Institut für Fördertechnik und Logistiksysteme

Gotthard-Franz-Str. 8
76131 Karlsruhe
www.ifl.kit.edu

Operations and Supply Chain

Management WS 2019/2020
Case study 1: Strategy, Products and Capacity

Your company specializes in electric motors for various applications. These are used, among other things, as
drives for window regulators or seat adjusters in various passenger cars.

Figure 1: Electric motor

Your product consists of several individual parts, which are combined during the production process here in
Karlsruhe in a pilot project in the learning factory at the wbk in eight steps to the end product.

1. Press in magnets and springs 5. Push on brush carrier, worm and housing
2. Press in sinter bushing 6. Screw housing to pole
3. Press in bearing bushing 7. Mount gears and cover
4. Mount armature and round magnet 8. Screw covert to housing

To be able to offer your product on the market, you need a functioning supply chain and a network consisting
of several players. In the course of your annual company review, you review your supply chain and identify the
players involved.

1. Task: Draw the supply chain for the production of the electric motor including the actors involved. Go
into the production process (manufacturing) and the logistic instances involved in it in more detail. You
also deal with the elements of quality assurance in the supply chain. To put it simply, you can assume
that you are procuring all individual parts externally.

In the course of your analysis, you notice various adjusting screws in the network. You believe that the
suppliers of some components are too expensive. You instruct your purchasing department to look for new
suppliers for the gears. The purchasing department has selected different suppliers from several countries.
The annual demand is 45000 pieces. You are not sure which supplier to choose and remember Murphy's Law:
What can go wrong? What if the plan cannot be met due to unplanned incidents? To be on the safe side,
conduct further investigations:

Gears Supplier A Supplier B Supplier C

Germany China Brasil
Max. capacity 50000 pcs. 45000 pcs. 48000 pcs.
Price 2,00 Euro/pcs 1,60 Euro/pcs 1,80 Euro/pcs
Lead time 1 day 4 weeks 6 weeks

KIT – Universität des Landes Baden-Württemberg und

nationales Forschungszentrum in der Helmholtz-Gemeinschaft www.kit.edu
 2. Task: Evaluate the different suppliers for two potential risks and find appropriate mitigation strategies
for the potential risks. Avoid the same risks and strategies. For the different risks and strategies, give
sources, literature and examples of companies that faced the risks/used the strategies.

Due to changed market structures in Europe, the demand for your window regulator motors is falling. Your
marketing department is expressing the wish for a new innovative product variant.

3. Task: Work out the essential customer requirements for a window regulator motor from the point of
view of an automotive manufacturer.

You are not yet sure which characteristics the new variant should incorporate. Ishikawa has oriented its quality
towards the customer under the principle of "Conformance to customers’ requirements". During the lecture you
got to know the method of "Quality Function Deployment". The following data is known about your old product
and your competitors:

Zielwert Old product Competitor A Competitor B

Closing time 3 seconds 2,8 seconds 2,0 seconds
Noise emissions 77 dB 60 dB 69 dB
Overall dimensions 14 cm x 9 cm 20 cm x 11 cm 12 cm x 7 cm
Weight 500 g 750 g 390 g
Operating hours 2000 2100 2800
Energy consumption 21 W 22 W 20 W
Anti-trap protection No Yes Yes

4. Task: Apply the QFD method (House of quality) based on your previous knowledge to find out the
characteristics of your new product. Make meaningful assumptions and justify your choice of
"importance to customer and importance weighting".
5. Task: Name three pros and cons of the QFD method. Since you only use trustworthy sources, you
only do research in textbooks, literature, etc.

You have decided to manufacture the new product variant. However, the capacity of the current production
facility in Karlsruhe is not sufficient to produce all variants. There are now various possibilities to design the
production network. You can choose between the location Germany (expansion or additional location STAY)
or a shift production in each case to Brazil or China. STAY with expand has an acceptance rate of 80% due to
the strong works council. Among the MOVE alternatives, China enjoys the greater acceptance of 60%. The
alternatives have the following framework conditions:

Properties China Brasil Expansion KA Additional GER

Invest 15 Mio 16 Mio 12,5 Mio 17 Mio
Ramp-Up Time 1 Year ¾ Year ½ Year ½ Year
Unit production and 50 Euro 55 Euro 65 Euro 65 Euro
delivery costs

You plan to produce 50,000 engines after the ramp-up. (During the ramp-up period, you can assume half the
production on average.) The planning period is 4 years. The investment is made before the first year. For the
production a machine worth 200,000 euros each have to be purchased. The selling price for one engine is 150
euros. By the employment in the learning factory and already existing variants your marketing expenditures
are relatively small with 20000 euro per year. During the start of production, the proportion of rejects varies. In
China you have to reckon with 15,000 euros in material costs for the scrap, while in Brazil 100,000 euros are
incurred. In Germany, on the other hand, these costs amount to 5000 euros.

6. Task: Create a decision tree using the net present value method for the above problem. Consider all
circumstances. Which alternative do you choose? Justify your answer.

Your firm’s bank has heard about your project and offers you an alternative investment opportunity with an
interest rate of 10% p.a..

7. Task: To what extent does this event influence your choice? Give reasons for your choice.
Tip:
 Use a spreadsheet program (such as MS Excel) to work on the case study.
 A search engine such as Google Scholar or KIT Katalog Plus is ideal for scientific research. The
number of articles in English is significantly higher than the number of articles in German.

In general, the following applies to all case studies: Please make reasonable assumptions if
necessary! Please upload the case study to ILIAS until 31.10.2019 at 12:00. The case study
colloquia will take place on 04.11.2019 at 9:45. The groups which present as well as the chronology
of these will be announced in ILIAS.

Please submit the documents, in the following format and replace %group number% with your
group number:
- Excel: %group number%_CaseStudy01.xlsx
- Presentation: %group number% _CaseStudy01.ppt/pptx