Components and sub-assemblies for agriculture.

Farm Equipment International

Farm Equipment International (FEI) produces components and sub-assemblies for agriculture. Here, we are considering one product family, hydraulic control sections. These are produced in several configurations for different tractors and markets. The market for hydraulic control sections covers both original-equipment tractor assemblers and the aftermarket repair and overhaul businesses that support the agricultural industry worldwide.

As the company offers a wide variety of possible configurations, and the fact that the exact configuration each customer requires can vary from order to order, hydraulic control sections are made to order. A hydraulic control lever currently takes 27 days to go through the factory. This production lead time and a large order backlog have resulted in FEI to quote a 60 day lead time to customers. Unfortunately, FEI’s original-equipment customers can not predict their exact requirements more than 2 weeks before use. As a result they make frequent changes to the detail of their orders 2 weeks before delivery. These changes lead to frequent expediting of batches at the FEI factory.

Production Control at FEI releases customer orders to the factory approximately in the sequence that they are received, the shop floor supervisors and operators “batch” the orders together by configuration in an attempt to reduce the number of changeovers. This also leads to expediting of orders.

The product

 A hydraulic control section is a metal tube with a cast connector welded to each end.

 Hydraulic control sections are available in 30 different lengths, 3 diameters, and with 2 different types of connectors. Each end of a hydraulic control section can have a different connector. This means that FEI can potentially supply 360 different finished hydraulic control sections. It is not known what the demand for each individual specification is.

Customer requirements

 24000 hydraulic control sections per month.

 Order size varies from 20 pieces up to 200 pieces. Average order size is 50

pieces.

 5 hydraulic control sections per box.

 Several shipments each day by truck to different customers.

 Each order from each customer varies in quantity and configuration.

 FEI requires orders to arrive 60 days before shipping of finished hydraulic

control sections.

 Customers may change the mix of configurations up to 2 weeks before the

shipping date.