Question

Scenario A manufacturing company has been producing and selling industrial product (cannot consumed by human/animal) to its customers in West Malaysia. The company owns only one factory which consists of 5 departments: Storage, Production, Maintenance, Quality Control and Warehouse. During the last few months, the company has been experiencing the rapid increase in manufacturing costs despite of constant in production output. The Management has decided to engage you and your group as a consultant to investigate the problem.

Additional information: Fuctions of the departments:

a) Storage: receiving, storing and preparing raw materials before production.

b) Production: carrying out different stages of processes in converting raw materials to competed product.

c) Maintenance: focusing mainly on the machines/tools/equipment used in Storage and Production departments.

d) Quality Control: checking the completed product to meet customer expectation/quality standard.

e) Warehouse: receiving approved completed product from production department and preparing for shipment

1. Storage department: (The boss asks you: How do you know?)

1. How many types/volume of raw materials have been received/or rejected?
2. How to ensure the quality of the raw materials meet the standard upon receipt?
3. How many/types of raw materials are issued out to production?
4. How much wastes have occurred after the raw materials are being handled before storage?
5. Any delay of shipment?
6. How the waste is kept and disposed
7. How to maintain the quality of raw materials while they are still at storage?
8. Etc, etc

2. Production department: (The boss asks you: How do you know?)

1. How many types of work-in-progress have been completed?
2. How many machines/equipment break down?
3. How many types of raw materials sent from Storage department are defective?
4. How many types of work-in-progress become defective when the whole assembly line break down?
5. How much/many types of work-in-progress become defective due to machine failure and human error?
6. How is the defective work-in-progress disposed?
7. How many types/volume of raw materials sent from Storage department?
8. How is the rejected finished goods (rejected by quality control department) handled?

Answer 1

	Question	A
1	How many types of material received/rejected	1. Type of material and quantity of material received can be ensured based on original copy of invoice and delivery challan. 2. Checking entry inward and outward at factory gate to know material received and rejected. 3. Checking of stock book register. 4. Verifying debit note for purchase return
2	How to ensure quality of raw material	1. To check finished goods produced is safe and legal 2. Checking of quality testing report 3. Production inspection to check material quality- Inspection of regular random sample. 4. Inspection of raw material 5. Checking of defective material rejected by production department 6. Checking of finished goods rejected by customer due to defective and less quality.
3	Raw material issued to production	1. Checking of raw material issue register. 2. Inward register of production department to check quantity of material received from godown. 3. Checking of store ledger account
4	How much wastage occured	1. Checking of quantity actually received and quantity as per delivery challan. 2. Inventory counted at the time of storage
5	Delay of shipment	1. Verification of supplier of raw material 2. Location form where supplier supplies raw material. 3. Ensuring of vehicle used for transportation based on details mentioned on delivery challan with details available at factory gate
6	wastage	1. Waste should be kept at different locations 2 If wastage is saleable then it should be dispose with NRV. 3. If wastage have no disposal value then it should be disposed as per government policies.
7	quality at storage	1. Properly storing of material 2. Maintenance of fire fighting equipment and cctv cameras at godown. 3. Optimal temperatures maintaining at storage 4. Timely checking of raw material
2		Production
1	How many type of WIP completed	1. Checking type. of finished goods produced. 2. Checking type of material issued for production 3. Checking no.of labours used. 4. Checking types of labour used and expenditure incurred
2	How many machine breakdown	1. Checking output produced 2. Comparing actual output with standard 3. Checking frequency of maintenance. 4. Verifying maintenance register
3	How many types of material sent is defective	1. Checking no of materials sent 2. Checking no of material rejected 3. Checking of waste items.
4	WIP when breakdown	1. Verification of no of WIP when breakdowns 2. Types of raw material issued. 3. Checking no of labours working
5	type of WIP defective when machine failure	1. Types of WIP when machine failure 2. Raw material issued when machine failure
6	How defectives disposed	1. If defectives are harmful then it should be disclosed as per rules and regulations 2. Sale at NRV if wastage have saleable value. 3. Maintaining wastage material register.
7	how many raw material issued	1. Checking of raw materials issued 2. Checking of issue register 3. Checking of store ledger account
8	how rejected goods handled	1. Ensuring reasons for rejection of goods. 2. Checking of quality requirements . 3. Inspection of goods before issue. 4. Checking of raw material quality.