Wriston Manufacturing Corporation free essay sample

Wristons Detroit plant is no longer a viable operation due to long-term capital underinvestment and product-process mismatch. It is recommended that the plant be phased out of operations over a five-year period with production and staff gradually shifted to a new plant to be built in the Detroit area. Further, it is also recommended that division accounting procedures and evaluation mechanisms be modified to allocate revenues/costs allowing for the synergistic benefits of Detroits products, and to recognize inherent manufacturing complexities, respectively. Issues Detroits production is unique when compared to other Wriston plants. Runs are typically lovwolume, involve significant set-up time, and vary significantly due to the sheer volume of different products lines, families and models. It is notable that the Detroit plant is the only plant manufacturing all three product lines: brakes, off- highway and on-highway axles; all other plants produce only a single product line. As seen by its area in Figure 1, manufacturing in Detroit is significantly more complex than other plant. We will write a custom essay sample on Wriston Manufacturing Corporation or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Also notable in this fgure are Detroits low return and relatively low sales figures. Capital investment has lagged in Detroit and the equipment is out- ated and inefficient. The general work environment is poor, with leaking pipes and old fixtures. Built in an ad-hoc manner, the layout of the Detroit plant is piecemeal; production typically requires complex flows through dedicated machining areas scattered about various buildings. Both the environment, and other factors seem to contribute to a poorly motivated workforce. Analysis If used prescriptively, Figure 1 would suggest Detroit and its products be divested, though Wristons study group report suggests some products may be profitable if transferred to alternate plants. Shown in Table 2 though, the burden rate or each of these potentially profitable groups is well above normal, apparently reflecting the complexity and variability inherent in Detroits assigned products. Variability, coupled with low volume, suggests the need for a flexible manufacturing system (FMS); the Detroit shop is instead closer to a flow shop confguration. This represents a productprocess mismatch. As the majority of the divisions plants are also flow shops, it seems at best uncertain whether any of Detroits products could be better-produced at other plants; any product transfers would almost certainly inflate the receiving plants burden rates. The possible exception to this is the Fremont plant which has some experience and technology dealing with lower volume runs and product variety. Unfortunately, they are close to capacity. The true value of Detroits products (to the division) must also be considered. Each plant is currently accounted for on a standalone basis, but Detroits many low-volume products are in large part supplementary (e. g. replacement parts) to other plants high-volume products. While these products are necessary to enable high-volume product sales, they are not necessarily sufficiently profitable to Justify their standalone existence. So too, Wristons commitment to provide replacement parts seems indicative of the markets internal performance measures and accounting 2 systems should allocate a portion of other plant product revenues to Detroit in recognition of their synergistic contributions to those products sale. Aside from the depressing plant state, the demoralized workforce at Detroit can be explained by their long-term underperformer attribution. This negative feedback, coupled with a lack of situational control (inefficiencies relate to process primarily) destroys their intrinsic motivation. So too, the commitment of workers to a single machine inimizes flexibility and skill variations, both otherwise motivating factors. Local workforce expectations are diminished when successful products are transferred away to other plants. The rewards for Detroits efforts are usurped by the receiving plants. Alternatives and recommendations Four alternatives have been considered for Detroit; a summary of the key characteristics for each is provided in Table 1. The fourth option presented involves creation of a new plant, but varies from the third option in that production would gradually rather than immediately shift from the current plant. Based upon the analysis provided above, any new plant should be built around flexible manufacturing processes.