The company that will be used as the case study in the Report is the Suckwell Vacuum Cleaners who manufacture and sell vacuum cleaners to the public. The company is a medium sized organization and has a strong hold in the market. The company has an annual production of the company is around 300,000 units of vacuum cleaners (Meyer, D. 2005). The company produces and markets this. The marketing price of each of the unit produced is around £40.00. Thus, the annual revenue of the company through sales is £12,000,000. But there are also a number of expenses that have to be taken into account (Van Bon J., 2002). These include the salary of the employees of the company, the manufacturing cost, and the marketing and other costs. But there are certain areas of expenses which can be controlled and avoided through certain changes in the organizational system.
The areas of concern that have been realised after looking and analysing the reports and conduction of the final annual inspection are:
Scratches were found on 340 units on the plastic bodies. The cost that the company bears is almost £ 4.00 each unit if the scratches are severe. The paint is also chipped in certain units during the assemblage stage and can lead to costs of almost £ 0.40 each unit. The numbers of reported cases were 150. Inadequate suction was reported on 120 units, and due to this the units are sold at half the price in the market. The cases of perforated bag are 130 units, the cost of replacing which is one dollar each. Missing instruction booklets were reported in 20 units and each cost £5.00 as a complimentary set of bags were supplied as goodwill gesture by the company to compensate the complaints. There were also 130 cases of broken switched that were reported and the replacing usually cost half a dollar each. Also due to the fact that fault switches caused fire in almost 200 units, the company faced complains which took almost £200.00 each to settle. This was highly costing on the company expenses. There were also reported around 12 units with no serial numbers and around 200 units were reported with complains of damaged insulation on main cables. A new serial number plate can be fitted for £0.30. The damaged insulation requires a new cable and costs £2.00.
Important/difficult matrix is used to narrow the problems vision to find the important problems according to their importance to be solved and difficulty of solving. After fitting the problems in the matrix, choose a side to solve which can be easy to solve and most important, for example, or only the most important ones and so on. However, for academic choose the bottom right area would be ideal to solve or choosing the top left for a company to solve the problems that can affect the company.
Table 1 shows the important/difficult matrix. According to the question sheet, the closest six problems to the top left area were chosen as shown in the table in yellow. The problems were fitted in the table according to their importance and difficulty, such as Missing Instructions is easy to solve because it cost only £0.05, and it's very important to be solved because it will cost £5.00 and a goodwill gesture each. Another example is Scratches on plastic body, this one is difficult to be solved because it needs rework which means repaint the body again and it costs 10% of the product price, and it's important to be solved because it costs the company £14,144 annually which is 8% of the total problems costs (8 problems)
company will faces due to the problems that have been reported and the cost of dealing with these faults in the product totals to £34,299.2. The annual revenue can be calculated as follow:
The percentage of loses because of the problems is: 34,299.2/12,000,000 x 100 = 0.3%
From table 3 it's clear that the annual cost due to problems will be double if the company continued without solving the quality problems. Because they did nothing for Perforated Bags and No Serial Number issues and they get away without any costs. But it cost the company a lot by ignoring Missing Instructions and Broken Switches.
These have to be addresses as it not only takes away from the funds of the company, but it also creates a bad name for the product and the company. These need to be addressed so as to ensure that these do not occur in the future.
The Pareto principle was first formulated by the management thinker Juran Joseph and was later elaborated by the economist Vilfredo Pareto and the principle basically states that almost 80% of the consequences stem from only 20 % of the factors. Thus, the 20% need to be focused upon (Hankins J 2001). It is also known as the 80-20 rule, where the focus is on the small factors so that the end result can be affected. This is usually followed in the problem solving methods as it is seen that 20% of the variables affect almost 80% of the problems that later emerge. Thus the areas of focus is be narrowed down and can be realised and worked upon in the brain storming session.
Table 3 shows the forecasted cost of the problems after filtering and found that the important problems to be tackled are Damaged Insulation on mains cable and perforated bag which are the problems number 8 and 4 in chart 1. The reason of that is because they have the summation of the two highest percentage of the total cost which means they take 80% of the total cost; therefore, they must be tackled as shown in chart 1. However, the most important problem is the Damaged Insulation on mains cable.
Fishbone Diagram and brainstorming:
Fishbone diagram or called as cause and effect diagram was invented by Kaoru Ishikawa so it sometimes called "Ishikawa diagram". This diagram used as a tool to identify, sort, and display possible causes of a problem or a specific quality. Graphically, it shows the relationship between problem/quality and all factors related to it. Here are the benefits of using Ishikawa diagram:
â€¢ Helps determine root causes
â€¢ Encourages group participation
â€¢ Uses an orderly, easy-to-read format
â€¢ Indicates possible causes of variation
â€¢ Increases process knowledge
â€¢ Identifies areas for collecting data
By using Ishikawa diagram with six-M's on the main problem we have, it will give even more factors that involved in the problem/quality. These six-M's are machines, man (human), measurement, methods, material, and mother nature (environment). By using this method on the main three problems in the case study (Damaged Insulation on mains cable, Perforated Bag and Broken Switch) , the factors that involved it will express as follow:
As it shows in diagram 1, 2, and 3 all the problems share several factors because they have different methods to be produced. Also, they have different machines to be assembled, and different measurement and environment. Nevertheless, they have almost the same factors in human and material because that is the basic line in manufacturing. The reason of having the third diagram is because if we conceder the last year, then it will be the biggest problem in the company due to the complaints which cost the company £40,000.
Solving main problems:
The various problems that have been interpreted during the analysis of the process of production are evaluated and then the solutions are perceived. The study of the various figures have clearly helped established that the most costly and thus the most prominent problem that is faced by the company while dealing with the various problems in the various units is that of insulation on mains cable. If the Pareto principle is applied almost 80% of the cost that is faced by the company is due to this problem. There has to be realised that the cost of replacing the mains cable and bags during the process is considerably low, but the cost of the faulty cable is rather high because it might electrocute someone and it might kill him. Thus, since the company does not produce the cables nor the bags but buys them, there has to be put into place a mechanism which looks into ensuring that the various cables and bags that are supplied are in order at the time of delivery. This would help to ensure that the cost of replacing the faulty cables and the perforated bags are avoided, by just implementation of simple steps which are not that costly. But it has to be realised that this problem is not the problem of the engineering operation department yet since it directly affects its working this has to be considered and it has to work in sync with the purchasing department to ensure that the raw material is not defected.
Solving the other problems:
The other problem that is faced by the department is at the assemblage stage where the paint is scratched or the switches are broken. To solve the problems there, the employees need to be made sensitive to these so that the problem can be avoided. There has to be realised that the damaged insulation or the suction problem that is detected have to be resolved at the assemblage stage to ensure that the units that are produced are functioning efficiently. The employees have to be sensitised to the various intricacies that are involved in the assemblage process. The missing serial numbers can also be rectified through this. Thus, the two main areas of focus that the department needs to work on are the assemblage process which is within the area of influence of the department but the other is that of receiving of the raw materials which needs to be coordinated with the other departments of security and purchase. The service delivery that the company employees has to be improved to ensure that the company does not lose money and other resources due to the lack of proper checking of the materials supplied.
In conclusion, there can be said that, it is only through the implementation of the various techniques of engineering management and organizational functioning, that the various problems that are faced by the company can be evaluated and critically analysed, and only through the identification of these various hinges can these be addressed. Thus, to ensure that there functioning of the company continues in an economic and efficient manner there has to be ensured that the departmental coordination and management is carried out in the required manner.