Operational Strategies and Change Management in Preston Plant - Case Study Example

Operational Strategies and Change Management Introduction The present highly complex business environment and consumer awareness has necessitated the companies to deeply concentrate on their products and its quality. The recent crisis or recession, as it is popularly known, operation management is of critical importance in such times for the survival of the company. In short, operations management is about achieving better performance in day to day activities quickly, efficiently, without errors, and at low cost. It is also essential in helping companies create reasonable improvements in the customer service and reductions in cost (Chase et al, 2006:5).1 Further the importance of operational and change management is presented with the help of analysis of Preston Plant which was bought by Rendall Graphics in March 2008 from Georgetown Corporation. 1. Significant events that occurred in Preston Plant which influenced its survival Before being acquired by Rendall Graphics, Preston Plant was going through problems mostly related to the quality of the products, which were surprisingly identified the customer, HP. The company was facing many hardships in producing quality products and no concept of control over the product operations. The existing crisis revolving around the quality of products and business operating under loss, the success would have been only possible with occurrence of certain significant events. Significant can be expresses as something which is having or likely to have some effect, influence or very important (Merriam - Webster, 2010).2 The significant events which occurred during this period are witnessed after careful review of the case study which were - Prior to this, HP, the client of Preston Plant asked the management to submit the tender for the contract to supply a new inkjet platform namely Vector Project. Concern by HP criticizing the work of Preston Plant which was not able to control the quality of its products which was depicted in the control chart prepared by HP itself for Preston plant, which shows that HP was performance of quality was closely monitored by HP though it was not done by the Plant, worked as a alarm bell for the plant management. The plant initiated new approach like daily reviews within the each production team and monthly debate on the control chart data, so that the quality of the product can be checked and processed. Tom Branton, Managing Director, employed cost reduction strategies to bring the company expenditure down by job layoffs and decision was taken to create a portfolio for the plant dedicated to new ideas in order to establish greater confidence in the future sales and an innovative ideas was 'Photowrap' for newsprint that could be re-pulped. According to Slack et al (2007:566)3 quality is consistent conformance to customers' expectations. The word 'conformance' is stressed upon to meet the specifications set by the customer, ensuring a product or service conforms to specification whereas consistent implies that conformance to specification is not an adhoc. The quality crisis could be diagnosed by reducing the gaps in cusomter specification-operation's specification, the concept specification, the quality specification - actual quality, the actual quality - communicated image which can be done through marketing operations, product/ service development, etc. As per the case study, prior to the acquisition by Rendall Graphics, the management was producing goods which met the specification on the customer, but they did not performed any control check on the product, which was eventually done by HP, which showed the loopholes in the performance of Preston Plant. Preston Plant, after being acquired by Rendall Graphic underwent massive change in the operation and management wherein the departments were asked to review the day to day performance of the operations which was later put on to debate and discussion once in a month. The result was positive as the processes were coming under control, quality levels were improving and the management was getting into quality mode of thinking and reported profit for the first time. 2. Quality of Products and processes at the Preston Plant According to Prof. David Garvin (Slack et al, 2007:565), five approaches have been identified to quality which include the transcendent approach, manufacturing based approach, user based approach, product based approach and value based approach. Quality has been defined as consistent conformance to customers' expectations (Slack et al, 2007:566). This clarifies that products should meet the consumer demand in order to be saleable in the market. Products, foremost specification, is to meet the market demand and based on this the product is designed with appropriate specifications which links market needs to organizational and technical capabilities. Conformance quality is concerned with the capability of the operations process to produce to the specified quality standard. It is pertinent to mention here that failure to meet the required quality standard will lead to the failure of the business (Galloway, 1993:148)4 which is evident in the case of Preston Plant wherein the situations arise to close down the operations. According to the case study, Hewlett Packard reported the management that product has not according to the specification set by them as inkjet paper was curling under low humidity conditions which was identified by the HP's quality personnel. Even after revising the formulation of production, there were continuous complaints regarding the quality of the product. The main problem with Preston Plant was that they were not looking into the quality problem. It is further revealed that data collected from the quality department was not used for problem solving but only a formality to look about how the things were going. Further it is revealed that changes in the operations were made without any proper discipline and control process did not exist in the company which didn't help them to understand where the problem is. The bad quality drastically hit the performance of the plant with HP expressing disquiet over the quality of products and its inability to produce the materials according the specifications set by them and also resulted in loss of contention to bid for the vector contract which was also for the HP. After the expression of disquiet by Hewlett Packard, the company threw off 64 jumbo rolls which contained products out of specification valued over $100,000. All of which was destroyed at one go and accumulating to the loss statement of the company. The quality is essential for the positive growth of the company which is evident from the case study of Preston Plant which incurred huge loss in terms of money, reputation and trusted customers that normally take good amount to build. And in order to be competitive enough in the market, it was necessary to pursue these issues and find appropriate solutions. Thus, the case study reveals that quality plays an essential part in the development of the company in building reputation and clientele in the market. 3) Achieving better performance According to Slack et al (2007:543), quality can be improved by eliminating the gaps pertaining to mismatch between the organizations own internal quality specification and the specification expected by the customer, mismatch between the product or service and the way organization has specified the quality of the product or service internally; mismatch between the actual quality of the service or product provided by the operation and its internal quality specification and eliminate the differences between the organization's external communications or market image and the actual quality of the service or product delivered to the customer. Overall quality can be improved only by following the customer's specifications and matching the products manufactured with the specifications and should monitor it till it reaches the customer with same specification as asked by the customer. In view of the present case study, Preston Plant implemented new approaches to initiate change in the operations management of the company. According to the Engineer, Preston Plant; two changes were implemented in the management where the each production team was made to conduct daily reviews using the control chart data and the same control chart data was analyzed and debated with the members of the management regarding the production, quality and other issues. This resulted in positive attitude in the production team; processes came under control, quality levels improved, and more importantly the change developed a 'quality mode' of thinking among the personnel. And in order to avoid the closure of the plant, the decision taken by Rendall Graphics, Tom Branton, Managing Director formulated three task approach to keep the company running; first by improving the quality which was already under progress, second cost cutting strategy with zero based assessment and third, a new portfolio or identity about the plant to create awareness and freshness in the market with new products. The company took a zero based assessment as part of the cost cutting strategy which resulted in 40 percent lesser people in the plant with quality department reduced to mere six employees from 22 employees two months back. The cost cutting strategy further ensured that the paper was produced as per the specifications which will minimize or eliminate the requirement of quality check. Analyzing the present case study, it is evident that Preston Plant was able to achieve considerable improvement in the quality of their products through change in their operations, strategy directed towards cost minimization and creating new identity about the company with new products; that eventually resulted in profits for the company. As stated by Galloway (1993:148) changing the culture from confrontation and division to mutual cooperation and responsibility is an essential pre-requisite to improve quality, Preston Plant management has undergone the same process through imparting new responsibilities among production teams and management. 4) Statistical Process Control (SPC) and Discussion related to the extent of control over plant (A) According to Slack et al (2007:552) statistical process control is concerned with checking a product or service during its creation Marilyn and Robert (n.d.) stated that SPC is an analytical decision making tool that enables the quality person to see whether the process is working correctly or not.5 The main purpose of the SPC is to give signal whenever there is a deviation in the process means and when item to item variability increases. It is further stated that SPC's role is to give signals and the rest action lies in the hands of operators (cimt.plymouth.ac.uk).6 The use of SPC in the production department will enable the management to make necessary changes immediately without delivering the item to the customers. In this way, conformance of the specifications of the customers regarding the product could be easily achieved without much cost. However as Slack et al (2007:552) states, significant value of SPC is not just to make checks of single sample but to monitor the results of many samples over a period of time which can be done through control chart; which looks into the process whether it is performing as it should do or is there is any deviation. With the help of SPC, firm will be able to provide items as per the specification thus minimizing the cost arising out of wastage and saving time in reproducing the same item again and again. Preston Plant, with the help of statistical process control (SPC) was able to achieve good results and control the process in the operations. (B) According the case study, Preston Plant was incurring huge losses in producing and reproducing the same item again and again consuming time and money in the process. The control chart prepared and submitted by HP revealed that the operations at the plant were out of control and its capability to produce items according to the specification was diminishing gradually. In this scenario, it was essential to achieve positive results in order to avoid the closure of the plant. Therefore the Engineer, Preston Plant implemented the changes in the production team wherein they were asked to review their daily tasks on the control which were later discussed with the management on a monthly basis. This created positive attitude among the employees and management in the plant were already thinking in the quality mode. With the help of cost cutting strategies, and new portfolio, plant was able to achieve profit for the first time and consequently a new contract was formally awarded to the plant by HP. Thus the decision to bring the plant under control was essential and strategic in terms of profit, reputation and quality. Conclusion The case study of Preston Plant reveals that quality is important for company's future in the industry. The companies should manufacture products items as per the specifications and according to the customers' expectations otherwise it will lead to complete failure. Therefore it is essential that quality should be maintained by the companies with continuous innovation in the production process. References 1. Chase R, Jacobs, F.R., Aquilano N.J., and Agarwal N.K.(2006) Operations Management for Competitive Advantage, Ed. 11, Tata McGraw-Hill, India 2. Marriam - Webster (2010) 'Significant' http://www.merriam-webster.com/netdict/significant 3. Slack, N, Chambers S. and Johnston R (2007) Operations Management, Ed. 5th, Prentice Hall, Financial Times, Spain 4. Galloway, R.L (1993) Principles of operations management, Routledge, US 5. Marilyn K.H and Robert F.H (n.d.) Introduction to Statistical Process Control Techniques, http://www.statit.com/statitcustomqc/StatitCustomQC_Overview.pdf 6. Cimt.plymouth.ac.uk (n.d) Statistical Process Control, http://www.cimt.plymouth.ac.uk/projects/mepres/alevel/fstats_ch8.pdf Read More