Fabritek, 1992

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Featuring on-time delivery and competitive prices, Fabritek Corporation positioned itself in machining casting for the packaging machinery industry. The organization recently became the supplier to the Pilgrim Corporation and was committed the trial contract. A new machinist was introduced into the team after the first two weeks due to the hospitalization of the previous worker. But the machinist, due to the loss of his original salary premium, increased throughput from his workstation. Unbeknown to the worker, the decrease in quality for the output coming from his workstation forced the next worker to operate at a slower speed and resulted in an increase in defective parts and a reduction in the production line capacity.

Memo to Frank Deere:
The current production should focus on the quality of the products and on-time delivery which also echoes Fabritek’s market reputation. Moreno’s premium could still be maintained through other approaches such as readjust the payment or offering bonus. The sudden increase in the output bears the risks of defective products as well as delayed delivery. To add more people or machines will not automatically solve the problem and could possibly generate more costs. The most critical issue is to fully commit to the trial contract in order to further receive the follow-ups.

Problems to be addressed
1.Original manufacturing process
The original manufacturing process (Exhibit. 1) successfully sent out the first two shipments but since the change of the machinist, the process had revealed several disadvantages, e.g. a) unbalanced production rate: because the new machinist had certain finance need, he was encouraged by Frank Deere to make the process faster but the new speed not only produced more outputs but also high reject rate as well as overtime effort to balance the difference; b) poor quality control: the current manufacturing process could not accurately trace the responsibility for quality problems or...
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