Case Study Template for Submission

1. Problem and its Background

Case Problem 1, Just ERP

Just Sofas (JS) had begun the year full of promise with a new facility, restructured manufacturing
process, and high hopes for its new ERP system. Most of the domestic furniture manufacturers had long
since gone overseas, but JS believed being close to the customer gave it a competitive edge. The
workers had rallied behind President Ruffner's idea of guaranteed four‐day deliveries on customer
orders. And for a while, the promo had worked. Then orders began pouring in and the scheduling
system imploded.

It was for just such a case that Ruffner had sought out an ERP system—to automatically handle customer
orders, factory schedules, and supply chain coordination as demand varied. Ruffner had carefully chosen
the ERP software package used by all the large corporations he knew of, reasoning that if successful
companies had chosen this vendor, who was he to choose otherwise? Implementation had proceeded
carefully as well, one might say painstakingly slow, as the IT staff started with the finance module and
worked down through sales and marketing, order fulfillment, production planning, MRP, capacity
planning, and finally scheduling. Actually, the scheduling module was still having the kinks worked out
and the bill of materials file had not been updated to the current catalog offerings, but everything else
seemed to be working fine.

Ruffner had included statements about the ERP system in his earnings reports for the past three
quarters, noting that “productivity wanes as new IT system is being implemented,” “earnings down as
company adjusts to new ordering system,” and “scheduling glitch causes backlog of customer orders.”
For this quarter, he was trying to put a more positive spin on “only 5% of orders shipped on time due to
incomplete jobs waiting for materials that were not ordered as they should have been.” He supposed a
more innocuous “new scheduling system still not up to speed” would suffice. What Ruffner really
wondered was if the company could survive another year like this one.

What capabilities of an ERP system would be useful for a company like Just Sofas?

Describe the environment under which the ERP system was being implemented. Was due diligence
conducted in choosing the ERP vendor?
Does Ruffner understand the relationships between strategy and operations? Why or why not?

What problems contributed to the disappointing results of the ERP system? How would you suggest that
Just Sofa proceed next year. Case Problems Case Problem 16.1 The Blitz Is On Tina Rossi had been
preparing for her company's first kaizen blitz and wondered if she had thought of everything. The
process they had chosen to kaizen had been the subject of numerous customer complaints and
employee grumblings. Tina's list of reported problems, goals for the kaizen process, and team objectives
were stated in the team charter. Tina had planned for the group to review the charter first, then tour
the process, measure overall cycle time, and complete a process map. From there the team would break
up into four subgroups to perform a muda walk and 5S scan, conduct gripe interviews, and analyze
process flow. Tina provided forms for each activity and a digital camera for visually documenting the
current process and future improvements. The second day of the blitz was less directed. Team members
would regroup to go over the data collected in the previous day and suggest improvements to be tried
out on the third day. This is when Tina would have to prod the team to take action—to transform the
process or the layout, to improve quality or safety—to make a change and analyze the results. On day
four, the team would observe the new process in action, review cycle times, identify problems, and
make adjustments. After agreeing on the parameters of the new process, the team would record their
kaizen results by drawing standard operation sheets, training operators, and establishing visual control
tools. All those things in one week. Tina was ready and anxious to begin. Take Tina's challenge and
perform a kaizen blitz at your school or work. An excel file with kaizen blitz worksheets is provided on
the text website. Case Problem 16.2 Where's My Cart? The Senior Seminar at Allegheny State requires
students to complete a process improvement project with local industry. Jim Davis and Leanna Hearn
have been assigned to Wiley Construction. Here is their report. Wiley Construction Company History
Founded in 1975, Wiley Construction was one of the first designers and builders of wooden roof trusses.
Over the past 40 years Wiley has prospered, and it now has office and manufacturing space of
approximately 132,200 square feet and additional lumber storage facilities of about 22,300 square feet,
on a 60‐acre site near the Monongahela River in Pittsburgh, Pennsylvania. Utilization of this space has
never been difficult, and in the fall of 2000 Wiley proudly opened a new 6000‐square‐foot showroom,
which serves as an educational building center and showcase for many of the products it builds and/or
sells. In addition to its core roof truss business, Wiley now has over 200 employees designing and
building floor truss systems and preconstructed interior and exterior wall systems. Joseph Wiley, the
founder and chairman of Wiley Construction, not only wanted to build superior roofing systems, he also
envisioned the idea of prepackaging an entire house. The package of materials, from foundation blocks
to roofing shingles, would be available through one source. This idea soon led to a custom‐designed line
of homes, called Wiley Homes. The key selling point to these “prepackaged” homes, besides
convenience and accuracy, was that, while the interior layout was universally applicable, the exterior of
the home was designed with a very local flavor. The exemplary reputation of the Wiley Home program
as well as attention to customer service, prompt delivery times, and accurate product specifications
allowed Wiley to become an international supplier of quality building products. Their products have
been shipped to dozens of countries, including Russia, Germany, Spain, Japan, Korea, China, Greece,
Turkey, Mexico, and Chile. Gary Cox replaced Joe Wiley as president of Wiley Construction in January
2013. Executive Vice President Ciro Alvarez is one of the many highly skilled and motivated Wiley
professional management employees. To accomplish its diverse objectives, the company has assembled
a team of employees with degrees in Architecture, Building Construction, Civil Engineering, Math,
Forestry, Wood Science, Accounting, Business, International Relations, Computer Science, Architectural
Technology, and Biological Systems Engineering. Technology From the days of hand drafting and
manually designed framing layouts, Wiley now utilizes highly automated methods of production as well
as completely computerized design programs. These technologies have resulted in annual sales
approaching $25 million. The most automated piece of equipment at their Pittsburgh facility is a Uni‐
saw, a highly sophisticated machine capable of simultaneously making the necessary angle adjustments
on four circular saw blades. One of Wiley's newest endeavors is the construction of prefabricated wall
panels, for which it now has a new wall panel machine to more efficiently construct a higher quality wall
panel. The new partially computer‐controlled machine was designed especially for Wiley and is one of
the best in the industry. In order to maximize the utility of its automated capabilities, Wiley employs
nearly 50 computer operators and programmers experienced in engineering, design, export, sales, and
accounting software systems. Central to the operation is the highly specialized wooden‐truss design
program used by the engineering staff. To ensure that all of this technology results in the highest quality
products, the Wiley production facility is one of a very small percentage of facilities that opens their
doors to the rigid quality‐control specifications of the Pre‐Fab Construction Industry. Current Production
Process Wiley Housing Systems, Inc., is a batch production company that specializes in make‐to‐order
timber housing systems. The manufacturing facility is over 100,000 square feet in size (see the
accompanying figure) and is sectioned off into different areas such as wall, floor, and roof truss
assembly; raw material cutting; and metal storage. Each of the assembly lines is fed by a common
26,000 square foot on‐site supply point. The only required materials are common‐sized lumber (i.e., 2 ×
4, 2 × 6, etc.), aluminum connecting plates, and nails. However, each of the processes is tailored to meet
customer demands and specifications. All of Wiley's products are constructed of standard dimensional
lumber that arrives via truck or train and is stockpiled in its lumber yard. Typically, Wiley has enough
lumber on site for two weeks of continuous operation without replenishment. All other inventory, work‐
in‐process, and common materials are stored inside the production facility. Once an order is received,
the staff engineers design the truss system and electronically queue the order for manufacture. The
production foreman then assigns the order to a cutting team. This team consists of two men—the sawer
and the tailor. The sawer is responsible for saw setup, as well as lumber retrieval and optimization, while
the tailor stacks and labels the cut lumber for assembly. Mr. Alvarez explained that his major concern
was the amount of setup time required by the cutting teams. He said that up to 45% of production time
was spent adjusting the saws for each job, a very typical problem in batch production. This is where
Wiley's problem and our challenge began. Process Improvement After our initial plant tour, where we
noted the large amount of work‐in‐process inventory waiting in carts between the saws and the
assembly stations, we spent a day interviewing workers on the assembly teams. It was brought to our
attention that at certain points during the day the backup of WIP carts was in fact problematic, from the
standpoint of worker safety and from the ability to locate the required cart quickly and easily. There are
approximately 80 to 90 carts in use at any given time, which are loaded with raw materials on a per‐job
basis and are tagged with a work order. After the carts are loaded and tagged, they are placed in front of
the assembly workstations. Copies of the work orders are taken to the plant control office. The plant
supervisor then assigns the jobs to assembly stations by placing the work order copy in assigned bins
located on the plant control office wall. The assembly employees will go to their assigned bin, pick their
next job ticket, and then locate the corresponding cart for that job. Mr. Alvarez mentioned that locating
the cart required for the next job could take anywhere from one to ten minutes depending on the
assembly backup (number of full carts used that day) and the location of the cart within the facility. The
manufacturing employees are tracked on a 100th‐of‐the‐hour time basis for work, which means that
there should, in theory, be very little unproductive time during the day, with the exception of break
periods. This also reduces socialization of employees. We decided to narrow our analysis to the
immediate problem of locating the correct cart. After brainstorming possible solutions, we have
concluded that Wiley should use an electronic paging system similar to what restaurants use to notify
customers that their table is ready. We recommend that the carts be outfitted with long‐life, durable,
and replaceable lithium battery‐powered strobe lights that are activated by a keypad located on the
plant control office wall beside the pending job order bins. Each light would have a unique three‐digit
number assigned to it. These numbers would be handwritten on the work order, by the individual who
loads the cart, before it is given to the plant supervisor to be assigned. There is a chance of multiple
carts being needed for the same job, but each cart has its own individual work order and therefore
would have its own three‐digit identification number and light. This is no deviation from the current
process. The assembly workers would walk to the plant control office, retrieve their next job from the
bin, type the three‐digit code into the keypad, and then find the cart that has the strobe light turned on.
This process would eliminate all of the guessing currently required to locate the cart with the raw
materials and should reduce the overall average time needed to locate a cart. This would also allow
remote storage of the carts, rather than stacking as many as 30 carts at the top of the assembly line, a
hindrance to traffic flow and safety. Identify waste in the current production process. How does the
pager suggestion eliminate waste? Have the students and Mr. Alvarez found the root cause of the cart
problem? Why or why not? How would you apply the principles of lean production to improve Wiley's
situation? Case Problem 16.3 Leaning the Warehouse “We are interested in lean training for our
distribution center workers. Can you provide that for us, Professor Warren?” the (DC) manager inquired.
“Yes, we have training material on lean systems and would be happy to facilitate a series of workshops
for you and your employees. We usually start with a week of manager or supervisor training and then
move on to front‐line employee workshops one day a week for about two months. As your workers gain
experience participating in improvement teams, we would return for day‐long workshops once a month
for six months after that. The entire process takes about a year, after which time your facility would
have its own lean trainers certified to …” “Actually,” interrupted the manager, “we don't need to
educate our supervisors on lean—just our hourly workers, and I think that could be done in about two
days, one day for each shift.” “I see,” replied Professor Warren. “Perhaps you could tell me more about
what your lean objectives are and why you're seeking lean training at this time.” “Sure. We're
implementing a new performance‐based pay system from corporate in which our industrial engineering
staff has determined how long workers should take to complete a task and what a day's output should
be. We'll be recording task completion times and daily throughput with scanners and comparing those
with the standards that have been developed. Those workers who beat the standard receive bonus pay;
those who do not risk losing their position. Our pilot project at the Atlanta DC didn't go very well. None
of the workers met standard and they didn't seem to get how important this is. For example, they'd be
running off looking for tools, or moving the same merchandise several times to get an aisle clear or to
reach a pallet in back, or picking what they'd just put away, or stopping one task to work on another
more urgent one. So we thought if we taught them lean principles for eliminating waste, it'd be easier to
get the job done, and performance against standard would improve.” Explain the different views of lean
in this case. What might Professor Warren include in his more extensive training program? What
elements of lean would be most useful to the DC manager and his staff? Are the manager's views of lean
realistic? What is the best he can hope to achieve in the time allotted? What might be some drawbacks
in approaching lean implementation in this way? What might be some advantages? Does warehouse
work lend itself to lean?
Case Problem 2. The Texas Gladiators Apparel Store

The Texas Gladiators won the Super Bowl last year. As a result, sportswear such as hats, sweatshirts,
sweatpants, and jackets with the Gladiators' logo are popular. The Gladiators operate an apparel store
outside the football stadium. It is near a busy highway, so the store has heavy customer traffic
throughout the year, not just on game days. In addition, the stadium has high school or college football
and soccer games almost every week in the fall, and baseball games in the spring and summer. The most
popular single item the stadium store sells is a red and silver baseball‐style cap with the Gladiators' logo
on it. The cap has an elastic headband inside it, which conforms to different head sizes. However, the
store has had a difficult time keeping the cap in stock, especially during the time between the placement
and receipt of an order. Often customers come to the store just for the hat; when it is not in stock,
customers are upset, and the store management believes they tend to go to other competing stores to
purchase their Gladiators' clothing. To rectify this problem, the store manager, Jessica James, would like
to develop an inventory control policy that would ensure that customers would be able to purchase the
cap 99% of the time they asked for it. Jessica has accumulated the following demand data for the cap for
a 30‐week period. (Demand includes actual sales plus a record of the times a cap has been requested
but not available and an estimate of the number of times a customer wanted a cap when it was not
available but did not ask for it.)

The store purchases the hats from a small manufacturing company in Jamaica. The shipments from
Jamaica are erratic, with a lead time of 20 days.

In the past, Ms. James has placed an order whenever the stock got down to 150 caps. What level of
service does this reorder point correspond to? What would the reorder point and safety stock need to
be to achieve the desired service level? Discuss how Jessica James might determine the order size of
caps and what additional, if any, information would be needed to determine the order size.
Case Problem 3 Pharr Foods Company

Pharr Foods Company produces a variety of food products including a line of candies. One of its most
popular candy items is “Far Stars,” a bag of a dozen individually wrapped star‐shaped candies made
primarily from a blend of dark and milk chocolates, macadamia nuts, and a blend of heavy cream fillings.
The item is relatively expensive, so Pharr Foods only produces it for its eastern market encompassing
urban areas such as New York, Atlanta, Philadelphia, and Boston. The item is not sold in grocery or
discount stores but mainly in specialty shops and specialty groceries, candy stores, and department
stores. Pharr Foods supplies the candy to a single food distributor, which has several warehouses on the
East Coast. The candy is shipped in cases with 60 bags of the candy per case. Far Stars sell well despite
the fact that they are expensive at $9.85 per bag (wholesale). Pharr uses high‐quality, fresh ingredients
and does not store large stocks of the candy in inventory for very long periods of time.

Pharr's distributor believes that demand for the candy follows a seasonal pattern. It has collected
demand data (i.e., cases sold) for Far Stars from its warehouses and the stores it supplies for the past
three years, as follows.

The distributor must hold the candy inventory in climate‐controlled warehouses and be careful in
handling it. The annual carrying cost is $116 per case. The item must be shipped a long distance from
the manufacturer to the distributor. In order to keep the candy as fresh as possible, trucks must be air‐
conditioned and shipments must be direct, and are often less‐than‐truckload. As a result, ordering cost
is $4700.

Pharr Foods makes Far Stars from three primary ingredients it orders from different suppliers: dark and
milk chocolate, macadamia nuts, and, a special heavy cream filling. Except for its unique star shape, a
Far Star is almost like a chocolate truffle. Each Far Star weighs 1.2 ounces and requires 0.70 ounce of
blended chocolates, 0.50 ounce of macadamia nuts, and 0.40 ounce of filling to produce (including
spillage and waste). Pharr Foods orders chocolate, nuts, and filling from its suppliers by the pound. The
annual ordering cost is $5700 for chocolate, and the carrying cost is $0.45 per pound. The ordering cost
for macadamia nuts is $6300, and the annual carrying cost is $0.63 per pound. The ordering cost for
filling is $4500, and the annual average carrying cost is $0.55 per pound.

Each of the suppliers offers the candy manufacturer a quantity‐discount price schedule for the
ingredients as follows:

CHOCOLATE

MACADAMIA NUTS

Determine the inventory order quantity for Pharr's distributor. Compare the optimal order quantity with
a seasonally adjusted forecast for demand. Does the order quantity seem adequate to meet the
seasonal demand pattern for Far Stars? That is, is it likely that shortages or excessive inventories will
occur? Can you identify the causes of the seasonal demand pattern for Far Stars? Determine the
inventory order quantity for each of the three primary ingredients that Pharr Foods orders from its
suppliers. Discuss the possible impact of the order policies of the food distributor and Pharr Foods on
quality management and supply chain management.