Planning a Performance Improvement Strategy in a Small Manufacturing Company

The object of this assignment is to produce a two year plan to implement a programme of integrated performance improvement activities in a small manufacturing company that employs about 30 people. Metal components are manufactured, and the factory is arranged around five machines in three cells according to small, medium and large components. Heat treatment and grinding and the other major operations, as well as secondary operations. The following text describes the situation on the factory prior to the implementation of a performance improvement programme. . Company History and Structure In 2000 the long-standing co-director and manager of the Company resigned, leaving the position open for one of the present staff. There were several contenders for the position, including the two office staff both of whom had worked closely with him for years and had been given management titles. Two senior and experienced shop floor staff were also contenders. The Chairman of the company was unsure that anyone of these individuals possessed the skills required for the position, and consequently established a team of managers to run the factory.

The management team consisted of the two office staff and one member of the shop floor who was elevated to ‘Works Manager’ to liase between the office and the factory. No hierarchy or line accountability was introduced. However, the Works Manager believed he was now the most senior member of staff. The office staff refused to accept this and consequently a power struggle developed. The company Chairman appeared to champion the Works Manager, however the Works Manager’s seniority was never formally acknowledged. Prior to 2000, the structure of the company was centred round the co-director.

Without any production teams or team leaders, every member of staff was directly accountable to the co-director. The lack of any intermediate line management resulted in the co-director communicating directly with every member of staff. After his departure, the company structure remained the same, however with the new management team there were now three managers who could communicate directly with any of the shop floor staff and consequently all shop floor staff were directly accountable to all three managers! 2. Production Planning The following describes the production process and the associated problems.

The production process began when a customer faxed / phoned an order to the office. The details of the order were placed on the computer system and a print out was produced with all of the order details, called a ‘works order’. If there was no raw material in stock then material was ordered and the ‘works order’ was placed in the ‘Awaiting Material’ tray in the office. When the material was delivered, or if there was material in stock, the ‘works order’ was taken from the office straight to the appropriate machine setter, where it was added to his pile of other works orders waiting to be made.

The works order stayed with the product throughout the factory. 2. 1 Prioritising Jobs The Company is a jobbing shop, and manufactures thousands of varieties of products at relatively low volumes and consequently set up times for each job take up a significant proportion, typically 50%, of production time. The sequence in which orders are manufactured greatly affects the efficiency of production. When manufacturing the Company’s products, the set up times are reduced if orders of similar sizes are produced together.

Other parameters requiring consideration include customer delivery date, secondary operations and customer importance. Unfortunately, there appeared to be little evidence that these parameters were being considered. The machine setters were prioritising their workload based on which orders would be easiest to manufacture. 2. 2 Prioritising Jobs -Effects of Customers The office staff would complete a ‘progress sheet’, providing details of the order, which was then passed to the machine setter for a delivery date.

If the order had already been made then the setter would have to search the factory for the product, with no information concerning its location. Once the order had been located then a dispatch date would be obtained from who ever was working on it at that stage. This date would then be conveyed back to the customer via the office. If the order was yet to be made then the setter would be asked to give the best date possible for that order and be obliged to put the order up next on the machine. In other words the customer was dictating the priority. . 3 Prioritising Jobs -Effects of Office Staff A machine setter was typically receiving 1 to 5 ‘progress sheets’ in a day. If a search was required to locate the order, this proved to be a very time consuming process. If the order was yet to be made he had to prioritise his work accordingly. He would receive ‘progress sheets’ from all three office staff, each saying the order in question was of top priority. The office staff may even request the machine setter cease his present manufacturing batch to commence the order in question.

The promised dates provided by the machine setters were unrealistic and unachievable. The machine setters tended to tell the customer what they wanted to hear rather than what was realistic. The machine setter received a confused and contradicting message from the office staff. His order priorities were based in this case on the demands of the office staff, each of whom reflected the level of hostility given by the customers. Typically 60% of all orders in the factory were consistently late, creating huge customer pressure and a permanent backlog. Lines Of Communication The many lines of communication between the office and the factory, and the on-going power struggle between the office staff, resulted in three independent managers passing instructions to shop floor staff without prior discussion. Each manager was unaware of instructions given by their colleagues and consequently none of the managers were aware of every activity being sanctioned. The resulting confusion on the shop floor created low morale, dissidence and very low confidence in management.

The shop floor staff instinctively wanted strong leadership and direction, without which they felt disorganised and insecure, resulting in low morale and a lack of discipline. No formal communication forum existed at the time of the co-director’s resignation. The shop floor staff were aware that important company developments were taking place, but they were not given any information and were left to make their own conclusions. These feelings of isolation and insecurity resulted in further distrust in management. 3. 1

Communication Between Shopfloor and the Office Communication between the office and the factory was chaotic. The lack of intermediate line management, such as team leaders, resulted in every shop floor problem, however minor, being highlighted directly to one of the management team. This proved to be very time-consuming for the management team and often resulted in problems being passed from one manager to the next. 3. 2 Communication on the Shopfloor A further problem was the lack of willingness from shop floor staff to contribute to problem solving.

Not only was this a direct reflection of their low morale but was also a result of there being no formal communication forums to encourage their participation in problem solving and supplying feedback to management. 4 Product Flow and Bottlenecks The flow of products through the factory was very poor with major bottlenecks at the heat treatment department and the grinding department. The unacceptable amounts of work in progress at the heat treatment and grinding departments had both a negative and positive psychological effect throughout the factory.

The machine setters felt discouraged by the work in progress ahead of them in the production line, knowing that however quickly or slowly they worked, and however urgent the order, there would still be a lengthy delay before the order was dispatched. This produced the feeling that failure to deliver products on time was inevitable and uncontrollable, and severely reduced morale amongst the machine setters. Ultimately, this resulted in the machine setters working slower with less regard for the customer. The large amounts of work in progress also lowered morale in the heat treatment and grinding departments.

Whereas the machine setters had a pile of works orders to manufacture, the heat treatment and grinding departments had large quantities of boxes waiting for completion, creating a very visible pressure. This stress was amplified in the grinding department by the fact that the majority of the work in progress was already late. The work in progress created stress amongst many staff but also gave them a sense of job security. They all believed that with plenty of work to be done, there would always be a place for them in the factory.

The notion that the was and the economic climate was very concerning. This demonstrated a real lack of awareness among operators of the cause of outstanding work; operators viewed work in progress as a reflection of customer demand 5 Teams There was inevitably little or no teamwork displayed by the shop floor personnel. In addition, there appeared to be a negative working culture where the etiquette was to work as little as possible and no harder than your colleagues. Nobody was prepared to assist a colleague outside of the boundaries they considered to be their job description.

Those who openly wasted time without rebuke were seen as setting the benchmark for acceptable behaviour. Although there were no formal communication forums, to encourage their participation in problem solving, shop floor staff occasionally made improvement suggestions to their managers. However, the staff felt that it was not their responsibility to carry out the improvements and the managers did not have sufficient time to address the suggestions. The shop floor staff believed their suggestions were being ignored and their managers were arrogant and foolish.

As a result relationships and morale declined. 6 Pay and Rewards Throughout its history the company had carried out an annual pay review for all staff. Along with many other companies, the pay reviews were initially in place to maintain pay in line with inflation. As interest rates and inflation fell to record lows the shop floor staff strongly defended their entitlement to an annual pay review. The pay reviews continued, however equal percentage increases across the company also continued as the norm.

Although there was some evidence of management intervention for the pay review of certain personnel this appeared to relate more to favouritism than performance. Across the shop floor this created the perception that not only was performance not measured, it was also not important. As a result, the shop floor staff felt powerless and unimportant resulting in very low morale. The factory was significantly under performing, creating huge pressure on the three managers. The shop floor lacked confidence in the management team and the management team believed the shop floor staff should take more responsibility for the factory’s failures.

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