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John Deere Component Works

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by

Ashley Katie

on 4 December 2014

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Transcript of John Deere Component Works

John Deere Component Works
Innovation
Competitive environment that JD confronted
Fan Sum Yi
Sou Man Neong
Jian Wei Ting
Wu Cheng Ju
Huang Tse
Our Group Members
Introduction
Promotional video
established in 1837

was one of the seven full-line farm equipment manufacturers in the world

separated into three subdivisions afterwards
John Deere
John Deere Component Works
The Hydraulics Division
The Drive Trains Division
The Gear and Special Products Division
Subdivisions
The Gear and Special Products Division
Machine capabilities and operations
automatically fabricated small metal parts

Barstock was fed horizontally

Finished parts were transported
Layout
The chip and coolant recovery system

The cooling system

Rise in material's cost in 1970
Process engineering
To bring a new part into production required extensive process engineering activities

Both setups and runs had to be timed and standards established

Had to make sure they designed correctly
By Ashley Fan
B02702124
B01702116
B99305003
B99303057
B00A01305
Sales increased,
but finally declined
The collapse of farmland values and commodity prices in the 1980's
The high dollar effect
So, what did JD do?
Adjust the level
of operations
Cut cost
Separated into
three subdivisions
Existing Cost System
in 1980s
FAILED
1. Fixed rate for indirect cost

2. Cannot reflect the change in Demand

3. Cannot apply on complicated operations
SYMPTOMS
ABC System
Imperfect interim and annual report
Wrong production strategy
Suffered from loss by using past info
How to break the limitations?
Indirect cost pool
Varieties of cost drivers
Higher accuracy
,BUT?
Still have something to be considered!
Large amount of information
Labour cost
Time cost and etc.
Direct labour support
Machine operation
Machine set up
Production order
Materials handling
Part administration
General administration
DLS
Annual ACTS hours
Annual Setup hours
Annual Orders
Annual Loads
Part$’s
Value Added
Activities
Cost drivers
THE END
Thank you!
Example
Cost of product
A103
:
INFO.
Comparisons
By using existing cost system:
By using ABC system:
Direct labor

Direct material

Overhead
direct labor

Overhead
material dollars

Overhead
ACTS machine hours

$12.76*0.185=$2.36

$6.44

2.05*(0.185*$12.76)=$4.84


(0.021+0.076)*$6.44=$0.62


0.31*$27.56=8.54
TOTAL:$22.8
Direct labor

Direct material

Overhead
direct labor support

Overhead
machine operation

Overhead
machine set up

Overhead
production order

Overhead
materials-handling


Overhead
part administration


Overhead
general and administration

CON'T
$12.76*0.185=$2.36

$6.44

11.1*(0.185*$12.76)
=$2.62

($8.99+$7.61)*0.31
=$5.15

$33.76*4.2*2/8000*100=$3.54


$114.27*2/8000*100
=$2.86

$19.42*2*2/80=$0.97



$487/80=$6.09


0.91*($2.36+$2.62+$5.15+$3.54+$2.86+$0.97+$6.09)=$2.07

TOTAL:$32.1
The problem about bidding
Full transcript