Wriston Manufacturing Corporation
MEMORANDUM
TO: Richard Sullivan
FROM:
SUBJECT: Wriston Manufacturing Corporation
DATE: June 9, 2011
Wriston Manufacturing Corporation (WMC) is faced with a Detroit plant that is no longer viable because of underinvestment, labour issues, and product-process mismatch. This has lead to low sales figures, low return, and high burden rates (as calculated by the company). The issues at the Detroit plant will be reviewed and options will be presented. A recommendation to address the Detroit plant will be be made based on this review.
Issues: Investment in the Detroit plant has lagged significantly from other plants in the corporation. As a result, the infrastructure and machinery is outdated, haphazard, and inefficient. The working environment is poor, with an unplanned collection of buildings that have received little attention over the many years of use. The plant produces multiple product lines, often of low volume, because of the transfer of higher volume products to more efficient plants. Set-up times are longer, because of outdated machines, small batch sizes, and high variability. Routing of products through the plant remains complex, because of the differing requirements for small volume products, and because of single machine operator training. Poor working conditions have lead to prominent labour issues, including increasing levels of absenteeism and turnover.
Options:
1. Plant Closure and Product Line Transfer As seen in Appendix 1, closure of the Detroit plant and transfer of product lines results in the best NPV of the three options, using the financial information provided in the case. However, the financials in isolation do not consider the impact of the transfer of product lines to the other plants, as well as the impact of Group 3 product line discontinuation. The other plants in the WMC system are generally high volume, flow-shop style plants. The transfer of lower volume products with variable manufacturing
TO: Richard Sullivan
FROM:
SUBJECT: Wriston Manufacturing Corporation
DATE: June 9, 2011
Wriston Manufacturing Corporation (WMC) is faced with a Detroit plant that is no longer viable because of underinvestment, labour issues, and product-process mismatch. This has lead to low sales figures, low return, and high burden rates (as calculated by the company). The issues at the Detroit plant will be reviewed and options will be presented. A recommendation to address the Detroit plant will be be made based on this review.
Issues: Investment in the Detroit plant has lagged significantly from other plants in the corporation. As a result, the infrastructure and machinery is outdated, haphazard, and inefficient. The working environment is poor, with an unplanned collection of buildings that have received little attention over the many years of use. The plant produces multiple product lines, often of low volume, because of the transfer of higher volume products to more efficient plants. Set-up times are longer, because of outdated machines, small batch sizes, and high variability. Routing of products through the plant remains complex, because of the differing requirements for small volume products, and because of single machine operator training. Poor working conditions have lead to prominent labour issues, including increasing levels of absenteeism and turnover.
Options:
1. Plant Closure and Product Line Transfer As seen in Appendix 1, closure of the Detroit plant and transfer of product lines results in the best NPV of the three options, using the financial information provided in the case. However, the financials in isolation do not consider the impact of the transfer of product lines to the other plants, as well as the impact of Group 3 product line discontinuation. The other plants in the WMC system are generally high volume, flow-shop style plants. The transfer of lower volume products with variable manufacturing