05 Dec Margirius Switches onto Higher Customer Service Levels and Connects with Increased Profits Using Preactor
The electrical switch is an essential part of any electrical appliance and this is the focus of MarGirius Electric who design, develop and distribute switches and connectors for low tension electric energy. Based in Porto Ferreira, São Paulo, Brazil, MarGirius is one of the largest manufacturers of electrical switches in Brazil. They make more than 8.000 different products.
Apart from electrical switches they make electronic ballasts, surge protectors and line filters for applications in computers, cars, buses, trucks, telecom equipment, machines and tools and household appliances. The company produces more than 35m electrical switches every year and is proud to be able to say that every Brazilian house, company or commercial institution will invariably be using equipment that utilizes their products.
Besides assembly their products, Margirius also manufacture most of the metal and plastic component parts. It is a make-to-stock oriented manufacturing process with a make-to-order assembly area where product is completed against the customer specification and delivered typically within 3 to 7 days depending on volume. In some cases however special agreements allow for even more demanding response times for specific customers. Assembly was thus chosen for the first implmentation of Preactor. In the assembly area approximately 450 staff is involved working on 50 assembly tables arranged in 7 production cells. Approximately 16,000 batches a month are processed through the cells. The problems included poor visibility of production progress, inability to determine the capacity to meet production targets, high levels of stock and work in process, and poor synchronization between production cells. This led to difficulties in balancing demand and capacity and an inability to manage shift patterns and prioritize effectively customer orders.
The Preactor Project
The first phase in the project was a 5 day workshop involving the MarGirius team and a consultant from Tecmaran, the Master Reseller for South America, based in Vitoria. During this workshop the MarGiruis team carried out an in-depth study of the functionality required for the planning and scheduling system and test configurations developed to determine the best approach. It was decided that Preactor 400 APS met their needs.
Two models were developed by Tecmaran for MarGirius.
One of them is used for a short time horizon of a week that encompassed all the detail of critical constraints such as staff and tools while the other is set up to deal with medium and longer term planning that calculates future capacity requirements. Both models are integrated with MarGirius’s bespoke ERP system. This sends Preactor the customer orders or forecast with all the production details like process time, setup time, resource requirements and so on. In addition information such as average price of each product is also added in order to predict the revenue generated for each possible schedule.
The project took 5 months to complete including running the tool in parallel with the existing systems and test scenarios to ensure the model could manage all possible situations before go-live. The comparatively long project enabled MarGirius staff to be thoroughly trained and accustomed to using Preactor and enable them to get the most out of the system in terms of improved production control and customer service.
In February 2007 the system went live and very soon benefits started to emerge. Straight away the Planning staff felt more confident about commitment to delivery dates which resulted in fast and accurate customer response. Also improvements were observed on the shop floor. The lack of coordination evident before quickly disappeared and staff were less worried about sudden changes to production requirements and could concentrate instead on improvements to the production process itself.
After 3 months of use, the MarGirius directors reported more benefits:
- All the production problems experienced before Preactor were now a thing of the past;
- A drastic improvement in stocks and work-in-process;
- Better production coordination had enabled changes in production flow that had increased capacity;
- Enabled the simulation of different strategies for future months to optimize cost reduction;
- Improved Cash flow;
- Increased revenues and profits.
And the future? Having solved the assembly scheduling issues, the company will now expand the models to cover the plastic injection molding and other component production areas.