Aero Gear Inc.: Performance Measurement, Cost Management and Product Costing in a Lean Transition

Topics: Lean manufacturing, Lean accounting, Kaizen Pages: 5 (2164 words) Published: May 3, 2014
Juhtumi analüüs: Aero Gear Inc.: Performance Measurement, Cost Management and Product Costing in a Lean Transition

1. Millist liiki ettevõte on Aero Gear? Milline on nende konkurentsi olukord juhtumis kirjeldatud hetkel?
Aero Gear is a small private owned (family business) precision-machining company , which supplies the aerospace industry. Aero Gear’ s customers were engaged in fierce competition for market share in the commercial aerospace sector. They pressed for cost reductions from their suppliers (Aero Gear). Foreign commercial and defence suppliers insisted on local sourcing of significant amounts of work as a precondition for accepting bids from manufacturers. In order to meet their demands companies were forced to divert subcontract work away from their local U.S. suppliers. The fact that Aero Gear was located in a high wage state added to the competitive pressure. Aero Gear’s customers would on short notice request delays or cancellation on orders for some parts and rapid acceleration of the delivery schedule on others. Aero Gear was a small customer with little leverage to negotiate frequent shipments and vendors for major materials had lead times as long as 50 weeks. Due to the current market situation and customers’ demands Aero Gear and other local aerospace suppliers decided to join together to improve overall efficiency and to work cooperatively to attract business beyond the capabilities of any one member company by implementing lean business practices.

2. Miks Doug Rose otsustas üle minna Lean tootmisele? Milliseid eesmärke püüti selle muutusega saavutada?
Dough Rose spearheaded the development of the Aerospace Components Manufacturers organisation. The goal of Aero Gear and other local aerospace suppliers was to improve overall efficiency and to work cooperatively to attract business beyond the capabilities of any one member company. The ACM members decided that adopting and implementing lean business practices would be the foundation of their efforts to jointly improve their competitive position because customers pressed for cost reduction and obligatory local sourcing of significant amount of work (diverting work away from USA). So their hoped to maintain the amount of orders from their customers by holding costs under better control (cutting off where necessary). As customers also give short notice period traditional accounting system is not suitable: reports are generated too late to be useful for supporting continuous improvement. 3. Millist informatsiooni annavad Osakondade põhised aruanded (joonis 3) ja

summaarne tundide arvestus (joonis 4)? Kuidas seda infot ettevõttes kasutati? Both reports were meant to monitor production efficiency.
DPR was a detailed list of all direct labor activity with summary totals by employee, shift and department (part, job, run number, operation number, ten time codes used to identify time spent on setup, making tooling or to indicate abnormal conditions; 16 additional time codes to identify time spent on various indirect production activities). Report was generated daily and weeklyThe report showed the Direct Labour Factor ((sales price-material cost-outside tooling-outside processing)/(estimated direct labor hours*55)), the Efficiency Percentage (actual pieces per hour/estimated pieces per hour), „Dollars Earned” metric, „Actual Rate” metric. DPR report was used: when negotiation prices the next time that part is ordered and when preparing quotes for similar parts (DL factor below 1.4 is a loser); to identify problem operations on a given part (Efficiency Percentage for each operation

performed by each employee); to identify particular efficient or inefficient employees (high or low efficiency ratings). Combination of Efficiency Percentage and DL Factor shows how is company doing on each run of particular part (a part could have DL Factor over 1,8 - profitable, but if EP were only 50%, company lost money on that run). “Dollar Earned” metric shows how much...
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