Analysis and Recommendations

SHERPIN SBU
BRIEF INTRODUCTION
 Sherpin is a SBU under Northrop Industries, part of
Artne Group
 Contributes 10% towards total revenue of parent group
 Operates in four segments
 Aerospace
 Automotive
 Industrial - core segment
 Motor Sport
PRESENT SITUATION
Actual conditions
Requirements
prevailing

Reaction to shorter lead

Delays in delivery by a
Aerospace time demands and on time
maximum of 13 days
delivery is crucial

Price sensitivity and Delays in delivery by a

Automotive
delivery speed maximum of 6 days

Delivery speed not very Delays in delivery by a

Industrial
crucial maximum of 21 days

High level of support in

market dimensions such
as technical expertise, Operating as per the
Motor Sport
delivery speed, delivery requirements
reliability and quality
conformance
CURRENT PRODUCTION & OPERATIONS
SETUP

 Products produced in batches using a single shift

setup.
 To meet the technical sophistication of the
products the operators are trained extensively in
techniques like Statistical Process Control.
 Productivity of operators is in par with the
requirements.
CURRENT PRODUCTION & OPERATIONS
SETUP CONT…

 Customer demands are received either as

contracts or one-off orders.
 Components ordered will be placed to suppliers
considering the lead time of the supplier and the
time needed for production.
 Customers are promised delivery time
accordingly keeping some buffer time.
PROBLEMS
 Aerospace
I. Delays in delivery, which cannot be afforded
considering the norms in the industry
II. Demand is unpredictable in spares stage as
well as in OEM stage
 Automotive
I. Delays in delivery to a small extent

II. If the delays continue then there are high

chances of losing major customers
PROBLEMS
 Industrial
I. Huge delays in delivery

II. Spare parts demand is poorly managed

III. JIT is not managed effectively even with the

support from industrial customers
IV. There is wide fluctuation in demand in spares
segment
CAUSES FOR THE PROBLEMS
 Demand for spare parts is unpredictable due to
uncertainty in breakdowns
 Company has adopted JIT and at the same time
suppliers have failed to supply the components as
per the lead times
RECOMMENDATIONS
 Sherpin has to engage closely with the suppliers
and rework the size of order given to the
suppliers
 Have multiple suppliers for each component
 Regular suppliers should be given 50% of the
order and the remaining 50% be divided between
two suppliers who have shorter lead times
RECOMMENDATIONS
 Buffer stock should be maintained for spare parts.
 Considering the present situation, another shift
would take care of the surge in demand.
 If another shift does not suffice the requirement
then capital expansion can be recommended.