SUBMITED TO

VIJAYTA FULZELE

FRUMHERJI’S SUBMITED BY
MADHUSUDHAN RAJU

CASE
ASSIGMENT
DOM634
1. What were the primary challenges facing Frumherji's Vehicle department? Which ones were
most important and why?

Answer:

The challenges included:

I. A shortage of qualified mechanics who had completed the government-mandated training
program and passed the certification exam.
II. Most employees taking their vacations during summer months when demand for
inspections were highest.
III. High employee turnover rate of 22 to 23 percent per year, and the prospect of an even
higher percentage.
IV. Compensation like providing incentives to mechanics were prohibited due to the
limitations imposed by Icelandic government on inspection companies.

High turnover rate is the main concern as employees are moving to other employers after getting
experience. High employee turnover rate means that the company always have to train new staffs
and it will slow down the processes as they are not as experienced. Also, the cost of hiring and
training new staffs increases as well as the process time.

2. What is your assessment of Sigurdsson's idea (mentioned at the end of the case) to create
separate lines for first and second inspections? What would be the arguments for and against
it?

Answer:

Creating separate lines for first and second inspection is a good idea because customers are not
happy for waiting at both first and second inspection also there is an increasing number of large
vehicles imported to Iceland. However, inspection station doorways and lanes were too narrow
and the elevators too small to accommodate some of these larger vehicles easily. So separate
lines for both first and second inspections is a good idea according to me.

However, keeping both first and second inspection in the same place will help employees to know
the process of both the inspections and help in getting assistance during peek times. This will help
in cross training the employees.

3. Answer the following questions:

A. Where is the bottleneck in this process?

Bottleneck in the process is base 2 as the waiting period for this process is typically 5 to
78 minutes.

B. What is the capacity of this process in cars per day?

 Base 2 to 4 Min Max
Cycle time 15.00 25.00
Cars 48 28.8
processed

The maximum capacity of this process is 48 cars per day and the minimum capacity is 28
cars per day depending on demand.

C. What is the total value-added processing time for Check-in, inspection, and data entry
if we ignore waiting?
Total value add processing time for small and large vehicles considering the maximum
time

Process Name Processing Processing time(min)

time(min) Small large vehicles
vehicles
Check-in 2 2
Inspection 25 45
Data Entry 1 1
Total Value add Processing time 28 48

4. In what ways does the performance of Frumherji’s emission testing and inspection process differ
from the ideal? What ideas do you have for improving operational performance? In what ways
would your ideas enhance Frumherji's market position?

Answer:
Reasons for difference in performance of Frumherji’s emission testing and inspection process
from the ideal is as follows
a. When there is a high waiting time customer falling asleep in car further increasing
the delay sometimes missing their turn.
b. There are no sign boards apart from Exit to guide customers, because of this
customer sometimes driving into wrong lane.
c. Less number of receptionists causing delay in reception area.
d. No proper ERP system because of this if there is any error in paperwork, it needs to
be redone.
e. Faulty inspection in one base increasing delay in next base.
f. Sometime because of incorrect documents, customers are collecting someone else
documents.
In order to improve operational performance, we should implement following ideas:
a. Implement ERP system to avoid errors.
b. Increase number of receptionists.
c. Separate counters for driver testing, license plates, buying drinks and sweets and
inspections.
 d. Instead of customers moving cars, we can have our employees to take control and
move cars till the EXIT or we have an Automated system introduced which will move
cars automatically without the requirement of customer or employee.

By following above improvements, we can reduce the waiting period of customers at the same
time we can also give estimated completion time by which customers can have their other
works done and can pickup car once the inspection is completed.

5. How would you implement the changes you have suggested? What
challenges might you face?

Answer:

We can implement the above improvements in pilot basis, as there is a high volume at
Hesthals we can start implementing the improvements in this location. First, we can
have ERP system in place and analyse the difference in waiting time by implementing
them. Later we can have employees move cars instead of customers and calculate the
difference in waiting time before implementing the automated system to move cars.

Challenges in implementing the improvements:

a. High cost for implementing ERP and Automated system.
b. Employees needs to be trained to get knowledge of these systems.
c. High employee requirement initially.
d. Accurate forecasting of delivery time.

6. What metrics would offer the best indicators of the success of your implementation plan?

Answer:
We can implement six sigma quality check which will help in identifying error rate and
efficiency of the process. This will improve the quality control which is our primary motive
and also help improving the customer satisfaction. We can also introduce a feedback
system for the customer to grade our services. This will help in improvement process and
also help to increase word of mouth marketing which is our primary marketing tool