosen through a matrix diagram, comparing different possible solutions in relation to the identified factors. The investigation showed that the problem area of quoting delivery dates was a significant problem. There is a tendency to give quotations for more than what would be possible to produce, to make sure the company get enough orders. This strategy induce uncertainty to the quoted lead times, since more quotations than what is possible might get accepted and the orders then have to wait for others to be completed. The long lead times further increase the problem, since the impact from the quotation phase is not visible until months later. Many times the company end up with too many orders to full and a stressful environment on the shop floor. The proposed improvements are based on the workload control approach and the two decision points; Customer Enquiry & Order stage and the Job Release stage. The goal is for the company to be able to make well informed and motivated planning decisions where priorities are applied in a systematic way. Focus should therefore be on improving the communication between departments. One important step is visualising the capacity utilisation when looking for a new delivery date. The quoted orders should be taken into account since they imply a contingent demand and use of capacity. The expected outcome of the methodology is that the quoted lead times will be more accurate and the company will have better means to deliver on time.

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