The Hong Kong Housing Authority

Supply Chain Management

Module 4

Case Study

Unicon Concrete Products

John Bernard

April 5, 2012

Instructor: David Slichter

TABLE OF CONTENTS

TABLE OF CONTENTS 2

EXECUTIVE SUMMARY 3

ISSUE(S) IDENTIFICATION 5

ENVIROMENTAL AND ROOT CAUSE ANALYSIS 6

ALTERNATIVES AND OPTIONS 8

RECOMMENDATIONS 9

IMPLEMENTATION 10

MONITOR AND CONTROL 11

EXHIBITS 12

EXECUTIVE SUMMARY

The Hong Kong Housing Authority (HKHA) have forecasted an average of one hundred and seventy-nine blocks in each of the next four years, fifty percent of which is in precast product, or approximately eighty blocks, and needed in the first year alone. Unicon's capacity is only seven blocks, and our manufacturing methods are old and antiquated, using the most current batching manufacturing methods.

We experience long lead times with the approval process with the HKHA, which doesn't allow us to forecast what products we need to manufacture in a timely manner to support the HKHA's demands. If Unicon does not come up with a solution quickly, the industry will be opened up to manufacturers located outside of Hong Kong and Unicon will lose its competitive advantage.

The problem is not how to convince the HKHA to buy precast products, the problem is how does Unicon meet the huge demand and still remain competitive. The solution is expansion, and this is how I plan to do it.

* Add a second shift to the current day shift, doubling our current capacity

* Move to a lean manufacturing process and away from our current batch processing method. An analysis of the times involved for each step should be completed in order to determine the full impact, but estimate production of slabs and facades could double capacity further.

* Re-allocate plant space to solely produce slabs and facades and subcontract the manufacture of stairs and partition walls to an outside supplier. This doubles capacity as well, and finally

* Build an additional 5000 square meter plant expansion, in order to double capacity again. Plant will be up to full capacity by August 1998.

With these changes capacity will go from seven blocks to fifty-six block capacity at a minimum, and with experience and continuous improvement, Unicon will remain HKHA's main supplier of slabs and facades for years to come.

Described in the following report are my findings, recommendations; and plans for implementation and monitoring the results of these drastic changes. I look forward to reviewing my plans and progress with you at next month's Senior Management Meeting.

Herman Li

Deputy Managing Director

Unicon Concrete Products (H.K.) Ltd.

ISSUE(S) IDENTIFICATION

Immediate Issues:

Currently, multiple products are being produced, at very low quantities and volumes, using a batch processing method on one shift. Production of facades and slabs takes place simultaneously, but uses subcontracted workers. The Hong Kong Housing Authority (HKHA) has forecasted an average of one hundred and seventy-nine blocks in each of the next four years, of which fifty percent or approximately eighty blocks are precast and required in the first year alone. Currently Unicon's capacity is only seven blocks, and industry wide only twenty blocks capacity.

Long lead times of cast slab products and how to streamline the approval process with the HKHA to reduce the lead times and eliminate the unnecessary costs associated with the approval process, however any improvements to this process would not only benefit Unicon it would also benefit Unicon's competitors as well. This would have an affect on Unicon's competitive edge. If Unicon does not come up with a solution quickly, the industry will be opened up to manufacturers located outside of Hong Kong and Unicon will lose its competitive advantage.

How can Unicon improve its production process in order to increase it enough to meet HKHA's increased demands for the next four years? There is a need to look at the entire production process and seek more efficient way of producing facades and slabs in the volumes needed to support 80 blocks per year.

Systematic Issues:

Current government regulations prohibit the manufacture of facades and slabs outside of Hong Kong, but the regulations are being revised to permit companies outside of Hong Kong to supply these parts in 1998.

The blanket approval process with the HKHA takes time. A strategy where approved technical submissions for HKHA projects would not require review or approval by the structural engineer or government could simply be re-submitted for future project does not currently exist, and any changes to plan also require additional time for HKHA to approve them.

There are also space limitations at the Unicon plant and how the plant is organized make it difficult to increase production to meet the substantial increase in demands by HKHA. Currently, Unicon produces four different product lines, partitions walls comprise of fourty percent of Unicon's total sales, followed by slabs, facades and stairs, at thirty-four, twenty and six percent respectively.

ENVIROMENTAL AND ROOT CAUSE ANALYSIS

Precast systems provide opportunities to reduce total costs in the building assembly time, reducing the overall schedule time, and simplifying both site construction and site congestion for the General Contractors (GC). Precast construction also helps reduce the need for skilled labour. There is a shortage of skilled labour in Hong Kong because of the amount of construction ongoing. This effect is reduced if the block can be made from precast product. Precast slabs and facades are produced in a controlled environment, hence