Problems at Mowdem Industries Limited - Case Study Example

Problems at Mowdem Industries Table of Contents Problems at Mowdem Industries 1 Table of Contents 1 Summary 1 1.0 Introduction 2 2.0 Problem identification 4 3.0 Problem analysis 6 4.0 Management areas needing address 7 5.0 Country of choice 8 6.0 Conclusion 8 7.0 Recommendations 8 Bibliography 9 Summary Employing about 200 people, Mowdem Industries Limited is a medium-sized U.K. based company which manufactures components in zinc based alloys and die cast aluminum, and also machined components in steel and non-ferrous alloys for which it acts as a sub-contractor. It also manufactures complete equipment and machines as a distinct separate company. Mowdem's service to the industry spans four decades but undercurrents of threats to its long standing has recently been felt on account of stiff competition from high quality and competitively priced machines and components that are manufactured in India, China, and some East European companies. Recently, the company has been feeling the heat from Pritchards, one of its customers, on account of their die castings which have cracked within a few days of operation, which they had procured from Mowdem. Infuriated Pritchards have triggered a panic reaction within Mowdem and this report is based on the corrective actions that are being deliberated upon by three key people at Mowdem – Mr. Tom Williams, who is the managing director of the company and happens to be the grandson of its founder, Ted Collins, Factory Manager, and Arthur Sanders, Chief Inspector. The report looks into what ails Mowdem and towards the end it recommends what the company is supposed to do in order to stay afloat in the market. 1.0 Introduction Organisation of Mowdem industries Mowdem is a limited concern, which means it must have a correct organisational hierarchy. But as is apparent from the case given, it seems the company lacks that as the discussions revolve around only three people – the managing director, the factory manager, and chief inspector. Ideally, the hierarchy must flow from board of directors to chief executive officer (CEO) and president forming its secretariat, further divided into several heads like vice president finance, human resource, vice president operations and production, vice president marketing and sales, vice president research and development (R&D) and engineering, vice president product management, information technology, quality manager, environment and safety. Background and development Technically, vice president operations and production must look into the division where the problem has arisen; and must be aided by quality manager. The former will have under its control foundry under which shift supervisors would come, then production planning, machining, finishing, maintenance, tooling under which die designing would fall. On the other hand quality manager would be controlling head of quality control, head of laboratories, and head of non-comformative quality. But what is happening at Mowdem is that only two people in the line, factory manager and chief inspector seem to be answerable for anything going wrong, while rest of the processes and controls seem to be absent. Mowdem seems to be a family-owned business as is evident from the minor details of the case and the fact that one of grandchildren of its founder occupies the seat of the managing director. Even though Mowdem is a limited company it is apparent that some traces of a family-owned business run through its functioning. Family-owned businesses, apart from exhibiting risks of ownership, are fraught with a number of drawbacks in as far as their management is concerned. One of such drawbacks manifests in Mowdem since it lacks effective control. That is probably why despite a 40-year old existence, Tom Williams seems to be relying on only the factory manager and chief inspector for quality of the products that come out of the assembly to the market, and in this case to Pritchards particularly. Otherwise, on global economic front companies like Mowdem have been the backbone that have weathered several types of ups and downs. Statistics reveal that as much as 70-90 percent of GDP per annum is contributed by companies like Mowdem that have been founded by individuals. UK's family firms are said to employ 33 percent of the population in this country and contribute as much as 30 percent to the gross domestic product. Aims and objectives Keeping in view such a background and its core strength of having gone strong for 40 years, this report’s main aim is to see what, all of a sudden, has given its client’s complaints and is it totally the relevant staff that could be made accountable for the same or complaints have their genesis in the low-cost competition brought in by similar products manufactured in China, India, and some East European companies. Typical objectives In this light the report will: i) evaluate the level of accountability in each personnel involved in supplying faulty castings to Pritchards ii) establish who in the act could be said was at fault iii) develop a possible hypothesis as to what must have been done both by factory manager and chief inspector iv) examine flaws in the production line and check if there is dearth of relevant manpower in the same, and v) determine the future course of action that Tom Williams or people must resort to 2.0 Problem identification When the Mowdem case is carefully studied it leaves little doubt about its workforce being irresponsible – reference must be particularly taken with regard to the factory manager and chief inspector. That one asks to stop die casts to Pritchards and another does not because the delivery was already running late is no justification for a bad product having been delivered to them. The two entering into a near verbal spat in front of the managing director does not seem to be a hallmark of quality workforce and also clouds the overall management of the company into one that does not seem to be having a process-driven control over its two key personnel who must be completely responsible both in practice and behaviour. In a competitive world as this it is important for companies like Mowdem to have a well-trained and productive workforce. Businesses of today have altered the fundamental system of working in almost all industries .That is on the internal front; on the external one it is important for companies to adapt to the changes in order to foster a sustainable model of business development. Pritchards has been a longtime purchaser of Mowdem products and factory manager and chief inspector should not have taken the fault in manufacturing process so lightly. Given the conversation that takes place between the three, Arthur Sanders, the chief inspector, says that he rejected them because there were cracked areas around one of the main sections on about half of the plates which were tested.” Ted Collins interrupts and says: “I told Arthur to pass them. We have only one die casting machine which is big enough, but the hydraulics went wrong, and the machine was out of operation for two days. By the time we were back in production, we were late on delivery. Although we gave the job priority and we made the batch, by the time they were inspected and the fault was discovered, the mould had been removed and another job loaded. In the past, when we found rejects, and I have let them go, there has been no trouble. We were unlucky this time.” Clearly, Mowdem had both hard as well as soft problems to handle. Firstly, a four decade old company having to rely on only one machine seems to be implausible, and secondly by Ted Collins remark it is evident that rejects were let go previously too, and there was no check from the top to ascertain why. Ted Collins also remarks that ‘they were unlucky this time’ a statement that actually goes against the ethics and functioning of a company. That a key staff would leave something on luck rather than a good business practice shows Mowdem has huge soft problems as well. That Ted Collins told Arthur Sanders to pass a reject and Arthur has to comply simply because Ted was his boss in not an ample justification to supply a client the wrong product. Arthur Sanders could anyway, and he was authorized to do so, report the matter to the managing director, even if that meant trespassing the protocol. It is evident both did not want to give up their own stands, or one actually submitted to another’s whims, and none kept a larger organisational interest in mind. Pritchards’ complaint could not have been unexpected. A conflict seems to be running perennially between Ted Collins and Arthur Sanders. This comes to the fore during their second meeting as well when they discuss certain changes that the managing director wants to get implemented. Arthur is against setting up an inspection function; instead he wants to call it a quality function. That is a good suggestion, but on this point Ted retorts back to Arthur satirically that whatever the change that comes, he would ‘anyway still be doing inspections’. Being at loggerheads with each other indicates that Mowdem has certain soft problems in hand too. Effective handling of soft organisational issues and amalgamating them with correct handling on hard issues, the strategy and business goals goes a long way in creating a motivational culture which is performance based. Under such a scenario the managing director have also had a role to play, which could have improved business results by connecting three elements successfully, strategy, people, and culture. Even though he is eying Six Sigma, the issues between Ted and Sanders seem to stay there for long. 3.0 Problem analysis Fishbone diagram The Mowdem problem can be analysed using fishbone diagram. Since the problems are pertaining to manufacturing unit, there are some fundamental blocks that can be used. These include machines, manpower, materials, methods and environment. If the problem is identified in the manufacturing segment, the diagram can move further to equipment; and in case the problem is identified in the administrative block it can move further to procedures, policies, and people. The blocks that are jotted down must only be suggestive and do not necessarily be exhaustive. Since the managing director, Ted and Arthur seem to be having differences of opinion on some points, each can analyse the problem from his stand and suggest solutions thereby. Whatever conclusions are drawn by analysing these blocks, then the results deduced can further be analysed by senior management and an appropriate plan of action can be mooted to identify the root cause of the problem so as to ensure a foolproof solution to the same. All this leads to a comprehensive cause and effect exercise which can be a guiding step towards quality management of Mowdem. In fact problem solving efforts begin where exercise comes to an end. ] 4.0 Management areas needing address Apart from analysing the root cause of the problem, there are a number of management areas that need to be addressed. These are leadership, structure, perception, motivation, team working, change, and culture. Since the overall structure of Mowdem is not clear from the case provided, any changes suggested might not be warranted. However, given that there seems to be lack of coordinated control over the processes, structure might need to be looked into. Another area of concern is leadership; lack of which had led to more infighting between the chief inspector and factory manager. This perception needs to be changed and can be done by motivating the staff by making them shareholders to success and growth. Overall change at Mowdem is essential to bring about a spirit of team working. 5.0 Country of choice Mowdem is facing stiff competition from Chinese machinery and also from other countries as discussed above. China, in fact, is riding the cheap labour bandwagon, which enables it to enter and compete in established markets in almost all segments. This is one reason why by 2020 Chinese economy is expected to rise threefold. In order to meet this challenge head-on, one of the solutions for Mowdem to reduce costs would be to shift its manufacturing base to any such a country that can offer it not only cheap labour but also cheap raw material. India could be a good choice, because of two reasons – one it has relatively cheap labour and two, it is rich in aluminum and zinc mines. 6.0 Conclusion In conclusion, Mowdem is faced with twin problem of product and people management. What has happened with Pritchards can be taken as the beginning of something that could repeat itself in future, and complicated by the reality that other countries have begun to place their products in the segment competitively and of high quality. The ideal way out of the situation for Mowdem thus would be to streamline its act, reconsider its policies and probably think of relocating its manufacturing facility to a country in which it can reduce production costs drastically. 7.0 Recommendations This report recommends Mowdem the following: i) bring about an overall culture of job sensitivity in the organization ii) streamline its existing team and incorporate stringent quality control processes iii) address both hard and soft issues iv) do a thorough fishbone analysis of root cause of problems and come up with solutions v) deliberate on relocation of its manufacturing facility to a cheap labour country to meet competition Bibliography Abilla, P. (2007). Hacking at Branches or Striking at the Root? Available http://www.shmula.com/hacking-at-branches-or-striking-at-the-root/433/. Accessed May 01 2012 China Daily. (2002). Cheap Labour Fuelling Growth. Available http://www.china.org.cn/english/48127.htm. Accessed May 01 2012 Coutts 2005 Family Business Survey: Are family businesses better prepared than other businesses to compete in the future?” Available http://www.fbn-i.org/fbn/web.nsf/b1cc337f283c9b4887256e350065237d/da86a96a5f9d4de2872575f200570bf1/$FILE/UKFBdata31108.pdf. Accessed May 01 2012 Farell D, et al (2005). McKinsey Quarterly: Beyond cheap labor: Lessons for developing economies. Available http://www.mckinseyquarterly.com/Beyond_cheap_labor_Lessons_for_developing_economies_1545. Accessed May 01 2012 Franks, Mayer & Rossi, (n.d.). “Spending Less Time with the Family: the Decline of Family Ownership in the UK”, London Business School, Available http://www.fbn-i.org/fbn/web.nsf/b1cc337f283c9b4887256e350065237d/da86a96a5f9d4de2872575f200570bf1/$FILE/UKFBdata31108.pdf. Accessed May 01 2012 Henning, M. (2004). Disadvanatages of family business ownership. Available http://bus.collins.utulsa.edu/fobi/newsletter/november2004/all_in_family_fall04.htm. Accessed May 01 2012 Herzberg, F. (1987). One More Time: How Do You Motivate Employees? Available http://www.facilitif.eu/user_files/file/herzburg_article.pdf. Accessed May 01 2012 Hammer, M., & Champy, J. (1993). Re-engineering the Corporation: A Manifesto for Business Revolution. New York: HarperBusiness. MBendi Information Services. (n.d.). Bauxite Mining in India. Available http://www.mbendi.com/indy/ming/baux/as/in/p0005.htm. Accessed May 01 2012 Read More