Table of Contents P1. 1 DEFINE ENGINEERING BUSINESS FUNCTIONS. 2 P1. 2 Outline the Interrelationships Between Different Processes and Functions of an Engineering Organisation. 4 Analysis techniques. 6 Action plans. 11 P1. 3 Organise Work Activities to Meet Specifications and Standards. 14 P1. 1 DEFINE ENGINEERING BUSINESS FUNCTIONS. On the whole, businesses can be very clearly defined and categorised using government and business standards. These categories include, but are not limited to: 1. Size- A company can generally be classified using the companies act 2006 as small, medium or large.
According to the Office of National Statistics (http://www. bis. gov. uk/files/file51198. pdf) the definitions of small medium and large companies are based on 3 variables- number of employees, turnover and assets. | Small| Medium| Large| Number of employees| <50| 50 < x < 250| >250| Turnover (? million)| < 5. 6| 5. 6 < x < 22. 8| >22. 8| Assets (? million)| < 2. 8| 2. 8 < x < 11. 4| >11. 4| 2. Product- manufacturing, service, agricultural. 3. Trading objectives- for profit or non-profit. An example of a not for profit company would be Oxfam, a charitable company. . Industrial Sector- primary (agriculture, mining, forestry), secondary (manufacturers), tertiary (service engineers). Some would also argue that a fourth sector now exists involving the technical support of IT equipment (the quaternary sector) 5. Ownership- Sole trader, partnership, private or public limited companies, franchise. 6. Culture- the attitudes, beliefs and values of the company. 7. Structure- how the business is organised- hierarchical, top heavy etc. With the above in mind we can now assess the organisational set up at Vehicle Safety Systems Ltd (VSS).
VSS would appear to be a medium sized company with 145 employees however their annual turnover is toward the upper end of the stated medium sized business statistics indicating that the business may be in transition from medium to large. VSS is a manufacturing company placing it firmly within the secondary industrial sector and more specifically, according to the Standard Industrial Classification for Economic Activity 2007 (SIC 2007) VSS falls into section C, sub section 29320. VSS is a privately owned limited company meaning they can sue, or be sued, on their own contracts as they are seen as a separate legal entity.
Gaining funds as a Ltd company is fairly difficult as money has to be raised using business loans, overdrafts and personal savings whereas VSS’ parent company Atlantic Research Group PLC (ARG) are a public limited company meaning raising capital is much easier as shares can be offered for sale on the stock market. As much as the previous comment is an advantage, it is equally a disadvantage as this means that the holding company can be easily taken over by somebody purchasing enough shares to become majority shareholder.
Assumptions can be made about the culture at VSS from the information we have been given but without more details assumption would be as specific as we could be. VSS was once owned by a sole trader in the form of Mr David Pegg, who later invited his 2 sons to join him on his business journey. We can assume from this that whilst the founder of the company was still involved in the business that the culture at VSS would have been very family orientated.
I believe this to be an advantage to VSS from a customer point of view as family run businesses are thought to carry a level of pride and personalisation of their services due to the emotional relationship between the shareholders and the company. This family business style culture can also be a disadvantage as family feuds can cause problems within the business and I think we would be right to assume that this may have happened at VSS due to David Pegg’s majority share holding being offered to the other family members but then ultimately being sold to ARG PLC.
ARG PLC are a publically owned limited company, that’s not to say that they are in the public sector but that their shares are offered for sale publically on the stock exchange. Advantages of being a PLC include increased means of raising capital by offering shares for sale, limited liability of the shareholders and they benefit from economies of scale due to their ability to make larger purchase orders etc. Disadvantages of such a company include the possibility that the founding owners can lose control of the majority shareholding, detailed financial eports must be produced annually and larger companies can become increasingly difficult to manage- a point that seems to be valid at VSS. Another assumption that we can make is that since the business has been trading since the 1960’s that they must have been relatively successful but recently, since ARG took majority shareholding and directed VSS to move premises, mistakes have become common and as a result complaints have followed. It is my understanding that ARG as the parent company must put strategies in place to rectify the issues at VSS- a point that I will discuss in more detail in further texts.
Another assumption we can make with regards to structure and culture is that since VSS was formed it has probably never had a restructure to increase efficiency and that there is a broad hierarchical type structure. Complaints don’t seem to reach the correct people or get dealt with efficiently and some departments seem over staffed in relation to others. Also, we can assume that there is a communication breakdown between the logistics and planning manager and the other department managers.
All the other managers are Pegg family members and have moved together to the new facility whilst the only non-Pegg manager has stayed with his team at the old facility. To me this would indicate a possible rift between departments and the potential for a ‘blame’ culture to develop within the company. An advantage that VSS now have as a company however is being part of the larger group. As ARG own other trading subsidiaries within Europe it is clear that they are trying to monopolise in the car spares industry and they have presented VSS with a readymade client in the form of the European subsidiary that they ship to.
This decreases levels of competition so that VSS should only need to maintain a quality product in order for the European sister company to keep providing the car manufacturer with the specified number of quality units. This aspect of the company is, at present, suffering as defective parts are causing complaints but with new technology during the manufacturing process or increased quality control after manufacturing is complete, these problems can be extinguished and VSS should have a safe reliable future. P1. Outline the Interrelationships Between Different Processes and Functions of an Engineering Organisation. It is clear that at VSS there are problems that need fixing. In order to implement a positive change we must first understand the root cause of the problems that are present using a variety of recommended tools. These tools include: 1. SWOT analysis. 2. Pareto analysis. 3. Ishikawa fish bone diagrams. 4. McKinseys 7 S model 5. The 5 why’s? Before we adopt any analysis tools to investigate the problems at VSS it is first important to know the inter relationship between the different business functions.
The first thing to notice is that in recent years it has been recognised that there are 9 distinct functions within a business, VSS however has only 8 business functions that don’t appear to have clear responsibilities- complaints not being dealt with the correct department for example. The 9 key functions are recognised as: 1. Finance- responsible for monitoring the flow of money within a business and shaping the company’s financial position. 2. Purchasing- this function is concerned with obtaining the raw materials and components needed to meet the production requirements. . Marketing- responsible for establishing customer needs and promoting business opportunities. 4. Sales- sales staff have direct contact with customers and potential customers to ensure all needs are met. 5. Production- All aspects concerned with making the company’s products. Roles include: labour; quality control; production planning; facility maintenance. 6. Product development- concerned with R&D. 7. Quality control- maintaining a high level of quality. 8. Stores and logistics- storing raw materials ready for production and finished products ready for shipment. . Human resources- responsibilities include wages, trades union negotiations, recruitment and training etc. Inter-relationships of departments. The table below gives a very brief idea of the level of communication and interdependency between different business functions . Shows a high level of communication. Shows a lesser level of communication- maybe a morning briefing or weekly meeting. Shows that HR have a responsibility to bridge any gaps between departments and have a high level of communication between all departments.
Although not shown on the table, finance also have an inter-relationship with every function due to wages, bonuses and financial monitoring of each department. | Finance| Purchasing| Marketing| Sales| Production| R&D| Quality| Stores and Logistics| HR| Finance| | | | | | | | | | Purchasing| | | | | | | | | | Marketing| | | | | | | | | | Sales| | | | | | | | | | Production| | | | | | | | | | R&D| | | | | | | | | | Quality| | | | | | | | | | Stores & logistics| | | | | | | | | | HR| | | | | | | | | |
Using the 9 key business functions and the inter-dependencies table above we can now start to see where VSS have made mistakes with regards to different departments roles and responsibilities and leaving stores and logistics at the old facilities. Stores and logistics should never have been segregated from Production , purchasing, sales and quality control due to the high level of inter dependency of these 5 business functions. A better option would have been to leave the laboratory department at the old unit but relocate stores along with quality to the new facilities.
When ARG PLC became majority shareholders it would have been much wiser to re-structure VSS in their own image, as is common practice in many takeover bids, before instructing the relocation of the company. ARG have other successful subsidiaries which they could use as a benchmark and adopt a more efficient business model. VSS would definitely benefit from a re-structure that better resembles the 9 key business functions- a point I shall discuss in my proposed action plan. Analysis techniques. SWOT Analysis
Swot analysis is generally used as the first tool in strategic planning. This tool focuses on key issues and uses 4 headings: Strengths; weaknesses; opportunities; and threats. This style of analysis would usually be executed in ‘brainstorming’ fashion in a board meeting with managers or shareholders. STRENGTHS(internal issues)WEAKNESSES -high demand from ready-made customer. -answerable to holding company. -well established business +brand name. -poor quality control in all areas. -in a specialist field. -communication, roles and responsibilities of depts. purpose built facility. -structure. -unreliable manual operations and storage. OPPS(external issues)THREATS -bring in automated equipment. -other companies already using automation -increase customer base. -companies stealing work due to unhappy customer. I will use the above findings when producing an action plan. Ishikawa (fishbone) diagram. MAN MACHINES METHODS
Production staff faults Lack of automation unclear department roles -Lack of training -possible lack of capital -complaints not reaching correct department -lack of morale -not enough knowledge of new tech -quality control staff are inefficient: -not enough parts lack of training and morale? unreliable quality control under staffed? complaints Moving premises poor quality parts Mis-measured products. may not be best layout – purchasing dept using unreliable sources -logistics and stores still at old unit -quality control not highlighting issue -quality control not picking up on faults – wrong numbers of orders dispatched
MOTHER NATURE MATERIALS MEASUREMENT Pareto analysis Pareto analysis uses the relatively loose 80/20 rule. That is to say the 80% of the problems in a company by resolving 20% of the highest priority issues.
Although there is probably not quite enough information in the case study to accurately prioritise the major downfalls at VSS, it is certainly clear to see that quality control is majorly lacking and from our other analysis tools above it is apparent that the unrealistic separation of production from stores and logistics are two of the major problems. It is a fair assumption to state that if these two issues were resolved that a large percentile of the complaints could be avoided.
In addition to using this Pareto analysis technique VSS would benefit from adopting a ‘Total Quality Management’ (TQM) system in order to maintain the success of the company. TQM gurus include- Juran, Crosby and Deming. Each of these gurus emphasise that quality must be adopted as a companywide policy. They say that quality involves everyone and must be managed like any other business function. Deming has studied and published documents on TQM for many years. Two of his more recognised pieces of work are the Deming chain and Demings 14 points plan. both sourced from google images. The 5 whys?
This technique is a quick way of trying to get to the root cause of a problem by starting at the problem and asking why it became apparent. The tool becomes less effective as the initial problem becomes more complex so other tools may need to be used to solve the problem more effectively. The following is an assumption made using the 5 why tool. Problem: customer complaints. Why are customers complaining about the products? Because the barcode labels are incorrectly fitted and some inflators are over tolerance on diameter dimensions. There is also a shortfall in weekly outputs and incorrect shipment quantities.
Why are the barcodes incorrectly fitted and why are inflators too large? Because the barcode labels are manually fitted whilst other companies use automated machines and inflators are not being checked before leaving for shipment. Why is weekly production down and why are under-shipments still despatched? Production line grinds to a halt waiting for supplied parts and some parts are defective so production is down. Confusion with shipments due to logistics being separated from production department. Why are we not using automation and why are inflators not being checked before shipment?
Not using automation as funds have been used for relocation and inflators not being checked before shipment as quality and stores department are geographically separated. Why are we using unreliable parts supplier? Preferred supplier of purchasing department. From the above we can assume that to reduce the numbers of complaints and rejections of products, VSS would have to: 1. Investigate supplier faults and possibly change suppliers. 2. Look at investing in automated machinery. 3. Relocate stores for greater quality management. 4. Implement more quality control with regards to tolerance and shipment quantities.
With various root cause analysis tools used we can now assemble an action plan to implement at VSS. Action plans. Short term PRIORITY| OBJECTIVE| PURPOSE| BY WHEN| RESOURCES NEEDED| WITH WHOM| COMMENTS| 1| Arrange meeting with all department heads| To discuss possible restructure and agree responsibilities of areas of work. | Within one week. | Meeting room, pens, paper, flip chart, copies of action plan. | All heads of departments. | Areas for discussion: complaints to correct department? Department roles. | 2| Arrange training for barcode labels staff. To train production staff to correctly fit barcode labels| A. s. a. p after departmental meeting. | Barcode label equipment, correct procedure handout, workstation. | Head of production and teams of production staff. | Take manageable sized teams through demonstration of procedure with production manager. | 3| Assess reliability of component supplier. | Search for new reliable component supplier. | a. s. a. p after departmental meeting. | List of local suppliers price lists, list of recent defective parts, pens, paper, meeting room. | Purchasing manager, representative from current supplier. | 4| Arrange meeting with department heads to discuss possible inefficient facility layout. | To discuss whether new facility would benefit from moving around| Within three weeks| Meeting room, pens, paper, flipchart, facility floor plans. | All department managers. | Any changes to be implemented by planning department. | Medium term action plan. PRIORITY| OBJECTIVE| PURPOSE| BY WHEN| RESOURCES NEEDED| WITH WHOM| COMMENTS| 1| Relocate stores to work closer with production, sales, purchasing and quality control. | Reduce number of quality errors due to departments being geographically separated. 6 months| Removal vehicles, new stores equipment (shelves etc), agreed location in new facility for stores| Logistics/planning manager, storesman, removal staff. | Production manager to give advice on best location for stores | 2| Re-training for quality control staff. | To ensure all quality control staff recognise problems before shipment| 6 months| External quality control training officer, training room, pens, paper, correct procedure handouts. | All quality control staff. | Training officer to recommend any further training. | 3| Implement department restructure plans. | Restructure company to become more efficient. 6-9 months| Minutes from 1st departmental meeting, action plan showing roles and responsibilities of new departments. | Company wide. | Provide company wide newsletter to inform everyone of new structure, roles and responsibilities. | 4| Carry out feasibility study to establish automation of plant. | To introduce automation to aspects of production causing errors. | 9 months| Quotations, technical data, floor plans| Production manager, finance manager, engineering manager, logistics and planning. | Look at barcode label operations initially but also other production aspects. | Long term action plan.
PRIORITY| OBJECTIVE| PURPOSE| BY WHEN| RESOURCES NEEDED| WITH WHOM| COMMENTS| 1| Implement new automation policy| Install new barcode label equipment| Within 18 months| New equipment| Production manager, external project manager, installation engineers. | External project manager hired on temp basis to oversee installation. | 2| Produce and implement new company culture of achieving excellence. | To create a positive company culture for staff and customers| 5 year plan| Meeting rooms, pens, paper, flip chart. | Companywide| Ongoing process, maybe involve external business guru to help with plans. 3| Establish TQM policies| To impose a companywide value of TQM. | 2 year plan| Meeting rooms, pens, paper, flipchart. | Initially with managers then companywide policy. | Part of the overall result of objective 2- positive company culture. | P1. 3 Organise Work Activities to Meet Specifications and Standards. With short, mid and long term action plans produced we can look in more detail at total quality management (TQM). TQM is a technique whereby quality is achieved by taking a proactive approach and not a reactive one or, more simply, not waiting for an error before trying to fix it.
Quality is closely associated with reliability and from the Deming Chain on page 7 we can see that these two attributes contribute to achieving market safety and company longevity. The Deming chain is a blueprint for success and in a global economy- quality and company success are very closely linked. As mentioned on page 7, gurus in the field of TQM include Juran, Crosby and Deming. Each emphasising that quality is important, involves everyone and needs to be managed. Implementing TQM at VSS will be a long term solution as quality is very much entwined with company culture.
Although quality control staff can report on errors or defects found it is down to the individual to see that quality is maintained in their daily work. The individual will be affected by the culture and beliefs of the company and these beliefs should seek to motivate all staff to strive for the best possible outcome. As well as implementing a new positive company culture at VSS, ARG could use one of their other successful subsidiaries as a benchmark for change. Benchmarking works by simply identifying the best in the field, copying and applying those standards and then attempting to exceed these new standards and deliver excellence.
Another method of proactively assuring customers of quality is to offer a warranty on the products. These warranties may only cover a specified time but the offer customers assurance that the company are confident enough in their product that they are willing to resolve any problems free of charge in that specified time. When embarking upon a journey of quality management an effective way to set and monitor specific objectives in using the SMART technique- Specific, Measureable, Achievable, realistic, and Time scaled.
An objective that follows SMART is more likely to succeed because it is clear (specific) so you know exactly what needs to be achieved. You can tell when it has been achieved (measurable) because you have a way to measure completion. A SMART objective is likely to happen because it is an event that is achievable. Before setting a SMART objective relevant factors such as resources and time were taken into account to ensure that it is realistic. Finally the timescale element provides a deadline which helps people focus on the tasks required to achieve the objective.
The timescale element stops people postponing task completion. http://www. learnmarketing. net/smart. htm In conclusion, we can see that VSS has currently got major problems but by root cause analysis techniques (pages 5-9) we have noticed that only a couple of specific functions need to change to eradicate a large percentile of their problems (Pareto page 7). If the short, mid and long term action plans are implemented adopting a SMART action method and VSS strives in the long term to change the key job functions and culture throughout the company that it shall once again achieve company and market success.