Case Analysis: Sunwind AB

By: Group -8 | Section-H

Anubhav Satapathy
Dhruv Roosia
Ketan Kachhadiya
Niyati Garg
Priya Arora
Sajal Gupta
Tushar Lokhande

Under the guidance of

Prof. Sanjay Choudhari
In Partial Fulfillment of the Requirements for qualifying a Pass in
Marketing Management II course
At

Indian Institute of Management Indore, Rau-Pithampur Road,

Indore, Madhya Pradesh, India.
2019
Q-1: What are the challenges Sunwind is facing? Do they need a change in strategy?

Challenges Sunwind is facing:

 By 1986, Average demand is expecting to reach 1400 units/week, while the effective
capacity is less than 1250 units per week. In addition, Sunwind was unable to run at
expected capacity due to frequent equipment failures. This can cause a loss of contract with
Volvo.
 Volvo’s requirement for floor lids has increased from 250/week in January to 1300/week in
November. This increases requirement for excess capacity.
 Quality control measures at manufacturing are lax. Procedures are not monitored formally
and there is a tendency to rely on worker’s ability to recognize and react to daily faults
although, there are written norms and rules for quality control.
 Automobile industry currently pose a trend to rely on fewer suppliers. Volvo currently
depends upon 600 suppliers and seeks to reduce it.
 Volvo has also implemented Just-in-Time. Thus, it expects its suppliers to implement the
Just-in-Time.
 The situation has aggravated by the competition from Belgian manufacturer as it supplies
floor lids Just-in-Time to Volvo’s Ghent plant where 700 series five-door models are
produced.
 High Cycle Time is majorly due to inadequate labor in riveting and gluing operations and
inadequate machine capacity in milling and shaping.
 It has very high inventory causing increased manufacturing lead-time.
 The batch size from different operations varies 500 to 2500 such a huge amount of batch
size would lead to uncontrollable quality issues and increase manufacturing lead-time.
 With adjustments in number of operators and shifts worked, more balanced assembly line
need to be achieved.
 Few items had a high lead-time from suppliers, Example: Carpeting, this may cause
hindrance in Just-in-Time implementation

Considering the above shortcomings of existing system, Sunwind may review its operational strategy
and address the issues.

2. What are the benefits to implement JIT for Sunwind? How will Volvo benefit if Sunwind goes for
JIT production and delivery?

BENEFITS FOR SUNWIND

 It will make it easier to implement quality control procedures. With a formal process in
place, it will reduce the dependence on workers in recognizing the faults.
 It will help Sunwind to reduce inventory holding costs (both for Raw Materials and Work in
Process).
 It will shorten the manufacturing lead time and improve the cycle time by bringing down the
batch size.
 The delivery lead time of its suppliers will come down if they implement JIT model. It can
further reduce the raw material inventory and help in planning the delivery schedules for
high delivery-time items like carpets.
  Line stoppage will help in realizing quality at the source and minimize wastage due to
rejections.

BENEFITS FOR VOLVO

 Volvo will not have to spend extra time and resources on inspection and replacement of
defective parts.
 JIT will make the deliveries of floor lids compatible with the Volvo owned transport company
and its standard container system.

Q3. Do this analysis only from Operation 1 to Operation 7. Draw the process flow diagram
of Sunwind operations. Perform capacity analysis for Sunwind's operations. Is the
capacity at plant sufficient to meet the requirement (Demand and any other) of all
VOLVO plants? How would you interpret the capacity calculations? (Consider a batch
size and process time information in Exhibit 7). What is the Manufacturing Lead time?
Do you think it is right or is a long MLT in line with JIT requirement? If it is short or
long, what is cause of such short/long MLT? Do this analysis only from Operation 1 to
Operation 7.

Capacity Analysis for operations 1-7-

 Sunwind A B.xlsx

No, it is not right to have a long MLT in line with JIT as it would reduce the responsiveness of
the manufacturing capabilities. MLT is long when either the cycle time or WIP or both are
high.

Q-4 How many varieties of products does the Sunwind manufacture for Volvo? How does this
information help to design production and design?

Currently Sunwind manufactures combination of 32 different product, which are distinguishable

based on color, carpet pattern and four separate layers of pieces ( 4 Colors X 4 Layers X 2 Carpet
Patterns = 32)

This would help in deciding buffer of Raw material when the Just-in-Time is implemented coupled
with the use of demand forecast.

Q-5 Should Lars Olav were to design a JIT programme at Sunwind, what should be its elements?
Give details about the current status and future requirements of few essential ingredients of
JIT/lean elements requiring improvement/change in Sunwind. Please suggest/show your
improved/changed version of the Sunwind operations process to meet requirement (Demand and
any other) to all Volvo plants.

To implement JIT program successfully, Sunwind should focus on the following elements:

1. Suppliers: Sunwind should ensure that the JIT should be implemented at supplier’s end as
early as possible to leverage more out of it. In a broader sense, it should have a collaboration
with suppliers, should ensure the frequent delivery, and reduced delivery lead-time.
2. Procurement Process: Existing procurement process is quite lengthy because purchasing
department uses a 3 to 6 months planning horizon to place orders. This leads to high
delivery lead-time, which may not be desirable for the implementation JIT.
3. Manufacturing Process:
Current Situation: Typical batch sizes for various parts are nearly 2500, which equal to weeks
of production. This can be considered as a hindrance in JIT implementation
Changes after JIT: Have to reduce the setup times by enhancing machine controls and
changeover preparations of future jobs while the current job is in process.
4. Warehousing:
 Current Situation: Larger inventory level leads to a high MLT of 9 days and hides several
problems, due to which the quality at the source cannot be ensured. Currently there are no
statistics being maintained for process rejects.
Changes after JIT: After Implementation of JIT the MLT would be reduced to 6 hours (please
refer excel). In addition, low inventories bring down the cost of rejection.

Implementation of JIT will lead to better customer satisfaction as Volvo will receive higher quality
floor lids. Also, earlier Sunwind had a capacity of 1250 units/week, which was not sufficient to meet
the rising demand of Volvo (1400 units/week). JIT can help in overcoming this demand.