Situation: To better
understand the operation at Lintel, John pays a visit to the Production manager
on his second day at work. He tries to get some information on the
manufacturing process at Lintel.
John: Good morning,
Steve. My name is John, and I am the new person in the Finance Department.
Steve: Good morning, John.
What can I do for you?
John: As a new person, I
need to understand the operation at Lintel. So, I wonder whether I can ask you
some questions about the manufacturing process in your department now.
Steve: Hold on a second,
John. Let me post this production schedule before we sit down and talk.
Steve: OK, where do you
want to start?
John: Well, you can
describe the production flow in your department.
Steve: The production
process is based on the customer-order information that I receive from the Sales
department. First, we order raw materials from our suppliers. Once the
materials arrive at our plant, they are transferred to the production floor
where they will go through five different processes before they become finished
goods.
John: How many suppliers
do we deal with? Are they all local suppliers? Do any materials come from
overseas?
Steve: We have a very
limited number of suppliers. We deal with approximately ten main suppliers in
the US, and we only have a handful of suppliers overseas.
John: How do you control
the quality of the purchased materials?
Steve: One of the reasons
for having a limited number of suppliers is to ensure the quality of raw materials.
My Quality Control group works very closely with our suppliers to make sure
that they meet our quality requirements.
John: Do you maintain a
high level of inventory?
Steve: No, we keep a very
low level of inventory.
John: How do you move
materials from one department to the next?
Steve: Very easily through
the Material Request form. If department B needs materials from department A,
it will fill out a Material Request form and give it to department A.
John: A very simple
process. How about labor? How do you calculate the labor cost?
Steve: The Engineering
department has done a study on the production process. It has calculated the
time required by each different process.
John: So, under normal
situations, the actual production time of each product should be close to the
estimated time calculated by the Engineering department?
Steve: That is right.
John: How do you make
sure that we only ship good products to our customers?
Steve: We definitely do
not want to send out defective products. My employees are always reminded that
product quality is Number One priority at Lintel.
John: Do they understand
that they should always give their best and that defective products raise the
cost of production?
Steve: Yes, they perfectly
understand that. As a matter of fact, our defective rate is lower than one tenth
of one percent. We are very proud of our record.
John: How do you maintain
this excellent record?
Steve: We adopt the
Continuous Improvement spirit. We evaluate our operating results very often and
strive to excel in our job. And, those posters on the wall also help. See the
slogan Nothing
But Excellence over there?
John: Yes. What is good
for the company is ultimately good for the employees, right?
Steve: Definitely.
John: Next question. How
many production shifts do you currently have?
Steve: There are two
shifts. The first one is from 8:00AM to 4:30PM and the second one is from
2:00PM to 10:30PM.
John: Do the employees
earn the same hourly rate?
Steve: No, the pay rate of
the second shift is ten percent higher than the rate of the first shift.
John: That makes sense,
Steve. I think I have enough information for now. I might come back and bother
you again if I have more questions. Thanks a lot for your help.
Steve: Any time, John. You
know where I am.
