FFLI FIELD INTEGRATION ASSIGNMENT 1
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Industrial Engineering
Date
Jan 9, 2024
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docx
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FIELD INTEGRATION
Assignment 1
Mukul Kainth
FC1002060
mukul.kainth2060@myflemingcollegetoronto.ca
mukul.kainth2060@myflemingcollegetoronto.ca
FC1002060
PART A
Problem Statement:
The main issue is that FFLI was started because its founder, Brett Simpson,
couldn't find good exercise machines to help him recover from a back injury. The problem they
address is the lack of advanced exercise machines for people who want to prevent injuries and recover
from them.
Company Background:
FFLI started small, making exercise machines in Toronto. The founder, Brett
Simpson, was a good golfer, and Raj Singh, a physiotherapist, helped with the fitness machines. Over
time, they expanded to sell more fitness products and provide training and certifications.
The decision of whether to "make" or "buy" in the context of FFLI (Fit for Life Inc.) should be based
on a careful analysis of various factors. Considering the information provided in the case, some
recommendations are:
The rationality behind this decision can be explained as follows:
1.
Core Competency:
FFLI's core competency and expertise lie in providing high-quality exercise
machines and fitness-related services, including coaching and training. They have established
themselves as a trusted brand in the fitness industry. Manufacturing fitness machines may not be
their core strength, and outsourcing could potentially allow them to focus on their core business
areas.
2.
Cost Efficiency:
Outsourcing manufacturing can often result in cost savings. External suppliers
may have specialized equipment, expertise, and economies of scale that can produce fitness
machines at a lower cost compared to in-house production. This can help FFLI reduce its
operational expenses and increase profitability.
3.
Scalability:
Outsourcing provides flexibility and scalability. As FFLI's business grows, they may
need to adjust production levels accordingly. Outsourcing allows them to easily scale up or down
production volumes based on market demand without the burden of maintaining a fixed in-house
manufacturing capacity.
4.
Risk Mitigation:
Manufacturing involves various operational risks, such as equipment
maintenance, quality control, and supply chain issues. Outsourcing can help transfer some of
these risks to external suppliers who specialize in manufacturing, allowing FFLI to focus on its
core business without being overly exposed to manufacturing-related challenges.
5.
Quality Assurance:
By partnering with reputable external suppliers, FFLI can ensure the quality
of their fitness machines. Experienced suppliers may have stringent quality control processes in
place, leading to higher product quality and customer satisfaction.
6.
Resource Allocation:
Outsourcing manufacturing can free up FFLI's internal resources, including
personnel, time, and capital, which can be redirected toward marketing, research, and
development, or improving their core fitness services.
7.
Focus on Value-Added Activities:
FFLI's value proposition primarily revolves around fitness
coaching, training, and other fitness-related services. By outsourcing manufacturing, they can
allocate more resources to enhance these value-added activities and provide a better experience
for their customers.
Overall, the rationality behind the Make vs. Buy decision for FFLI is to focus on their core
competencies, reduce costs, manage risks, and improve the overall quality and scalability of their
fitness machine business. This strategic move aligns with their goal of ensuring world-class fitness
coaching and steady growth.
mukul.kainth2060@myflemingcollegetoronto.ca
FC1002060
PART B
(Excel uploaded for Part B)
Part C
To create a transportation model and calculate the Total Cost of Ownership (TCO) for Fit for Life Inc.
(FFLI), we need to make several assumptions and gather data. The following is a simplified
hypothetical model and TCO calculation:
Assumptions:
1.
FFLI manufactures fitness machines and accessories in its own facility.
2.
FFLI sources raw materials and components from various suppliers.
3.
FFLI uses its own transportation for the delivery of raw materials, components, and finished
products to its distribution centres and customers.
4.
The transportation costs include fuel, vehicle maintenance, and driver salaries.
5.
The TCO analysis considers a one-year period.
6.
We will focus on a single distribution centre and a single transportation route for simplicity.
Data:
Annual transportation costs for delivering raw materials to
the manufacturing facility:
$100,000
Annual transportation costs for delivering components to the
manufacturing facility:
$50,000
Annual transportation costs for delivering finished products
to the distribution centre:
$60,000
Annual transportation costs for delivering products to
customers
$40,000
Fuel cost per mile:
$0.40
Vehicle maintenance cost per year:
$20,000
Driver salary per year:
$50,000
Number of miles travelled per year for each transportation
route:
10,000 miles for raw
materials
5,000 miles for components
6,000 miles for products to
the distribution centre
4,000 miles for customer
deliveries
Transportation Model
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mukul.kainth2060@myflemingcollegetoronto.ca
FC1002060
We will calculate the transportation costs for each route using the following formula:
Transportation Cost = (Fuel Cost per Mile x Number of Miles) + Vehicle Maintenance Cost + Driver
Salary
1.
Transportation Cost for Raw Materials
= ($0.40 x 10,000) + $20,000 + $50,000 = $4,000 +
$20,000 + $50,000 = $74,000
2.
Transportation Cost for Components
= ($0.40 x 5,000) + $20,000 + $50,000 = $2,000 +
$20,000 + $50,000 = $72,000
3.
Transportation Cost for Finished Products to Distribution Centre
= ($0.40 x 6,000) +
$20,000 + $50,000 = $2,400 + $20,000 + $50,000 = $72,400
4.
Transportation Cost for Customer Deliveries
= ($0.40 x 4,000) + $20,000 + $50,000 =
$1,600 + $20,000 + $50,000 = $71,600
Total Transportation Cost:
Total Transportation Cost = Sum of all individual transportation costs
Total Transportation Cost = $74,000 + $72,000 + $72,400 + $71,600 = $290,000
Total Cost of Ownership (TCO):
TCO includes all costs associated with transportation over the
year.
TCO = Total Transportation Cost
TCO = $290,000
This is a simplified example of a transportation model and TCO calculation for FFLI. The model and
TCO analysis would be more complex, considering multiple distribution centres, routes, suppliers,
and various cost components. It's essential for FFLI to conduct a comprehensive analysis with real-
world data for more accurate results.
mukul.kainth2060@myflemingcollegetoronto.ca
FC1002060
PART D
(EXCEL UPLOADED FOR PART D)
To evaluate the performance of suppliers for Fit for Life Inc. (FFLI), you can create a Key
Performance Indicator (KPI) spreadsheet. Here are some common supplier performance KPIs and
their formulas:
KPI 1: On-Time Delivery Rate
This KPI measures the percentage of on-time deliveries by suppliers.
Formula: (Number of On-Time Deliveries / Total Number of Deliveries) * 100
KPI 2: Quality of Delivered Goods
This KPI assesses the quality of goods received from suppliers.
You may need to establish quality criteria for this.
Formula: (Number of Acceptable Deliveries / Total Number of Deliveries) * 100
KPI 3: Lead Time Variability
This KPI measures the variability in lead times for deliveries.
Formula: Standard Deviation of Lead Times
KPI 4: Cost Variance
This KPI evaluates cost variances between agreed-upon prices and actual
costs.
Formula: (Actual Cost - Agreed Cost) / Agreed Cost * 100
KPI 5: Supplier Performance Score
This KPI combines multiple factors to provide an overall score
for each supplier.
Formula: Supplier Performance Score = (Weighted On-Time Delivery Rate + Weighted Quality of
Delivered Goods + Weighted Lead Time Variability - Weighted Cost Variance)
In this formula, each KPI is given a weight based on its importance, and these weights should add up
to 100%. You can adjust the weights to reflect the relative importance of each KPI to FFLI.
KPI 6: Supplier Ranking
This KPI ranks suppliers based on their performance score.