Norsat - Business Consulting Project
|Project Client:||Norsat Inc.
|Project Description:||Manufacturing order handling and cost accuracy
|Students:||Alexander Osipov and Calvin Cam
|BCIT Program:||Business Operations Management
The project scope was set as: the time from when the Production Manager received documentation to start planning to when the customer is invoiced. This part of the process captures all major operations that are performed in regards to a manufacturing order.
The project team was tasked with reducing handling time of manufacturing orders and labour consumption while simultaneously increasing the accuracy of the work-in-process inventory during assembly and reducing the lead time it takes to invoice the customer. Through staff interviews and data analysis tools the team determined that there were several major causes of the problem. The major causes being: the nature of the business, lack of strict standardized procedures, inaccuracy of bill of materials and information system.
The Analysis revealed that the current process is consuming 2,804 hours annually, involving at least seven different people across multiple departments. The labour consumed was equal to 1.4 full time employees, which comes to $86,932 in annual cost based on a Full Time Equivalency.
The team then focused on shortening the time it takes to perform steps rather then elimination of them due to high amount of necessary steps in process that did not add value. The students then developed a set of improvements that were combined into one recommendation:
- Establishing communication between production and engineering departments
- Training and a set of standardized procedures for handling inventory and manufacturing orders for both engineers and production assemblers
- Elimination of batch production in order to align the process with the ERP constraints
- Reduced lead-time to invoice customers (66%)
- Increased WIP accuracy to above 80%
- Reduced total labour consumption by 1,502 hours (54%)
- Reduced process cost by $46,570 annually