DRAPER INSTRUMENTS
DRAPER INSTRUMENTS
Individual Case
Table of Contents
Executive Summary 3
Introduction 4
Issues 5
Analysis 6
Performance Evaluation 6
Inventory Management 6
Considerations for Action 6
Performance Measurement 6
Inventory Management 7
Considerations in Transitioning to a (Total) JIT System 8
Recommendations 8
Short-term 8
Long-term 12
References 13
Appendix 17
Appendix A: A: Traditional Performance Measures (Financial Objectives) 17
Appendix B: Non-Traditional Performance Measures 18
EXECUTIVE SUMMARY
Introduction: Draper Instruments (DI) is adopting a JIT system. Currently, the company is facing inventory and quality control issues and employees are not acting in line with organizational goals. Employees are also preoccupied with the intense pressure to meet shipment schedules, leaving little time to attend to other areas. Inventory spoilage, obsolescence and build-up have resulted. Major critical success factors the company hopes to achieve include reducing inventory levels and improving quality.
Issues: How can DI motivate employees to achieve JIT objectives and track progress on the implementation of the JIT system? How can DI successfully move towards implementing and utilizing a JIT system?
Analysis: The current performance evaluation and incentive system is causing workers to behave dysfunctionally as employees are aggressively focusing all efforts on factors that are measured to maximize their performance ratings and compensation. Other areas have been left to suffer as employees are not motivated to excel in them. DI's performance evaluation system rewards poor-quality work and encourages high levels of production. Workers’ unmonitored access to an overabundance of materials has resulted in unecessary waste and the over or under production of various parts. Quality, reliability and process issues have been compounded by problematic suppliers and poor internal coordination.
Considerations for Action: DI must review
Individual Case
Table of Contents
Executive Summary 3
Introduction 4
Issues 5
Analysis 6
Performance Evaluation 6
Inventory Management 6
Considerations for Action 6
Performance Measurement 6
Inventory Management 7
Considerations in Transitioning to a (Total) JIT System 8
Recommendations 8
Short-term 8
Long-term 12
References 13
Appendix 17
Appendix A: A: Traditional Performance Measures (Financial Objectives) 17
Appendix B: Non-Traditional Performance Measures 18
EXECUTIVE SUMMARY
Introduction: Draper Instruments (DI) is adopting a JIT system. Currently, the company is facing inventory and quality control issues and employees are not acting in line with organizational goals. Employees are also preoccupied with the intense pressure to meet shipment schedules, leaving little time to attend to other areas. Inventory spoilage, obsolescence and build-up have resulted. Major critical success factors the company hopes to achieve include reducing inventory levels and improving quality.
Issues: How can DI motivate employees to achieve JIT objectives and track progress on the implementation of the JIT system? How can DI successfully move towards implementing and utilizing a JIT system?
Analysis: The current performance evaluation and incentive system is causing workers to behave dysfunctionally as employees are aggressively focusing all efforts on factors that are measured to maximize their performance ratings and compensation. Other areas have been left to suffer as employees are not motivated to excel in them. DI's performance evaluation system rewards poor-quality work and encourages high levels of production. Workers’ unmonitored access to an overabundance of materials has resulted in unecessary waste and the over or under production of various parts. Quality, reliability and process issues have been compounded by problematic suppliers and poor internal coordination.
Considerations for Action: DI must review
References: 9. Once the JIT system is functioning smoothly, ownership of the cells should be given to the team of workers rather than using a hierarchy of managers and task workers (Hopp and Spearman, 2000). Atkinson, A. A., Kaplan, R. S., Matsumura, E., Young, S. M., 2012. Management accounting: Information for decision making and strategy execution. 6th ed. Upper Saddle River: New Jersey Pearson Education.