1. Given the case facts and the technical audit report, the main reason for low productivity seems to be poor maintenance of the reconditioning plant which includes the shop floor as well as the machinery. Poor Quality, on the other hand, apart from being due to the reason stated above, may also be attributed to improper adjustments in the equipment. Improper training and high turnover rate is another reason for low productivity and quality.
Though the Management has an experience of 25 years in this business, they have never handled automated production at such a large scale. Ever since they moved to the new plant, their volume of sales has increased by 3.6 times, from 50,000 units to 18,000 units. However, with the change in the factory, there is also a change in their product. Instead of reconditioning 44 gallon drums, they now have to work on 55 gallon drums.
Moreover, their customers have also changed. The new customers have higher quality and delivery standards which the management needs to incorporate in their process, but has not been very successful in so far.
The factory still runs on the 'backyard' family business style. There is no check on inventory, work in process and even on the process itself. The labor or the management is not trained enough to work in an automated plant and hence the required adjustment or maintenance of the machines is not made. The bottlenecks, mainly the Outside Cleaning machine and the Photo-Cell Vacuum Dryer, have not been taken care of which has resulted in the daily output of just 500 units instead of the anticipated 1200. Besides, looking at the state of their equipment, one knows it has not been a wise buy. Some new equipment is also not operational hence increasing dependence on old equipment...