Identifying Constraints In Production: A Case Study On XYZ Limited (Essay).

Identify the constraint in the production process (not the constraint in the maintenance practices). To be able to describe at a high level how maintenance practices and asset management might best support this constraint.

Efficiency and production are two sensitive factors that work together in the mining and processing industry. In order to maintain a consistent output and ensure that there is maximum productivity on a regular basis, a business must reflect on all the sensitive issues that affect both its internal and external environment. The case presented for the XYZ Limited, a heap leaching copper mine organization located in Atacama desert in Chile, seeks to have a 15% improvement on the current production of saleable product, which in this case is the copper cathode (A case study based on maintenance practices in the mining industry, 2018). The organization also seeks to have a 20% plus reduction in the operating costs especially for the maintenance section, and an additional 20% in investments of the organization.

The XYZ Limited’s poor management practices is the major factor behind inefficiencies in production and high operation costs. The company needs to critically evaluate their internal structure starting from the top management in order to address the issue of high operation costs and investments that widely affect the sales generated.

The constraint in the production process

The production process of XYZ Limited which is an entity that has highly invested in the heap leaching of copper mine products is greatly influenced by lack of machinery and their maintenance activities and most importantly, the nature of operations and how it is constituted. It is also highly affected by the poor management strategies used in implementation and allocation of production resources. (A case study based on maintenance practices in the mining industry, 2018). The organizational structure of XYZ Limited must have an operations department that is engaged in coordination of the actual business activities which is mining of copper. Additionally, another major issue of concern for the organization is that there are issues of quality of spare parts produced, this is caused by lack of efficient means of production, poor policies in the production department as well as poor communication. There has been an issue of the amount of spares needed for maintenance being unsubstantiated. On the other hand, most of the spares that need maintenance have generally been classified as slow moving. It is hence difficult to make high sales when much of the time, efforts, and resources are directed to maintenance of such products as operational costs of XYZ Limited.

XYZ Limited Case Study

The Maintenance Section

The management of XYZ should be structured according to the following model. The board of directors should the top most in power ranking. Management should then be divided according to departments which include finance, human relations, marketing, production and each department should have a manager who is answerable to the board of directors.

All managers in all departments have a duty of ensure they conduct all their departmental business activities with specified limits and timeframe. The production department led by production manager should conduct a detailed assessment on all spare parts and machineries that are brought before them for issues of repair and maintenance. After the assessment process, they can proceed with a section process that defines what is liable to maintenance as well as what is not. Not everything that is brought before the maintenance should be considered liable for the maintenance process. The cost of maintaining some of the spares in the organization which is part of the processing costs might not have a profit value compared to the state in which the machines are.

All the departments MUST coordinate towards achieving the goals of the company. However, there is a complete disconnect in the actions that take place in the organization (A case study based on maintenance practices in the mining industry, 2018). If there was proper coordination between all the departments, it would not be possible to pump a lot of money on spares that have no value or market to the organization.

The finance department must get information from the marketing team and from all department of how much financial resources they want to be allocated to achieve departmental goals. The finance department must also be part of the team that offers viable information to maintenance section. They have the actual information of the finances and revenue of the organization. They can offer a detailed breakdown of all the maintenance costs based on the previous projects that have been completed. With such information, it would possible to make comparisons and decided on whether it would be profitable to invest in certain maintenance actions or not.

The purpose of the maintenance section in this case study would be to restructure the company’s operations team so that it becomes well equipped and informed of the activities that directly influence production (A case study based on maintenance practices in the mining industry, 2018). The other purpose also is to give a detailed marketing research on the slow moving parts to consider whether they could be sold elsewhere without involving a lot of maintenance costs in the organization. Thirdly, the maintenance section will also be helping the finance department when it comes to accounting for the operations maintenance costs. 

The constraint in the production process

Causes of Maintenance UDEs (Undesirable Effects)

The main causes of undesirable effects are poor management and ineffectiveness in production in the company. Failure at the top where the upper management is not properly educated. The decisions made by manager influence production efficiency in organizations to a greater extent. Poor decisions will lead to poor production strategies and hence poor use of funds. Consequently, the financial department might have management failure for instance, the accounting department in finance section might not have been properly tracking the expenses. This might have been the cause of the other departments of the company overspending and hence cutting the organizations profit margin.

In addition to that, the maintenance issues that are noted in the organization are as a result of poor coordination of staff members and departments. In this case, there is lack of proper coordination between major departments including the marketing, finance, management, and the actual maintenance sections. Due to disjointed efforts, the maintenance units do not get the required information in order to execute their actions. The marketing department might also be having poor marketing plans having o idea of who the company’s niche client really are.

The following chart flow indicates the assumed causes of XYZ inefficiency in production activities.

Addressing the perceived issue

For XYZ company to address these issues  to solve the constraint in production, there is need of improving production efficiency in XYZ Company and also to increase profit margin and coordination among departments. The board of directors therefore can use various tools to solve the constraints. These tools include: Connecteam, workflow max and pocket.

There is a major issue of XYZ Limited investing too much money in the processing stage. The processing costs have a direct influence on the overall sales that are generated over a long period. As time moves, the processing costs are increasing and affect the level of production in the company (Daithankar & Pandit, 2014). Communication channels should be well structured between departments to address the communication issues explained above which have contributed in a disjointed communication structure, it would be easy to restore proper functionality at the processing stage and ensure that the costs especially for maintenance are completely cut down to boost the sales that are generated.

First, the finance department must be active in ensuring that costs of maintenance are not directed to the individual stores where they are located. By having a common platform for all the finances where costing it conducted as a single organization of XYZ limited, it would be possible to cater for all the issues of accountability that exist (Daithankar & Pandit, 2014). By having a common platform for all the activities of finance, it would be easy to assess the maintenance needs and do away with spares that may consume lot money (Daithankar & Pandit, 2014). The finance department must also offer consistent reports for the maintenance units and decide on whether it would be financially reasonable to invest in specific maintenance issues or not. 

Secondly, the marketing unit has a major issue of performing detailed research on external markets for spares that may not have value when it comes to maintenance. Research should also be conducted on the final decision that is made by the maintenance unit on the spares that are supposed to undergo the process. Their market demand should be well known and a decision made to determine whether the process is economically valuable or not (Daithankar & Pandit, 2014). In general coordination of all these units is very crucial in producing optimal results. The disjointed units which in this case are increasing as time moves affect the efficiency of the work force for the XYZ Limited organization, which in turn leads to a constant decrease in the production of sales generated progressively.

Lastly, the board of management should ensure that quality managers are employed in the company. This can be done by conducting thorough interviews and assessing the applied managers to ensure they get the best. Additionally, all staff members especially those in high ranks must be competent, know organizational operations in various departments. The board should also hire auditing personnel who comes to audit the finance departments after each financial periods.

Conclusion

The XYZ Limited has an opportunity to redeem its sales and regain stability of the income revenue. First, they must reflect on their structure which is a central part of communication and coordination of all the activities that take place. Second, the organization must reflect on their current leadership and offer suggestions on what can be done to ensure that it is reformed at ready to restructure the system to offer efficiency and productivity. The lack of a clear structure in this case affects the policies and decisions that are made especially when it comes to issues of maintenance which have greatly impacted sales activities of XYZ limited.

References

A case study based on maintenance practices in the mining industry. (2018). Case Study- Plan the work, work the plan.

Daithankar, J., & Pandit, T. (2014). Industry Best Practices for Implementation, Rollout, and Maintenance of SAP TM. Transportation Management with SAP TM 9.0, 37-58. doi:10.1007/978-1-4302-6026-4