Daktronics Case Study Solution

Back in 2006, Daktronics faced a strong three-year growth period since 2003. To-tal sales increased by 74% from $177M to $309M. To maintain this growth, Daktronics set the goal of eliminating manufacturing and capacity constraints. Before 2006, Daktronics followed the main strategy of replication (increasing number of facilities, equipment and people). They decided to expand their first facility in Brookings and add two more (Redwood Falls and Sioux Falls). Increas-ing pressure on cost reduction led the company to think of different methods of growth management. The main problem they had to face was the scalability of the replication method. One example for this problem were the difficulties of hiring new workers for the Brooking factory due

• Order-to-Cash process is too long.
The first step of their strategy towards lean manufacturing was several trainings for manufacturing employees and top management. Additionally, Daktronics set up the “lean team“ consisting of externally trained lean manufacturing engineers and supervisors. Hence, the first lean method Daktronics used was the involve-ment of the entire workforce. These trainings were essential for changes towards lean thinking and to build the core of a lean improvement mindset.
Based on that knowledge and with the help of Pragmatek Consulting Group, Daktronics decided to implement the first lean initiative by converting the produc-tion of the LED panels from batch-and-queue to a one-piece flow line. This caused several changes and benefits on the manufacturing objectives:
Before using gravity conveyers for transporting materials, parts were moved be-tween workstations by manpowered carts (Separation of human and machine work). Hence, transportation waste times and motion, like racking and unrack-ing parts, were reduced. Also, product handling related defects are reduced due to the lower number of product handlings for non-value adding

The TQM had two major weaknesses in the batch-and-queue system: First, the long time between the occurrence of a quality issue and its de-tection which impede the search for the root cause of the quality problem. Second, the inexistence of quality testing in the production line. Due to the missing quality control stations in line, defective parts were queued at the next process step in-stead of being sent to rework (Zone control). Daktronics decided to eliminate the quality problems by the “live testing” strategy. With the help of electronic, visual and standardized work instructions and checklists (in A3 format) including in-spections in line, testing of all parts was implemented to eliminate waste of de-fects (Jidoka and Poka-Yoke). In line testing improved the First Pass Yield (FPY) rate to a maximum of more than 97.5% in five out of eight months after its implementation. As a result, the average monthly scrap cost decreased from $9,615 to $2,762 (71.3%). To evaluate Daktronics FPY rate, the following figure shows boxplots of benchmark FPY rate of different