Amgis Case Analysis Essay

Amgis, a flavors and food additives company has a sudden surge in production due to increase in sales and transfer of production from an affiliate. The company requires additional labor to cope with the sudden increase in production. However, strict labor laws have limited the company to hire permanent employees, and overtime employees and forced them to engage temporary labor to keep the process flowing. The company then had to make arrangements with a third party labor provider and the arrangement made between the third party labor provider and the Amigs "was supposed to help maintain the cost-effective use of casual labor by the company. Instead, Amigs was seeing an unreasonably high increase in casual labor cost." Hence, the finance and the operations team of the company were advised to control their temporary labor cost using a manufacturing leverage index as a key performance indicator which compared the temporary labor costs to the increase in production volume.
Problem Statement: "Manufacturing leverage index is calculated by subtracting the labor cost percent change from the production change percent
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Control is the last and final step of the DMAIC process. In this phase one has to standardize improvements made in the improve phase. The key outputs in this phase are standard operating procedures, financial savings, project deliverables, and tracking system. In this case, Amig 's achieved their objective of improvements in labor cost based on a clearly defined system, they created and implemented a tracking system for all improvements. For example, "To continue to optimize production quantity, the company established a minimum process quantity in the workflow system. As a failsafe, a warning message will pop up if the minimum quantity is not reached with one order; the planning team will not let incomplete orders proceed to production". Similarly, control action plans were created to develop fine policies for requesting temporary

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