Wausau Equipment Company (WECO) is a recognized multinational brand in engineering and manufacturing of machinery for agribusiness industry. In late 2000, the operating profit of the company declined by over 10%, due to high cost of labor and materials and due to increased work in process and finished goods inventory which was at a five year high of 30 million. This situation led the executive board of the company to direct John Stegier, president of MSD to develop and implement a comprehensive action plan to meet the goal of $2.925 million in improvements in operations.
John Stegier had a prior experience of lean concepts, therefore, he was aware of the significant start-up problems faced when applying lean concepts. Hence, he involved Lean Dynamics, a management consulting group for the implementation of lean. The company planned to undertake the lean transformation project over a time span of 39 weeks with three improvement process cycles, each consisting of 13 weeks. After the assessment phase, performed by two consultants from lean dynamics, five lean pilot areas were formed. Eight teams, each consisting of two to four operators, one engineer, one maintenance technician, and the department foreman/supervisor were formed to analyse the improvement opportunities. Each team explored improvement opportunities by using various problem-solving techniques such as the fishbone diagram, 5 Whys, cause and effect analysis, etc. and by applying specific methodologies like Single Minute Exchange of Die to reduce setup cycle time. The results achieved were part rework reduced by 70%, throughput time increased by 35% and OEE increased by 65% by the end of first process improvement cycle.
(a) From the data presented in Appendix 1, we conclude that idle Time, planned downtime and setup time are responsible for about 50% of the losses. Therefore, the Management at WECO needs to resolve these three key issues to reduce the lead time from 16-22 weeks to 10-12 weeks which...
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