Case 12 Firebird Electric, U.S.1 In 1994, Firebird Electric, U.S. (Firebird), was the first foreign supplier to relocate to the United States to supply the Road-Master Car Company. Located in Columbia, South Carolina, Firebird supplies headlights, taillights, lid lamps, center high mounts, and front-turn assemblies to Road-Master. Road-Master sales account for 98.5 percent of Firebird's revenues. Original equipment manufacturing (OEM) lighting is supplied to the Orangeburg plant, the Columbia auto plant, and the Columbia motorcycle plant. In addition, service (aftermarket) products are made for foreign and domestic demands. Weekly shipments go to Road-Master Canada Manufacturing and Road-Master De Mexico. Service models also are shipped to Germany, Brazil, and Japan. Firebird Electric, U.S., exports components from the molding division to sister and parent companies. Molded parts also are supplied to Road-Master. OPERATIONS AT FIREBIRD U.S. Firebird has five distinct operations centers. The East plant manufactures light as- semblies and units. Manufacturing I produces headlights and front-turn assem- blies. Manufacturing II assembles taillights, lid lamps, center high mounts, and aftermarket products. The West plant provides components to assembly and exter- nal sales. Manufacturing III is a sanitization coating process for lenses, reflec- tors, and extensions. Manufacturing IV is a die injection molding facility producing reflectors, lenses, and housings. A halogen bulb department provides the majority of the bulbs used in production. Assembly in the East Plant Approximately 40 lines supply different makes, models, and types of lighting for Road-Master vehicles. Dedicated lines run multiple shifts to meet OEM produc- tion for current year A-car and B-car models. OEM production for the Avenger and Odyssey Minivan runs on one-shift dedicated lines. OEM requirements may ex- ceed 1,200 units daily. Fourteen lines run to meet aftermarket demand. These lines are interchangeable among different models. Aftermarket assemblies and units are made 10-20 years after OEM production Service requirements range from 30 to 10,000 units per month. West Plant Operations Manufacturing III is an isolated sanitization area for coating processes. Products are cleaned, prepared, and either aluminized or hard-coated. Aluminization pro- vides reflective coating to components such as reflectors and extensions. This process allows a plastic-molded part to reflect the light at the designed angles. Lenses are hard-coated to protect against chips and cracks. Manufacturing IV, the focus of the upcoming make-or-buy decision, molds parts for finished assembly and sales. Lenses, reflectors, and housings are molded from resins and fiberglass-reinforced plastics. injection molding machines range from 60 to 900 tons of pressure. These machines are adaptable to produce The author expresses appreciation to Brandon Smeul for his contributions to this case. Names and data have been disguised. Copyright © 2006 W. C. Benton Jr. All rights reserved. 485 486 Case 12 Firebird Electric, U.S. multiple parts by interchanging the die molds. Firebird Electric has recently ac- quired the two largest molding machines in the world. The productivity of these machines will aid in the upcoming decision regarding further expansion. Firebird is reducing inventory in the West plant Material Order Center (WESTMOC) to possibly expand operations by three machines. Firebird Electric manufactures halogen bulbs for in-house production and ex- ternal sales. The halogen bulb (HB) department is capable of producing 60,000 bulbs per week. HB runs a continuous three-shift operation until weekly produc- tion quotas are met. PURCHASING AT FIREBIRD Purchasing for Firebird Electric is decentralized. The purchasing department at Firebird U.S. consists of nine full-time associates. The purchasing manager assists in decision making and controls administrative duties. Six buyers are responsible for obtaining materials to meet production requirements. One buyer supplies the HB department and one is solely responsible for MRO purchases. The other four buyers are responsible for specific vendors. Each buyer oversees all products pur- chased from 8 to 10 different suppliers. The two other purchasing associates are specifically assigned to supplier evaluation and incoming quality conformance. Firebird Electric has been awarded OEM production for the lighting on the 2005 model two-door B-car. This report focuses on the procedures and decisions in- volved in supplying the housing for upcoming production. HOUSING DEFINITION AND SUPPLY Housings are fabricated through die injection molding. A resin is melted, injected, and stamped into the die mold. The housing's function is to attach to the body of the vehicle, protect internal components (cords, bulbs, etc.), and hold components in place so that the light functions as designed. Each make/model has unique housing specifications with regard to size, durability, holes, and necessary attach- ments to perform these duties. As stated earlier, Firebird has the ability to produce housings in the molding divi- sion; however, of the approximately 240 parts presently molded in Manufacturing IV, only 11 are housings. Firebird also outsources production of housings to four central South Carolina molding firms: FPE, The South Carolina Plastics Company (TOPCO), Central South Carolina Plastics (COPCO), and Charleston Custom Plastics (WCP). NEW PRODUCT DEVELOPMENT: DEFINING REQUIREMENTS The customer, internal departments, and potential suppliers contribute to design- ing quality into molded parts. Due to Road-Master's strict quality requirements and just-in-time inventory systems, nonconformance results in high costs, hinders customer relations, and endangers prospective contracts. Departments included in the product definition and development stages include product design, purchas- ing, quality assurance, sales, die molding, engineering, manufacturing, plant man- agement, quality control, production control, and materials management The first stage in new housing development is gathering model information from the customer via the sales department. Based on this information, the first drawings of the housing are completed and evaluated. Firebird considers the Case 12 Firebird Electric, U.S. 487 application of new technology, alternate manufacturing processes, and new inputs to production for all new model components. Project leaders and project members, representing the aforementioned departments, are selected for the development team. Quality assurance reviews the initial drawings. The review encompasses sim- plifying fabrication by eliminating components and processes, and searching for alternative methods of tooling and production. The design review then sent to manufacturing departments, die mold, purchasing, quality assurance, and quality control. A follow-up meeting is conducted involving representatives from all departments. Development conferences with manufacturing personnel are held to inform team members of schedule updates, quality targets, costs, and responsibilities. The periodic meetings are held as needed to ensure that members are aware of revi- sions to plans. A constant flow of information is emphasized to continuously im- prove processes After product development is completed, Firebird defines the specifications for the fixture (die mold) measurements. The fixture is designed for accuracy, ease of use, and cost efficiency. A rough sketch of the fixture and the required materials is drawn. Purchasing and engineering personnel from Firebird and Road-Master must approve the concept. Upon approval , the fixture manufacturer submits a de- sign drawing to quality assurance. Firebird purchases and retains ownership of the die mold fixture regardless of the outcome of the make-versus-buy decision. The initial trial run of the product, always performed in-house, is done to ver- ify that the fixture is capable of meeting drawing specifications and minimizing the rejection rate. Statistical process control charts are kept for resin input and out- put quality. If the process is deemed out of control, a modification schedule for a new trial run is scheduled. An evaluation meeting is held to inform all depart- ments about potential problems. Cause-and-effect judgments are made and recon- ciled via modification request sheets. Target finish dates also are established at this meeting THE MAKE-VERSUS-BUY DECISION As can be seen, new-product development is an involved process. Recently, more and more of Firebird production is outsourced. Using the assumptions given below, please analyze the make-or-buy decision. Please write a detailed report rec- ommending either the make or buy decision. Assumptions 1. Make and buy information is shown in Figure C12.1. Internal production costs were obtained from manufacturing and cost accounting; information on the cost to buy was gathered from journals, historical pricing, supplier information, and engineering estimates. • OEM demand is estimated at 250,000 units over the next year (1,000 units/day, 250 working days/year). • The resin usage is 454 grams (1 pound). Actual product weight is 432 grams with a spru weight of 22 grams. • Variables include cycle time, labor costs, overhead costs, material costs, trans- portation costs, and profit margins. • Difference in quality levels of in-house and procured parts is negligible.
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