Whistler Corporation

Amit Bhalotia (2008007)

Mayank Mathur (2007096)
Naufal Kukkadi (2008039)
Pradeep K Panicker (2008093)
Vandana Rajendran (2007116)
Varun Basu (2008062)
Swapnish Khanolkar (2007112)
Synopsis
 Whistler Corporation: Incorporated in 1970
 Had been a market leader in the radar
detector industry since 1978.
 Once profitable company has seen its
market share and sales decrease
dramatically.
 Forced to examine its current manufacturing
strategies
 Make possible recommendations for future
implementation.
Company Background
 Whistler Corporation held a dominant position in the market
for civilian vehicle detection devices of police radar.
 Between 1983 and 1987 the sales of radar detectors
increased by 450%.
 The first radar detectors were introduced to market in 1972.
 Multiple firms emerged and by 1987 there were nearly 20
companies vying for market share.
 Due to intense competition and access to low cost
producers, the average price of radar detectors declined
steadily.
 Radar detectors were a maturing product within the U.S. as
sales in the next few years were expected to level off.
 Further, the entire radar detection market faced serious
curtailment through local and state legislation prohibiting such
devices.
Situational analysis
 Functionally divided between two plants
in Westford and Fitchburg.
 Financial performance had been rapidly
deteriorating
 Company loosing market share.
 In 1980, the market size was 473000
units.
 Whistler’s manufacturing strategy : largely
tailored towards low volume, low variety
and stable demand conditions.
Problems
 Quality Issues – First pass yields dropped
to critical levels and rework effort accounted
for nearly 30% of the WIP inventories.
 Inefficient process workflows – As final
assembly was being done in Fitchburg,
components had to be shipped back and
forth between the plants.
 Inefficient space utilization – 30% of
Westford plants floor space was taken up by
WIP which accounted for approximately
$600,000 of WIP inventories. This WIP was
susceptible to damage.
Problems
 Inventory management - In-process inventory
levels soared across all points in the assembly line.
 Material handling issues -
Defective boards hindering smooth material flow
High rate of defective subassemblies created problems
in matching subassemblies to final assembly kits since
parts from other batches were used as replacements
 Sub-optimal process time - A unit spent an
average of 23 days in process whereby actual
production time was simply eight hours.
Other issues
 There exists an additional threat to the
company in the form of increasingly
restrictive regulations with regard to the
use of the radar detector product.
 The company is faced with the very real
possibility that the entire market could
literally vanish overnight due to a adverse
regulation coming into effect.
Alternatives
Multiple alternatives that can be adopted :
 Whistler Corporation can outsource
manufacturing to suppliers in Korea
 Whistler can implement RACE-ME for all
product lines
Outsourcing
 Advantages of outsourcing:
 There is a clear cost saving of 33% over its current costs
 This will enable Whistler to concentrate on what it does best –
product design and marketing. This becomes particularly
important in the light of regulatory changes that might take place.
 This allows Whistler to quickly dump the product line in case of
adverse regulations coming into force.
 Disadvantages of outsourcing:
 Whistler can no longer control product quality and hence may
not be able to command the same price premium
 Since the suppliers are located in East Asia, they will be unable to
respond quickly to surges in demand due to shipping delays
 Existing plants will need to be closed and the subsequent job
losses may lead to adverse reaction.
 Proprietary designs of Whistler may not be adequately protected.
RACE-ME
 Advantages of RACE-ME
 There is a clear cost and productivity improvement
 It enables the firm to obtain almost similar cost
advantage with outsourcing : added benefits of local ,
creating a clear competitive advantage.
 Disadvantages of RACE-ME
 Pull systems require high supplier co-ordination so
that low levels of input inventory can be maintained.
 It appears that whistler’s distribution channels (mostly
retail) will not completely align with a made –to-
order strategy.
 Implementing a pull strategy across the entire system
would require significant investment and commitment.
Recommendations
 Outsource selected product lines
 Implementation of RACE-ME
 Closure of Fitchburg plant
 Diversification into new product markets
 Estimated cost details
Cost head Estimated cost saving Estimated cost
Material 0 31.90
Scrap 17% 0.65

114% for 40% labour rework + 237% for 60%

Direct labor direct labour 5.44

Variable Overhead 68% 4.28

Shipping 0 0.00
Duty 0 0.00
U.S coordination 0 0.00
Fixed overhead
HQ 0 3.38
Westford 146% 6.36
0 0.00
Total 52.01
Conclusion

 A successful scale up of RACE-ME will

cost $52, almost comparable to the
production cost ($47) at an outsourced
location
 Manufacture high end products locally
leveraging RACE-ME to control quality
and response times
 Outsource low end products to low cost
destinations.