Metal Hoses Inc. (MHI) is a major manufacturer of metal braided hoses for industry. These products are used in everything from cars to tanks to motorcycles. MHI’s products can even be found on the Space Shuttle. At first glance, it may seem that MHI’s products are mature and compete on the basis of cost alone. However, recently, the management at MHI have identified that there is a market segment that demands (and is willing to pay for) speed in delivery. That is, these customers are willing to pay if MHI can receive, process, and deliver orders quickly. From talking with its customers, the management at MHI has determined that the customers are most sensitive to order lead times of one week or less (from time of receipt to time of delivery). In studying their processes, management has determined that order entry is the major bottleneck. This process consists of the following steps: (1) the order is received from the customer; (2) it is moved to accounting where it is checked and entered; (3) it next goes to engineering for evaluation and acceptance; (4) purchasing is next for material assessment; and (5) it is scheduled by operations. These five steps are separated physically since the order has to move to the departments where these activities are carried out. Analysis of the situation has indicated that under the current process it takes an order two weeks to complete this process. However, when errors are uncovered, the process can take up to five weeks (since the problem order has to return to the steps where the problem was first created). Management has determined that order entry should take no more four hours.
a. Identify appropriate metrics for both the order entry process and the overall order fulfillment process for MHI.
b. Use process thinking to re-engineer the order entry process
• With technology
• Without technology (management has determined that MHI should not spend its way out of this problem).