Ranger Electronics Ltd

Question

Examlex · Accepted Answer

The Answer is Note responses may be in short formal report or memo format. This is an open ended question and student responses will vary. Instructors may wish to add details to guide students more in their analysis (for example, instructors may wish to advise students that the product mix remained constant over the 3 month period).
Productivity Considerations:
The plant's throughput time has improved from 12 hours to 11.5 hours. Setup time has also dropped from an average of 6.9 hours to 6.8 hours. This might indicate that the efficiency of the actual processing of products has improved, or it might indicate a different product mix in production with different average throughput time. Different types of production runs may necessitate different types of setups. If the product mix is constant, then this is an indicator of efficiency. Overtime hours have decreased which may be a result of overall volume of demand decreasing, or perhaps less urgency of demand (better planning? customer expectations for delivery?). The DM partial productivity has improved as the ratio of outputs produced to inputs used has increased. Downtime is down which may indicate efficient production scheduling, but could also be an indicator of product mix and customer demand.
Quality Considerations:
The company is performing well with respect to quality. The defect rate is down and the number of products returned has declined. In addition, machine breakdowns have declined. Downtime is down, this may be related to the lower breakdowns. Since the company is a manufacturer of high quality products, the quality dimension is important.
Customer Considerations:
On time delivery is high at 98+%. It improved in May but fell back to April's level in June. Additional information would be useful to determine whether the 98% level is competitive for the industry. Again, the defect rate is down and the number of products returned has declined. However, we do not have information on total volumes of product sold, so it is not clear if the return RATE has changed.
Financial Considerations:
We do not have specific information on the financial dimensions of performance. However, high DM productivity, lower overtime, lower defects, lower returns, lower setup hours, lower throughput time, lower downtime and lower breakdowns are all indicators of improvements which would suggest favourable efficiency variances. We do not know the prices of the inputs though.
Recommendations:
Investigate causes for overtime. Although the hours are declining, overtime increases unit costs due to overtime premiums for labour. Is the overtime a result of heavy demand, poor production scheduling, shortage of raw materials? Is the on-time delivery rate consistent with industry expectations? Why was it higher in May and can this be replicated?
Since the company is a manufacturer of high quality components, can the reporting be extended to include more aspects of quality reporting (prevention, appraisal, internal and external failure)?
Balanced Scorecard Considerations:
The important points for students to note are:
1. BSC should be linked to the company's mission. Since we do not have the mission statement, we are limited in our analysis; however, the quality dimension is important. Therefore of returns would be an important measure. On time delivery may be important to customers, but perhaps there are other aspects of quality that are more important (service?). In the internal business processes dimension, defect rate is a measure directly linked to the quality dimension. There are quite a few productivity and measures that relate to the internal business processes. The company should select the ones that best link to its mission. As noted, financial measures are missing; cost of quality measures may be added. Learning and growth measures are also missing. Innovation measures ( of new products) likely link well to mission of quality.
2. The number of measures should be limited. While, for example, there are many internal business processes measures, not all of these measures should be elevated to the strategic level.
3. BSC should include several dimensions. Traditionally the four dimensions are Customer, Financial, Internal Business Processes and Learning & Growth. The performance measurement, for strategic BSC, needs to be broader.

Ranger Electronics Ltd

Essay

Correct Answer:
Verified

Ranger Electronics Ltd

Essay

Correct Answer:VerifiedShow Answer

Correct Answer:
Verified