Performance and cost
analysis: seminar
Marcus Komponenter AB
Benjamin Rubin Anders Holmberg Arvid Claeson
Marcus Komponenter
Producing unthreaded fixing elements
16 employees with 2 million euros of revenues (24 million products
delivered every year, with 4000 different article numbers in their catalogue)
The MARCUS-stick (in the picture above) is their, by far, biggest product
both volume-wise and revenue-wise
Value chain(s)
Two different value chains; for specially ordered products and own produced
articles, respectively:
Design (CAD together with customer)Supply (receiving raw material, in this
case steel wires)Production (the core)Distribution
DesignSupplyProductionMarketingDistribution
All in all, Marcus has demanding customers, that wants large volumes of
products fast. This puts pressure on the production and distribution
apparatus, which for a sustainable competition must fulfil the wants
effectively. That is, with fast throughput time and with as low inventory levels
as possible.
Production – the core
Different products demand different production steps, but the picture
below visualises the factory and thus some of the identified different
cost centres;
Färdigvarulager=finished goods storage, Pack=packaging, Slip=grinding, Råvarulager=raw material
storage, Klipp=cutting and rolling machine, Svarvar=lathes
Major activites – cost centers – cost drivers
Major activities
Production and distribution of diverse products (both specially ordered and common products)
Cost centers for production
Production centers for each individual product are the cost centers (lathe, cutting and rolling machine,
grinding machine and soforth)
Administration
Cost drivers
Machine hours
Storage costs (including both storage and bufferts) –>minimize by just in time
Labor hours
Production of large volumes and batches makes it diffcult to allocate overhead costs for single
products. Therefore, we suggest to use an activity based cost management system in order to
focus on managing activities and thus being able to control and to minimisie cost in each step of
the production cycle.
Activity control
ABCM – Activities consume costs, the basis!
Can lead to an effecient overlook of value adding and non-value adding
activities
Green=value adding. Red=not value-adding. White dots=exchange time White stripes=hardening
from
to
JIT…
For Marcus Komponenter it is of great importance to deliver products fast and with great
”correctness”, since the products are relatively difficult to technically differentiate.
Thus, it is necessary to adapt to a JIT-concept.
JIT- a ”pull” system
Right amount of products is to be produced at the right time. The demand creates the
pulling mechanism throughout the production.
Prod.step1Prod.step2…Prod.stepXDemand
Lower storage levels and smaller batch sizes makes JIT possible as it visualises
problems within the production where, consecutively, continuos improvements in the
production can take place.
…for competition, quality and time
Reduces costs
Minimizes storage due to that the customer wants/gets the product directly. Also reduces waste since
what is being produced is actually needed.
Shorter throughput time
This, since only what needs to be produced is produced, thus avoiding queues in the production.
Competition enhancing
Shorter throughput time and faster reaction to customer´s wants gives a competitive advantage
Total quality management (TQM) should permeate the work.
- Minimise mistakes, maximising quality
Marcus has room for improvements
Reduce exchange time, will make it possible to produce
smaller batches  working towards JIT
Smaller batches will give faster throughput time
More alike products could reduce exchange time 
more extensive production planning!
Thanks for listening!