Diagon Alley Magic Company Ltd

On February 9, 2021, Harry Potter, Materials Manager at Diagon Alley Magic Company Ltd in Diagon Alley UK, was preparing for the next continuous improvement team meeting. Recent supply problems had threatened to shut down the magic broom assembly line and Harry's task was to come up with a viable and profitable solution.

Diagon Alley Magic Wand Company Ltd.

DAMC, Ltd, the UK's only magic manufacturer in 2020, produced a variety of magic equipment for domestic and export markets and also distributed imported magic potions, magic robes, magic wild animals, magic equipment and broomsticks, etc. . Total sales amounted to around $500 million, of which around 40 percent were exported to 80 different countries. DAMC was organized into four divisions: wands, broomsticks, clothing, and potions.

An important recent initiative had been the establishment of the broomstick assembly plant in Godrick's Hollow, Ireland, which had developed a reputation for innovative technology in both the broomstick product and its process design. One of their recent successes was the 2020 “Smart Drive” electronically advanced direct drive broom that uses the world's first telepathically controlled motion.

The Materials Management Department

The supply of raw materials and components was a major challenge at DAMC. Ireland's small size (a country with only 5 million people) and remote location meant that local supply was limited and many requirements had to be imported. Purchased materials, spare parts and services accounted for about 50 percent of sales revenue at DAMC. To meet the needs of the various magical groups, purchasing used a centralized/decentralized organization. The centralized corporate unit in Ireland dealt with procurement strategy as well as major contracts with suppliers around the world. Decentralized supply units took care of the logistics side of their side of the corporate supply contracts, as well as other requirements unique to their local supply and needs. Coordination and cooperation between subgroups was very important and was constantly encouraged by Albus Dumbledore, who headed the corporate purchasing function.

harry potter

Harry Potter, a materials manager in the broom group, had joined DAMC eight months earlier. His experience included completing a Bachelor of Business Studies (Honours) at Hogwarts University and recently, in his own time, he began studying for a Master of Commerce at the Ministry of Magic. Harry had been asked by his own leader to conduct a serious investigation into the broomstick supply situation when a series of supply problems occurred in November and December 2020.

Manufacturing of broomsticks

Several models of Broomsticks required the smart unit. Smart steering, an essential component in any Broomstick, as it avoids unstable and turbulent driving. The smart unit itself, located under the bristle section of the broomstick and attached to the oak shaft, with the smart unit fitting perfectly into the bristles and attached to the oak shaft. Proper fit was important because about three percent of the broom's energy efficiency was affected by the fit quality of the smart unit.

There were three basic sizes of smart drives: small, medium and large. Each smart unit contained 8 holes and two cutouts of various shapes and sizes to help ensure proper fit and closure. The smart units were used in both DAMC's UK and Irish assembly plants. The different hole locations on the Irish units meant that from three standard blanks, six different smart units were formed.

The unique parts required in the manufacture of broomsticks and the lack of local supply resulted in DAMC's decision to produce the most significant unique parts in-house. For a number of different unique parts, DAMC had an ABS smart disc cover making machine. These plastic sheets could be produced in different dimensions and thicknesses. The smart drive covers were produced from a two-millimeter thick 1,180 by 560 millimeter master sheet. The smart drive blanks were vacuum formed, one box at a time, in a way that produced a panel of one small, one medium, and one large smart drive size simultaneously in each run. The material cost for each ABS smart disc averaged around £3. The discarded and leftover casings were re-ground and mixed with virgin ABS granules to be converted back into ABS sheets. After forming, the operator inspected each three-deck panel and the quality panels were then cut into three individual decks.

Early each morning, the overnight production was taken by a DAMC truck to Wise Acres Magical Equipment for the hole cutting operation. At the same time, daily requirements for finished smart units were collected for the broomstick assembly line and the stores area which was responsible for meeting the needs of the Ireland operation.

Wise Acres Magic Team

Wise Acres Magical Equipment, located about five minutes from DAMC's Irish broomstick plant, was a local manufacturer of plastic items for magical equipment. It had been selected as a suitable source for the hole cutting operation on Smart drives due to its proximity as well as its hole cutting technology. Wise Acres Magical Equipment charged £7.00 per cover. Wise Acres Magical Equipment owned a cutting machine that used very high pressure water. It used this equipment for its own requirements and also sold excess capacity of this equipment to external customers including other manufacturing units of DAMC. Hermione Granger, marketing manager at Wise acres Magical Equipment, was responsible for the DAMC smart unit requirement and also programming the water cutting machine for external customer orders.

SMART DRIVE DELIVERY PROBLEMS

The continuous supply of covers for the smart drive assembly line was essential. The lack of covers could stop the entire line. In the fall of 2020, the shortage of covers threatened several times. Typically, the assembly line supervisor would complain to purchasing when it appeared that there were not enough covers available to meet scheduled assembly requirements. An urgent call to Hermione Granger would then begin a frantic search for more complete covers on Wise Acres Magical Equipment. If necessary, a last minute production change was made to meet immediate demand at Wise Acres Magical Equipment. When a shortage was averted in mid-December 2020 by just a few minutes, Harry's immediate supervisor asked Harry to resolve the cover supply issue.

The Smart Drive Cover Team

Harry decided that the problems of supplying cover could best be tackled by a team. He, therefore, asked four others at DAMC to help him and also asked Hermione Granger of Wise Acres Magical Equipment to join the team. The other four from DAMC were: Luna Lovegood of wandmaking; Neville Longbottom, who ran the Australian store operation at DAMC in Auckland; Draco Malfoy, the team leader on the assembly line, and Ron Weasley on the quality and statistics side.

Weekly meetings were held beginning January 18, 1995. The first three meetings focused primarily on clearly identifying DAMC requirements and concerns.

DAMC Pad Cover Requirements

All team members realized that a good solution to DAMC's real coverage needs was a critical start. Working from the marketing forecast and master production schedule, the team determined the following daily needs for the six different covers for a five-day work week.

DAMC Smart Drive Daily Requirements

	United Kingdom	Ireland
Little	114	24
Half	60	24
Big	138	1
Total	312	49

During November and December, DAMC had worked an extra half day on Saturday mornings, but this was discontinued in the new year. Variability in daily requirements at DAMC may be due to a shortage of a critical component, such as non-slip grips, production disruptions, or last-minute marketing requests.

The supply of blanks for making smart unit covers is shipped to Wise Acres Magical Company from DAMC Smart Unit Manufacturing on a regular basis every day in containers containing 30 cover blanks each. Identifying blanks and finished caps presented some challenges, as all the containers were stacked in a variety of locations. Space requirements were tight at DAMC and any solution found could not include a significant inventory of smart units at DAMC facilities.

However, some aspects of the Wise Acres Magical Company's cutting operations emerged from Hermione. Hermione said that this cover order seemed to be a constant annoyance for her and that it was difficult to prioritize to meet DAMC's demands. The DAMC team members thought that Hermione was nervous when she was asked how she programmed the cutting machine. She said other DAMC customers also used the machine and to her knowledge, 400 covers was the maximum output the DAMC broom manufacturing group could expect from the equipment. There was no additional capacity available. She wasn't sure how long it took to change the machine's settings from one coverage requirement to another, but she believed it was at least half an hour. She was sure that Wise Acres Magical Company did not wish to set any particular cover size more frequently than once a week, which was the current practice, unless it threatened a shortage. Hermione also said that it was very difficult to keep track of the decks at the Wise Acres Magical Company facility. It was not immediately clear which boxes contained blanks and which had finished products and what size. Occasionally, the cutting machine would break down or require extended maintenance. Hermione thought that maintenance shutdowns rarely delayed production for more than a day and a half.

At the end of the third meeting, the coverage team decided to establish some priorities for any solutions found for the gaps. The solution had to: (1) ensure the supply of covers; (2) minimize inventory at DAMC; (3) be simple and economical; (4) must be applicable for some time; (5) and be acceptable to both Wise Acres Magical Company and DAMC.

The team agreed that continuing with the status quo was unacceptable and that a solution must be found quickly. Harry offered to bring at least one possible solution to the next meeting for everyone to discuss. He thought this might be more productive than waiting for the group's creativity to generate the solution. He encouraged team members to provide him with any suggestions they had.

ALTERNATIVES

Harry knew there were a variety of manufacturing alternatives and had researched them in January.

make at home

One possibility was to perform the hole cutting operation internally at DAMC. Various processes were available. Three-dimensional routing would require the purchase of a $200,000 machine. There was no such machine available in the UK. This process produced a lot of dust, which would interfere with several other processes at DAMC. A laser cutting machine would cost around $2 million, a considerable sum to apply to a relatively simple operation. A water cutting machine like that from Wise Acres Manufacturing Company was also expensive and had considerable excess capacity.

Two other considerations also affected the in-house manufacturing option. One, space was at a premium at DAMC's Broomstick plant. Second, smart drives may not be a long-term requirement, as the redesign of future Broomstick models could modify or eliminate the need for smart drives. Harry had therefore ruled out all in-house manufacturing options as a possible solution to the cap supply problem.

Buying elsewhere

Harry knew that it might be possible to purchase a hole cutting service from other suppliers. The preferred equipment for such work was a 3-D router where a very dusty environment was acceptable. This equipment did not exist in the United Kingdom; therefore, multiple configurations would be required to achieve the same result. He knew that the decision to go with Wise Acres Magical Company had been considered the best option. Furthermore, he honestly believed that the problem with Wise Acres Magical Company should be resolved without a massive effort.

Equipment Suggestions

Several suggestions from team members included:

1. A two-day safety stock of finished product production requirements for each of the six different decks would address the challenges of variability in DAMC needs and production disruptions from Wise Acres Magical Manufacturing and

2. Ron Weasley suggested that different colors or color codes could be used on containers with 30 covers each to indicate which covers were inside and whether they contained blank or finished parts. Ron also suggested that all decks be assigned a designated floor space at DAMC to simplify visual identification. Lastly, he suggested that container-free floor space should be a visual cue of an additional requirement for Wise Acres Magical Company.

harry's challenge

Harry knew that the others on his coverage team were very busy with their usual duties. It was unrealistic to expect them to spend a significant amount of additional time working on developing multiple alternatives. Therefore, he had volunteered to find at least one solution that he believed was viable and that addressed the team's five priorities. He had asked the team not to attend next week's meeting and to give him two weeks to come up with a simple and practical way to avoid the constant threat of coverage shortages for smart units.

What would be your offer? Explain.