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Satellites and licensees : improving the Capitole 40 OEM product and process design to implement material kitting

Wageman, F.H. (2011) Satellites and licensees : improving the Capitole 40 OEM product and process design to implement material kitting.

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Abstract:Eaton Industries B.V., a supplier of electrical switch and distribution systems, sells their Capitole 40 system in both domestic and foreign markets. Foreign markets are served by OEM (Original Equipment Manufacturer) partners. These OEM partners are subdivided into: (1) satellite partners, which are Eaton property and (2) licensee partners, which are non Eaton property. Eaton Industries B.V. purchase, (if needed) produce, and supplies a range of components or all components needed for assembly. The job of the OEM partners is restricted to sell, assemble, and deliver Capitole 40 systems. As stated in the strategic goals of both Eaton Industries B.V. and the Eaton Corporation, OEM related throughput have to increase. However, the management team of Eaton Industries B.V. doubts the performance of the current OEM process and supplies. A hype in the electrical empowering business is to supply flat packs or material kits. These flat packs or material kits contribute to more efficient material handling in the assembly process. This research shows that Eaton Industries B.V. can implement material kitting to supply their OEM partners. A major problem in the current situation is that all OEM related processes are second‐class derivatives of the in‐house assembly process. In this research, we conclude that Eaton Industries B.V. should focus on minimizing the – process design – gap between in‐house assembly process and OEM (assembly) process. We recommend Eaton Industries B.V. to implement stationary material kits (one material kit contains the components needed for one panel or drawer type and one workstation) and an OEM process design that uses the same management and design policies used in the in‐house assembly process. In this process design, routing information is used to allocate components to material kits. The implementation of material kitting will affect the OEM material handling workload and the total inventory levels. We estimate the annual inventory costs to rise with € 21,000 and the annual material handling costs to decline with € 10,000. Result, it will cost Eaton Industries B.V. approximately € 11,000 on an annual basis to supply material kits to their OEM partners. This € 11,000 is less than 1% of the current Capitole 40 OEM related turnover. In this research, we conclude that Eaton Industries B.V. is capable to implement material kitting. However, just as important, we identify some barriers Eaton Industries B.V. have to overcome, in order to make the implementation of material kitting a success. The most important barriers are: (1) employees of Eaton Industries B.V. should start realizing that the in‐house assembly process and the OEM process are highly interrelated (material kitting requirements should be included in the new LVS process design), (2) the supply chain value of material kitting is unknown, this makes it impossible to state whether the implementation of material kitting will contribute to the intended goal (increase OEM related turnover), and (3) the currently ongoing project, focussing on implementation of Bid Manager and Design Automation, should strive to standardize the flow of – input – information for the processes of Eaton Industries B.V.
Item Type:Essay (Master)
Clients:
Eaton Industries B.V., Hengelo (O), the Netherlands
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:Business Administration MSc (60644)
Link to this item:https://purl.utwente.nl/essays/62853
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