PGDIE A: Roll No.

31-40
Operations Management
 Company History
2

 Dore Dore was established by Jean Baptiste in 1819

 It was the world class manufacturer of fashionable
knitted products
 Its hosiery division produced socks and stockings for
men, women and children & accounted for 88% of
DD’s sales
 Its knitwear division produced a line of children's
knitwear such as play clothes, sweaters and
nightclothes.
Dore-Dore
 Contd…
3

 It focused on both quality and fashion

 It produced hose not only under its DD
trademark, but also for famous designers.
 DD commented a 30% to 40% market
share in this segment
 One of DD’s competitive strengths was its
superior customer service for hosiery.

Dore-Dore
 Company Background
4

 Dore-Dore established itself as a world class

manufacturer of fashionable knitted products.
 Its hosiery division is accounted for 88% of
total DD sales.
 Due to change in fashion trends, 75% of
knitwear collections changed each year.
 Its hosiery line was characterized by unusual
breadth, detail, wide variety and sizes and
also impeccable fit
Dore-Dore
 Market Share
5

 DD was mainly selling its products through retailors

and exclusive stores like Le Printemps and Le
Galeries Lafayette.
 High end segment of hosiery only accounted for 5%
in French hosiery market.
 Out of which DD market share was 30% to 40%
 DD share of children knitwear market is mere 0.5%.
 In 1990 sales are expected to total of
250,000,000FF out of which 35% came from
exports.

Dore-Dore
 Existing Scenario(1990)
6

 Francois Marguet was appointed as

Director of Operations
 Competitive Pressures – rising labour costs
and improving service levels of the
competitors.
 Challenge of what changes could be
made in the operations to strengthen
the company’s competitive position.

Dore-Dore
 Replenishment
7

HOSIERY:
 Key factor of its customer service strategy was

immediate fulfilment of replenishment orders for

basic hosiery items.
 25000-35000 SKU’s were classified as replenish able

with 2 to 3 days for replenishment.

 Such rapid response proved costly as they had to

hold substantial inventories of finished hosiery items

 DD does not promise replenishment for fashion

hosiery. Replenishment was done only if the desired

fashion hosiery was available in stock.
Dore-Dore
 Replenishment contd.
8

KNITWEAR:
 DD did not offer replenishment of children’s

knitwear products. Retailers placed orders

far ahead of the season and DD delivered
orders in full at the beginning of the season

Dore-Dore
 The Problem Statement
9

 Designing of the products, forecasting and

preliminary production schedules were made
a full year before the delivery of finished
goods
 Long lead time is often dangerous as the
apparel market segment is quite volatile in
regards to fashion and is often at the mercy
of nature
 The weather dependent articles have seen a
big fluctuation in sales when there is
unusually hot summerDore-Dore
or cooler winter
 The Strategy
10

 Marguet started to investigate Quick

response strategies that would link
production and actual demand closely
 The requisite speed and flexibility to respond
to the shifting market demand
 Quick response mode involved making
demand forecasts and establishing
production schedules closer to selling
season, reducing lead times and basing
replenishment on actual sales data
 Marguet thought that quick response might
Dore-Dore
 Operations-Knitwear
11

 Factory Produces 37,000 pairs of hose and

2,000 children’s garments per day.
 Production is achieved in two Campaigns

1) First campaign production is done on the

basis of forecast from previous year sales
data
2) Second Production is started after
receiving early orders from retailers
 Long throughput time leading to slow
response to meet demand
Dore-Dore
 Contd…
12

 Long throughput time also leading to huge

inventories carrying cost, around 20% to 25%
21000000 FF raw material
13,000,000 FF work in progress
45,000,000 FF finished goods
 Fashion products making forecast more
complicated due to volatility of fashion trends
 Fashion products are very important from long
term strategy point of view

Dore-Dore
 Cost Structure for Hosiery
13

Material/Operation Cost (in FF)

Raw Material 7.08

Knitting 0.99

Sewing 0.95

Ironing 0.15

Quality Control and finishing 0.72

Factory Overhead 5.80

Cost for Seconds & Closeouts 1.10

Total Manufacturing Cost 17.42 per pair

Wholesale Selling Price 30-32 per pair

Retail Selling Price 60-70 per pair

Dore-Dore
 Intro: Cellular Manufacturing(Knitwear)
14

 Factors that contributed to the set up of

children’s knit wear division
 To experiment outside flagship hosiery line
 Lesser dependence of knitwear on heavy
machinery
 It was a more competitive market

The manufacturing experimentation with

children’s knit wear division was expected to
provide valuable clues for improvements in the
hosiery division’s operations
Dore-Dore
 Planning and Production Cycle(Knitwear)
15

Yarn Sewing
and and
Knitting
Fabric Dyeing Cutting Finishin
Supplier (2 g
(5 (1 week
s weeks
weeks average (3
average
(2.5 average through weeks
through
months lead put average
put
average time) time) through
time)
lead put
time) time )

Dore-Dore
 Production Details
16
(Knitwear)
 80% of knit wear production was sold under Dore-Dore label
while remaining 20 % was divided between two other private
channels, Chantal de Thomas & Monde des Enfants
 The average production batch size in sewing was 200 pieces

of the same style and colour, with an average of 8 different

sizes within a batch.
 The knit wear sewing room had 55 sewing machines installed

and was staffed by 42 workers. The additional machines were

either speciality machines used for occasional operations or
extra machines used in periods of peak demand.
 The knit wear factory was currently organised by machine

type. Batches of partially-completed product were moved in

wheeled bins by floor supervisors or material handlers to next
required operation.
Dore-Dore
 Cellular Manufacturing
17
System
 Sewing an average garment took only 10
minutes while it took 3 weeks for a garment to
pass through all the operations.
 This discrepancy led to the introduction of
cellular manufacturing system by the firm.
 In the new system a group of cross trained
workers operated a small cluster of machines
to manufacture a family of similar items.
 The groups were autonomous managing their
own time, distribution of work and work flow
Dore-Dore
 Cell Design

18 Six peoples and 12 sewing machines were
assigned to the cell
 Machines had different sewing capabilities
 Cost of machines for knit wear ranging from
30000FF-80000FF
 All cell workers are cross trained and
encouraged to act autonomously with regard to
work methods
 Worker may move to another machine within
cell to continue working.
 Batches were split within the cell and garments
passed from operation to operation
Dore-Dore as
19

The cell configuration:

 Originally designed in horseshoe shape.

 According to workers, there is two

drawbacks of this shape, flow is only
unidirectional and lack of communication
between workers.
 Workers implemented new shape of cell

but it is difficult to adapt to new style.

Dore-Dore
20

Advantages :
 Quick replacement and repairing of broke down

machine.
 Replacement might also require set up period of

5 to 10 minutes only.
 Workers in the cell balanced their work

 Efficiency were increased.

 Inventories were reduced.

 Batch flow through the cell made as quick as

possible and moves without need of supervisors.

Dore-Dore
 Cell Results
21

 Throughput time dropped from 15 to single

working day
 Defect rate drop from 5 to 2.5%

 Motivation among the workers is well maintained

 New system is more suitable to handle smaller

batch sizes
 Second cell of 6 workers is organized

 Cross training was provided by first line

supervisors
 Planned to have a total of 7 cells for Knitwear

sewing operation
Dore-Dore
22

First Line supervisor

 With the new cell manufacturing structure first line

supervisors now have a minimal role to play

 Supervisor began to cross train workers in variety

of sewing operation
Cell Decision Making
 Workers were provided with training to solve

relationship problems among workers

 With increased loyalty among cell members ,

workers began to shorten their leaves and are more

focused on their work
Dore-Dore
 Children’s Knitwear Division
23

    Previous layout Cellular layout

1 MLT 15 days 1 day
2 Labor content 10 min 10 min
3 Capacity 2016 units 2016
4 Production 2000 units 2000 units
5 % Utilization 99.2 99.2
6 WIP 30000 units 2000 units
7 No. of sewing machines 55 12*7 = 84
required
8 Average Capital cost 55 * 60,000 84*60,000= 5,040,000
=3,300,000
9 Defect Rate 5% 2.5%
10 Batch Sizes Large Batches Smaller Batches
11 Supervisors Material Movement, Not essential
Handle conflict

Dore-Dore
 Operations- Hosiery Division
24

Dyer
365 styles/season
35,000 annual
Dyed
Rejected

Yarn
after QC

SKUs
Central Factory at
Batch Size:- 120
Gres (Handles 200 pairs (same size,
ton raw material
inventory) color; different
size)
Knitti
ng

Gres
Knitting 1 out of 11
floor knitting Dore-Dore
shops
 Dore-Dore
• Batch Throughput time:- 2-3 weeks QC+
• Labour content/pair = 1-4 minutes; effective time per batch = (120*3)/60 = 6 hrs packaging/
• Good ergonomics; only women workers (107) Embroidery
• QC followed by packaging (1st floor)
• Embroidery (13 workers) (location: Basement)
• Laundry, a prerequisite (4 workers)
• Batch Throughput time:- 1 week
• Actual Production time per pair = 1 min, implies effective time per batch = (120*1)/60 = 2hrs
Ironing
• Only men workers (20), difficult ergonomics hot steamy , noisy room
• 10-15 ft. high machines
• Location:- Basement
• Batch Throughput time:- 1 week Toe
• Actual Production time per pair = 1 min, implies effective time per batch = (120*1)/60 = 2hrs
• Poor ergonomics Closing
• Heavy Yarn:- Automatic; Light yarn: Blind loop process
• Only female workers (92)
• Location: Ground floor
• Batch Throughput time:- 1 week
• Actual Production time per pair = 6-8 mins, implies effective time per batch = (120*7)/60 = 14 hrs
• Automatic machines produced knitted tubes Knittin
• Centrally programed Designs onto cassettes, only men workers g
• Reprogram time:- few minutes
• Setup /recalibration time :-1 hr – 2 days
• 24*7 operations
• 0.6% defects + 10%) second quality product
25
Operation Sequence
 Proposal for Autonomous
Groups in Hosiery
26
Manufacturing
 Claude Enfert, Director of Manufacturing of the
hosiery division, believed that if total manufacturing
throughput time fell to one week, finished goods
hosiery inventory would drop 30-40%
 Then he envisioned a one day throughput time for

post knitting operations

 Enfert proposed introduction of cell operations

which include all the three activities after knitting-

closing the toe, ironing and quality control/finishing
 All the three activities would be grouped in a single

room which forms a cell

Dore-Dore
27

 Enfert’s proposed cell design was based on the

capacity of two ironing machines
 He assigned 36 workers to a cell to balance the

capacity, which they would work as two teams of 18

each and as a whole would be capable of producing
the entire line of hosiery
 He believed that teams should not be completely

cross-trained but would be specialized for a specific

task and trained for second
 Enfert expected that 80% of worker’s time would be

spent on his specialized activity and remaining 20%

on cross-trained task
Dore-Dore
28

 He also proposed that two activities, blind

loop toe closing and quality control should
not be cross-trained
Future Prospectus
 Greatest constraint was the availability of

raw materials due to current flexibility of

knitwear cells
 Rebuilding its computerized forecasting

systems
 Limited capacity of MRP system in size

and capability to handle 35000 SKU

Dore-Dore
 Enfert’s cell proposal
29

Dore-Dore
 Hosiery Division
30

    Previous layout Cellular layout

1 Production 37000 pairs 36756 pairs
2 Total WIP- including 37000x33 36756 x 7=257,292
Knitting =1,221,000

WIP Inventory which gets Freed up = 1221000-257292 = 963,708

pairs

Avg. WIP cost = (7.8+17.42) / 2 = 12.61 FF/pair

Money Freed Up = 12,152,357 FF

Dore-Dore
 Alternate Layout
31

2
6 6
2 2

Dore-Dore
 Alternate Layout
32

Dore-Dore
 Calculations- Knitwear
33

Sewing operation
For Previous layout:
 Labor content: 10 mins, Workers: 42,

Available time = 8 x 60 = 480 mins.

 Capacity= 42 x 480/10 = 2016 units

 Daily Output = 2000 units

 Mfg Lead Time (MLT) = 3 weeks = 15 days

 WIP = MLT x Daily production = 15 x 2000

= 30000 units
Dore-Dore
34

Cellular Layout
 Workers= 6, labor content: 10 mins per pair

 Capacity per day = 6 x 480 / 10 = 288 units

 No of cells = Total number of workers / No. of workers

per cell = 42/6 = 7

 Daily production capacity in sewing operation

= 7 x 288 = 2016 units per day

 MLT = 1 day

 WIP = 2000 units

 Similarly we can modify other processes into cellular

manufacturing to decrease WIP and Inventory

Dore-Dore
 Children’s Knitwear Division
35

    Previous layout Cellular layout

1 MLT 15 days 1 day
2 Labor content 10 min 10 min
3 Capacity 2016 units 2016
4 Production 2000 units 2000 units
5 % Utilization 99.2 99.2
6 WIP 30000 units 2000 units
7 No. of sewing machines 55 12*7 = 84
required
8 Average Capital cost 55 * 60,000 84*60,000= 5,040,000
=3,300,000
9 Defect Rate 5% 2.5%
10 Batch Sizes Large Batches Smaller Batches
11 Supervisors Material Movement, Not essential
Handle conflict

Dore-Dore
 Calculations- Hosiery
36
Division
Previous Layout:
Knitting operation: (1 week –Batch throughput time,7 days a week,
24 hrs, production time=7 min/pair)
 Cycle time = 7 minutes/pair, Available time = 24 x 60 = 1440 min

Capacity = 1440/ 7 = 206 pair/machine/day

 Actual production= 37000 pairs/ day on 6 days of the week

Production required from knitting operations over a week =

37000*6 =222,000
 Production per day = 222000/7 = 31.715

Allowance for 0.6% defect = 31,715/0.994= 31,907

No of machines = 31907/206 = 155 knitting machines
 Considering the New design setup change over time, other 11

knitting shops not running 24 hrs a day, we approximate the,

 No. of Machines presently available = 180 machines

Dore-Dore
37

Closing the toe: (1 week –Batch throughput time,

6 days a week, production time=1 min/pair)
 Cycle time= 1 min/pair, Available time per shift =

8 hrs
Lunch + break = 30mins+15mins+15mins = 1 hr
Available time for production per shift = 7hrs
 Labor content= 1 min/pair, Total labors= 92

Capacity = 92 x 7 x 60/1 = 38640 pairs

Actual production= 37000 pairs
% Utilization = 37000/38640= 95.7%

Dore-Dore
38

Ironing: (1 week –Batch throughput time, 6

days/week, production time=1 min/pair,
Labor content = 15sec/pair =0.25
min/pair)
 Labor content = 0.25 min/pair, Total labor

= 24
Capacity = 24 x 7 x60/0.25 = 40320 pairs
Actual production = 37000 pairs
% Utilization = 37000/40320 =91.7 %

Dore-Dore
39

Quality Control and Packaging:(2.5 week –Batch

throughput time, 6 days a week)
 No of workers = 120

Daily production = 37,000 pairs

Labor minutes available = 120 x 7 x 60 = 50400
min
Avg. Cycle time = 50400/37000 = 1.36 min
 Total Mfg Lead Time = (5.5 weeks x 6 days) = 33

days
 WIP = 33 x 37000 = 1,221,000 pairs

Annual sales = 250,000,000FF

Dore-Dore
40

 Annual sales in hosiery = 250,000,000*0.88 =

220,000,000FF
Annual sales = 220,000,000/31 = 7,096,774 pairs
Raw material Inventory = (1/3) *7,096,774 =2,365,591
pairs
Given: Across both the divisions,
 Avg. Raw Material inventory = 21,000,000FF

 Avg. WIP inventory = 13,000,000 FF

 Avg. Finished Goods Inventory = 45,000,000 FF

 Cost of FG > Cost of Raw Materials + Cost of WIP

So, on assumption, Cost of FG inventory > WIP + Raw

Material Inventory
Dore-Dore
41

 Cost of FG >1,221,000*(7.8+17.42)/2 +
2,365,591*7.8
> 15,396,810 + 18,451,610 FF
> 33,848,420 FF
 Therefore Finished Goods Inventory = 33,848,420/
31 =1,091,884 pairs

 Total inventory (WIP+ Raw Materials +FG)

=4,678,475 Pairs

 Inventory Turns =7,096,774 / 4,678,475 = 1.51 times

Dore-Dore
42

Cellular Layout:
 They are converting post-knitting processes
into cellular layout.
Close the toe:
 7 workers, Labor content = 1 min/pair

Capacity = 7 x 420 / 1 = 2940 pairs

Quality control and packaging + Embroidery:
 9 workers, labor content = 1.36 min/ pair

 Capacity = 9 x 420/ 1.36 = 2780 pairs

Dore-Dore
43

Ironing Machine:
2 workers, Labor content = 0.25 min/pair
Capacity = 2 x 420 / 0.25 = 3360 pairs
 Bottleneck = 2780 pairs / team = 5560 pairs/cell
No of cells = (92 + 24 + 120)/36 = 236/36 = 6.55
For 6.5 cells = 13 teams. No of workers = 234
 Additional 2 members can be given to the Bottle neck ie QC of
two different Cells.
This would increase the capacity of that one particular cell by
by = 1* 420 / 1.36 = 308
The new capacity of the cell would be =5560+308= 5868 pairs
Total capacity = (5560 x 4.5) + (5868 x 2) = 36756 pairs

Dore-Dore
 Hosiery Division
44

    Previous layout Cellular layout

1 Production 37000 pairs 36756 pairs
2 Total WIP- including 37000x33 36756 x 7=257,292
Knitting =1,221,000

WIP Inventory which gets Freed up = 1221000-257292 = 963,708

pairs

Avg. WIP cost = (7.8+17.42) / 2 = 12.61 FF/pair

Money Freed Up = 12,152,357 FF

Dore-Dore
45

Thank You
Dore-Dore