Value of Information Sharing Between and Among the Functional Departments: An Insight
The General Manager – Operations (GM) of a small scale company M/s XYZ Company had was employing most of his working hours resolving conflicts between various functional departments than to focus on planning for the capacity addition, modernizing of the shop floor and identifying ways of improving the competitiveness of the company. Apart from the conflicts the other problems that he was facing was long lead time, delay in deliveries, customer complaints regarding the quality, high inventory
of raw materi.
XYZ Limited: Company Background
M/s XYZ Limited was an ISO certified small scale manufacturing company. The company had ten departments namely, Marketing, Design, Personnel, Finance, Purchase, Production Planning and Control, Production, Stores, Quality and New Product Development. The firm produces products in a made-toorder environment. The lead time for delivery ranges between 45 days and 10 months depending upon the type of products. The production of the company can be divided into three divisions. There was a fabrication shop that includes painting and plating, a machine shop that had manually operated machine tools and an assembly shop. There were 80 shop floor employees and around 40 administrative employees. Currently the firm M/s XYZ Limited had multiple suppliers and the company had decided to prune the number of suppliers.........
Organization Structure and Information Sharing
Organization had a structure with five levels, was more of hierarchy (Exhibit I). The top management of the Board of Directors had reposed full faith on the capability of the general managers and especially the General Manager (Operations). The interest of the top management lay in Finance and Marketing. The operation part was left to the discretion of the GM............
Personnel
The role of the personnel in the company was preparation of payrolls, disbursement of salary and initialization of the recruitment process for the 80 shop floor employees and the administrative employees. The selection of the candidates was through references followed by interview. The company employs regular shop floor employees and also had employees on contract.............
Marketing and Forecasting
The Marketing Department was headed by General Manager Marketing. He had four Marketing Executives to assist him. The company works in an environment of make-to-order. All the work orders received from the customers have sufficient lead time to deliver and were booked in advance. Lead time to delivery of the work orders ranged from 45 days to 10 months.............
Design
The technology of the switch and panel assembly was licensed from a Swiss firm for which the company pays royalty. The Marketing Department after obtaining the customer’s order passes on the customer’s specifications to the Design Department.............
Production Planning and Control (PPC)
The department was headed by a manager. The department received the information from the Design Department regarding the part drawings and bill of materials. The Marketing Department provided delivery date of orders to the Design Department which on receipt of the date of orders prepared the part drawing according to the customer’s specification and............
Purchase
The Purchase Department received information regarding the requirements of the assembly shop from the PPC and also from the foreman of the machine shop floor. Around 95% of the components used in the assembly shop were bought out items. The PPC Department on arrival of the BoM from the design marked a copy to the purchase stating the components to be bought outside. Some components were both bought outside and also made in house.............
Production Department, Product and Production Process
The department was headed by the Production Manager. He had three Production Engineers to assist him. One looks after the fabrication, shop, and two engineers working on shift supervise the switch and panel assembly, along with painting shop and plating shop. The fabrication shop consists of six workers. The switch assembly consists of two groups that consist of three members...............
Quality
The Quality Department was headed by a Quality Manager which had a team of four members. They were required to carry onsite inspection of the fabricated components and inspect the incoming raw materials that were critical in nature. They inspected the work-in-process of the machine shop and fabrication shop also..........
Finance
The interaction of the Finance Manager within the firm was limited. His role was confined to checking the documents received from the purchase after approval of quality and entry of stock in the stores for payment. The Finance Department received the transport bill from the security gate and processed the bill for payment separately, since the transport payment had to be settled immediately unlike the raw materials, the bills of which were paid after a month.............
Assignment Questions
I. Which of the inventory policies would you suggest the company? Why?
II. What would be the decision of the Purchase Department with respect to the purchase of steel rod?
III. What would be the decision of the Finance Department regarding the standard cost?
IV...................
Exhibits
Exhibit I: Organization Structure
Exhibit II: Demand Data for Stand-Alone Switch Assembly
Exhibit III: Demand Data for Panel Assembly
Exhibit IV: Backward Scheduling
Exhibit V: Master schedule – Month-wise Schedule
Exhibit VI (a): Demand Data of Connecting Levers
Exhibit VI (b): Demand Data of Contact Levers
Exhibit VII: Frequency and Quantities of Order of Connecting Levers
Exhibit VIII: Price Details of Connecting Lever
Exhibit IX: Demand of Product X
Exhibit X: Steel Rod Specifications
Exhibit XI: Specifications of the Suppliers
Exhibit XII: Quotation 1 Price Details
Exhibit XIII: Quotation 2 Price Details
Exhibit XIV: Quotation 3 Price Details
Exhibit XV: Bill of Materials of Switch Assembly
Exhibit XVI: Panel Assembly Bill of Material
Exhibit XVII: Process of Panel Assembly
Exhibit XVIII: Demand Data
Exhibit XIX: Freight Rates