INSOURCING CONSOLES: IMPROVING SUPPLY CHAIN PERFORMANCE

AT ELECTRONIC THEATRE CONTROLS

Mark CigichDan Sutter

Sanika AbhyankarAbhinav Tallavajhula

Shichuan Quan

Center for Quick Response Manufacturingwww.qrmcenter.org

DirectorProfessor Ananth Krishnamurthy

Project AssistantsBen Quirt & Debjit Roy

Saturday, April 15, 20231

OUTLINE

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About Electronic Theatre Controls Focus Target Market Segment (FTMS)

Structure Supply chain

Project motivation Project goal Project approach Analyses Recommendations Results

COMPANY BACKGROUND

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Founded in 1975 $200 M company Locations in Middleton,

London, Germany, Hong Kong, Netherlands

Products include dimmers, LED lighting, theater controls and architectural lighting

Leaders in theatrical lighting

Consoles

Lighting Fixtures

PRODUCT PLACEMENT

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Broadway hit Dreamgirls, US

The London Studios, UK

Grand Mosque, U.A.EQintai Grand Theater, China

Deal Or No Deal, South AfricaEurovision,Ukraine

FOCUS TARGET MARKET SEGMENT

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CONGO SR: Premium console mainly for the European market 70% sales in Europe and 30% in the US Flagship Console, highly complex

CONGO SR STRUCTURE

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TOP

BOTTOM

Assemblies Sub-Assemblies

PCBPCBPCBPCBPCBPCBPCBPCBPCB

PCBPCB

CABLECABLECABLECABLECABLECABLECABLE

CONGO SR

PROJECT MOTIVATION

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Post in-sourcing difficulties: Extra shipping time and associated cost Language barriers

Benchmark supply chain performance before and after in-sourcing

Identify opportunities for lead time and cost reduction

Defined a new performance metric to evaluate supply chain performance

Improve Manufacturing Critical-path Time (MCT) :

• Create map of the entire supply chain• Evaluate lead-time performance of the supply chain

• Capture system waste• Improve on lead-time, improve on time to market

MCT MAP- USA OPERATIONS

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PCBs

CablesMCTTotal = 1249 days

*demand reduced as product matured

INSIGHTS FROM INITIAL MCTs

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EFFECT ON MCT

Inventory accounts for 94% of MCTTotal (82% MCTRaw , 12% MCTStock )

PCB and Cables account for more than 3x annual CONGO SR demand

In-sourcing adds 28 days transportation lead time

Post in-sourcing distribution of FGI in London, Germany and USA must change

EFFECT ON COST

Money tied up in high PCB and Cable inventory

Possible savings in FGI depending on FGI distribution in London, Germany and US

*RMI levels are high to prepare for in-house assembly

PROJECT GOAL

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To benchmark the manufacturing critical path time of CONGO SR and provide recommendations to target 50% reduction in MCT leadtime, from the current MCTTotal of 1249 days.

PROJECT APPROACH

MCTOper.

MCTStock

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MCTRaw

• In-house inventory of PCBs and cables Inventory level analysis

• Finish goods inventory Inventory Model Cost benefit evaluation

IN-HOUSE INVENTORY- PCBs & CABLES

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PCB and cable inventory in Germany accounts for more than 85% of the MCT

If PCBs and cables can be made in-house Shorter lead time (less than10 days versus 29/85 days) Better control over inventory (shorter lead time)

MCT REDUCTION!

DETERMINING OPTIMUM INVENTORY LEVEL

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Components of inventory:COMPONENT OF INVENTORY PURPOSE

Safety stock Buffer against uncertainty

Production lot Satisfy regular demand

INPUTDemand= 60 units/ yr.

Demand Variance (sales data of 2008-’09)

Lead time= 10 days

Usage Quantity per CONGO SR

SYSTEMCalculating:

Production lot size

Safety stock level

Inventory days(using Little’s Law)

OUTPUTProduction Lot size= 3 months’ demand

Safety stock(Ex.5 units of B5601)

Inventory days(Ex.73 days for B5601)

Contributes to 87% Total Reduction in MCTTotal

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18% Additional Reduction in MCTTotal

IMPACT ON MCTTotal

MCTTotal = 271 days

MCTTotal = 222 days

IMPACTS OF RECOMMNEDATIONS- SUMMARY

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IN-HOUSE PRODUCTION SETTING FGI LEVELS

BEFORE AFTER BEFORE AFTER

MCT Raw 1028 days 73 days - -

MCT Operations 1 day 11 days - -

MCT Logistics 61 days 28 days - -

MCT Stock - - 152 days 104 days

MCT Total 1249 days 271 days 271 days 222 days

% reduction in MCT Total 78% 18%% reduction in material

cost 11% -

% reduction in labor cost 7% -

% savings in unit cost 17% - 21% -

Inventory holding cost 94% 17%

Net reduction in MCT Total = 82% !Net savings in unit cost = 17% to 21% !

IMPLEMENTATION TIMELINE

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Activity Quarter 2 ‘10 Quarter 3 ‘10 Quarter 4 ‘10

Create Eng. Drawings and Mfg. Packages

Manufacture Prototype and make Pilot Runs

Write Additional Work Procedures

Phase in production of Cables based on inventory levels

Phase in production of PCBs based on inventory levels

Modify FGI across all Inventory sites

ACKNOWLEGMENTS

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Alperen Ozalp – Manufacturing Engineer ETC Alex Stoltz – Manufacturing Engineering Manager ETC Professor Ananth Krishnamurthy – Director Debjit Roy, Ben Quirt – Project Assistants

QUESTIONS?

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