SCM110-02 Supply Chain Administration

Case Study 3

on

Oak Hills

Prepared By:

Itmam Sanjid Sparshan

(A00159525)

Submitted to:

Ambreen Ansari

Professor

Canadore College of Applied Arts and Technology

Date of Submission: 3rd April 2023

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1. What are the specific quality problems Oak Hills is facing, and how will they

influence the company’s ability to convert to a lean system?

Answer: Oak Hills is facing four main quality issues, including concerns related to

employees, damaged machines, an overwhelming workload in the quality

department, and a lack of quality checkpoints. Employee-related concerns stem from

poor communication from management regarding layoffs due to economic issues,

which has resulted in diminished morale among employees. Additionally, there are

issues with unfair bonus pools being awarded on a team basis, which can lead to

cross-functional training and employees being forced to assist with rush jobs.

Damaged machines have also been a problem for Oak Hills, as old and worn-out

machines are causing a waste of raw materials and employee turmoil, negatively

impacting the company's expenses and employee confidence. The quality control

department is overloaded due to all seven units being used by the company being

started simultaneously, and all assemblers must bring in their first boxes of the batch

for quality assurance checks. This puts the success of the quality control department

in jeopardy and can result in many faulty products, which can damage the company's

image. Oak Hills lacks quality checkpoints, which means they cannot monitor the

direction or production of work in progress. The company does not perform quality

checks when packing the products, only during assembly. As a result, when products

reach customers in poor condition, it is difficult to assign the faults to the correct

department. Before implementing a lean system, Oak Hills must resolve these major

issues. To do so, management must understand that quality is important for both

employees and management, and they must communicate and educate employees

to ensure a smooth transition to the new system.

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2. What changes in the manufacturing environment need to be undertaken to

convert the current system to a lean system? Think about this from both a

short-term and a long-term perspective.

Answer: To successfully implement the lean system in the manufacturing

environment, Oak Hills needs to make several short-term changes, including:

 Organizational behavior: For the lean system to work effectively, both

management and employees need to embrace lean views and understand the

technicalities of the system. This requires proper communication and

education from management, including implementing an information system

that allows employees to learn more about the system.

 Customer/supplier communication: While Oak Hills aims to reduce the

lead-time to one week, it's essential for the company to have constant

communication with its suppliers and customers. This means having real-time

data on drilling projects and project information for internal customers like

E&E and Triangle. This not only solves short-term problems but also sets the

company up for long-term success.

 Continuous improvement: To align with the lean system's zero-wastage

viewpoint, Oak Hills needs to consider improvements in product quality,

reduction of raw materials, and product waste.

To maintain excellence and align with the lean system's long-term goals, Oak Hills

needs to implement leadership-led changes and foster a lean system thinking

throughout the company. The company must be positioned in the lean system

processes to sustain quality in the long run.

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3. How will the implementation of a lean system impact employees, and what

can be done to smooth the transition?

Answer: A Lean system implementation goes beyond delivering specific outcomes;

it concentrates on driving changes across all dimensions of an organization. The

implementation begins by changing the employees' overall views and ensuring

compliance, thereby affecting internal departments in various ways. The Oak Hills

shipping department has already adopted a Lean system with a team of four

individuals rotating leadership duties.

However, there are areas that require further implementation, such as offering

rewards for each employee based on individual task success, rather than team-

based bonuses. This would increase productivity and reduce stress. For a successful

implementation, Oak Hill needs to integrate the Lean system across the entire

organization, with every employee possessing multifunctional skills. Proper

employee education and communication are also critical to achieving superior results

and a smooth transition.

Additionally, trust and communication among team members and management must

be established, ensuring employees are aware of all company issues and

opportunities, and are equipped to embrace Lean views. Oak Hills management

must implement these changes by involving all employees and keeping them

informed about changes and benefits. The Lean system implementation will relieve

stress and create benefits and rewards for all employees, maximizing results and

leading to smoother operations across the company.

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4. At what stage in the development of a supply chain is Oak Hills, and what

can be done to improve the supply chain?

Answer: Oak Hills lacks a proper supply chain network, resulting in extended lead

times of up to three months for large foreign orders and unpredictable Exploration

and Extraction unit (E&E) domestic orders leading to rushed jobs. The current

relationship with E&E is inadequate, preventing accurate demand forecasting and

leading to an inventory turnover rate of only five times per year. This results in high

inventory holding costs, delivery expenses, and overtime pay related to expediting

orders. Furthermore, Black Dome, the company that supplies Oak Hills with sensor

boards, has a poor track record of on-time delivery, causing late deliveries and

scheduling conflicts for Oak Hills and E&E.

To address these issues and strengthen the supply chain connection between all

parties, Oak Hills must adopt a practice of supply chain integration, utilizing direct

communication channels to receive information about current or upcoming projects

from E&E. This will enable forecasting of instrument testing demands and reduce

costs associated with rushed orders, as well as decrease the amount of raw material

inventory held onsite for unexpected orders.

Additionally, Oak Hills already uses a Materials Requirements Planning System

(MRP) but must fully utilize it to schedule and manage production planning and

requirement planning with Black Dome, thereby eliminating late deliveries and

rescheduling issues.

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5. For Oak Hills, what is the connection between demand management and the

supply chain?

Answer: The relationship between supply chain management and demand

management is critical as it involves prioritizing demand in the absence of supply.

Oak Hill is facing issues due to fluctuating demand, which leads to several

consequences. Oak Hills is dealing with rush orders due to the lack of information

regarding the current or upcoming projects of customers, leading to high inventory

levels, increased holding costs, delivery costs, and overtime costs. While a Lean

system can reduce waste, Oak Hills must manage supply chain communication on

its own since Lean manufacturing cannot solve the demand issue. Supply chain

management can be used to create a production schedule by receiving details of

clients, including the Exploration and Extraction unit (E&E) projects, which can

reduce inventory costs. However, the issue at Oak Hills is that demand management

is not being effectively implemented. The demand for testing instruments produced

at the facility fluctuates and is influenced by various factors, making it difficult to

accurately predict using the data from surveys. Furthermore, Oak Hills' managers

and employees lack information about Exploration and Extraction unit projects and

orders for Triangle Corp, exacerbating the demand management problem.

Additionally, the organization faces unlimited rush orders from customers, which puts

pressure on the manufacturing process and often results in changes to schedules

and operations. These demand management weaknesses are associated with

supply chain problems at Oak Hills, which can lead to increased costs for

manufacturing, inventory, labor, and delivery. When there are many rush orders, the

supply chain must be adapted to the situation, and regular procedures to manage

this process seem to be underdeveloped.

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6. What should Oak Hills do? What problems might occur in implementing

your recommendations, and how can these problems be avoided or

neutralized?

Answer: The implementation of lean manufacturing at Oak Hills facility can resolve

production process issues, but it may also raise concerns within the company. The

primary challenge is that employees may resist change. The solution is effective

communication with stakeholders, clients, and employees to illustrate the

advantages of a lean system before implementing it. The cost of changing processes

and techniques may also be a problem, but management must be convinced about

the long-term benefits of lean manufacturing to invest in the change. Despite the

challenges, the Oak Hills facility can overcome them by communicating the change

to all stakeholders, including employees. The Oak Hills facility is facing various

challenges, such as poor management of product lines, high overhead costs due to

inventory holding and overtime pay, unpredictable demand, poor quality

management, and wastage due to defects in the production system. Furthermore,

the low employee morale results in poor customer service. To address these

challenges, management must prioritize supply chain integration, proper employee

communication, and investment in new technology. To successfully transition to the

lean system, Oak Hills should communicate the change to all stakeholders in the

supply chain, including employees. The Oak Hills facility needs urgent solutions to

challenges such as poorly managed product lines, high overhead costs, low

employee morale, and wastage in production. To address these issues, the facility

can improve supply chain integration by having direct contact with project managers,

implementing an MRP system, and reducing rush orders. Employee morale can be

improved by providing proper training, communication, and compensation.

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Additionally, worn-out machinery should be refurbished or replaced. Despite

challenges, effective communication, supply chain integration, and investment in

new technology can help Oak Hills achieve its goals.

References

 Shankar, V. (n.d.). Integrating Demand and Supply Chain Management.

Retrieved March 30th, 2023, from

http://www.pearsoned.ca/highered/divisions/text/cyr/readings/ShankarT3P2R3

.pdf

 Choy K.L., Lee W.B. and Lo Vicor. (2003). Design of a case based Intelligent

Supplier Relationship Management System. Expert Systems with

Applications, 25, pp.87-100.

 Flinchbaugh, Jamie. (n.d.). Beyond Lean: Building Sustainable Business and

People Success through New Ways of Thinking. Lean Learning Center.

 IvyPanda. (2020, August 10). Oak Hills Facility's Supply Chain

Implementation. Retrieved March 30th from: https://ivypanda.com/essays/oak-

hills-facilitys-supply-chain-implementation/.

 Case Study 3 (2023). Lean Implementation and Supply Chain Development

at Oak Hills, Retrieved March 30th from:

https://ilearn.canadorecollege.ca/d2l/le/content/385300/viewContent/

2262896/View.