Case Study

Buckeye Technologies

Buckeye Technologies is a manufacturer of semiconductors for mobile consumer electronic devices, such as laptop computers, smartphones, and digital cameras. Ms. Sabina Norton has been working at Buckeye Technologies for about a year as a production manager. The volatile demand of the semiconductor industry has been an obstacle in designing an accurate production schedule. The unstable demand causes the company to carry high amounts of safety stock and incur other types of wastes. Sabina is wondering if the operation can be modified to become more efficient.

Transistors are key components used in the manufacture of a semiconductor. One of the transistors of a cell phone semiconductor is sourced from Xiang, a supplier in China, with a lead time of two months. Buckeye Technologies usually carries enough of these transistors at the plant. When it runs out of them, however, they experience high levels of workinprocess (WIP) inventory and are unable to continue with production. Although this transistor can also be obtained from several suppliers in the United States, the cost is considerable higher compared to the cost of sourcing it from Xiang.

The semiconductors for laptop computers, smartphones, and digital cameras are produced differently, so every time the company needs to produce a different type of semiconductor, the operator is required to change the setting of the production machinery. This can be time-consuming, and the company wants to be able to respond quickly to changes in demand. Sabina knows that there must be a way to reduce inventory, but at the same time, she wants to keep a flexible production schedule to keep up with the fastpaced environment and the volatility of the demand.

Sabina has also noticed that the current design of the facility is not very efficient. Currently, the facility production system is grouped by function, and components move from function to function. There are about 350 steps in producing a semiconductor chip. Some functions of the facility are located at one end of the facility, whereas other functions are at the other end of the facility. This results in long waiting times between procedures. She is thinking about changing the design of the facility to one that will give more flow to the production process.

Sabina recognizes that a number of changes must be made. She has heard of Lean as a method to reduce waste but is not sure where to begin.

Case Questions 1. What suggestions do you have for Sabina about working with suppliers, and how would you address the sourcing issue from the Chinese supplier based on Lean principles? 2. What should Sabina do about reorganizing the work environment? Should any layout changes be made, and how do you think they should be implemented? 3. How would you address the issue of equipment setup? How would you proceed? 4. What other suggestions would you offer Sabina to improve the operation of this company? In what order should these changes be made? 5. Describe the organizational culture of Lean. How can Sabina promote this at Buckeye?