Optotronic Strategy

Case Synopsis

The main purpose of this case study is to improve the accuracy of monthly inventory count for a manufacturing company. The huge variance found in monthly inventory count is a serious issue for a manufacturing company. The huge variance of monthly inventory count found which means that the manufacturing company does not know what is the status of the inventory. They do not know the inventory is keeping at anywhere that nobody noticed or the inventory stolen by someone. This situation is very unhealthy for a company. To solve this problem, the root cause must be identified. A few method including interviews, data compilation and on-site observation are used to found out the root cause. In this case study, identify the process flow and fish born analysis are used to pinpoint the causes of this issue. Finally, a few solutions are recommended to improve the accuracy of monthly inventory count.

Introduction

Optotronic is a subcon of Philips Lumileds. Optotronic started its operation in 1996 with its core business as manufacturing service provider specializing in Semiconductor based activities from Package Assemblies to Light Modules. Optotronic established under Statidge Technologies Sdn. Bhd. on 1996 and change its ownership from Staridge Technologies to CS Opto on 2002. At 2010, CS Opto changed its name again to Optotronic. Optotronic head office stays at Kuala Lumpur, manufacturing plant L1 at Kamunting, Perak and manufacturing L2 at Bukit Minyak, Penang.

Although Optotronic has undergone various changed in its business and operation, its core business remains supplying electronic product. The main products of L1 manufacturing are supplied the LEDs used in the cars example car taillight and car signal light. Myvi taillight and signal light are Optotronic products. The Optotronic annual sales increase tremendously from 119 millions for 2009 to 300 millions for 2012.

Every early of the month Production Optotronic will conduct monthly inventory count to make suret that the fiscal of the product in Optoronic is tally with Optoronic's inventory report. Production Optotronic conduct this monthly inventory count found that the variance of monthly inventory count increase tremendously since January 2010. The variance increased tremendously from January 2010 to September 2010, which is increase from 1.8% variance to 12 % variances.

Mr. Patrick, the CEO of Optotronic has urged the production department to tackle this issue as Optotronic set a target to reduce variance of monthly inventory count to below 2 %. He believe that huge variance of monthly inventory count will lead to company instability in operation and financial company. Therefore, the huge variance of monthly inventory count is looking seriously by Optotronic