Applichem

Table of Content

1. INTRODUCTION 3

2. Performance Comparison of Release Plants 5

3. Reasons for Better Performance of Some Plants 8

4.Optimization Plan 10

1. INTRODUCTION

Applichem manufactures specialty chemicals devised as solutions to specific customer's problems. It was founded in Chicago just before World Was II.

Release-ease is a specialty chemical that Applichem developed in 1952 for a customer's request to help in formulating a plastic molding compound which released easily from metal molds after compression molding. It is in the form of dry powder. The difficulty involved in cleaning stainless steel molds for plastic parts along with un-molding forms the bottle neck for the plastic manufacturing process. Release-ease helps molded plastic parts to separate out easily from the molds and ensures that the mold remains clean.

Release-ease was manufactured in four steps.

⌐ Reaction: Compression of raw materials under heat/pressure to form Release-ease. Slurry was formed. The size of particles (mentioned under suspendability) depended on the timing of introducing materials, federates etc.

⌐ Cleaning: Isolation of Release-ease particles from the slurry. This was done through th e use of a conveyor belt.

⌐ Drying: Release-ease was dried

⌐ Packing: its powder then packed

The main problem faced relates to differences in operational efficiencies between the various locations producing Release-ease. Example at their Gary (Indiana) plant 1,300 people produce about 300 million tonnes a year, while their Frankfurt facility accounts for almost 90% of this value with only 600 employees.

Applichem has 6 plants spread across US, Europe and Asia. Their performance is discussed below:

i. Gary Plant

The plant is situated in North America. Its very first manufactured product was Applichem. Most of the equipments installed for the process are more than 20 years old. It was designed to run a wide range of product formulation and package types and it is utilizing it quite well. It is running 8 formulations of Release-ease and about 80 package sizes.

ii. Canadian Plant

The plant is located in Southern Ontario. It supplies only 4 products in addition to Release-ease, so in that sense it has not been using it capacity well. The plant has been regarded for its efficiency and the quality of its product. It has a "no frills" design and has been well maintained since its inception. It uses the packaging of only 50-kilo packets.

iii. Frankfurt Plant

It supplies in Eurpe, Middle East and Africa and other Applichem plants. It has 2 processes for manufacturing Release-ease. The processes featured computer control of one process and extensive solid recovery and waste treatment. This plant bulk ships Release to other plants where the product is packaged and shipped to customers.

iv. Mexican Plant

It is similar in design to the Gary plant and manufactures 6 product families in addition to Release-ease. All its Release-ease is packaged in 50-kilo bags. The education levels of the operators are significantly below those of operators in the other plants.

v. Venezuelan Plant

It has a no frills design and no improvements have been made between 1964 and 1982. The plant has old equipment and the only dryer is in poor repair. The education levels of the operators are significantly below those of operators in the other plants.

vi. Sunchem, Japan ( joint venture)

The process had been redesigned in 1969. Some automation and waste recovery has been introduced.

Its volume was constrained by low dryer capacity. The Japanese plant processed many 1/2-kilo and 1-kilo packets.

Within Applichem, the Japanese plant was thought to be technically excellent. Employees did more development work than other plants; they have a product test laboratory, a plastics engineering lab and a workers' dormitory for single men. There was awareness for environmental protection.

2. Performance Comparison of Release Plants

An evaluation of the factories is necessary for Applichem to comprehend its operations and identify the weak spots within. Although the plants are not alike, they cater to the needs of specific markets. The factors that are varying are

⌐ Level of technology from state of the art technology to old,

⌐ Age of machinery

⌐ Skill levels of workers too vary from plant to plant.

The performance of the plants can be measured by many parameters and all these parameters should be seen separately as there are lots of constraints for few plants. Due to these plants the comparison of performance of the plants becomes very difficult. Here are few bases on which the performance of the all six release plants can be compared.

2.1 Comparison of Manufacturing Cost

Manufacturing cost for each of the six plants is shown in the table-1 and also been shown the fig-1. Total cost of manufacturing consists of mainly two types of cost i.e. raw material cost and operational cost. Raw material cost is governed by many macroeconomic factors of country so performance can be measured in terms of operational cost that includes labor cost also. As it is clear from the table that operational cost at Sunchem is at top among other plants while Mexico plant has the lowest operational cost. The high operational cost at Sunchem is due to many labor constraint and other regulations like quality etc.

Cost Mexico Canada Venezuela Frankfurt Gary Sunchem

Raw Material Cost 75.05 68.70 87.29 53.00 60.83 91.86

Operation Cost 17.58 24.55 25.02 20.34 25.67 57.38

Total Manufacturing Cost 95.01 97.35 116.34 76.69 102.93 153.8

Table 1: Manufacturing Costs at Release