Reduction of variation between the actual and target direct labor cost of Mobileye C2-170 production in integrated microelectronics, Inc. in Biñan, Laguna

Date

2011

Degree

Bachelor of Science in Industrial Engineering

College

College of Engineering and Agro-Industrial Technology (CEAT)

Adviser/Committee Chair

Marc Immanuel G. Isip

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Abstract

Integrated Microelectronics, Inc. is an Electronic Manufacturing Service (EMS) provider to some of the world’s largest Original Equipment Manufacturer (OEMs) such as Panasonic, Toshiba and Bosch. IMI Laguna, one of IMI’s plants in Philippines, offers

services such as printed circuit board assembly, flip chip assembly and products sub- assembly.

The company had a volume of 17M units and earned revenue worth approximately PhP2 billion from June 2010 to November 2010. Based on the financial statement of the company during the period, actual production cost exceeded the budget for production cost due to overshoot in the direct labor cost of the company. In line with this, the production for Mobileye was identified as the highest contributor to the variation between the actual direct labor cost and budget for direct labor cost. An average variation of 26.95% between the two was computed based on the overall direct labor cost report of IMI.This indicates that the company paid 26.95% more to direct labor in producing the same number of units for Mobileye customer. This reduced the profit of IMI in Mobileye by a total of PhP869,213.40. Thus, to address the problem, decreasing the variation between the actual and target direct labor cost of Mobileye production was the focus of the study. The assignable causes of the high variation between the actual and target direct labor cost in Mobileye production were identified using the Ishikawa diagram. CNX analysis was done to analyze the root causes. These root causes were categorized into controllable, noise and experimental factors. The recommendation for the first controllable factor identified were for the group leaders to maintain an activity monitoring sheet to identify operators who does not comply to the working hours rules of the company. Disciplinary actions based on the frequency of not following the rules were established. For the second controllable factor, requiring the operators to obtain at least three certificates on the workstations that they are certified to work on was recommended to eliminate delays caused by absent operators. On the other hand, it was recommended to add another inspection on materials which are about to enter the production area to ensure that it is still in good condition. For the last controllable factor, reorganization of the work instruction and usage of uniform symbols were recommended for clearer presentation of procedures. For the first experimental factor, it was recommended to change the sub lot size from 54 units to 43 units to reduce the move time of sub lots from one workstation to another. For the second experimental factor, improvement on the workstation design was recommended. Finally, an inventory monitoring excel sheet was proposed for the third experimental factor to regulate the actual level of inventory. Consolidation of actual and system count was also proposed to obtain an accurate shortage list of raw materials. In implementing all these recommendations, an initial cost of PhP205,479.96 will be incurred and an expected annual savings of PhP3,913,518.28 will be gained by IMI.

Language

English

LC Subject

Industry analysis, Productivity progress

Location

UPLB College of Engineering and Agro-Industrial Technology (CEAT)

Call Number

LG 993.5 2011 E66 C37

Document Type

Thesis

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