Question:
An off-road buggy original equipment manufacturer (OEM) has decided to outsource the production of a particular subassembly of their buggy. The outsourced production job shop is a small sized privately owned business that shall be referred to as “The Job Shop” with limited machine and labour resources. The OEM initially requested a small scale production volume, but with the likely possibility of expansion if sales volume increases with their initial design. This increase in sales volume is forecast based on achieving a 20% cost reduction in the subassembly. It is expected that this will be achieved by identifying and eliminating all of the waste in the production operations and by further streamlining the value added processes. However there is scepticism from the OEM that the production order fill rate can be achieved.
Your task is to analyse the production process based on the data provided. A value stream map for the current state, ideal future state and first improved state should be provided. Your report section should include no more than five pages including (1) introduction, a (2) VSM for current state, (3) VSM for ideal state and (4) VSM for first state, followed by (5) discussion of where the opportunities for cost reduction exist and the reasoning behind why you would start with the changes recommended in the first improved state. A cover page and a references page should also be included (total of 7 pages complete).
Answer:
The process flow is assumed to be happening in a straight fashion with minimum backtracking and work in progress between the processes. There are unnecessary movements within the shop floor. The work in progress consumes space and time as the production ensues. This is further compounded by the fact that due to quality challenges within the existing state, percent rework and rejects are on the rise. Notably, customers need quality products within the shortest lead time otherwise due to stiff competition, the company in question may lose out hence lean manufacturing is proposed where production is customer-driven rather than company-driven, in other words, there is need for a pull system.
![]()
![]()
In this case, it is assumed that the processes are grouped into two stages; stage 1: The parts production & quality check and stage 2: Assembly and Quality check. The proposed model ensures that all reworks and quality challenges are dealt with at the departmental level before being escalated to the end point where final inspection is done. Certainly, this will save on the material transfer cost and time to make these improvements. Besides, incidences of machines idling are almost zero as machine works with zero work in progress. Bottlenecks and backtracking are effectively eliminated. It also allows production of many units at the production stage before stage 2 can be done hence batch production is encouraged. Batch production simplifies production planning and control. Hence customer requirement can easily be met.
VSM of the Ideal state:
![]()
- Future state
Similar to ideal but additional issues are included to accommodate the practicalities of production. This include: Work in process between the production and assembly stages. Continuous improvement plans to progress to the cellular group technology.
VSM of Future state
![]()
