ACME Custom Elevators manufactures custom designed home elevators. Located in a growing urban and suburban environment in the Southeast, was founded by John Doe. John Doe is a mechanical engineer and had worked in the industry for more than $20$ years before branching off as an entrepreneur.

ACME original business mission was to provide homeowners or homeowners building their own houses with custom designed home elevators. All elevators had to meet quality and safety standards per industry and government regulations.

ACME started receiving phone calls and request from large builder companies to build elevators for communities with similar building design. This meant their business model would add a product line of low volume home elevators based on an original custom elevator design. This was a difficult business decision for it would require extensive capital investment in plant layout, material procurement, inventory, and assembly line labor and tools. John Doe made a decision to proceed with this new business model $–$ custom home elevators and low volume home elevators for building contractors $–$ because a couple of building contractors invested in the company providing the needed capital.

After $2$ years pursuing the strategy, ACME started to have customer complaints about elevator performance and, elevator late deliveries. ACME had never quite tracked customer complaints in the past for late deliveries were less than $20\%$ of projects, and quality issues after installation were few. Now, John judged that there was more than $40\%$ late deliveries and quality complaints had grown dramatically were labor involved in design, engineering, and assembly, now had to be diverted to fix quality problems. The problem $–$ the cost of quality $–$ was feeding on late deliveries and quality problems due to labor being diverted to fix problems.

ACME$’$s business involved two distinct processes that were intertwined and link in many areas $–$ from suppliers, to inventory, to procurement, and both in engineering, tool technicians and assembly, testing and quality assurance labor.

Fabricating custom elevators is an engineered and design skill$-$oriented process. The first step in the process is a sales consultancy event where ACME sales and designers meet with customer to evaluate customer need and budget. A preliminary rough order of magnitude is provided to customer after the consultancy meeting. When an order is received for a custom elevator, a design team is put together to develop the design specifications. Working closely with the client, a final design specification is approved and priced $–$ with established delivery and project milestones. All project design and engineering specifications are documented in engineering and assembly drawings.

A project manager is typically assigned, if available, or a lead enginer is assigned as project manager. All bill of material $($BOM$)$ needed for the project are sent to buyers in the procurement office for procurement. The time to receive all materials $–$ a complete kit $–$ for a single custom elevator is typically eight to twelve weeks. The materials are inspected before acceptance, and if there is any quality problem, material must be re$-$order on an expedited basis. As the materials are received, they are staged in the project specific inventory bay until the entire BOM kit is complete. The project manager then updates the MRP plan for the next stage of the project $–$ final manufacturing and assembly. Then, the material is moved to the machining and assembly areas. Fabricating a custom elevator takes $8$ weeks$-$ if all goes well.

The time to receive all materials $–$ a complete kit $–$ for a single custom elevator is typically eight to twelve weeks. The materials are inspected before acceptance, and if there is any quality problem, material must be re$-$order on an expedited basis. As the materials are received, they are staged in the project specific inventory bay until the entire BOM kit is complete. The project manager then updates the MRP plan for the next stage of the project $–$ final manufacturing and assembly. Then, the material is moved to the machining and assembly areas. Fabricating a custom elevator takes $8$ weeks$-$ if all goes well.

As each unit is assembled, each unit is sent to testing and quality inspection. If during the testing and quality inspection, the elevator unit does not pass protocols, it is sent back to the assembly stage area for repair and fix. Then it is once again sent to testing and quality inspection for final release and delivery to customer. Testing and inspection typically takes a week, and delivery and installation is usually done within a week for each elevator unit.

QUESTIONS
1. What are the major issues facing ACME? Focus on process issues for business strategy has been decided. Ensure you talk about the type of processes at hand.
2. What are the competitive priorities for ACME? Have they changed from custom elevator fabrication to low volume manufacturing?
3. What would you recommend to fix the challenges being faced by ACME? What operations management concepts would be applicable

 

Answer rating: 100% (QA)

1 What are the major issues facing ACME Focus on process issues for business strategy has been decided Ensure you talk about the type of processes at hand ACME is facing several processrelated issues ... View the full answer