Ace Designers – Competing Through Process Improvement Case Solution

Introduction

Ace designers, a flagship company of the Ace Micro smatic Group, founded in 1979, entered in the market with a variety of special purpose import substitution machines. Since then the company has grown tremendously over the years and has transformed itself as one of the India’s leading machine tools manufacturing company with a strategic focus on developing quality and cost effective products.

In the early 90 s; the company decided to compete on the basis of volume due to which Ace designers were manufacturing standardized machines while pricing them aggressively, leading to a conscious drop in profit margins and pursuing cost reduction. Therefore, Ace transformed the assembly of their machines from  job shop into flow line; in an attempt to reduce cost and increase volume in order to fulfill the demand for a standard machine tool. The sequencing of all the activities and the flow of material being performed at all stations helped in improving the assembly line by improving the efficiency of the process immensely.

Along with this, Ace also implemented 5 S during 2004-2008 in order to gain the business excellence by adopting international standards which allowed the company to save over $75000 and receive the 5 S excellence award in 2006, 2008 and 2011.

By the end of 2005, the company implemented the flow line in almost all of its product lines, which allowed the company to reduce its cycle time to 8 hours and enabled it to produce and deliver products at a much faster pace with improved quality than most of its competitors. But even after the success of the flow line, Shirgurkar, the MD was not satisfied as he knew the key of assuring the success of Jobber was the cost, therefore he wanted to capture the market by making Ace designers one of the most cost effective company.

Key issues

Within the last five years, the competition within the industry increased dramatically, as many foreign and domestic players entered the Indian machine tool industry, and the companies in order to stay competitive; initiated a war on the basis of price. Prabhakaar, the COO and the head of high volume machines implemented Half day indexing in LM Elite assembly line in order to instrument a fundamental change, with an aim of doubling the productivity of the line, thus reducing the cost. After the successful implementation of Half day indexing in LM elite assembly, Prabhakaar is planning to implement it in all of the other product lines. But before transferring the new system effectively in the entire product lines, it is extremely important that all the residual issues should be identified before handed, in order to achieve smooth implementation of the new process and the desired results.

All the pre-requisite data has been collected by Rupali and her team which was assigned the task of identifying any outstanding issues and the possible areas for improvement and to recommend some actionable plan to mend the half day indexing before it gets executed on rest of the lines.

Half day indexing

The idea of half day indexing was to double the productivity line in order to reduce the cost by moving the line once every four hours. In order to experiment this system; Jobber LM elite was chosen mainly because it was one the model that required minimal amount of customization and few other optional features. Apart from this Jobber LM Elite was one of the commodities that needed most cost reduction.

The process of improvement was approached from three angles i.e. product design, floor& assembly design and inventory management. Each activity was carried out during the production of LM Elite machine and an attempt was made to either reduce or eliminate the time or effort needed to perform it.

Initially the focus was to change the product design itself in order to minimize the efforts without compromising the quality or the needs of the customers. After transforming the design; the task force shifted their focus towards infrastructure, with an aim to implement improvements on the floor in order to minimize the manual efforts and to reduce the lead time. With a simple design added by the task force, the company was able to eliminate the need of moving the machines during testing and allowed the trolley to be screwed tightly which helped the company in reducing the lead time.

In addition to this; the task force redesigned the product line in such a manner that the assembly components were stored on both sides of the line using storage racks.  Furthermore a cross trained operator was also introduced in the line, that could operate in all station in order to cover any sudden absenteeism of any employee and minimizing the time needed to find any floor manager.

All these efforts made significant contribution to the success of the half day indexing experiment and within a meantime the company was successfully able to reduce the price of an older Jobber model by 10%. As a result of which, market responded remarkably as it received 200 orders in 20 days showcasing that the market being inversely correlated, as low cost will lead to high volume.

Pros and cons of Half day indexing

In order to better evaluate the successful implementation of half day indexing system and to identify any outstanding issues and the possible areas for improvement, the pros and cons of the new system have been identified, which are as follows:

Pros

  • The implementation of half day indexing program not only reduced the cycle time by also minimized the efforts of the worker.
  • Due to the implementation of the new system; the company was able to reduce the price of older jobber model by 10 percent which help the company in increasing the demand by a significant margin.
  • The entire process became much more efficient mainly due to improved control. The changes in the designing of the parts benefited the company by reducing the time by 4 hours.
  • Furthermore the changes in the infrastructure in the floor helped the company in minimizing the efforts required by workers and the lead time, by creating a required level for the ground.
  • Apart from that, the incorporation of an additional cross trained operator and a red and green tower lamp on each station helped the task force in reducing the time further by 1.5 hours.
  • The company as a part of the process stored the components of inventory that were required for one week on the shop floor and halved the replacement time of components, which befitted the company by reducing the time for operators and the inventory storage efforts by minimizing the time by 4.2 hours and making the implementation of the new system successful i.e. by reducing the time required to complete the task, leading to low cost.

Cons

  • Initially when the idea was introduced to the floor workers, the floor workers rejected the idea mainly due to the fact that they were required to put additional efforts in order to complete the job in half the time. The idea was presented repeatedly in order to convince the workers to the idea.
  • The implementation of new system created space constraints on the assembly and sub assembly lines, mainly because of the requirement of storing the components on the floor shop, leading to a certain level of duplication.
  • The implementation of central procurement strategy in order have better control over the suppliers created a new set of problem for the company i.e. dividing the raw material at times of shortage.
  • Furthermore, half day indexing doubled the need of raw material required for the LM Elite line which led to delays in the supply of raw material, as the suppliers were not able to cope up with increased scale.
  • Most of the suppliers dealing with the company were comparatively small and did not process the required expertise to carry out the process of improvement or to invest in the sudden capacity expansion.
  • Furthermore, it was also uncertain that whether the supply chain would be able to hold up when the demand scale up………….

 

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