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Facility Consolidation

Proposal

IEM 5121

July 21, 2003

Robert Volk

• Proposal Goals

• Proposal

• Problem Statement

• Measures

• Objectives

• Deliverables

• Alternatives

• Project Approach

• Project Plan

• MSETM Tools

AGENDA

PROPOSAL GOALS

• To give a clear understanding of the project and the opportunity that exists.

• Green light to proceed with project.

PROPOSAL

• To consolidate the Trane Macon Commercial Self

Contained (CSC) and Compressor Products (CP) buildings into one building.

• This consolidated facility would house all product assembly lines (currently one in CSC and one in

CP), all sub-assembly lines, and the material warehouse space that is currently being occupied in both buildings.

PROBLEM STATEMENT

• Products are being manufactured in two separate buildinigs using similar processes and equipment.

• Two separate materials warehouses

• 2x the space

• Higher annual operating cost per sq. ft in the CSC building

– CSC = $8.33 / sq. ft

– CP = $3.52 / sq. ft

MEASURES

Successful implementation of this project will result in the following improvements:

• 11% reduction in production area for the business

• Productivity Improvement in the hours per unit for each product line.

– CSC = 147 hours per unit baseline

– CP = 110 hours per unit baseline

MEASURES

•Benefits

Elimination of CSC Building Annual Lease = $220,500

– Elimination of CSC Building Taxes and Insurance = $49,500

– Elimination of CSC Building Variable Costs = $80,000

Elimination of Inter-Building Trucking = $123,000

– Production Technician Reduction (15) = $525,000

– Material Warehouse Technician Reduction (4) = $140,000

– Production Leader Reduction (1) = $50,000

Manufacturing Engineer Reduction (1) = $75,000

Maintenance Technician Reduction (2) = $70,000

Total Benefits = $1,333,000

•Costs

Production Line Move = $175,000

– Facility Upgrades = $598,000

– New Equipment = $205,000

Benefit/Cost Ratio =

$1,333,000/$1,128,000 =

Total Manpower Resource = $150,000

– Total Costs = $ 1,128,000

1.18 > 1.0, Project is attractive

OBJECTIVES

Consolidate the CP and CSC Buildings into one building

Maximize the utilization of floor space.

Standardize similar processes and promote best practices.

Determine the most cost effective manner of handling the Lease Agreement of the CSC building.

(Note: A need for warehousing space has been identified in the American Standard organization. In addition, a current vendor has shown interest in occupying the space. The confidence level is extremely high that one or both of these scenarios will occur. The lease will be removed or offset in the Trane Macon financials)

Reduction of Manpower and Support requirements for the Production, Materials, and

Operations departments.

20% Production Technicians

20% Materials Technicians

33% Operations Management

25% Manufacturing Engineering

33% Maintenance Technicians

Create the Building Strategy of the CP.

DELIVERABLES

Building Strategy.

Improvement results of the consolidation.

Financial Analysis justification.

Marketing Plan that will convey the benefits of this project to our customers and how we will be better positioned to meet their requirements.

Control Plan for maintaining the integrity of the changes from the project after the initial implementation.

ALTERNATIVES

• No Production or Materials Warehouse Redesign -

Lift and Place current CSC line and materials warehouse into CP

• Materials Warehouse Consolidation Only -

Production line design to remain the same

• Production Line and Materials Warehouse

Consolidation and Redesign

PROJECT APPROACH

Project Champions

Plant Manager

Six Sigma Methodology

DMAIC

Alternative Selection through the use of a ranking matrix using the following criteria for selection:

Compliance to customer requirements.

Reduction in resources.

Benefit-Cost Ratio.

Resources required for implementation.

PROJECT PLAN

Milestones

– Proposal/Define Phase – July 22, 2003

– Measure Phase, Facility Upgrades to start– July 25,

2003

– Analyze Phase to start – September 2, 2003

– Improvement Phase to start – September 22, 2003

– Control Phase to start – October 20, 2003

– Project Completion – November 14, 2003

– Capstone Project Completed– December 5, 2003

SUMMARY

Drivers

Productivity

Elimination of unused floor space

Cost Reduction

Consistent use of MSETM tools throughout the course of the project

Objectives

Manpower Reduction

Maximized space utilization

Building Strategy

Six Sigma

Meeting Customer Needs

Schedule

Start Project: July 2003

Complete Project: November 2003

Results

$1,333,000 annualized Cost Savings

Consolidated building housing both product lines, sub-assy’s and materials warehouses

Productivity - Hours per unit reduced

Process excellence through the standardizing of best practices

MSETM TOOLS

Finance and Advanced Capital Investment

Analysis

Marketing Management

Management of Technology and Innovation

Performance Management

Planning and Managing Technology

Implementation

QUESTIONS

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