Senin, 25 April 2011

BENCHMARKING APPLICHEM

  1.  How would you measure the productivity at a plant and perform a fair comparison of the performance of Applichem's six plants?
We assume that the 'Number of People at Each Operation at Each Plant' means 'number of people for each product type at each plant'. Therefore the product variety difference among different plants should already be taken into consideration in Exhibit 3.
But the package variety is also an important factor for performing a fair comparison of the performance, since the package variety difference is very big among all the 6 plants. For example, Gary is carrying 80 package sizes while most of the others carrying only 1. Therefore we divide the package labor (in Exhibit 3) by the number of package sizes the plant runs, and calculate the subtotal of direct labor based on it. By this modified calculation, the plant productivity is as shown in table 1.2.
Table 1.1 Direct labor

Mexico
Canada
Venezuela
Frankfort
Gary
Sunchem
Original package labor in Exhibit 3
10.4
5
6.2
14.6
11.3
2.7
Modified package labor
10.4
5
6.2
14.6
0.14125
1.35

Table 1.2 Productivity

Mexico
Canda
Venezuela
Frankfort
Gary
Sunchem
average
by direct labor
0.882
0.215
0.318
0.828
0.591
0.278
0.518523
by direct labor-modified
0.882
0.215
0.315
0.828
1.116
0.304
0.610116
by indirect labor
0.691
0.167
0.373
0.945
0.405
0.241
0.47017
by total
0.387
0.094
0.172
0.441
0.240
0.129
0.243886
by total-modified
0.387
0.094
0.171
0.441
0.297
0.134
0.254144
Similarly, for the manufacturing cost, it is unfair to measure using total manufacturing cost which includes the packaging cost. The manufacturing cost before packaging is a more realistic measurement.

  1. Why do you think the plant have different productivity?
The productivity depends on the product make-up, equipment efficiency, employee loyalty, improvements, operator technology, national labor rules, product quality etc. The following table summarizes the differences in all aspects among the six plants:


Product Make-up
release-ease / other / packages
Equipment Efficiency
Employee Loyalty
Improve-ment


Operator Technology
National Labor Rules
Product Quality
Mexico
1-6-1
68, dry-78
-
-
ok
-
-
Canda
1-4-1
55
non-union
-
-
-
high
Venezuela
1-1-1
64
-
Bad
low
-
-
Frankfort
2-12-1
71-74, 1961
-
Good
-
-
-
Gary
8-19-80
59-64
excellent
-
-
-
-
Sunchem
1-1-2
57, redesign-69
non- union
best
excellent
severe
high


  1. A new cost measurement. Set up a linear program using the demand data, transportation and manufacturing costs and capacities to find the optimal production for Applichem's global network for 1982.
Because there is no technology break-through from 1977-1982, we assume that the manufacturing cost is affected by exchange rate and inflation rate only. The exchange rates and inflation rates vary greatly by country. For example, Mexico has the most dramatic change between 1982 and 1981, while Japan has the lowest overall inflation rate change, and Venezuela has no exchange rate change at all. Since all the plants' equipment setup date and manufacturing starting date are before 1975, the plant's performance (manufacturing cost) should be based on the modified cost eliminating the effect of outside influence out of control of plants (exchange rate and inflation rate). For the 1982 manufacturing, if it was performed in 1977-81, the corresponding cost should be:

year
Mexico
Canda
Venezuela
Frankfort
Gary
Sunchem
1982 (check)
92.63
93.25
112.31
73.34
89.15
149.24
1981
216.7922
91.70873
103.9096
73.29401
86.71935
156.7062
1980
198.4
82.52094
91.30894
78.05058
78.40809
167.4084
1979
162.1102
73.9437
76.06035
82.23734
67.50937
120.3686
1978
137.6809
63.54112
69.66872
74.14891
59.82537
138.1361
1977
118.8233
63.51462
64.82935
63.887
55.66974
114.9789


And the ratio with average cost (among 6 plants) is:



Mexico
Canda
Venezuela
Frankfort
Gary
Sunchem
1982
0.911234
0.917333
1.104833
0.721472
0.877
1.468127
1981
1.78398
0.75467
0.85507
0.603135
0.713612
1.289533
1980
1.710107
0.711288
0.787036
0.672756
0.675838
1.442975
1979
1.670581
0.762006
0.783818
0.847473
0.695698
1.240424
1978
1.521333
0.70211
0.769819
0.819323
0.661053
1.526362
1977
1.48004
0.791126
0.807502
0.795764
0.693412
1.432156