The Morrison Company

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This manufacturer of RFID smart tags was experiencing severe parts shortages, increases in work-in-process inventory, and other production difficulties due in part to the fact that it was running two distinctly different production lines serving two quite different industries – pharmaceutical and retail. In addition, there are longer-range concerns about capacity constraints in the face of rapidly growing demand.

1. Identify and assess the operations problems occurring at The Morrison company.

o Significant increases in sales and shortage of available raw material cause problems in the production process o There are inefficiencies that are caused by a shortage of materials, especially in ICs, because the producers reduced their stock during the economic crisis so that orders are delayed by up to 10 weeks o Production delays have tripled in the last 6 months. Some orders remained incomplete on the floor. This did not only produce cost, but also takes space in the packaging area where the uncompleted orders are stored. o During the production process of the inlay more and more mechanical or technical defects occur, so that the process has to be halted and repeated. o Personalization interrupts the production process and delays packaging o In the last year the number of return orders increases from 1 to 3 %. The majority are not technical defects but incorrect contents of the packages o Availability of machines has decreased, there are concerns that some of the assembly machines do not work correctly o the production planning is working without electronic support, there is no ERP system

2. Explain the differences between the production processes for the pharmaceutical product line and those of the retail product line. Why are they different?

o The production process consists of six steps:

(1) receiving, inspection, and inventory
(2) parts picking
(3) inlay fabrication and testing
(4) tag assembly and testing
(5) personalization [optional]
(6) packaging.

o Inlays are fabricated on two fully automated. Inlay production was rarely the system bottleneck. o Tag assembly is an automated process, Morrison has 10 large, sophisticated machines to assemble the finished tags at a rate of up to 20.000 units per hour. Each machine required two operators to complete setups and to monitor performance tests. o 4 of the tag assembly machines could be used for personalization. More than 70 % of retail products ordered personalization, compared to fewer than 15 % of pharmaceutical orders.

The differences can be found in tag assembly. More than 70 % of retail orders required customization, which is an additional step. Only 4 of the machines can be used for personalization. Some types of customization add no extra processing time because they involve simply picking selected parts. Certain combinations of non-standard features, however, can increase our total processing times. That’s because operating times can increase, additional operations may be necessary, and sometimes we need to adjust a machine to produce at a slower rate to maintain quality

3. What recommendations would you offer Shauna Breen about how to address those issues? Be specific about any policies or organizational changes you propose.

What has to be improved:

1. Delays in delivery of orders of up to 10 weeks.
2. Improve production planning.
3. Lower the returns of orders, which have reached up to 3 %. 4. Improve the relations with parts providers.
5. Improve the company’s information systems.
6. Better identify the markets/products what we are targeting.

Possible solutions:

I. Short term adjustments

Morrison should have a strong eye on levering the potential of the retail line, as it promises considerable revenues, but so far has not been very profitable. Always keeping in mind that the strategy of the owner is to sell the company in the near future.

30 % of the primary materials...
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