Diverse Industries International

Diverse Industries International

Executive Summary

The case Diverse Industries International is a case which involves the pondering of the decision of whether or not to invest in a new machine on Line 1 (the busiest line)which would increase efficiency but cost eighty-thousand dollars,  but also give the plant the option to labour costs and make a significant profit of three-hundred thousand dollars.  The decision maker at the end of the process will be the financial department, though the one fighting for change is Mike Paterson, the operations manager of the London Ontario plant for DII.  He was in turn inspired by Mr.Peters, a colleague whom sparked the idea to Paterson.  A quantitative analysis by crunching the numbers ruled in favour of redistributing and cutting labour due to the increased efficiency of the new machine.  Taking into account cutting the jobs of numerous people spread about shifts due to the redistribution, it equated to about three-hundred and eighty thousand dollars,  give or take.  With the investment in a new machine however, it gets brought down to about three-hundred thousand dollars.  Quantitatively the decision is quite clear as to whether or not to invest into the new machine.  However, problem could occur as a result from the cutting of labour and forcing employees to take on a larger workload.  The impacts of morale and stress upon the quality of work can be estimated to cost quite a bit initially, and since the product produced on Line 1 is advertised as premium and set to a higher standard, it is clear why it could be problematic if the employees are not 100% agreeable with their working conditions.  This qualitative analysis gave a fresh breath and grounded the view of the operation and could make one take a step back and reevaluate the situation.  Taking into account the adaptability of an individual, looking at the long term, it becomes less of a problem if one compares it to the savings found in cutting labour, which in turn makes the most logical sense to redistribute the labour on Line 1, cut the excess remains, then purchase a new machine to keep up with demand.  The alternative solution was to not redistribute labour and cut costs by cutting labour, though this one can feel defeats the purpose of getting a new machine if the workforce could not be reformed around the idea. Another alternative was simply not to invest at all and simply keep the status-quo and not have to deal with immediate qualitative or quantitative problems at all, along with any possible quality problems.  Conclusively, it was felt that both redistribution of labour and a new machine would be most worthwhile.

Problem Statement

The current operations manager of the Diverse Industries International plant in London Ontario; Mike Paterson, is currently attempting to justify the restructuring of the automatic dish washing gel line to the finance department.  If that is approved then there is also the possibility of reallocating direct labour on the line.  The focus is primarily on Line 1, which is the busiest line in the plant.  Certain problems are occurring, such as if automated machine that fills, labels, and moves the bottles goes faster than 12 cases per minute, the bottles would begin to back up on the conveyor and cause problems for the machine due to the packers being unable to keep up.  There is also a problem where the skid loader whom took completed skids from the packers and took it to shipping and receiving, these skid loaders found the pace fairly easy and could easily deal with 15 cases per minute, so there is an obvious waste of time in this area.  The equipment if exceeding 15 cases per minute, broke down once a shift for 1.25 hours which would require mechanics to repair said machine.  The problem is that there is hundreds of thousands of dollars being lost due to this inefficiency and mechanical problems found on Line 1 of the London plant, and it could be solved by a simple investment and labour redistribution.  Though the main factors of this evaluation is the quality of the goods, the quantitative, and the qualitative.