The Real Strategies in Shoe Manufacturing

ABSTRACT In this paper “The real strategies in shoe manufacturing” we take a look at the reality of a Mexican industry dedicated to shoe manufacturing, with the intention of showing the lack of professional techniques that take place not only in the company studied, which affect the efficiency of the business. THE REAL STRATEGIES IN SHOE MANUFACTURING Nowadays there are many different approaches and methodologies that can be used for industrial systems’ optimization and analysis. Among these techniques are the ones for production and inventory management and industrial plant distribution, which are mainly used for reducing the company’s cost.

According to APICS Dictionary, production management consists of “planning, scheduling, executing and controlling the process of converting inputs into finished goods. ” In addition APICS Dictionary defines inventory as “those stocks or items used to support production (raw materials and work-in-process items), supporting activities (maintenance, repair, and operating supplies), and customer service (finished goods and spare parts). ” (2) For many businesses it is very important to maintain certain number of goods in inventory because their capacity it is not enough to fulfill clients’ orders.

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Each product in inventory represents money, an investment tied up until finished products are delivered to clients. It is important to select the best techniques depending on the type of industry and the goals of the company. ZEBRA SHOES The company Zebra Shoes is located in the metropolitan area of Mexico City, Mexico, and they produce and sell sneakers. Those shoes are manufacture in seven different colors and eight different sizes. Zebra Shoes doesn’t have any methodology at the moment of making business decisions.

They produce according to the demand, but in many cases they don’t complete the entire orders on time. This is why they base their production rate and inventory levels on intuition, with the objective of avoiding stock-outs during the demand period. This leads them to have problems; not only with their efficiency but also with their inventories (large quantities of shoes stuck or lack of them for an uncertain period of time). A complex analysis was made in order to understand how the company’s procedures could be improved. How they work

Zebra Shoes produces approximately 6,500 pairs of shoes per week. They use the following raw materials for the manufacturing: polyvinyl chloride (PVC), fabric, shoelaces and iron holes. The company uses a chase strategy for purchasing raw materials; this means that purchasing varies to meet demand. Usually they get 1. 5 ton of PVC, 400 m2 of fabric, 91 boxes of shoelaces (each box has 72 pairs of shoelaces) and 130 000 pieces of iron holes. The way that Zebra Shoes keeps its warehouse is not well planned. They don’t have a specific order for raw materials nor finished products.

This isn’t only a space optimization problem but also an ergonomic and time issue. Workers have an active movement inside the factory and it’s difficult because of the lack of free space to walk. In addition they don’t always reach the shelves properly and have to carry ladders from one place to another; and even worst, sometimes they use the pile of bags or boxes as stairs. These obstacles create a waste of time which affects the factory’s efficiency. FIGURE 1 Actual warehouse distribution SUGGESTIONS FOR IMPROVEMENT

There are some mathematical methods used to optimize the size of inventory and orders. One of them is EOQ model that assumes instantaneous production (it may be a purchase), a deterministic and constant demand. This model will be used in this study to determine the optimal quantity because it allows analyzing singly every raw material. Its graphic behavior shows that the inventory will be decreasing on time and when the product is over you must buy more material. In the case of Zebra Shoes this EOQ model applies perfectly because providers deliver products at the moment of purchase.

FIGURE 2 Inventory versus time in the EOQ model On the other hand, Zebra Shoes is a producer and it must be able to reach its clients full satisfaction; this means having on time, on place and quantity required. Nowadays, the company has some difficulties in completing an order because sometimes they only use one injection machine and this affects its relationship with clients. Therefore the importance of having a production policy, during this analysis the authors have considered a production rate of only one machine and a EPQ model is going to be used.

This model fits with the behavior of the company because the demand remains constant, but in this case we are considering a production rate (units produced per year). Optimal quantities of shoes to produce Considering a constant and uniform demand, an EPQ (1) analysis was made to determine the optimal quantities of shoes that Zebra Shoes must produce and the maximum level of inventory that the company must have in order to satisfy the demand. Unitary cost = C =50 $ Annual cost for maintaining inventory = i = 15% per year Annual cost for maintaining inventory per unit = h = ic = 7. $/pair-year Preparing production cost = A = 55$/order Demand = D = 300 000 pairs/year Production rate = P = 312000 pairs/year Zebra Shoes must produce 10695 pairs in 13 days approximately, if not they must react in order to avoid any delays in their deliveries. Optimal quantities of raw materials to order Considering a constant and uniform demand, an EOQ (1) analysis was made to determine the optimal quantities of each raw material to purchase and the time between orders. Polyvinyl chloride Unitary cost = C = 10700 $/ton Annual cost for maintaining inventory = i = 5% per year

Annual cost for maintaining inventory per unit = h = ic = 535 $/ton-year Cost per order = A = 500 $/order Demand = D = 18 ton/year Fabric Unitary cost = C = 30 $/m2 Annual cost for maintaining inventory = i = 5% per year Annual cost for maintaining inventory per unit = h = ic = 1. 5 $/m2-year Cost per order = A = 150 $/order Demand = D = 19200 m2/year Shoelaces’ boxes Unitary cost = C = 37 $/box Annual cost for maintaining inventory = i = 1% per year Annual cost for maintaining inventory per unit = h = ic = 0. 37 $/box-year Cost per order = A = 5 $/order Demand = D = 1092 box/year

Iron holes Unitary cost = C = 0. 3 $/ piece Annual cost for maintaining inventory = i = 1% per year Annual cost for maintaining inventory per unit = h = ic = 0. 003 $/piece-year Cost per order = A = 5 $/order Demand = D = 1560 000 pieces/year As mentioned before Zebra Shoes purchase certain quantities of raw materials. With the EOQ analysis the right quantities and times between orders have been calculated. The company should purchase 5. 8 ton of PVC every 114 days; 1959 m2 of fabric every 37 days; 172 boxes of shoelaces every 54 days; and 72111 iron holes every 17 days.

These quantities are the ones that reduce the total cost, that consist of the order cost and the cost of keeping inventory. The time between orders represent the time that the company has to wait until the next order. This time guarantees that there won’t be lack of raw materials in order to keep the manufacturing going. Industrial plant distribution It is important to develop a layout that minimizes the distance employers have to travel while doing their job. That is the reason why it must be analyzed the relationship between activities in order to design an optimal distribution.

The process to produce a pair of sneakers is: FIGURE 3 Sneaker making process A lot of changes can be done in an industrial plant in order to improve efficiency and optimize the manufacturing time. Firstly, the bathroom requirements for a type of industry like Zebra Shoes depend on the number of employees. The industry has to include separate bathrooms for each gender. Zebra Shoes has 24 employees (11 women and 13 men). For each bathroom there must be two toilets (1. 4 m2 for each toilet) and two lavatories. (5) The minimum corridor space for personnel is 0. 91 m. According to the security egulations that any industry must follow, a new lay-out was developed with the intention of providing a safer and more comfortable environment to Zebra’s employees. FIGURE 4 Proposed industrial plant distribution This is a scale model of the proposed distribution center considering that Zebra Shoes has 500 m2 (20 m x 25 m). CONCLUSIONS Taking a look at a regular and typical Mexican industry showed us that industrial reality it? s pretty different than what the books say. The literature dedicated to operation management’s issues provides us with a wide range of techniques to improve the process of almost any factory or company.

Unfortunately the way in which real companies operate are based on intuition and experience, which in many cases (like the one exposed in this paper) translates in wastes of enormous amount of money and time. By exposing the differences in numbers between what Zebras does (orders and manufactures) by intuition and what should do (determine with the formulas of the EOQ and EPQ models) we can see that the use of these techniques are gaining more importance because they are synonymous of saving money, which at the same time translate into a better service provided to the customer.

Besides the profit issues, security is another fact that must be taken into account when analyzing an industry. Many Mexican industries (mainly small and medium industries) only worry about security after an accident takes place, and even then they barely repair what was damaged forgetting about the factors that may have cause the accident in the first place. With this in mind and taking in consideration Zebras actual lay-out, we developed a new lay-out in which the security of the worker is guaranteed at the same time that their jobs becomes easier to perform thanks to the flow of materials suggested in the design.

REFERENCES APA Reference Style (1) Bjork, K. (2008). The Economic Production Quantity Problem with a Finite Production Rate and Fuzzy Cycle Time. Proceedings of the 41st hawaii international conference on system sciences – 2008. Retrieved (2010, April 7) from http://www. google. com. mx/url? sa=t&source=web&ct=res&cd=1&ved= 0CAsQFjAA&url=http%3A%2F%2Fciteseerx. ist. psu. edu%2Fviewdoc%2Fdownload%3Fdoi%3D10. 1. 1. 134. 69%26rep%3Drep1%26type%3Dpdf&rct=j&q=The+Economic+Production+Quantity+Problem+with+a+Finite+Production+Rate+and+Fuzzy+Cycle+Time&ei=k2a-S8LmNsH58AbBtciQCQ&usg=AFQjCNGAs89D8PP3o1R46cDIni9E0GMIlQ (2) APICS Dictionary 12th Edition (3) Arnold, T. , Chapman, S. , & Clive, L. (2008). Introduction to materials management. Colombus, Ohio: PEARSON-Prentice Hall. (4) Sipper, D. , & Bulffin, R. (1998). Planeacion y control de la produccion. Mexico: McGraw Hill. (5) Tompkins, James. Planeacion de instalaciones. Tercera Edicion: Thomson, Mexico.

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