Initial assessment

The left hand-side o f Figure 7.1 shows the areas o f strength and the right hand-side shows the areas o f potential improvement.

The first strength comes from principle 1, the integration o f the production and marketing functions when bidding for customer orders. Due to the small size o f the company, both the production and sales departments work on the same floor and communicate several times during the quotation process. Since the production and sales functions integrate well in responding to customer enquiries, ninety-percent o f the quotations are done very quickly. It takes one or two hours to figure out these quotations. The MD claimed that if there is a delay, it is because the company is searching for the right kind o f raw materials

u re 7 .1 : Summary - initial a ss e ss m e n t fo r C o m p a n y A us in g th e SH E N m o d e l. 5i l vS O ^ ^ !Z3

to include in the quotation. This may require one or more days. After that it will be sent straightaway to the customer by fax. Therefore it was concluded that the company is doing well in principle 1. Hence the first strength listed is an excellent response to customer enquiries as indicated by the first left-hand arrow in Figure 7.1.

The next area o f strength as indicated by the second left-hand arrow in Figure 7.1 relates to principle 4, storage issues. The company’s finished products are not stored for very long. A product will be dispatched immediately after it has entered the packing area. The storage area is small and very simple. This is because some o f the raw materials are not stored in the storage area. When raw materials arrive, they are unloaded from the wagon and will be given a stock number so that they can be placed immediately beside the machine that requires them. However materials such as tubing are placed in storage areas. The storage area is needed because it is more economical to buy a large amount o f tubing that can be used at anytime. The company is using approximately £200,000 worth o f tubing a year, which is considered a large amount for a small MTO company. However this practice is just the beginning o f the world class agenda under principle 4. More improvement is still needed in this area. As illustrated by the arrow in the diagram, the next set o f issues identified for improvement are on the proper placing o f tools and “housekeeping” which will be discussed later on in the chapter.

The flexibility o f equipment referred to in the third strength comes from principle 5, “seek simple, flexible, movable, low cost equipment in multiples” . The company has excellent flexibility o f equipment. It has more than 15 manual machines, three CNC and

1 NC machine. Manual machines are used most o f the time. Except for the CNC, all the machines are small and can be moved around when needed. CNC and NC machines are used to produce a large amount o f orders because it is quicker, more reliable and more economical than the manual machines.

The next area o f strength is that workers are able to maintain their own machines. This issue has been derived from principle 7, to “cut the startup/changeover time and improve preventive maintenance”. The sixth strength that workers are very skilled is connected to this issue as it is the level of worker expertise that enable them to carry out machine maintenance. They have mastered a range o f skills and have the ability to do jobs, which require different machines and different specifications. All the machines are continuously monitored and maintained by the workers. “Everybody is responsible for machine maintenance”, claimed the Production Manager.

The fifth area o f strength is derived from principle 8, regarding the information flow. Computerisation is o f course of great importance for the company. Much data on employee attendance, personal records, salaries, company purchasing and sales are computerised. This cuts out many internal transactions and lately more than 50% o f the office transactions were performed using computers. In terms o f “external transactions”, most quotations, drawings and specification are sent through the fax machine. Thus the fifth strength listed is good flow o f information.

The sixth area o f strength, which comes from principle 9, is on workers skills and flexibility. The workers commonly called Engineers (i.e. Miller Wright, Fitter Turner) are very skilled and expert in their area. Minor breakdowns are not a problem to the company. When the situation arises, the operators can repair their machines by themselves. The Production Manager claimed that the only major breakdown is when there is an electrical fault. The company has then to call a specialised electrician to do the job since it requires certain qualifications. Occasionally, an outside company will also be called if the breakdown has to be repaired immediately. This occurs when the workload is heavy and the machine must be available as soon as possible.

The seventh area o f strength which relates to principle 12 is on quality. Everybody in the company is responsible for quality improvement. There is no specific training given to the employees on quality. However, all shop floor members are aware o f the significance o f having high quality standards in their products. Many products are made on a sequence o f different machines so that if an operator passed non-quality work, it would affect the whole production process.

The eighth and final strength relates to principle 14, promote market/sell every improvement. The company gained accreditation to the British Standard 5750 Part 2, ISO 9002, in 1990.

The right-hand side o f Figure 7.1 presents an overview o f the improvement activities for various time periods: short-term, medium-term and long-term improvements. The first

and second issues under the short-term activities come from principle 4 in the SHEN model; proper placing o f tools and implementing the housekeeping concept. Usually a machine has its own tool storage box. And some tools are stored in the tool room. Due to improper placement, time has been wasted searching for the right tools when needed. “Sometimes we have a problem finding tools... We spend time looking for tools”, claimed the turner operator. Therefore it is essential that the tool be placed in good order, properly labelled so that it is easier to find when needed. What is needed is self-discipline among employees. This needs to be developed deliberately by the company. Tidiness is also one o f the major concerns that the company needs to improve. There is one cleaner who is responsible for cleaning the office and the shop floor. But the shop floor still looks untidy because there are many leftover small pieces o f sheet metal on the shop floor. To improve matters, the company could introduce a “self cleaning” or “housekeeping” concept. Each operator should be given responsibility to maintain the area around his machines in a clean state.

The third issue comes from principle 13, compiling data on customer needs, complaints and satisfaction. The company is constantly in touch with its customers. Any dissatisfaction which occurs is reviewed by the top management. Complaints may be with regard to product delivery, product quality or the price. Product drawings are used to locate any fault o f the products. Drawings are stored in the database as well as in file cabinets. A specific number is stamped on the drawing. When complaints occur, the company can use the drawing to trace the faults either to raw materials, delivery or the person who worked on it. “It is important because sometimes customers make complaints

about the parts which turn out to be someone else’s fault”, claimed the MD. But the company does not gather data formally. “We haven’t gathered formal data but constantly get in touch with customers”, said the MD. Hence it was concluded that the company should start collecting formal data regarding customer needs, complaints and satisfaction.

The fourth and final short-term issue relates to principle 10, to have systematic appraisal in the company. Acquiring systematic recognition can improve workers’ enthusiasm towards work. A supervisor or floor manager can play a role in the process by providing employees with performance feedback related to their job. At present the company does not have a proper means o f assessing employee performance.

The first improvement under medium-term activities is with respect to principle 7, training employees to cut the start up/changeover time. Machine set up can take from hours to minutes depending on the type o f job. There is no specific training given on this matter. It is based on many years o f experience using the machine. When asked about the possibility o f reducing the set up time, the only way employees think o f achieving this is to combine several jobs together. “Possibly to combine several orders”, said the turner. Therefore it was concluded that the company should provide proper training to employees to cut set up and flow-time.

The next issue comes from principle 10 on the variety o f low cost/no cost awards to workers. At present there are no bonuses, no incentives and no awards given to the employees. “We think techniques like displaying o f photos, monthly recognition and so

on is useless ... [but] we do a few things like inviting them to join us for party”, claimed the MD.

The third and final issue under medium-term improvement is with respect to principle 6, scheduling. In this company, the Production Manager is responsible for scheduling most o f the jobs. His main duty is to ensure that the production processes run smoothly. He prioritises and translates orders into a timetable for all employees. He does this based on his experience to determine the jobs that go to the different machines. He knows when to start the job, when to order materials, which machine is suitable, the running time and set up time needed for each job. Relying on one person to do scheduling is too risky because nobody on the shop floor can do the job as well as this person. One possibility is to have a simple computerised scheduling package for the company to assist in the scheduling process. Another possibility is to train other people on scheduling to cover sickness or holidays.

For long-term improvements, the first issue comes from principle 1, a systematic method for calculating price and delivery lead-time. Even though the company does well in this category, all quotations are done manually. The company has very little data on past quotes, in particular very little is known about the unsuccessful bids. This data could be used in marketing strategies for pricing future orders.

The second issue is the amount o f the company’s repeat business. This issue is derived from principle 2. At present, the company has a long time established continuing repeat

business with one o f the customers. In this particular case, the company may manufacture a similar kind o f product for the same customer for the next order. This trend can be seen as an attempt to ensure that the business with that particular customer is going to be continued in the future. Therefore it was concluded that the company should aim for repeat business with other customers too.

The third issue is with respect to principle 3, establishing a persistent relationship with its customer. Having continual relationships with customers can better ensure customer satisfaction, reduce misunderstanding and make the production planning process run more smoothly. Going beyond ISO 9002 certification is the next issue which comes from principle 14, promote/market/sell every improvement. At the moment the company’s highest attainment is ISO 9002. Next is having strategic planning, which as referred to in principle 11 relates to the need for future strategic planning for the company. At present the company does not have a clear plan, it is very informal: “Basically we make profit ... the long-term goal is to put ourselves in a position where we are really secure...”, claimed the MD. The sixth issue comes from principle 12 and relates to implementing appropriate performance measures. At the moment, company measurement is simply by profit and sales growth. There is nothing on due date adherence, quality standards and so on. Finally, the seventh issue under long-term improvement is benchmarking. At the moment, the company does not perform proper benchmarking. The only comparisons carried out are to ask customers about the prices o f the company’s competitors.