Q

Assignment is focusing on production wastes in a printed circuits boards (PCB) manufacturer.

Home, - Agile, lean and competitive enterprise

Introduction

Every business wants to be able to take up opportunities quickly and to stay ahead of customers’ demands, to be agile. A company also wants to create more value in products for customers with less waste. This is to be lean which means companies maximize value and minimize waste. For an enterprise to be termed as competitive, it should control a significant interest in its line of operation in the market. Its services or goods should hold their own against competing products.In this paper, I will be focusing on production wastes in a printed circuits boards (PCB) manufacturer. 

The printed circuits board manufacturing company manufactures specific PCBs according to customer requirements. The company therefore only manufactures according to the demand of the PCB and any unsold stock is taken as dead stock. The information recorded gives information on the work order, the type of work order which can be ‘make to order’, ‘internal remake ‘or ‘Cust Return remake’. ‘make to order’ represents a PCB that customers have ordered to be made for them. The ‘internal remake’ are the additional goods made when the finished quantity is less than the demand. The ‘Cust Return remake’ represents goods that have been returned by the customers. Here, the company has to remake a good and refund the customer. 

There are also other columns representing how business is done. The wanted PCBs represent the demand. The loaded PCBs represent the amount that the company is willing to make. The finished PCBs represent the total made by the company. The number of loaded PCBs may not be equal to the finished ones as various factors may affect the production. The allocated PCBs represent the number that has been dispatched to customers. The stock PCBs are the remaining goods in the store after sale. The PCBs per panel represent the minimum production unit  inorder to fit to the fixtures in production. There is also a record of time used in the manufacture of the PCBs and the date the PCBs are required. The price per PCB is also recorded. 

Although a company would desire to be as lean as possible, there is always a probability of waste occurring. In the printed circuits board manufacturing company given, various types of waste of the company can be seen in the data.Firstly, the company suffers from over processing waste. This is firstly because the company always loads more PCBs than those required by customers which causes high investment costs. The company also takes unnecessary processes by manufacturing more than is needed.

Another cause is low processing capability which causes manufacturing of defective PCBs. This leads to over processing when remake is required by a customer after return of a defective PCB.Though it is safer to be prepared by loading extra, this causes the company to suffer from high process investment cost. This also takes longer processing time thanrequired. The company would have used such time to perform other activities that would lead to its development. A good example of over processing waste is order number 29517, cat number 48513. The required number of PCBs was 40 and the company loaded 60. Only 32 were sold as 28 were defective. There was a remake, where 8 were required but the company loaded 30. Only 8 were sold, 1 was defective and 21 unsold. 

The company suffers from unnecessary inventory waste with dead stock ranging from 1 to 300 per order. An example is cat number 29560 where the remaining stock is 200. Although the PCB seems to have had high demand at that time, it is unnecessary to have all that extra as it will go to waste when the demand reduces. Excess inventory affects the cost of production by increasing cost of quality and capital required. Many PCBs require high quality raw materials which may be expensive to acquire and also additional costs on expenses such as electricity. 

These extra stocks also lead to high cost of warehousing. The company may be storing the goods in a warehouse different from the company itself leading to additional warehousing stock.  The company may also be storing the stock in the same building which leads to much space given to warehousing. Such space could be useful for other activities such as expanding the business. The stored PCBs also have a high chance of spoilage and deterioration which may cause the company to suffer from losses. 

The company also suffers from waiting waste. As seen in cat number 30312, order number 29201, the required date of the completed PCB is 19thMarch 2002. However, the PCBs are completed only a day before which is late for a business manufacturing such goods. This is due to the unnecessary inventory produced at that point and other PCBs. This may also be caused by idleness of the workers.The price of the PCB is cheap compared to others, meaning the PCB would have not necessarily taken all that time to be made as it does not require much attention like the others. 

The company suffers from overproduction. The company has numerous PCBs in warehousing due to overproduction. An example is order number 30185, cat number 49326. The required PCBs were 240 but the company made 360. 120 PCBs are in stock meaning only the required 240 were bought. There are various causes of this over production. One may be due to uncertainty in production. The company has experienced times when there has been production of numerous defective PCBs which cause them to lose customers. The management therefore decides to produce more than the required goods incase some of them have defects. 

Another reason for overproduction may be uncertainty in demand. The company decides to make more than the demanded PCBs incase other customers are interested. Overproduction here is mainly seen in PCBs with high demand as the company is expectant of having more customers. Lastly, it may be due to a planned push system that the company operates under. The management may have decided that the company should always make more than the required PCBs to meet demand that may arise later in the future.

Lastly, the company suffers from waste of defects. Several defective PCBs have been returned, as seen in the rows labeled ‘internal remake’ and those labeled ‘Cust Return Remake’.an example of an ‘internal remake’ is cat number 47535 where 20 PCBs were required. The company loaded 30 but only 10 were finished. This means 20, which is more than half were defective. The company had to load 21 more to meet the remaining demand of 10. An example of the customer return remake is order number 29470, cat number 48481, where the defective goods are 8 in number and are returned for remake. 

There are various reasons that may have caused the defects. Firstly, it may be due to limited resources used to make the PCBs. Secondly, time may be limited in making complicated PCBs. Thirdly, it may be due to a defect on the machines required to make such PCBs. Fourthly, the employees may also be the cause especially if there are untrained employees handling the machines and products. 

The types of wastes in these company have been found to be interrelated. The defects are a reason for over production, leading to the over production waste. This is because they are the reasons for the remake. The defects also lead to late delivery hence causing the waste of waiting. Fear of defects is also the cause unnecessary inventory. The company therefore prefers to be on the safe side by having extra PCBs. The defects may also cause a new type of waste, the transport waste, due to redelivery. Over production which is caused by waste of defects, affects the waste of inventory. Over production increases the amount of inventory which in turn may cause defects when goods are stored in the warehouse. 

As seen earlier, there are three types of work order. Firstly the ‘make to order’ which represents the PCBs which are made due to order by customers. These PCBs are strictly made after demand is made. The company makes the PCBs as per the order plus some extra more depending on the level of demand. Secondly, the ‘internal remake’. These are PCBs that the company makes when they realize there are defective ones among the ready-made PCBs. Here, the company makes the required PCBs to reach the demand and some extra. Lastly, are the customer return remakes. Here, the customers return defective goods and the company refunds and remakes a new PCB to replace the defective one. The company also adds some extra maybe incase some customers have not returned their defective goods. 

Different PCBs have different qualities, hence different prices. The cost of materials used is also affected by the quality of materials needed in production of a certain PCB. In the first order from the record, order number 24723, the price per PCB is given as 13.35 euros. This is a ‘make to order’ type of order. 8 PCBs are required in that panel; hence 8 PCBs can be used to create 64 PCBs. 50 PCBs are completed hence 14 turn out defective. The material cost is 25% of 13.35 which gives 3.375 euros of material per PCB. 

Order number 30117 is an ‘internal remake’. The price per PCB is 3.72 euros. Therefore, the price of material would be 25% of 3.72 which is 0.93 euros. Order number 28119 is a customer return order. The price per PCB is 53.32 hence the material price is 25% of 53.32 which is 13.33 euros.  

I believe the major problem at the company is fear of producing defective goods. This is where the cycle of all their problems and wastes begin and if they could find a way to solve this then they would solve most of their problems. As said above, the defective goods are the reasons for over-production, which in turn leads to over processing, which in turn leads to unnecessary inventory which would lead back to defects. Defects are also the main cause of waiting as the company has to wait for remake of the goods and customers have to wait for more time for the remake of customer returned goods. 

Although making production of extra goods is a way to reduce the number of defective goods, the company should research on better ways to avoid defects. They should check the root cause of the defection and deal with it. The cause may be the machines, maybe due to wear and tear and therefore old and defective machines should be replaced regularly. The company should also ensure people handling the machines are well trained. They should ensure each worker is placed in a position that best suites his or her skills. 

There are also various activities that the company should take up to reduce wastes. They should learn the activities of their competitors like how their competitors avoid defects, and if the solutions are better than theirs, they can also adopt those ideas. They should talk to their targeted customers more frequently so as to know their customers’ wants. This would prevent manufacturing of unnecessary products as they would have an idea of the range in which demand of a product lies. 

Leave a comment


Captcha

Related :-