Performance Monitoring of Cartelec Factory
Analyze if this type of performance monitoring is coherent with a just-in-time strategy.
I think this type of performance monitoring is not coherent with a just-in-time strategy. The key of just-in-time strategy is keep the stock at a low level or near zero. But maximizing out putof presses and labour is very likely to bring a large amount of products(pressed board) which the second unit cannot handle at one time.
Can you explain the incoherence between the declared strategy and the performance monitoring approach actually applied through the existing management control?
The company has some problems at producing PCB. First, the upstream PCB unit is often late in delivering PCBs to the downstream unit. Second, the perception of market fluctuations delays slightly. And the uncontrolled stocks take up space in plant. All these problems may bring a large cost of storing and responding to the order.
Just-in-time strategy is a zero stock strategy, which aiming at systematically reducing times for supplies, production and distribution, and therefore reducing stocks and response time, eliminating delays, and accelerating and facilitating flows.
In this case, the company uses a type of performance monitoring that is maximizing output(profitability) of presses and labor. The operation requires a non-negligible setup time. To reduce the times of setup and make the board pressed as soon as possible, the company combines similar short batches and prioritizes the longer batches.
However, the boards pressed in the upstream unit may not be processed in the downstream unit in time, if they are in a very large batch. In that case, there will be still some stocks in the plant and the time for delivering and supplying cannot be reduced. Also, the longest batches go first means the company could face the risk of getting a large amount of stocks if the selling does not go well.
What