PGDIE A: Roll No.

31-40
Operations Management

Company History
2

Dore Dore was established by Jean Baptiste in 1819

It was the world class manufacturer of fashionable

knitted products

Its hosiery division produced socks and stockings for

men, women and children & accounted for 88% of
DDs sales

Its knitwear division produced a line of children's

knitwear such as play clothes, sweaters and
nightclothes.
Dore-Dore

Contd
3

It focused on both quality and fashion

It produced hose not only under its DD

trademark, but also for famous designers.

DD commented a 30% to 40% market

share in this segment

One of DDs competitive strengths was its

superior customer service for hosiery.
Dore-Dore

Company Background
4

Dore-Dore established itself as a world class

manufacturer of fashionable knitted products.
Its hosiery division is accounted for 88% of
total DD sales.
Due to change in fashion trends, 75% of
knitwear collections changed each year.
Its hosiery line was characterized by unusual
breadth, detail, wide variety and sizes and
also impeccable fit
Dore-Dore

Market Share
5

DD was mainly selling its products through retailors

and exclusive stores like Le Printemps and Le
Galeries Lafayette.
High end segment of hosiery only accounted for 5%
in French hosiery market.
Out of which DD market share was 30% to 40%
DD share of children knitwear market is mere 0.5%.
In 1990 sales are expected to total of
250,000,000FF out of which 35% came from
exports.
Dore-Dore

Existing Scenario(1990)
6

Francois Marguet was appointed as

Director of Operations
Competitive Pressures rising labour costs
and improving service levels of the
competitors.
Challenge of what changes could be
made in the operations to strengthen
the companys competitive position.

Dore-Dore

Replenishment
7

HOSIERY:
Key factor of its customer service strategy was
immediate fulfilment of replenishment orders for
basic hosiery items.
25000-35000 SKUs were classified as replenish able
with 2 to 3 days for replenishment.
Such rapid response proved costly as they had to
hold substantial inventories of finished hosiery items
DD does not promise replenishment for fashion
hosiery. Replenishment was done only if the desired
fashion hosiery was available in stock.
Dore-Dore

Replenishment contd.
8

KNITWEAR:
DD did not offer replenishment of childrens
knitwear products. Retailers placed orders
far ahead of the season and DD delivered
orders in full at the beginning of the season

Dore-Dore

The Problem Statement

9

Designing of the products, forecasting and

preliminary production schedules were made
a full year before the delivery of finished
goods
Long lead time is often dangerous as the
apparel market segment is quite volatile in
regards to fashion and is often at the mercy
of nature
The weather dependent articles have seen a
big fluctuation in sales when there is
unusually hot summerDore-Dore
or cooler winter

The Strategy
10

Marguet started to investigate Quick

response strategies that would link
production and actual demand closely
The requisite speed and flexibility to respond
to the shifting market demand
Quick response mode involved making
demand forecasts and establishing
production schedules closer to selling
season, reducing lead times and basing
replenishment on actual sales data
Dore-Dore
Marguet thought that quick
response might

Operations-Knitwear
11

Factory Produces 37,000 pairs of hose and

2,000 childrens garments per day.
Production is achieved in two Campaigns
1) First campaign production is done on the
basis of forecast from previous year sales
data
2) Second Production is started after
receiving early orders from retailers
Long throughput time leading to slow
response to meet demand

Dore-Dore

Contd
12

Long throughput time also leading to huge

inventories carrying cost, around 20% to 25%
21000000 FF raw material
13,000,000 FF work in progress
45,000,000 FF finished goods
Fashion products making forecast more
complicated due to volatility of fashion trends
Fashion products are very important from long
term strategy point of view
Dore-Dore

Cost Structure for Hosiery

13

Material/Operation

Cost (in FF)

Raw Material

7.08

Knitting

0.99

Sewing

0.95

Ironing

0.15

Quality Control and finishing

0.72

Factory Overhead

5.80

Cost for Seconds & Closeouts

1.10

Total Manufacturing Cost

17.42 per pair

Wholesale Selling Price

30-32 per pair

Retail Selling Price

60-70 per pair

Dore-Dore

Intro: Cellular Manufacturing(Knitwear)

14

Factors that contributed to the set up of

childrens knit wear division
To experiment outside flagship hosiery line
Lesser dependence of knitwear on heavy
machinery
It was a more competitive market
The manufacturing experimentation with
childrens knit wear division was expected to
provide valuable clues for improvements in the
hosiery divisions operations
Dore-Dore

Planning and Production Cycle(Knitwear)

15

Yarn
and
Fabric
Supplier
s
(2.5
months
average
lead
time)

Knitting
(2
weeks
average
through
put
time)

Dyeing
(5
weeks
average
lead
time)

Cutting
(1 week
average
through
put
time)

Dore-Dore

Sewing
and
Finishin
g
(3
weeks
average
through
put
time )

Production Details
(Knitwear)

16

80% of knit wear production was sold under Dore-Dore label

while remaining 20 % was divided between two other private
channels, Chantal de Thomas & Monde des Enfants
The average production batch size in sewing was 200 pieces
of the same style and colour, with an average of 8 different
sizes within a batch.
The knit wear sewing room had 55 sewing machines installed
and was staffed by 42 workers. The additional machines were
either speciality machines used for occasional operations or
extra machines used in periods of peak demand.
The knit wear factory was currently organised by machine
type. Batches of partially-completed product were moved in
wheeled bins by floor supervisors or material handlers to next
required operation.

Dore-Dore

Cellular Manufacturing
System

17

Sewing an average garment took only 10

minutes while it took 3 weeks for a garment to
pass through all the operations.
This discrepancy led to the introduction of
cellular manufacturing system by the firm.
In the new system a group of cross trained
workers operated a small cluster of machines
to manufacture a family of similar items.
The groups were autonomous managing their
own time, distribution of work and work flow
Dore-Dore

Cell Design

18

Six peoples and 12 sewing machines were

assigned to the cell
Machines had different sewing capabilities
Cost of machines for knit wear ranging from
30000FF-80000FF
All cell workers are cross trained and
encouraged to act autonomously with regard to
work methods
Worker may move to another machine within
cell to continue working.
Batches were split within the cell and garments
passed from operation to operation
as
Dore-Dore

19

The cell configuration:

Originally designed in horseshoe shape.
According
to workers, there is two
drawbacks of this shape, flow is only
unidirectional and lack of communication
between workers.
Workers implemented new shape of cell
but it is difficult to adapt to new style.

Dore-Dore

20

Advantages :
Quick replacement and repairing of broke down
machine.
Replacement might also require set up period of
5 to 10 minutes only.
Workers in the cell balanced their work
Efficiency were increased.
Inventories were reduced.
Batch flow through the cell made as quick as
possible and moves without need of supervisors.
Dore-Dore

Cell Results
21

Throughput time dropped from 15

to single
working day
Defect rate drop from 5 to 2.5%
Motivation among the workers is well maintained
New system is more suitable to handle smaller
batch sizes
Second cell of 6 workers is organized
Cross
training was provided by first line
supervisors
Planned to have a total of 7 cells for Knitwear
sewing operation

Dore-Dore

22

First Line supervisor

With the new cell manufacturing structure first line
supervisors now have a minimal role to play
Supervisor began to cross train workers in variety
of sewing operation
Cell Decision Making
Workers were provided with training to solve
relationship problems among workers
With increased loyalty among cell members ,
workers began to shorten their leaves and are more
focused on their work
Dore-Dore

Childrens Knitwear Division

23

1
2
3
4
5
6
7
8

MLT
Labor content
Capacity
Production
% Utilization
WIP
No. of sewing machines
required
Average Capital cost

9
10
11

Defect Rate
Batch Sizes
Supervisors

Previous layout
15 days
10 min
2016 units
2000 units
99.2
30000 units
55

Cellular layout
1 day
10 min
2016
2000 units
99.2
2000 units
12*7 = 84

55
*
60,000
=3,300,000
5%
Large Batches
Material Movement,
Handle conflict

84*60,000= 5,040,000

Dore-Dore

2.5%
Smaller Batches
Not essential

Operations- Hosiery Division

24

Dyed
Yarn

Rejected
after QC

Dyer

Central Factory at
Gres (Handles 200
ton raw material
inventory)
Knitti
ng
Gres
Knitting
floor

1 out of 11
knitting
shops

365 styles/season
35,000 annual
SKUs
Batch Size:- 120
pairs (same size,
color; different
size)

Dore-Dore

Dore-Dore
Batch Throughput time:- 2-3 weeks
Labour content/pair = 1-4 minutes; effective time per batch = (120*3)/60 = 6 hrs
Good ergonomics; only women workers (107)
QC followed by packaging (1st floor)
Embroidery (13 workers) (location: Basement)

Laundry, a prerequisite (4 workers)

Batch Throughput time:- 1 week
Actual Production time per pair = 1 min, implies effective time per batch = (120*1)/60 = 2hrs
Only men workers (20), difficult ergonomics hot steamy , noisy room
10-15 ft. high machines
Location:- Basement
Batch Throughput time:- 1 week
Actual Production time per pair = 1 min, implies effective time per batch = (120*1)/60 = 2hrs
Poor ergonomics
Heavy Yarn:- Automatic; Light yarn: Blind loop process
Only female workers (92)
Location: Ground floor
Batch Throughput time:- 1 week
Actual Production time per pair = 6-8 mins, implies effective time per batch = (120*7)/60 = 14 hrs
Automatic machines produced knitted tubes
Centrally programed Designs onto cassettes, only men workers
Reprogram time:- few minutes
Setup /recalibration time :-1 hr 2 days
24*7 operations
0.6% defects + 10%) second quality product

QC+
packaging/
Embroidery

Ironing

Toe
Closing

Knittin
g

25

Operation Sequence

26

Proposal for Autonomous

Groups in Hosiery
Manufacturing

Claude Enfert, Director of Manufacturing of the

hosiery division, believed that if total manufacturing
throughput time fell to one week, finished goods
hosiery inventory would drop 30-40%
Then he envisioned a one day throughput time for
post knitting operations
Enfert proposed introduction of cell operations
which include all the three activities after knittingclosing the toe, ironing and quality control/finishing
All the three activities would be grouped in a single
room which forms a cell

Dore-Dore

27

Enferts proposed cell design was based on the

capacity of two ironing machines
He assigned 36 workers to a cell to balance the
capacity, which they would work as two teams of 18
each and as a whole would be capable of producing
the entire line of hosiery
He believed that teams should not be completely
cross-trained but would be specialized for a specific
task and trained for second
Enfert expected that 80% of workers time would be
spent on his specialized activity and remaining 20%
on cross-trained task

Dore-Dore

28

He also proposed that two activities, blind

loop toe closing and quality control should
not be cross-trained
Future Prospectus
Greatest constraint was the availability of
raw materials due to current flexibility of
knitwear cells
Rebuilding its computerized forecasting
systems
Limited capacity of MRP system in size
Dore-Dore
and capability to handle
35000 SKU

Enferts cell proposal

29

Dore-Dore

Hosiery Division
30

1
2

Production
Total
WIPKnitting

Previous layout
37000 pairs
including 37000x33
=1,221,000

Cellular layout
36756 pairs
36756 x 7=257,292

WIP Inventory which gets Freed up = 1221000-257292 = 963,708

pairs
Avg. WIP cost = (7.8+17.42) / 2 = 12.61 FF/pair
Money Freed Up = 12,152,357 FF

Dore-Dore

Alternate Layout
31

Dore-Dore

Alternate Layout
32

Dore-Dore

Calculations- Knitwear
33

Sewing operation
For Previous layout:
Labor content: 10 mins, Workers: 42,
Available time = 8 x 60 = 480 mins.
Capacity= 42 x 480/10 = 2016 units
Daily Output = 2000 units
Mfg Lead Time (MLT) = 3 weeks = 15 days
WIP = MLT x Daily production = 15 x 2000
= 30000 units
Dore-Dore

34

Cellular Layout
Workers= 6, labor content: 10 mins per pair
Capacity per day = 6 x 480 / 10 = 288 units
No of cells = Total number of workers / No. of workers
per cell = 42/6 = 7
Daily production capacity in sewing operation
= 7 x 288 = 2016 units per day
MLT = 1 day
WIP = 2000 units
Similarly we can modify other processes into cellular
manufacturing to decrease WIP and Inventory
Dore-Dore

Childrens Knitwear Division

35

1
2
3
4
5
6
7
8

MLT
Labor content
Capacity
Production
% Utilization
WIP
No. of sewing machines
required
Average Capital cost

9
10
11

Defect Rate
Batch Sizes
Supervisors

Previous layout
15 days
10 min
2016 units
2000 units
99.2
30000 units
55

Cellular layout
1 day
10 min
2016
2000 units
99.2
2000 units
12*7 = 84

55
*
60,000
=3,300,000
5%
Large Batches
Material Movement,
Handle conflict

84*60,000= 5,040,000

Dore-Dore

2.5%
Smaller Batches
Not essential

36

Calculations- Hosiery
Division
Previous Layout:
Knitting operation: (1 week Batch throughput time,7 days a week,
24 hrs, production time=7 min/pair)
Cycle time = 7 minutes/pair, Available time = 24 x 60 = 1440 min
Capacity = 1440/ 7 = 206 pair/machine/day
Actual production= 37000 pairs/ day on 6 days of the week
Production required from knitting operations over a week =
37000*6 =222,000
Production per day = 222000/7 = 31.715
Allowance for 0.6% defect = 31,715/0.994= 31,907
No of machines = 31907/206 = 155 knitting machines
Considering the New design setup change over time, other 11
knitting shops not running 24 hrs a day, we approximate the,
No. of Machines presently available = 180 machines
Dore-Dore

37

Closing the toe: (1 week Batch throughput time,

6 days a week, production time=1 min/pair)
Cycle time= 1 min/pair, Available time per shift =
8 hrs
Lunch + break = 30mins+15mins+15mins = 1 hr
Available time for production per shift = 7hrs
Labor content= 1 min/pair, Total labors= 92
Capacity = 92 x 7 x 60/1 = 38640 pairs
Actual production= 37000 pairs
% Utilization = 37000/38640= 95.7%
Dore-Dore

38

Ironing: (1 week Batch throughput time, 6

days/week, production time=1 min/pair,
Labor content = 15sec/pair =0.25
min/pair)
Labor content = 0.25 min/pair, Total labor
= 24
Capacity = 24 x 7 x60/0.25 = 40320 pairs
Actual production = 37000 pairs
% Utilization = 37000/40320 =91.7 %
Dore-Dore

39

Quality Control and Packaging:(2.5 week Batch

throughput time, 6 days a week)
No of workers = 120
Daily production = 37,000 pairs
Labor minutes available = 120 x 7 x 60 = 50400
min
Avg. Cycle time = 50400/37000 = 1.36 min
Total Mfg Lead Time = (5.5 weeks x 6 days) = 33
days
WIP = 33 x 37000 = 1,221,000 pairs
Annual sales = 250,000,000FF
Dore-Dore

40

Annual sales in hosiery = 250,000,000*0.88 =

220,000,000FF
Annual sales = 220,000,000/31 = 7,096,774 pairs
Raw material Inventory = (1/3) *7,096,774 =2,365,591
pairs
Given: Across both the divisions,
Avg. Raw Material inventory = 21,000,000FF
Avg. WIP inventory = 13,000,000 FF
Avg. Finished Goods Inventory = 45,000,000 FF
Cost of FG > Cost of Raw Materials + Cost of WIP
So, on assumption, Cost of FG inventory > WIP + Raw
Material Inventory

Dore-Dore

41

Cost of FG >1,221,000*(7.8+17.42)/2 +
2,365,591*7.8
> 15,396,810 + 18,451,610 FF
> 33,848,420 FF
Therefore Finished Goods Inventory = 33,848,420/
31 =1,091,884 pairs

Total inventory (WIP+ Raw Materials +FG)

=4,678,475 Pairs

Inventory Turns =7,096,774 / 4,678,475 = 1.51 times

Dore-Dore

42

Cellular Layout:
They are converting post-knitting processes
into cellular layout.
Close the toe:
7 workers, Labor content = 1 min/pair
Capacity = 7 x 420 / 1 = 2940 pairs
Quality control and packaging + Embroidery:
9 workers, labor content = 1.36 min/ pair
Capacity = 9 x 420/ 1.36 = 2780 pairs

Dore-Dore

43

Ironing Machine:
2 workers, Labor content = 0.25 min/pair
Capacity = 2 x 420 / 0.25 = 3360 pairs
Bottleneck = 2780 pairs / team = 5560 pairs/cell
No of cells = (92 + 24 + 120)/36 = 236/36 = 6.55
For 6.5 cells = 13 teams. No of workers = 234
Additional 2 members can be given to the Bottle neck ie QC of
two different Cells.
This would increase the capacity of that one particular cell by
by = 1* 420 / 1.36 = 308
The new capacity of the cell would be =5560+308= 5868 pairs
Total capacity = (5560 x 4.5) + (5868 x 2) = 36756 pairs
Dore-Dore

Hosiery Division
44

1
2

Production
Total
WIPKnitting

Previous layout
37000 pairs
including 37000x33
=1,221,000

Cellular layout
36756 pairs
36756 x 7=257,292

WIP Inventory which gets Freed up = 1221000-257292 = 963,708

pairs
Avg. WIP cost = (7.8+17.42) / 2 = 12.61 FF/pair
Money Freed Up = 12,152,357 FF

Dore-Dore

45

Thank You
Dore-Dore