In today’s day and age, the biggest challenge for businesses is to gain a competitive advantage in terms of cost and quality. The lean approach can help organisations in doing so by eliminating waste. This report is based on the case study of an organisation named Australian Engineering Works Private Limited (AEW). The company deals in manufacturing plastic moulding components for telecom industries. Being in the industry for more than 30 years, it has a great reputation in the market. Having a lucrative market, the new competitors start emerging out causing serious damages to the company. In this report, the problems faced by the company has been identified and discussed by making use of a fishbone diagram, and other techniques. In addition to this, the risk management plan will be formulated by making use of the PMBOK tool. The report concludes after suggesting the leadership style for the case study.
Analysis of the case study from a broader viewpoint determines that cost and quality are two major areas where the company needs to think of. This section will determine issues by making use of seven tools, namely cause and effect analysis, check sheets, control charts, 5 why’s, 5S, Kaizen events, total quality management (Saraph, et.al, 2013).One assumption has been made while applying each tool and technique.
For the cause and effect analysis, fishbone diagram has been used to identify the factors increasing the cost of manufacturing for AEW.For this tool, an assumption is made which is that even the indirect factors contributing to the issue have been taken into consideration.Five different factors have been considered while identifying the issues contributing to the poor performance and reducing the profitability of the company and experienced employees are leaving the company and joining the new competitors (Conger, 2015). There are many issues that will be identified that would ultimately lead to the root causes. The parameters taken for the fishbone diagram are:-
AEW can make use of 5 Why technique to uncover the root cause of the aforementioned problems. It is assumed that employees are demotivated and quality is declining.There is no need for the company to carry out any data segmentation or hypothesis testing or use any statistical tool to determine the root cause (Conger, 2015). AEW needs to develop the relationship between the root causes in order to prepare a comprehensive plan. The 5 Why’s in the following case are as follow:-
Ans: Because the major clients are switching to the increasing number of new companies in the market.
Ans: Because they are offering a better quality product at a reasonable price that is lower than the price of AEW
Ans: Because of the high operating and manufacturing cost of the product. In order to sustain, the company has set a price higher than the rival firms.
Ans: Poor efficiency of the machine, low productivity of employees as experienced employees have resigned.
Ans: Machine is designed based on obsolete technology. Processes are having redundant sub-process that is consuming resources and increasing operating cost. Due to poor career growth, low motivation, and improper appraisal experienced employees are resigning.
Hence, the root cause of the problem is redundant processes, obsolete processes, and technology used in manufacturing and low employee motivation and job satisfaction.
Since the fishbone diagram clearly highlighted that the defect in the products might be affecting the profitability of the company, it is important to keep a check on a number of defective items is produced.It is assumed that machines used by the company is delivering defective products affecting the bottom line of the company.A number of defective items in customer's order might force him to switch the supplier (Kendrick, 2015). Hence, the check sheet can provide useful data to the company about this problem. It will be helpful for GM of AEW to collect the real-time data. The GM can carry out qualitative and quantitative analysis.It is recommended to the company to make use check sheet only when the required data is observable. It is a simple way of representing the number of defects in the products. The‘define’ and ‘measure’ phase of the lean six Sigma DMAIC supports the use of check sheet. If the company is planning to implement DMAIC, then it should consider this strategy.
Before using control charts, it is assumed that all the samples collected are uncorrelated i.e., they are selected randomly and are independent of each other.AEW needs to consider factors like the poor performance of machines and poor organisational structure. The output of the machine reduces with time and most of the equipment of the company are obsolete. This has increased the operating cost of the company and to cover that up, the company is charging high amount from the customers affecting the market share of the company in a lucrative market. A control chart can help in determining and monitoring the whole AEW manufacturing process variance over time. This way the company can improvise its processes and performance. Ultimately, this would result in lowering down the cost of the process.
AEW is in strong need of creating an organised, efficient, and safe workplace. For that purpose, the 5S method can be very effective for the company.It is assumed that data is collected from primary data collection method rigorously. The company is facing issues with workplace organisation, efficiency, and waste in the processes. By implementing the philosophy of 5S, a company can be able to control the cost and waste generation in the process by taking necessary steps for improving the production line (Singh, et.al, 2014). It helps in improving the visual aspects, thereby helping the workers to detect the faults in the process causing poor efficiency.
The basic assumption in this case is that majority of the results of this situation is determined by making use of small amount of causes. By making use of Pareto Analysis tool, organisation can put its focus on issues with higher potential for improvisation. AEW knows where the actual problem is and why it is undergoing declining profitability.Hence, by making efforts for those issues, organisation can resolve up to 80% of its issues. In the Pareto analysis, the diagram of relative importance of issues can be made out and progress can also be measured simultaneously.
Since it is crystal clear from the 5 why’s that the root cause is redundant processes and obsolete technology, Kaizen event method can be very effective in the case of AEW. It is assumed that using this approach, company is considering positive attitude from management and employees in desire to implement change.Being an action-oriented approach, it can be used for rapid process improvement. The best part of this process is that it provides an opportunity of problem-solving to the team working on the AEW improvement plan. In addition to this, the 5S methodology is also compatible with it. The company can map the current process of manufacturing and moulding the telecom parts, by making use of the flowchart. Once this is done, it determines the redundant processes and eliminates them, thereby saving a lot of resources from getting wasted.
AEW needs to get associated with the total quality program.It is assumed that the company will make use of the approach in short-term basis.This would help in creating a purpose for improving the products and service of the company. In addition to this, the approach emphasises on accepting the philosophy of leadership and establish the concept of teamwork. This can help in improving the employees' morale and motivation. It advocates the need for training in the organisation in order to update the workforce with new skills and carry out employee development (Conger, 2015).
One of the major aspects of management is risk analysis. In the previous section, major factors contributing to the poor competitive position of the company have been highlighted. This part of the report will determine the risks associated with the company. First of all, it is important to understand the literal meaning of risk management for better understanding. The process of risk management isthe process of determining, assessing, and monitoring the potential threats for the operations of the organisations and its profitability. In the following case of AEW, the risks have been classified in terms of organisational, technical, environmental, operation, and human resource. However, there are various category one can classify them. A risk management plan consists of organisational processes for determining the factors contributing to the root cause of the problems (Brioso,2015). If an organisation is able to control those factors, then it can control the threats. For this report, Project risk management strategies given by PMBOK have been considered. There are majorly seven processes given:-
Qualitative Risk Analysis
Plan Risk Response
Poor Management Structure
Work in Progress (WIP)
Lack of Training
Lack of Motivation
Poor efficiency and Obsoletion
Non-Compliance with ISO 9001 2000
High Negotiating Power of Suppliers
Inflation in material cost
Substitute or Recycle
High Transportation Cost
Seek Local material
From the case study analysis, it was identified that the company is facing two major challenges. The first is a loss of revenue due to an increase in competitors offering a lower price for the products to the telecom companies. The second is associated with poor employee loyalty and trust as even the experienced employees are joining the competitor firms. Hence, the company should work on its leadership style in order to enhance the employee retention rate and loyalty and gain a competitive edge in the market. It is recommended that an organisation should implement a Lean Six Sigma approach for better efficiency and quality at a low price. Thetransformational style of leadership is best suited for the following case of AEW. According to Muenjohn& Armstrong(2015), transformational leadership style can be the best option for building trust and improving the loyalty of the employees. In addition to this, leaders can be able to establish individual identification. Once the team and individual team member feels valued and trusted, they will stay loyal to the company. In addition to this, they will promote harmony within the team and organisation. Further, resource sharing is one of the aspects of such a valued team. All that is required from the management is to opt a leader that trusts the team member and their capabilities.
According to Muenjohn& Armstrong (2015), the transformational leader support the team members to carry out innovation. Such leaders prioritise trust and faith in the team members over any other aspect. Looking into the case of AEW, one of the factors for an experienced employee to join the competitors could be lack of trust and limited growth in the company. Experienced employees want their efforts to be valued and rewarded. Possibly, the company was lacking in performance evaluation of the team members and rewarding them. This has forced them to leave the company in search of career growth that they deserve. From this event, the senior management of AEW should learn that boosting the team morale and motivation are also important aspects of running a successful team. This can be done on a short-term and long-term basis. Transformational leadership style promotes a fair and transparent evaluation of performance.
Engelen, et.al, (2015) state that when a company is planning to implement six sigma initiative, the most crucial aspect of planning is zeroing down on leadership style. The transformational leadership engages the followers and helps them in their leadership development. There are 5 components of transformational leadership, namely idealised influence-attributed, inspirational motivation, and individual consideration, idealised influence-behavioural, and intellectual stimulation (IS). The transformational leader promotes the development of critical-leadership skills. Such leadership style usually assesses the current situation of the company and formulate vision accordingly in no time. A transformational leader is so competent in communicating vision properly to other leaders in the organisation and to their followers.
Hence, it had been in this report that AEW was facing the problem of declining profitability which was caused by the root problems, such as obsolete technology, number of competitors, redundant processes, and employee turnover. In this report, the problems faced by the company had been identified and discussed by making use of a fishbone diagram, and other techniques. In addition to this, the risk management plan was formulated by making use of PMBOK. The report concluded after suggesting the leadership style for the case study.
just share your requirements and get customized solutions on time
offer valid for limited time only*
someone in is bought