Latino engineering is a manufacturing organization that sells specialized engineering equipments to companies in New South Wales, Australia. The company has 300 employees and it has been taken over by another organization. The services of Latino include designing, development, and manufacturing of equipments and they are served to industries like construction, utilities, infrastructure, and oil & gas.
An investor organization has acquired Latino Engineering a year back but the company started to face some major challenges within a year of acquisition such as a decline in the customer orders and increase in the customer complaints. Customers frequently complained about the delivery of defective or wrong equipments, poor follow ups, long turnaround time, and non-responsive team.
Because of the increasing complaints from customers, the number of orders received by the company is reducing and this is causing major concern to the company as it is affecting its bottom line profitability. The company needs to take appropriate steps to resolve issues faced by the company. The company needs an improvement in its existing processes and a solution for all the operational problems it is facing. For this, a continuous improvement plan using six sigma approaches is suggested which help the company would come out of the existing problems in the next three months by reduction of customer complaints. The six-sigma method is chosen as it effective in situations where the time available for making improvements is very less which is true for the current case. The company needs a fast improvement plan with methods that are proven to be effective and can get the company make rapid improvements. The company has already lost some of its customers and thus, if the improvements are not done fast, it would face the risk of losing more customers in near future (Dewar, et al., 2017).
Objectives of the plan include:
If the continuous improvement plan is approved, the process of execution of the plan would behind by 1st Jan 2018 and would be finished by 31st Mar 2018
Action Steps |
Milestones |
Identify root causes behind the issues |
5th Jan 2017 |
Develop proposal for continuous development using six sigma |
10th Jan 2017 |
Get approval for the continuous development |
15th Jan 2017 |
Initialize continuous development project by preparing resources for adopting six sigma |
20th Jan 2017 |
Identify activities to be completed for the continuous improvement |
25th Jan 2017 |
Get continuous improvement plan approved |
27th Jan 2017 |
Eliminate defects in equipments |
5th Feb 2017 |
Improve order management process |
20th Feb 2017 |
Improve follow up system for designing and development |
28th Feb 2017 |
Reduce turnaround time |
15th Mar 2017 |
Improve service delivery |
25th Mar 2017 |
Testing |
30th Mar 2017 |
Project Closure |
31st Mar 2017 |
The company is facing certain challenges at present that have to be managed. These include:
A continuous development plan has been made based on the principles of six sigma for the company. The plan includes root cause analysis, needs assessment, and improvement actions.
The problems that the company is facing current have resulted from specific causes at different stages of product development as explained below:
Order processing: Inefficiencies in deliveries can result from inaccuracy of data that is generated in the order management process. Some factors that can cause such an influence on the deliveries and order processing include value of products, consignment size, and delivery contracts. Some causes behind wrong or delayed deliveries could be wrong address receipt, missing address, inability to get contact details of the recipient, order entry errors, and sales order modifications (Maxwell & Mason, 2012).
Designing & development: The customers are complaining about the follow ups from the company staff during the designing and development phases. The difficulties in follow up could be a result of inefficiencies in information management which would make it difficult for the employees to keep track of order status and thus, they may not be able to resolve the queries of customers on time. Common problems that could affect information management during the designing and development phases include change control, product complexity management, and information management. These challenges have to be resolved such that the customer satisfaction is improved (George, Graham, & Lennard, 2007).
Production: There can be several causes behind production of defective products in different stages of the product development. A defect is a level of variation in a product which is not acceptable. For identifying defects, organization must have the knowledge about the acceptable limits. These limits make the measurable targets or benchmarks defined by the equipment industry. Thus, benchmarking can help identify the root causes of the defects in equipments produced. These benchmarks would be defined by expert achievers in the engineering equipment industry (Aronovich, Allain, Sommerlatte, & Collins, 2010).
Turnaround time is the time between the order receipt and product delivery to the customer. Organizational processes that add to the turnaround time include:
Following improvements are needed in the organization:
Some steps would help company resolve the issues discussed in the previous section. For establishing control over the order management, the organization needs to have a right structure in place with right people with right capabilities employed on right profiles. For this, the first thing that can be done is change of structure by centralization of the office such that a single place would be utilized for managing the complete order lifecycle. This includes management of product catalogue, pricing, and related information. With centralization in place, the company can expect to get the following benefits:
Besides these, some more steps can be taken to further make improvements in the system such as:
The continuous improvement plan would enhance the operational efficiencies of the organization and would reduce the turnaround time in the company which would enhance customer satisfaction. The company has only 3 months to make it possible. Before the improvement processes can be exercised, it is essential that the company is prepared to adapt to the new processes and thus, the project would begin with the training of employees on six sigma practices as it is the base of the development project. For implementation of the plan, the organization can take the Awareness-Motivation-Competency-Implementation approach in which first, the employees are informed to create an awareness about the changes expected in the system with the implementation of the continuous improvement processes. Once the staff is aware of what is happening and what is expected, they have to be motivated and trained to develop the needed competencies. After they are trained on six sigma practices, actual implementation of the improvement activities would be carried out. Development of competencies in people is a very important step as lack of competencies can cause a failure of the project (Peñaranda, Romero, & Molina, 2007).
Awareness: The awareness of the six sigma processes and its expected outcomes have to be created in the organization employees so that they understand how the new processes would affect their work and improve it if they learnt the new methods. Some methods that would help create awareness include suggestion boxes, poster campaigns, benchmarking results posting, newsletters, screen savers, etc (Desai & Shrivastava, 2008).
Motivation: As the improvement process would need more work to be done by the employees at the stage of learning and adoption, the senior managers need to keep their subordinates motivated so that they contribute effectively. For this, managers can use rewards and recognitions in response to the contribution from the juniors to encourage them to perform better. A complete cultural transformation would be required in the company to implement the plan and this would mean that people have to change the ways they work today which needs a high level of motivation in them (Miski, 2014).
Competency: The competencies of the employees have to be improved with trainings that would enhance the capabilities of the staff to deal with the improvement processes. The competency enhancement would also enhance the processes in the company. A strong foundation can be built which would ensure that the implementation of the continuous improvement plan is effective. Employees have not used six sigma practices earlier and thus, are not already required with necessary skills. Thus, training programs would help them develop required skills and understand the new processes for implementation of the improvement plan. The trainings of employees can be conducted on topics like waste elimination, defect identification, lean practices, DMAIC phases, designing, quality management and productive maintenance (Buonomo, 2007).
Implementation: Once the foundation for the implementation is build through training of employees on six sigma practices, the company would be ready for the execution of the activities planned for which the right environment has to be created. This would include collection of data and its evaluation such that needed improvements can be made accordingly. For this, company can use software tools that would help in tracking project activities, managing workshop information and trigger improvement processes. A monitoring and reviewing system also needs to be established such that results obtained are continuously checked to ensure that they are up to the mark (Reijns, 2010)
Six sigma practices provide a variety of methods and strategies for communication within the company between employees and outside the company between employees and customers or suppliers. Some of these methods can be used by the company for establishing communication in the improvement project such as:
Depending on the requirements of each stakeholder, appropriate communication method can be used (GE, 2016).
Conclusions
This report was prepared to present a plan for the continuous improvement of a manufacturing organization that is facing major challenges causing decline in their sales and revenues resulting form customer dissatisfaction. The objective of the plan is to identify the root cause of the problems faced by the company and develop a plan for soving them using specific methods. Some of the problems that were identified included high turnaround time; follow up inefficiencies, defective product manufacturing, and ineffective delivery processes. A continuous improving plan was suggested which would help company resolve these problems by enhancing the process cycle time efficiency and the efficiency of the system which would reduce the errors and defects in the manufacturing system. Some of the improvements suggested included change of process sequence, simultaneous execution of multiple tasks, and use of technology for tracking and processing information.
References
Aronovich, D., Allain, L., Sommerlatte, A., & Collins, E. (2010). Measuring Supply Chain Performance. John Snow, Inc. .
Buonomo, V. (2007). Lean Six Sigma for all. ASQ: Rochester Institute of Technology.
Desai, T. N., & Shrivastava, D. R. (2008). Six Sigma – A New Direction to Quality and Productivity Management. World Congress on Engineering and Computer Science (pp. 1047-1052). San Francisco, USA: WCECS.
Dewar, C., Blackburn, S., Nielsen, A. B., Irons, E., Keller, S., Meaney, M., . . . Wood, C. (2017). How do I transform my Orgnanization’s Performance? McKinsey & Company.
EYGM Limited. (2012). Revenue from contracts — the with customers — the revised proposal. E&Y.
Genesys. (2008). Customer Service Strategies for the Insurance Industry. Genesys.
George, M., Graham, P. C., & Lennard, L. (2007). Centre for Utility Consumer Law. University of Leicester.
Infibnet. (2015). Concurrent Engineering and Information System for Product Development . Infibnet.
Marden, M., & Young, R. (2015). Delivering Enterprise Value with Service Management . IDC.
Maxwell, J., & Mason, D. (2012). Issues and solutions for the retail and consumer goods industries. PWC.
MindTree. (2017). Reduced turnaround time and improved process efficiency for an insurance provider. Mindtree.
Miski, A. (2014). Improving Customers Service at IKEA Using Six Sigma Methodology. International Journal of Scientific & Engineering Research, 1712-1714.
Mitchell, P., Bradbrook, M., Higgins, L., Kunz, C. H., MacAulay, S., Steen, J., & Moran, C. (2012). Productivity in mining: now comes the hard part. EY.
Peñaranda, N., Romero, R. M., & Molina, A. (2007). Implementation of Product Lifecycle Management Tools using Enterprise Integration Engineering and Action-Research. Colombia: Tecnológico de Monterrey.
Ray, S., Das, P., & Bhattacharya, B. K. (2011). Improve Customer Complaint Resolution Process Using Six Sigma. Indian Statistical Institute.
Reijns, T. (2010). The advantages and limitations of Lean Six Sigma in process (re)design. Tilburg University.
Sarma, A. D. (2017). Follow a Structured Approach to Continuous Improvement. iSixSigma .
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