Indian Institute of Management Indore PGP 2011-13 Operations Management Case: Dor Dor Section B Group4

Group Members:
AMARENDRA SAHOO PGP2011533 BHAWNA GOKANI PGP2011595 CHATARKAR ANURAG MAHADE PGP2011600 C.LALRUATSHNGA 2011 FPM06 RUPSA CHAKRAVARTY PGP2011837 SAARANG K. MEHTA PGP2011841 UTKARSH SINGH PGP2011923

Introduction
Dor Dor was a French company, famous all over the world for fashionable knitted products. It had evolved from the 1800s Dor Society, which was founded by Jean Baptiste who suggested to his neighbours who like himself made hand-knit hosiery to pool their resources and produce together in order to earn better profits. Its Hosiery division produced socks and stockings for men, women and children; its knitwear division produced a line of childrens clothing knitwear such as playclothes, sweaters and nightclothes. The Hosiery division accounted for 88% of DDs sales. Dor Dor focused on the high end of its markets with regard to both quality and fashion. It not only produced hose under its trademark DD but also for famous fashion houses like Yves St.Laurent, Nina Ricci, and Chantal de Thomas. The differentiating factors of Dor Dor were its quality manifested in exclusive yarns like cotton lisle, silk and fine wool; stringent quality control; wide range of sizes; double reinforcement of heels and toes; invisible seams and impeccable fit. It differentiated also by making different calf sizes for men and women. The high-end segment represented only 5% of the total French hosiery market but DD commanded about 30%-40% of this market. Overall it represented 4% - 5% of the French Hosiery market but only 0.5% of the childrens knitwear segment. Exports comprised 35% of the companys total sales. Dor Dors operation was divided among two main plants; Troyes produced the childrens knitwear and the Grs plant produced the Hosiery. One quarter of the total Hosiery was produced at the main Grs plant and the rest in 11 family-run knitting shops around the plant. Each season Dor Dor produced each of its hosiery style in two campaigns; the first batch was produced when hardly any retailers had placed any orders and after getting the initial market feedback the next batch was produced accordingly. Even with the two campaign system the demand was uncertain and this led to high inventory costs as hosiery was produced before knowing the actual demands of the end-users. The demand forecasts which were primarily made by veteran sales representatives and production coordinators from their experience and intuition, was further complicated by Dor Dors fashion focus. This made the popularity of different styles highly unpredictable, even successful items enjoyed only short periods of popularity. The hosiery divisions experience during the previous two year had exemplified the problem of demand forecasting. While an unusually hot onset of spring and summer pushed the demand of the hosiery down, the thus adjusted production led to a shortage of hosiery due to a much cooler weather. Franois Marguet, the newly appointed Director of Operations was asked by the companys PDG to look into different problems and find a fresh perspective to deal with them. Some of the problems were: rising labour costs, ever-improving competitors etc. The PDG wanted to know a way to improve the operations of the company to strengthen their competitive position. Marguet after an initial experiment with the childrens knitwear production system had zeroed in on two different manufacturing systems.

One was of course the traditional manufacturing process. arrangement.

The other one was the cellular

Childrens Knitwear:
Sl. No. 1 2 3 4 5 Process Yarn and Fabric Suppliers Knitting Dyeing Cutting Sewing and Finishing Avg Lead Time 2.5 months NA 5 weeks NA NA Throughput Time NA 80 hours (10 days) NA 40 hours (5 days) 120 hours (15 days)

From the above table we can observe that Sewing and Finishing is the bottleneck process. Traditional Method: Number of units produced per day Throughput Time Work In Progress (WIP) = 2000 units = 15 days (3 weeks) = no. of units entering the system * throughput time = 2000 * 15 = 30000

Cellular Method: Number of units produced per day Throughput Time Work In Progress (WIP) = 2000 units = 1 day = no. of units entering the system * throughput time = 2000 * 1 = 2000

Cycle Time = Total Available Time / Number of Units Required Per Day Average Price of Sewing Machine = FF 55000 (varies from 30000 80000) No. of units produced per year = 2000*52*5 = 520000 units

Desired Cycle Time Actual Cycle Time Throughput Time

Traditional Operation 42*15*8*60 / 30000 = 10.08 minutes 10 minutes 15 days

Cellular Operation 42*1*8*60 / 2000 = 10.08 minutes 10 minutes 1 day

No. of Sewing Machines Reqd Capital On Machines (FF) Work In Progress Inventory Defect Rate Flexibility of Workers No. of Defective Units

55 3025000 30000 5% Less Flexibility 26000

84 4620000 2000 2.50% High Flexibility 13000

From the above table, the number of defective units reduces by 13000 in the cellular approach. The traditional approach is suitable for large batch sizes whereas the cellular approach is more suitable for smaller batch sizes. Output per worker and the time required to produce one unit remains the same.

Hosiery:

Following are the process flow diagrams of Hosiery production workflow for both Traditional Design and Cellular Management System:
Traditional Hosiery Production Workflow

1 WEEK KNITTING

1 WEEK CLOSING THE TOE (SEAM)

1 WEEK IRONING

2 WEEKS QUALITY CONTROL

CMS design for Hosiery Operation

TOE CLOSING (7 PERSONS)

QUALITY CONTOL & PACKAGING (8 PERSONS)

KNITTI NG

LAUNDRY (2 PERSONS) IRONING (1 PERSON) IRONING EMBROIDERY (1 PERSON) (2 PERSONS)

QUALITY CONTOL & PACKAGING TOE CLOSING (8 PERSONS) (7 PERSONS)

Sr. No.

Process

1 Knitting 2 Toe Closing 3 Ironing Quality control 4 and Packaging

Traditional Process Throughput Time Labour (per Batch) Content 1 week 6-8 min 1 week 1 min 1week 15 sec 2-3 week 1-4 min

Total No. of Labour Hours 92 12 120

Production/ Day 44160 23040 57600

From the above table we can observe that Ironing is the bottleneck process.

Traditional Method: Number of Units Produced per day = 37000 units Throughput Time Work In Progress (WIP) = 30 days (6 weeks) = 30 * 37000 = 1110000 Cycle Time = Available Time / Number of Units Produced per day = (42 * 480 * 30) / 37000 = 16.35 minutes

Cellular Method: Number of Units Produced per day = 37000 units Throughput Time Work In Progress (WIP) = 1 day = 1 * 37000 = 37000 Cycle Time = Available Time / Number of Units Produced per day = (42 * 480 * 1) / 37000 = 0.54 minutes

Stage I: Toe Closing Production Time per pair Total number of cells Total number of sewing machines in 1 cell Capacity = 14*6*480 per day Stage II : Ironing Production Time per pair Labour Content = 1 min = 15s = 1 min =6 = 14 = 40320 pairs per day

Total number of cells

=6

Total number of ironing machines in 1 cell = 2 Capacity = 2*6*(480/15/60) per day = 23040 pairs per day

Since this number is less than the required capacity, this is the bottleneck. Hence, we have to run the ironing machine for 5hrs Therefore, total capacity = 23040 + (5/8)*23040 Stage III: Quality Control and Packaging Labour Content per pair Average Labour Time Average Production Time Total number of cells Capacity = 6*(18*480/1.25) per day = 1-4 mins = 2.5 mins = 1.25 mins =6 = 41472 pairs per day = 37440

General Recommendations for Cells in Hosiery

Teamwork is hampered in large cells, hence groups should be small Maximum advantage of the cellular framework can only be obtained when the employees are cross trained. So proper trainings should be conducted at regular intervals. Complexity should be reduced to increase flexibility, hence the steps should be cut out