Situation: To better understand the operation at Lintel, John pays a visit to the Production manager on his second day at work. He tries to get some information on the manufacturing process at Lintel.
John: Good morning, Steve. My name is John, and I am the new person in the Finance Department.
Steve: Good morning, John. What can I do for you?
John: As a new person, I need to understand the operation at Lintel. So, I wonder whether I can ask you some questions about the manufacturing process in your department now.
Steve: Hold on a second, John. Let me post this production schedule before we sit down and talk.
Steve: OK, where do you want to start?
John: Well, you can describe the production flow in your department.
Steve: The production process is based on the customer-order information that I receive from the Sales department. First, we order raw materials from our suppliers. Once the materials arrive at our plant, they are transferred to the production floor where they will go through five different
processes before they become finished goods.
John: How many suppliers do we deal with? Are they all local suppliers? Do any materials come from overseas?
Steve: We have a very limited number of suppliers. We deal with approximately ten main suppliers in the US, and we only have a handful of suppliers overseas.
John: How do you control the quality of the purchased materials?
Steve: One of the reasons for having a limited number of suppliers is to ensure the quality of raw materials. My Quality Control group works very closely with our suppliers to make sure that they meet our quality requirements.
John: Do you maintain a high level of inventory?
Steve: No, we keep a very low level of inventory.
John: How do you move materials from one department to the next?
Steve: Very easily through the Material Request form. If department B needs materials from department A, it will fill out a Material Request form and give it to department A.
John: A very simple process. How about labor? How do you calculate the labor cost?
Steve: The Engineering department has done a study on the production process. It has calculated the time required by each different process.
John: So, under normal situations, the actual production time of each product should be close to the estimated time calculated by the Engineering department?
Steve: That is right.
John: How do you make sure that we only ship good products to our customers?
Steve: We definitely do not want to send out defective products. My employees are always reminded that product quality is Number One priority at Lintel.
John: Do they understand that they should always give their best and that defective products
raise the cost of production?
Steve: Yes, they perfectly understand that. As a matter of fact, our defective rate is lower than
one tenth of one percent. We are very proud of our record.
John: How do you maintain this excellent record?
Steve: We adopt the Continuous Improvement spirit. We evaluate our operating results very
often and strive to excel in our job. And, those posters on the wall also help. See the slogan
Nothing But Excellence over there?
John: Yes. What is good for the company is ultimately good for the employees, right?
John: Next question. How many production shifts do you currently have?
Steve: There are two shifts. The first one is from 8:00AM to 4:30PM and the second one is from
2:00PM to 10:30PM.
John: Do the employees earn the same hourly rate?
Steve: No, the pay rate of the second shift is ten percent higher than the rate of the first shift.
John: That makes sense, Steve. I think I have enough information for now. I might come back
and bother you again if I have more questions. Thanks a lot for your help.
Steve: Any time, John. You know where I am.