Ukan case study

1. UKAN Case Study
UKAN Ltd is a multinational manufacturer that
makes hundreds of products ranging from
auto parts to electrical products & computer
components.

2. Electric Motor and Components division:
It had six manufacturing facilities focused
on specific products types , the different
products made at each plant.
Production processes were similar in terms
of different products.

3. UKAN found itself becoming less and less
competitive in world wide markets.
A study of its competitors found that UKAN :
–higher production costs
–carried higher inventories per unit sales,
– more quality complaints,
–longer lead time for delivery of its products
–More late deliveries

4. The most notifiable symptoms:
1. Avg inventories :
$56 million= $9 million unprocessed + $27
million in-process + $20 million finished prod.
2. Nearly $15 million in–process + $3 million
unprocessed materials - component wiring
dept, appeared to be bottle neck.
$8million in process + $3.5 millions
unprocessed materials were in front of the Final
assembly.

5. 4. Defects rates for item shipped to customers
were twice those of leading competitors &
especially high for lower volume special
products.
5. Demand service level is below those of
competitors
6. Internal defects rates based on samples very
high

6. Overtime and Quality control:
Short term solution:
Component inspection before major
components went to cleaning department.
Extra inspection was estimated to cost
approx $120,000 per year.

7. Benefits:
1. Approximately 1 million defective component
would not have to be cleaned or wired.
2. Overtime in the cleaning and component wiring
departments was cut by more than half , and
overtime in the sub-assembly is eliminated.
3. Annual overtime cost would drop by almost $7
million to approx $5 million.
4. Over $1 million in material costs would be saved
by not assembling small components with
defective major components in the sub
assemblies.

8. Long term solution:
Focused on job redesign, training, mistake
proofing, employees suggestions were
implemented.
Standardizing setups, marking calibrations
clearly on machines, and changing tool more
frequently and instituting a simple inspection
machine operator.

9. Benefits;
1. similar programs in other departments
reduced defects generated in those
departments at-least by half.
2. In the sub assembly and assembly
departments mistake proofing techniques
eliminate defects due to using wrong
components.
3.After all these changes, major cause of the
remaining defects was found to be defective
components from supplier.

10. Process Reorganization and Job design;
The workers were further divided into who worked
primarily on seven major motor components.
Similarly who worked on the 9 major control units.
A small number of workers inn the department
were put into separate work cell that handled only
the low volume motors and control units.

11. Benefits:
1. Productivity has increased by 30% because of
less product changes.
2. Wiring defects were reduced to 0.05% and
job satisfaction surveys indicated a
sustainable improvements.

12. JIT scheduling and lot sizing:
The classical push scheduling was using based on
speculative demand.
Long production run of one product might be
scheduled for wiring and assembly while demand for
different product create shortage.
The team decided to implement JIT pull system
wherever possible and reduce production lot sizes.
SMED was used in the cleaning process to eliminate time
spent on cleaning process.

13. Result:
• Inventories and stock-outs began to decrease.
• As lot sizes reduced , UKAN made a special
effort to work with suppliers to provide
frequent JIT deliveries of high quality
components.
• UKAN now had a best quality and delivery
performance of any company in their markets,
result in large increase in market share.
• The large reduction in labor cost due to
elimination of overtime production.