O Estudo de Caso

A Critique analysis of Whistler Corporation regarding the current state of manufacturing, internal and external problems, risks and benefits.

By William Dias

This essay will discuss some problems in Whistler Corporation's manufacturing performance and process; another point that will be addressed is the competition with some firms from Asian countries1 .

As reported in the Case Study case - MMCS MO2018 - Whistler Corporation, the company was experiencing some difficulties related to the production system, productivity, transportation, market segment, quality, final product cost, high competition, among others.

As illustrated between 1983 and 1987, the company had a growth in sales of radar detectors in the USA over 450%; however, this growth attracted some Asian competitors who began to seek opportunities in the United States market to capitalize sales of the same product offered by Whistler (radar detectors) 1  .

Due to the growing demand during the years of 1983, the company opened a second factory; however, this opening caused a break in the production process system, making it even more inefficient1  .

Cost related to packaging, and traveling from one factory to the other, issuing invoices, hiring freight to send lots, logistical control, are some of the points that impacted this new strategy formation1  .

It did not have a previous and well-elaborated assessment as to whether this would be the solution to problems related to productivity1  .

Another major problem was the company's quality assessment system, which carried out batches of 5000 items; however, the manufacturing process was not correctly analyzed. That is, if any stage of the process was outside acceptable standards, it impaired quality, the final product, thus when the problem was identified, they had already produced at least 5000 items1  .

Therefore, the company used a lot of time to carry out rework on the circuits already made, further delaying the manufacturing process and final delivery of the product1  .

1  Case Study - MMCS MO2018 - 9-690-011 - Rev. July 20, 1992

We can understand that the underlying causes of the problems globally harmed the company's production process since the concept of productivity that was introduced and developed in organizations to assist, evaluate and improve its performance was inefficient.

Initially, we can see that productivity was calculated by the ratio between the result of production and the number and sales, with no system for controlling what was being offered, no KPI system, no clear definition of the processes2.

That is, the company manufactured due to sales, not having a real concern with indirect costs, which finally made the product more expensive2.

Another underlying cause of the problems was that the small electronic components used by the company were manufactured in Asian countries, where delivery could take about ten weeks between the purchase order and the receipt2.

This delivery time created another problem because, over the long term, the company needed to increase its stock of parts and materials, that is, less production space, higher storage costs, management, conservation of humidity control plates, among other factors.

Other problems suggest during high demand, quality problems in the assembly area, where many of these problems were initially created during the SMT process, as described in the article, about 30% of the space available by the company was used for reworking the plates.

In other words, in addition to needing to use part of the company's total area for storage purposes2.

It required to reserve 30% of the total value for rework, generating even more costs that hampered the company's competitiveness in the market, making growth even more difficult and company sales.

All products need to be appropriately tested, and each batch had its characteristics, however, due to the large volume of rework, the company started to remove parts from batch 1, to assemble batch two and so on, the purpose of this practice was to meet the delivery and shipping of the product, so some parts were not available when another batch needed to be assembled, generating even more inconsistency in production control, but instead of the company acting on the root cause of the problem, the company decided to join the more natural way, however, at a higher cost, the department requested 20% more of the sub-materials needed to carry out the assembly, in order to ensure that whenever necessary, material would be available to complete the manufacture and delivery process.

In this way, the production process became a real nightmare, showing enormous inefficiency, where the assembly time took about 23 days to be carried out effectively3.

Since the direct and indirect costs were increased, the company was losing more and more market to Asian companies, losing negotiating power, the board decided to try a new strategy.

In general, the company implemented a Kanban system method, this method and a combination of "Just in time" and "lean" where the company would start to produce just what is needed for sale, thus reducing costs with inventory, air conditioning, rework, raw material, labor among others3.

So, the main reason for applying Kanban and significantly improving the company's efficiency and productivity, making the right quantity of products, with the lowest cost, the shortest time, the least rework, the smallest production area, analyzing and testing the items at each stage of the process4.

Despite being extremely simple, Kanban was born with a complex idea to solve - to guide production by fulfilling these tasks, and not by stock movement. It is essential to say this because both Kanban and the other toyotist techniques of the Just in Time system came to modify a production that was still guided by the Fordist production model, used basically since the beginning of the 20th century in most industrial plants throughout the world

In the Fordist system, the industry operated through a production line where goods were manufactured and assembled at a constant pace. Each individual on the production line performed its function at a specific time when the product passed through their hands. The product was always the same, came and went to the next sector4.

This means that the system was extremely agile in producing goods. In a matter of hours, thousands of Ford-T model cars (the first popular large-scale car) were ready and could be stocked in the vast factory car parks. This means that the product was prepared whether or not there was a demand to make the stock turn; that is, it was essential to apply this concept to the radar production system since it worked perfectly well in other market segments as described above4.