Hill’s Automotive

Hill’s Automotive, Inc., is an aftermarket producer and distributor of automotive replacement parts. Art Hill has slowly expanded the business, which began as a supplier of hard-to-get auto air- conditioning units for classic cars and hot rods. The firm has limited manufacturing capability, but a state-of-the-art MRP system and extensive inventory and assembly facilities. Components are purchased, assembled, and repackaged. Among its products are private-label air-conditioning, carburetors, and ignition kits. The downturn economy, particularly the 'company ’s discretionary segment, has put downward pressure on volume and margins. Profits have fallen considerably. In addition, customer service levels have declined, with late del ivories now exceeding 25Rc of orders. Ariel to make matters worse, customer returns have been rising at a rate of 39c per month.

Wally Hopp, vice president of sales, claims that most of the problem lies with the assembly department. He says that although the firm has accurate bills of materials, indicating what goes into each product, it is not producing the proper mix of the product. He also believes the firm has poor quality control and low productivity, end as a result its costs are too high.

Melanie Thompson. treasurer, believes that problems are due to investing ie the wrong inventories. She thinks that marketing has too many options and products. Melanie also thinks that purchasing department buyers have been hedging their inventories and requirements with excess purchasing commitments.

The assembly manager, Kalinga Jagoda, says, “The symptom is that we ha e a lot of parts in inventory, but no place to assemble them in the production schedule. When we have the right part, it is not very good, but we use it anyway to meet the schedule.”

Marshall Fisher, manager of purchasing, has taken the stance that purchasing has not let Hill’s Automotive down. He has stuck by his old suppliers, used historical data to determine...