Halden Zimmermann – Stermon Mills Case Analysis Part 5

If inventory costs stayed the same, marketing estimates that a 5% pre-freight premium charge could be added for the ability to make weekly JIT production runs.  A survey of the sales force shows nearly a unanimous agreement among the sales staff that a “responsiveness in delivery” or JIT production would be beneficial to increasing sales of the various grades of paper.  It also shows agreement among the necessity to have a “broad product line” or offering various grades of paper.  There is also some agreement that flexibility in the sales force is important.       

If changeover times remained the same, then it would mean a lot more time lost due to grade changes on machine #4.  10% of available machine time was lost due to changeovers.  The question remains whether the changeover time could be decreased to save time and money in changeovers. 

One possibility for decreasing changeover times on machine #4 is to have personnel from machine #3 help out during this critical time.  This would have to be a coordinated effort so that machine #3 personnel would be available during changeover times or a schedule could be created so that personnel are available and are not leaving a critical post open on machine #3 to help out with changeover on machine #4.    It is important to have the employees cross-trained to facilitate working beyond constraints of labor classification guidelines (i.e., pipe fitters will also be able to tighten nuts and bolts instead of having one pipe fitter and one machinist to do two separate functions).


The union work rule change does not guarantee an increase in flexibility. It relies on managers on the floor to use this advantage and implement changes to fully utilize all personnel during a changeover of the equipment. If there are bad managers the increased labor flexibility will be lost. However a good manage will be easily able to move personnel into proper locations to implement a changeover more quickly. The management team must implement a standard operating procedure for everyone to follow for cost incurring events.


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