Case Studies-The Randomness of Rocks

• The Roughness of Rice
• The Randomness of Rocks
• The Raceways of Railcars

Cedarapids Screen Boxes: Custom “build-to-order,” not to stock.

The Situation:
Cedarapids, Division of Terex, builds Screen Boxes to sort quarry rock into various sizes. Each installation must be tailored from over 300 possible component and option parts. The fabricated parts range from small brackets to 8' x 20' vibrating decks.

The Challenge:
Forecasting, producing and maintaining an inventory to meet seasonal demand cost effectively is nearly impossible.

A Solution:
Sales reviews historical sales and forecasts future needs on part-by-part basis. Production releases orders to the shop in “Economical Order Quantity” (EOQ) builds (based on traditional methods of manufacture) and tries to have everything in stock when the season starts.

As orders near start of production, material handlers are assigned the job of finding and retrieving the parts from outside storage racks. Those parts that are either damaged, missing or out of date are sent to production for rework, and the customers are notified that their order will take a bit longer to fill.

When the order has been shipped, apply EOQ standard costs to “prove” it was profitable. Write off costs of repair, charge revision costs to engineering, apply stock handling costs to overhead, and blame sales forecasting for the cost of “outages” (they should have known more of those would be needed) or obsolete items (they should have known those don’t sell). Ignore inventory carrying costs as a “necessary evil,” and let top management worry abut it at the end of the year.

The Solution:
Send the Sales Orders, listing basic model and options needed, to Pickwick once a month. Pickwick’s Enterprise Resource Program (ERP) breaks them down to the individual component level part numbers and quantities, then creates build orders by need date for the actual quantities. The orders are released to production with current electronic documentation. Parts are laser-cut and fabricated with “soft” tooling; Pickwick had previously been requested to modify parts for “tab-and-slot” assembly to reduce or eliminate fixturing.

All parts are built, painted and put into temporary storage. A month after the original Sales Orders were received, Pickwick begins shipping parts in kits, by Sales Order number, twice a day, delivered to the first position in Cedarapids Screen Box Assembly Line. No parts are short, no parts are left over and everything is in new condition.

When the order is shipped Cedarapids adds Pickwick’s build, assembly and shipping costs to their own assembly charges to compile true total cost.