STEMCO: FACILITIES PLANNING

Transcription

1 STEMCO: FACILITIES PLANNING 4/17/2015 Team 1: Andrea Alzate Lorena Chanlatte Lorena Cruz Andres D Elia Daniel Sosa Andres Vargas Department of Industrial Engineering and Management Systems University of Central Florida Orlando, Florida , USA 1 P age

2 EIN 4364 Facilities Planning & Material Handling EXECUTIVE SUMMARY The purpose of this report is to develop a business plan and a facility plan for the production of the idrive2. A start-up business being developed by Irma Marie for an idrive2 device that when attached to a vehicle, can sense locations of other objects (i.e. people, vehicles, etc.) while also being able to adjust speed and brakes as needed. Irma Marie has been awarded a multi-million dollar development contract that will provide $2 million start-up funding along with a purchase of 250,000 units at $180/unit over a 30 month period. The contract will begin on July 1 st, 2015 and last until December 31 st, On January 2016, 500 units will be produced over a 250 operating days annually. Demand for the product is expected to increase 75,000 units during the last 18 months of the contract. A building of 100 ft. x 120 ft. will be leased for $20/sq./year. After analyzing the ramp-up plan, it was decided the need of 60 employees for the departments, including office personnel. These first 60 employees will be hired during the course of the first six months as needed to begin production, 49 additional employees will be required at the beginning of January 2016 to meet demand. A total of 109 employees will be hired until the end of the contract. The cost of equipment, along with the labor is expected to be $4,682,052. This following document will show a detailed layout of the different departments. Each department holds equipment, material handling, and the staff necessary for an efficient production. During the end of the contract it is expected to have an increase in demand therefore, process improvement will be necessary to move, relocate equipment, and staff in order to meet production. The financial analysis conducted shows that the 4.5 million loan from E.Z. Money with a 30% annual interest was needed to start production. The loan will be paid backed in 36 months. The facility will begin to see profit in its second year of operation and even more in its third year. Overall, this report will demonstrate the detail and analysis conducted to show what the facility will look like and how the company s financial standing will impact start-up/ramp-up and plans to pay back the loan provided by E.Z. Money. 2 P age

3 TABLE OF CONTENTS 1 PROBLEM STATEMENT OBJECTIVES 4 2 SLP Methodology Block Layout Detailed Layout Process Flow Tradeoff & Analysis/ Manpower & Equipment MATERIAL HANDLING 10 3 ASSUMPTIONS 15 4 IMPLEMENTATION PLAN 15 5 FUTURE EXPANSION 16 6 FINANCIAL ANALYSIS LOGIC START-UP FUNDING/ RAMP-UP PAYBACK PLAN IRR/ROI SUMMARY OF FINANCIAL SPREADSHEET 18 7 CONCLUSION 18 8 APPENDIX 20 Appendix A- Manpower/Equipment Spreadsheet 20 Appendix B- Financial Spreadsheet 25 Appendix C- Alternate Layout 28 Appendix D- STEMCO Part I 321 TABLE OF FIGURES 1 FIGURE 2.1 MAIN DETAILED LAYOUT 6 2 FIGURE 2.2 MAIN DETAILED LAYOUT ARRAY PROCESS FLOW 7 3 FIGURE 2.3 MAIN DETAILED LAYOUT PANEL PROCESS FLOW 8 4 FIGURE 2.4 TOTAL COST 9 5 FIGURE WOODEN PALLETS 10 6 FIGURE STRETCH WRAP 10 7 FIGURE FORKLIFT 11 8 FIGURE EC111 18X32 THREE TUB UTILITY CART 11 9 FIGURE TOTES FIGURE RACK FIGURE PALLET JACK FIGURE ESD MATS FIGURE ESD BAGS FIGURE BELT CONVEYER FIGURE ROI 17 3 P age

4 1 PROBLEM STATEMENT A sixth year IEMS UCF senior has been awarded a two million dollar development contract that will provide funding for the production of 250,000 units at $180/unit over a 30 month period. The contract will begin on July 1 st, 2015 and last until December 31 st, On January 2016, 500 units will be produced over 250 operating days. Demand for the product is expected to increase by a rate of 75,000 units in one year during the last 18 months of the contract. If STEMCO s financial plan is successfully implemented, the production rate is expected to increase to 1000 units/day. 1.1 OBJECTIVES The team objectives for this project include: 1. Designing a facility to maximize the process flow efficiency within the production areas 2. Create a manpower/equipment spreadsheet and discuss tradeoffs and analysis that will be used in the implementation plan 3. Create a detailed layout that shows each area with their respective features and required material handling equipment 4. Discuss any assumptions made during the project s development 5. Discuss plan implementation including ramp-up for employees/equipment/production output 6. Discuss any potential growth 7. Discuss a financial package and its key elements along with a financial summary 4 P age

5 2 SLP METHODOLOGY 2.1 Block Layout In the first phase of the project the team was asked to develop a flexible facility design that included a triangular activity relationship chart, a space relationship diagram, and several block layout options. The layout efficiency for each block layout was determined: Option 1: 284,325 Feet per day Option 2: 279,200 Feet per day Option 3: 308,750 Feet per day Option 4: 309,325 Feet per day Option 5: 304,588 Feet per day Option6: 308,400 Feet per day Looking at the options in terms of efficiency option 2 would be the most efficient for production based on feet per day traveled by the workers. Choosing option 2 will minimize the transport cost which will save money. The layout chosen represents all of the client s requirements along with meeting the facility planning standards. 2.2 Detailed Layout From the block layout chosen, a detailed layout was constructed with the appropriate elements for each area. As seen below in Figure 2.1, each area was given key features that will accommodate for material and process flow. A majority of the facility is open spaced so that management will be able to look on to the production floor from time to time. This will also allow for material to flow smoothly from area to area. The only areas enclosed are the office areas (i.e. Conference room, manager office, lunch area.). 5 P age

6 FIGURE 2.1 MAIN DETAILED LAYOUT Two entrances were created, one near shipping and the other in the lobby area near the offices. Two bathrooms were also added, one by each entrance to the facility. The warehouse was placed in an area where it can be reached by different departments depending on what product comes into the facility. The offices were placed near the entrance and on a corner to minimize any form of disturbance that is regularly generated from the facility. Due to strong odors that arise from the conformal coat area, the offices were placed far away. Isles were added to allow easy transportation between departments. 6 P age

7 2.3 Process Flow Two types of process flows were taken into account when developing the layout design. A process flow for arrays and a process flow for panels. Below in figures 2.2 & 2.3, arrows were added to show the array process flow that will be taking place within the facility: FIGURE 2.2 MAIN DETAILED LAYOUT ARRAY PROCESS FLOW 7 P age

8 FIGURE 2.3 MAIN DETAILED LAYOUT PANEL PROCESS FLOW One key factor that influenced the team s process flow is access to different areas within the facility. Shipping and Receiving were placed next to each other to maximize process flow efficiency. When a product is received, it can be taken either to receiving inspection or straight to the warehouse. The product sent to receiving can go to either component prep or straight to surface mount. The process flow helps us determine what the most efficient route is for each product. 8 P age

9 2.4 Tradeoff & Analysis/ Manpower & Equipment For the manpower planning, as seen in Appendix A, the team decided to gradually employ people as equipment arrived and the facility was ready to start producing. This business started with 14 employees during the month of July. The number of employees started increasing in the following order: 17 in August, 78 in September and October, 97 in November, 99 in December, and 132 in January. In January the facility was running at full capacity with all necessary personnel and equipment to produce 500 units per day. All employees go through training and ramp up for the first few months of their employment. Gradually as more operators were hired, our number of supervisors increased to a total of five due to a 20 operator to one supervisor ratio. In order to start production, the appropriate machines and material must be purchased. These include conveyors, forklifts, shelving units, and pallets. These materials must be taken into account to acquire an accurate cost estimate for the initial investment. An excel spreadsheet found in appendix A has a detailed cost of labor and equipment for the first six months. Starting January 2016 manpower will remain constant for full production therefore the cost of labor for the following months will remain the same as for January The following chart shows the total cost of labor and equipment. Cost Of Labor $ 1,811, Cost of Equipment $ 2,871, Total $ 4,682, FIGURE 2.4 TOTAL COST 9 P age

10 2.5 MATERIAL HANDLING The following equipment will be used to store and transport parts and materials through the factory. FIGURE WOODEN PALLETS Pallets are used in the receiving warehouse and shipping departments. They will be utilized by storing various goods on top of them, allowing easy transportation with the accompaniment of a forklift to move them. Because our facility is buying these pallets in bulk, we were given the price of $3 a pallet compared to the usual $5 when bought in smaller quantities. FIGURE STRETCH WRAP 10 P age

11 Stretch wrap will be used in the receiving warehouse & shipping departments. It will be utilized in conjunction with the various goods that will be sold in the facility by keeping them stored together and packaged tightly. We ll be using the model S-2433 that is a 90 gauge wrap that has the ability to withstand up to a 3,000 pound load which will be bought in bulk of 84 rolls at a time for $21. FIGURE FORKLIFT The forklift will be used in our warehouse department. It will have the responsibility to transport goods by utilizing the wooden pallets that are present in the facility. This model of forklift will cost $8000 to buy. FIGURE EC111 18X32 THREE TUB UTILITY CART 11 P age

12 The carts will have various locations throughout the facility because of the multitude of uses they will have in numerous departments. They can be used for item transportation, and temporary storage. The kinds of items carried on the carts will vary from department to department. It will be able to withstand up to 400 pounds being placed on it, and will cost $105 per cart. FIGURE TOTES Totes will be used in various departments throughout the facility. They have the purpose of storage for smaller goods. Since the facility will be buying this product in bulk, the price has dropped down to $8 a bin. FIGURE RACK 12 P age

13 Racks will be in various locations in the facility. They are the main equipment for storage and are utilized as such. Pallets, alongside totes will be stored on top of these. The cost for each rack will be $ FIGURE PALLET JACK The pallet jack will be used in the receiving, shipping, & warehouse departments. They will be utilized in conjunction with pallets by being able to transport them in smaller quantities compared to a forklift. We will be buying the model H-1043 which has the load capacity of 5,500 pounds with a price of $279 because they will be bought in bulk. FIGURE ESD MATS 13 P age

14 The ESD mats will be used solely in the workbench department. These mats are specifically tailored to ensure that no static electricity to passed to hardware that is sensitive to it and would ultimately destroy the hardware. The mat part number is EMFM2436BKT and will cost $78 per mat. FIGURE ESD BAGS The ESD bags will be located in various locations in our facility but will have a main concentration in the workbench department where the ESD mats themselves are located. The model number we are using is S which will have a cost of $12 each because we are buying them in bulk. FIGURE BELT CONVEYER 14 P age

15 The belt conveyers will appear in the machine department of our facility. It will be utilized by transporting goods such as totes from one end of the belt to the other in an efficient and safe manner. It will cost the facility $6, for each belt conveyor. 3 ASSUMPTIONS The following assumptions were made: Employees hired will continually work and not quit/get fired No major problems will occur in the facility that would cause a huge delay in production The PF&D allowance is minimal The end product of the goods produced will not have defects The facility will successfully be able to occupy the amount of employees that will be hired The exact machine dimensions were given 4 IMPLEMENTATION PLAN The team plans to invest the initial cash flow into the appropriate machines/equipment/personnel needed for production. The personnel will be hired in waves as early as financially possible to ensure a steady start that will further propel onward to meet the demand the facility has. These new personnel will be efficiently trained to secure the correct staff for the positions and will work the allotted days and standard operating hours for a facility. With the budget being kept in mind along with the quota, success will be ensured with the possibility of expansion in the future. 15 P age

16 5 FUTURE EXPANSION The team expects to receive an additional demand of 250,000 units per year starting in January Due to such an increase in demand, the facility will need an expansion. Coupled with this expansion a heavy focus on process improvement must be applied because our products are facing the threat of being knocked off by using reverse engineering. If this is done, others will be able to reproduce the facilities products at a price that is 80% cheaper. If this was to occur the team s sales will plummet to the point of losing the contract. More space will be needed alongside more machines, staff, and equipment in order to achieve this goal. Dedicated staff members to process improvement will also be needed in order to implement these new changes as soon as possible to bring the cost down. 6 FINANCIAL ANALYSIS 6.1 LOGIC To determine our company s financial standing we used the spreadsheet located in Appendix B to determine revenue, direct, indirect cost, and other variables including taxes, depreciation, and etc. This gave us an overview on how we re standing financially each month. 6.2 START-UP FUNDING/ RAMP-UP To begin production in our facility we took a 4.5 million dollar loan from the company E.Z. Money alongside the two million dollars that we awarded from the initial contract. This initial fund was used for direct costs which consist of materials and labor alongside some indirect costs which include the machines, equipment, overhead, and utilities. These costs can be found in the spreadsheet in Appendix B. 16 P age

17 6.3 PAYBACK PLAN 4.5 million dollars were loaned to STEMCO from E.Z. Money with a 30% annual interest and a 2.5% monthly interest. Our detailed payback plan can be seen in Appendix B. A monthly payment of $191, will be made over the course of 36 months to fully pay off the loan including interest. E.Z. Money has a 30% annual interest and a 2.5% monthly interest. E.Z. Money can see that our revenue during the course of 2016 and 2017 show a stable company which will be able to repay the loan. 6.4 IRR/ROI For the first year, the facility will have negative profit, however over the course of the next two years the profit margins will be positive. As seen in figure for 2015 there will not be a return on investment. We are actually not making any money until 2016 with a return on investment of 17%. For 2017 there is a return on investment of 35%. Return On Investment Cost $ 2,850, $ 17,563, $ 16,663, Revenue $ - $ 20,625, $ 22,500, ROI $ $ (2,850,536.17) $ 3,061, $ 5,836, ROI% - 100% 17% 35% FIGURE ROI 17 P age

18 ROI $ ROI% 60% 40% 20% 0% 17% $3,061, $5,836, % $7,000, $6,000, $5,000, $4,000, $3,000, % $2,000, % - 60% - 80% - 100% - 120% % $(2,850,536.17) FIGURE ROI $1,000, $- $(1,000,000.00) $(2,000,000.00) $(3,000,000.00) $(4,000,000.00) 6.5 SUMMARY OF FINANCIAL SPREADSHEET The financial spreadsheet summary has a detailed overview on cost for each month. It also shows the revenue for each month and the L&P analysis which was used to calculate the return on investment. The spreadsheet can be found in appendix B. The financial spreadsheet is the proof of you financial stability during the course of the years. 7 CONCLUSION As seen in this report, the team has successfully implemented the plan for a fully operational facility. The plan will produce the development contract being awarded to Irma. Our key points of success are: Balanced manpower High efficiency of the layout and flow of the product (arrays and panels) Necessary material handling to avoid scrap or rework and increase efficiency of production 18 P age

19 Balanced implementation plan of equipment and staff which allows future growth of company Financial package demonstrating economic stability of the company through years The team is confident with the implementation plan created, the company will be successful and ensure future expansion. The company has also prepared for growth to come in the following years. STEMCO is proud to implement and present this plan for the production of idrive2 with a revenue estimate of $45,000,000 by the end of P age

20 8 APPENDIX Appendix A- Manpower/Equipment Spreadsheet Cost of Labor 20 P age

21 Equipment Cost Spreadsheet 21 P age

22 Manpower Project Plan 22 P age

23 23 P age

24 24 P age

25 Appendix B- Financial Spreadsheet 25 P age

26 26 P age

27 Pay Back Plan 27 P age

28 Appendix C- Alternate Layout 28 P age

29 Alt. Layout Array Flow 29 P age

30 Alt. Layout Panel Flow 30 P age

31 APPENDIX D (STEMCO PART I) Relationship Diagram 31 P age

32 Triangular Activity Relationship Chart 32 P age