Shipper Manufacturing Company

Prepared by students:

Yussupova Yana 20080408

Syzykov Ruslan 20072973

Beisikenov Timur 20051558

 Companys Overview

* Started in the aerospace business in the 1960s.

* In the early years, development and production
of the Echo weather satellites.
* Company is being successful completing 12
aerostats per year.
3 Divisions of Shipper Company

Shipper Manufacturing
Company

Electrical Products Advanced Products

Materials Division
Division Divisions
(DM)
(EPD) (APD)
 James Wallace, general manager of APD
proposed new business strategy:

*APD will continue to respond to individual customer design

requirements;
*To tailor new products to unique customer applications:
*Low volume, but sole-source products;
a) by customer funding for product development;
b) by large year-to-year variations in sales and profits.
Financial data for the past 5 years

Thousands of U.S.
2002 2003 2004 2005 2006

Shipper Co.
Sales 34.884 41.029 46.824 41.914 47.85
7
Profits (after tax) 1.256 1.324 1.363 1.035 1.579

The APD
Sales 5.977 6.508 4.080 7.600 5.179

Profits (after tax) 703 597 223 1.139 150

Profitability gain in previous years
(since 2002 to 2006 )

16
14
12
10
Shipper Co
8
APD
6
4
2
0
2002 2003 2004 2005 2006
Main Objective

*Reduction of APD dependence on short-run customer-specified

products.
*Bringing on stream new products with higher volume;
continuously
*Fasten and shorten the process.
*Make the process and labor cost less, unless productivity and
efficiency acquired shall be high.
Analysis of objectives
* Farther changes in business strategy are concerned about
improving the manufacturing toward higher volume and lower
cost products. Temporary the products are custom-designed,
that means the costs are passed through to the customer. But
the plan is to convert system into producer-designed so that the
cost costs will not necessarily be passed to the customer. There
is have to be a change in the system since more intense
competition, where cost becomes the most important objective.
Further Analysis..
* The quality will remain the same, and products are being
same standard. That means the change in delivery should
not re-arrange the typical data for the products. However
that is not a main goal in adapting new business strategy.
There could be another innovations in product line to satisfy
the previous steps.
* The issue on delivery system would be changed toward
shorter deliver times in order to be compatible.
* Since the product is not custom designed, customer who
makes an order should not worry about product transactions.
Customers may also insist for some products for being
produced faster, if the product is possible for quick
production.
Changes in process..
* The change in business and manufacturing strategy will
directly cause changes in every part of operations.

* Below you can find an explanation for every part of a whole;

a) Process/equipment
b) Organization
c) Labor
d) Capacity and scheduling
e) Quality
Process
* The production process would definitely use more automated
equipment, since we need lower the cost. This will accompany
standardization of the product and less flexibility for product
and volume changes. So that we need less labor power to
complete work.

* After that, we face another change in process in line flow

process and away from a job shop layout. . Line flow will be a
more efficient form of layout since the process is fully
automated and volumes would have grown. As a result the
process shift would be changed from make-to-order, to make-
to-stock! Little sharpen of vertical integration, however the
company is already being integrated vertically, and it wouldnt
be dramatic advantage.
Organization
After the company gets higher volumes of production, a
production control will need additional manufacturing. While
the industrial group has shared services in materials
management, a separate department in APD manufacturing is
needed to focus attention on the production and inventory
control task.

* The APD department should think about moving quality of its

product assurance under the manufacturing department. This
will make quality standards higher, since now the quality
became as a part of the production process.
Labor
* More automated equipment gained that will re-
arrange the changes in force and labor. The
successful installment of new automated equipment
will cause the workers to be less skilled and less paid,
these are advantages of direct production. Fewer
people would be needed. As cost control becomes
more important, there will be more emphasis on
production standards. Internal inventory of
laboratories would also be fully equipped with PIC,
and such upgrade will fasten the process. As a result
the whole process would appear more effective.
Capacity, Scheduling and Production
and Inventory Control
* The changes will came upon stocking policy to control the
raw materials and finished goods to be carried in inventory.
The changes would be needed to gain higher volume
production and gain recognition among customers, upon
reduction of time for manufacturing. As the result of
stocking policy, some internal changes in production and
inventory will appear.

* As the operation becomes more line oriented and make-to-

stock, the possibility of higher are needed will grow.
Therefore higher capacity will allow more production be
completed in order. However, scheduling will become more
complex.
Capacity, Scheduling and Production
and Inventory Control ( continue )
* The top management like those of production and
inventory control people will be asked to have more
professional skills and tight knowledge in their
sphere. So that some outside highly-experienced
engineers will be attracted. Some inside training
options would be created for native personal, in order
to increase the professionalism.
Product Quality
* Production quality control would become more high-
volume-production oriented rather than job-shop or
project oriented. This process will need more quality
control charts, more attention on during inspections
and more qualified employees to attend. Since we
increase the volume of production, we also need to
avoid quality mistakes, whether the products will be
scraped during delivery or faked during production,
so to avoid the customers complains, and returns on
products. In case to avoid such mistakes of mass
production, some quality teams and total quality
programs would be organized.