Question

Kelifo Electric Vehicle Company (KEVCO) manufactures electric. golf carts, electric all-terrain vehicles, and electric senior citizen mobility scooters. Each of the three products has two or three models; a total of eight models are produced. Because of the somewhat erratic product demand and the lead time needed for the model changeover, KEVCO has been increasing its material and finished goods in- ventories. Work-in-process inventories are relatively low and have consistent costs from one month to the next. for setup During the last five years, KEVCO has experienced increased inventory costs, decreasing profit margins, and customer complaints concerning the long lead time to fill sales orders. KEVCO's president, Lou Watts, has grown concerned and has been discussing ways to change these deteriorating conditions with his produc- tion, marketing, and accounting staff. For the past few months, this top management group has been looking at how a JIT manufacturing system utilizing a Kanban concept could be used at KEVCO. The team has assembled data and information which indicates that KEVCO could change its production process from one of production push to de- mand pull by rearranging its production floor into manufacturing cells that would be dedicated to one of three products produced. Slight modifications to the equip- ment in the cell would be needed for a changeover from one model to another. Cell production teams would be responsible for cell performance, maintenance on machines and equipment, solving production problems, and training. The manage- ment team is aware of, and has visited, other equipment manufacturing companies that have been quite successful in utilizing demand pull and cell manufacturing techniques. Required 1. Discuss the effect on KEVCO's planning and operating processes if KEVCO im- plements a demand pull production system. 2. Identify and describe at least five benefits to KEVCO that should result from the demand pull approach. 3. Discuss the behavioral effects of the proposed change at KEVCO to team partici- pation in planning and production.

Answer 1

Ans .1 The purpose of implementing a pull system is to build products based on actual demand and not on forecasts. By doing so, Kevco company can focus on eliminating waste activities in the production process. As a result, they will be able to optimize their resources and reduce the possibility of overstocking.

As such this would lead to Cost efficient or low cost carrying cost of inventories.

Ans. 2 Following would be some of the benefit Kevco would attain in light of implementing Demand pull approach –

1. Quickly adapt to changes that may occur in the work process
2. Scale the optimal capacity of your team
3. Deliver work items much faster
4. Reduce waste of resources
5. Increase productivity
6. Improve flow efficiency

Ans. 3 Following would be the behavioural effect of the proposed changes to team participation in planning and production

1. High morale with respect individual contribution towards the implementation.
2. Employees are highly motivated towards the organisation goal since their goal is aligned with organisation goal
3. Employee would expect growth in monetary compensation as Carry cost would be minimal and revenue would grow.
4. Disgrunt in employee as not all employee will see this as an opportunity and willing to work in a dynamic environment which is outside their comfort zone