Crane Manufacturing Company: Operations and Project Management Case Study

Introduction

Crane Manufacturing Company (CMC) is an organization that has successfully operated in the market for over half a century. It is a profit centre, with over 200 employees. While it is also part of a larger firm, MEGACORP, it maintains its work independently. CMC is focused on the production of cranes, including the individual parts of a machine.

It serves mainly customers who are building factories, but it can also work with mechanical engineering facilities or nuclear power stations, etc. Today, CMC produces computer-controlled cranes. All four of its main departments are involved in the production area. However, the company is facing some issues which prevents it from reaching expected success.

Competitive Situation

Business Strategic Requirements that Should Be Achieved

Currently, CMC’s operations can be considered to be satisfactory, but they do not provide the company with the opportunity to develop and achieve greater success. It would be beneficial if the organization could implement a range of positive changes in order to develop. Taking into consideration the situation described by CMC, the company currently appears to utilize a flexible manufacturing strategy, aimed at enabling the company to meet the needs of all clients but in such a way that business is not affected adversely (Schnotz 2016).

It is critical to make sure that all machine tools that are needed for production meet appropriate standards and specifications. The material-handling system should aim to have no scheduling clashes so that it is less likely that queues will occur and the routine is followed. A supervisory system should be implemented to ensure that everything operates accordingly. Storage opportunities, and its costs, should be discussed.

To meets its business strategy, CMC should consider the unique needs of its various client groups. It is vital to be cooperative in order to remain competitive. This cooperation includes both teamwork within the company, as well as cooperation with suppliers, etc. To make the organization ready for any future changes, CMC can promote the creation of cross-functional teams. Finally, knowledge and skills of the workers should be constantly improved to leverage the influence provided by the workers and utilize their knowledge and experience. Educational and training opportunities can help with this (Inman 2016).

Assessment of the Existing Business Situation

CMC belongs to a multinational organization, which suggests that it is likely to have more clients than non-multinational competitors. Impressed by MEGACORP’s achievements, clients might expect to see the same level of standards and progress made by CMC, even without their operations being directly aligned. The company is profitable; it spends £6m in total, while turnover is about £12m, while every year, 15,000 work crane parts that are unique and meet customers’ needs are produced.

Clients often use cranes as the basis for their building projects and they consider it to be a great disadvantage if its delivery takes more time (even when compared to the very process of building). As a result, it is critical for CMC to ensure that its product reaches its destination and be ready for utilization as soon as possible on delivery.

CMC’s customers can be divided into two groups based on project requirements:

• Small cranes are allocated to steel stockholders, and mechanical engineering facilities;
• Larger cranes are allocated to shipyards, nuclear power stations (where the electronics have to be nuclear hardened) and goods yards.

Such differentiation can be used to adjust production to meet the needs of each group. However, up until now the company has not done so and continues to consider individual orders, requiring more resources.

Currently, CMC produces computer control cranes. They provide an opportunity to control and direct all machine actions with the help of computers and save information regarding the location of the material that has been moved. This product meets clients’ requirements due to its compatibility with current needs and technologies.

Even though CMC manufactures individual parts for cranes, it usually sells them as a whole product. It is estimated 20-30 items are produced each year. Sold separately, the main parts of the cranes provide 35-45% of turnover. In general, it is advantageous for CMC to provide both buying options. It designs the parts anyway, but a choice of options is likely to appeal to customers more, especially if they are not required to always purchase an entire crane.

Clients are located all over the Europe. Less than a half of all products are bought in the UK while the rest are re-distributed abroad. By reaching distant locations, CMC enters the global market and, in doing so, opens up more opportunities to succeed.

CMC consists of 4 departments aimed at aligning all processes and keeping everything in order. The Design Department has the most influence overall. The Engineering-driven Department operates the computer-aided drafting (CAD) package. The Information Systems Department deals with purchasing, costing, and production information, and the Production Department deals with the manufacturing.

It controls operations for the new equipment, as well as the old one. Facilities for component processing are also dealt with here, as well as those needed for assembly, testing, etc. Those crane parts that are used in large volumes are often subcontracted. Finally, within the Production Department, the Marketing Team focuses on selling and develops the price for products. They also deal with contacts between client and the company as well as the implementation of changes.

Operations

Areas to Deal with

Considering, the current state of CMC, it can be concluded that the organization has a range of issues needing to be addressed in order to secure future development and success. By dealing with each issue, it is hoped company performance can improve and take the necessary steps forward to a sustainable future. Attention should be paid to several areas, including:

• Stock volumes: They differ depending on the item so that some are never manufactured.
• A new/revised production management system: The present system is out-dated and fails to meet current organizational requirements. As a result, scheduling is not efficient and requires external involvement.
• Shop loading operations: Some parts wait for others to be done, causing losses.
• Planning: Some operations are poorly planned, leading to queues and additional expenditures.
• Machine tools: Although CMC has about 50, operations are still rather slow.
• Costs: A lot of money is spent on sub-contracting, with return on the capital being subsequently reduced.
• Offerings: The number of items, and information, on the Item Master List is too extensive.
• New products: Innovation is not advertised sufficiently. A new product is manufactured with shares, but their amount is not decently identified.

Assessment of Existing Systems and Procedures

As has been already mentioned, CMC manufactures cranes used mainly for building construction. While it is able to produce 120,000 part designs, the majority are rarely needed. Stock volumes differ depending on the things that are manufactured. As a result, some parts may be never used while others reach volumes of 100 items. In this way, the company tries to meet the needs of all its clients but creates more complications for itself.

Information about the products produced from the Item Master List is never removed. This does allow customers the opportunity to choose any of 120,000 parts but the production of separate components is more time- and resource-consuming compared to work with a large amount of identical details.

When a new product is created, the company also provides spares. They are critical for the business because they provide an opportunity to attract and satisfy more clients. However, the amount of spares should be re-considered, as its excess can lead to high and unnecessary losses.

The current production management system is based on out-dated software that does not work appropriately. It is advantageous that the system was developed by CMC, considering their experience, as it is specifically adjusted to this organization. However, it is critical to update it and ensure it is able to maintain current and expected operations, such as accurate schedules. Master scheduling that is used to determine when work can be started is a module that requires urgent change.

Shop loading is a time-consuming process, which normally lasts for 16 weeks. The majority of the parts have the same due date even though they are required at different stages, and their simultaneous production leads to queues that can affect the timing of manufacturing adversely. Very often components can also turn out to be missing during this process.

The shop floor control centre deals with all the work orders and then distributes them to the machines. The load is based on the date of the order, but it is adapted by the supervisor so that urgent orders and shortages are taken into consideration. In some situations, CMC also refers to sub-contractors, spending up to £20,000 for this each year. If the organization had a capacity planning system, it would have an opportunity to reduce expenditures by removing the need for sub-contracting.

Every year, CMC spends £6m to purchase required materials for production. The company refers to the a-b-c system, which is advantageous as it helps to categorize all goods regarding their importance. However, both design and purchasing departments are focused on these operations, which may lead to errors and misunderstandings.

Even though CMC has 50 different machine tools, their usage is not organized properly, which leads to queues and reduces the return on the capital by the value of stock on the shop floor.

The design department permits clients to select one of 120,000 items on the Item Master List. It is good that the company provides a wide range of products, but such an extensive list could cause problems with trying to meet such varied and low volume demand.

Envisaged Requirements

In order to improve the situation and implement advantageous changes, CMC should consider a range of requirements that should be met:

• Employees: The organization as an institution should be committed to change. Employees should cooperate and encourage each other to achieve more for change to be accepted.
• Hardware & software: When utilizing computer technologies, it is critical to make sure that they are up-to-date. Otherwise, they can potentially cause more issues and challenges for the personnel than they alleviate.
• Machines: CMC should make sure that the machine tools it uses are appropriate and do not require additional services.
• Options for training: Workers should receive training to ensure they are able to perform their duties within the new systems. Such training may require different resources (including time, money, new employees, etc.).
• Assessment: The company should introduce an assessment system, which will help it to identify issues.
• Costs: Almost all changes entail some expenditure. Even if they are not critical, CMC should consider all of them accordingly.

Changes Proposed

Considering the issues CMC has, it would be advantageous if the company reduces the amount of the part designs that it offered. It should concentrate on those items that are ordered the most. As an additional feature, it can provide an opportunity for customers to make an individual order and then find and propose ones similar to those requested (Erdin & Atmaca 2015). It would be optimal if special software could be introduced for such purposes so that appropriate parts are found when mentioning required characteristics. Moreover, it would be better to give only these special orders to sub-contractors.

When developing a new product, CMC should refer to the innovations that are highly valued by their clients. It should gather their feedback to calculate the maximum amount of spares needed (Regoa & Mesquita 2011). In addition to this, the opportunity of re-utilization of those parts that were not bought should be taken.

The production management system should be updated, including master scheduling (Proud 2012). It may be beneficial if the due date for the parts differs to prevent the simultaneous production of some items. The company should have a decent capacity planning system (Kerzner 2014). One department should be in total charge of specific operations so that there will not be split control over several departments. As such, the work of machine tools should also be re-organized.

Benefits and Costs of the Proposed Actions

Proposed changes can bring great benefit to CMC. Products will be organized and systematized, which will streamline the process of their selection and reduce workloads. New, efficient ordering opportunities will appeal to customers and enhance the company’s competitiveness (Jones & George 2007). Losses from unnecessary spares will be greatly reduced. Production management will improve due to the utilization of new software, and accurate schedules will be created (Needs 2014).

The process of manufacturing will be streamlined and become more organized. Queues will be greatly reduced, and all components will be sold with little or no losses. The load will be adapted automatically so that there will be no need for supervisors to waste time on adaptations. Sub-contractors will only be used as an additional power to deal with extraordinary orders that can slow operations. All machine tools will operate decently, and be organized properly. The purchase of materials will be the sole responsibility of the purchasing department, while the design Department will cooperate to ensure that no errors occur. Thus, employee relations will also improve.

Of course, any such changes require financing. Expenditures will deal mainly with new devices and software, machine tools assessment, and training. Still, CMC will also save money on sub-contractors, and increase the return on capital overall.

Conclusion

Even though CMC has satisfactory operation levels today, the company still has the possibility to enhance its performance even further and make processes and areas of production more efficient. The organization should stick to its business strategy and consider what it can do to both satisfy its clients and make procedures less complex. By updating its systems and training personnel to work in a new way, CMC will be likely to improve its performance substantially and guarantee its long-term future.

Reference List

Erdin, E & Atmaca, A 2015, ‘Implementation of an overall design of a flexible manufacturing system’, Procedia Technology, vol. 19, no. 1, pp. 185-192.

Inman, A 2016, Flexible manufacturing. Web.

Jones, G & George, J 2007, Contemporary management, McGraw-Hill, New York.

Kerzner, H 2014, Project management, John Wiley & Sons, Hoboken.

Needs, I 2014, 15 great ways project management can help your growing business. Web.

Proud, J 2012, Master scheduling: a practical guide to competitive manufacturing, John Wiley & Sons, Hoboken.

Regoa, J & Mesquita, M 2011, ‘Spare parts inventory control: a literature review’, ProDucao, vol. 21, no. 4, pp. 656-666.

Schnotz, W 2016, Examples of manufacturing strategy development. Web.