Pipework Plc - Business Improvement Proposal - Essay Example

? PIPEWORK PLC BUSINESS IMPROVEMENT PROPOSAL Pipework Plc Business Improvement Proposal Executive Summary PIPEWORK plc is a multinational company renowned in the United Kingdom for dealing in multi facet building materials and accessories. The company also possesses a common interest as other companies in its pursuit for maximal benefits and control of a significant percentage of the industry (Schonberger 2008, p, 636). Currently the company experiences numerous challenges in spite of its triumph in the industry. The research in this case targets the improvement of performance of the company. The main activity in this case would be the analysis of the current performance of the company to determine the current performance, requirements and the challenges (Maginn 2007, p, 288). The solution of the challenges will result following the formulations of means to transform the challenges into opportunities. The exercise targets the division of the company into sectors of performance. The difficulties will then be determined in regards to the company’s performance. Recommendations for the solution of the problems in every perspective will then be made. Eventually, assessment will be made on the recommendations to pride from more efficient mechanisms for improving the business. Introduction The fact that PIPEWORK plc is an old established UK company, it is not at its performing at its best due to various reasons. The company has challenges with lack of a succession plan that makes it look visionless. Lack of morale is a characteristic of many stakeholders hence hindering performance. Computerization of functions and departments is lacking leading to discrepancies in accounting and delivery delays. All these would be best addressed using the Business Process Reengineering. Moreover, there exist challenges with status quo who wish to maintain their status hence hindering the capacity of the company to get new technologies and managerial skills. Most of the staff and heads of department are untrained and incompetent leading to low quality products and poor service delivery. These challenges can only be best addressed by the Kaizen approach PIPEWORK plc is a UK based company that is a market leader in the pipework sector. PIPEWORK plc is divided into three divisions namely the Drainage Division, Do-it-yourself (DIY) Division and Boilers Division. Though they are operated as independent business units, with individual balance and profit sheets that are later amalgamated, the company has recorded losses with respect to the previous year’s performances (Patterson et al 2012, p, 624). This year’s turnover was ?700m with a pre-tax profit of ?35m though it is a loss compare to last year’s which was at ?900m with a pre-tax profit of ?50m. The average age of senior management staff being 56 years implies the company lacks in new managerial skills methods in the market. Lack of a succession plan by the Head of Human Resources and Divisional directors is clear indication for lack of a vision in the company. Only two divisions have staff and management appraisal procedures which are long overdue in terms of re-evaluation. In order to have a deeper establish the context for evaluation of PIPEWORK plc, it is vital to consider the vital sections considered for its maximal performance. Drainage Division Overreliance on the olden traditional way of making clay pipes using kilns leads to wastage rates due to fractures and malformation. The fractures and malformations are as a result of long time the clay takes in the kiln and the fire used. Though the engineers have recently introduced PVC pipes, PIPEWORK lacks the internal resources to develop brand new products. This has made the company incur extra costs to suppliers to help them develop a new plastic pipe making machine to facilitate the division create newfangled products appropriate for present day market. It is expensive to produce the PVC pipes alongside the clay ones. In as much as PIPEWORK has opened a major manufacturing plant in Germany with satellites in former eastern bloc countries, they have been unable to control the quality due to European funding and political machinations. In effect, this has led to high rejections on most of its imported goods. Procedures are inadequate, with the inspection function accepting many items which do not conform to specification (Imai 2007). Suppliers are clearly aware of this situation and some are exploiting the situation. The fact that PIPEWORK has 60% market share in the UK, 40% in the rest of Europe and 10% world-wide, this is not a point to celebrate as predictions indicate that these figures will dwindle due to competition from Far East producers. Do It Yourself (DIY) This division has grown briskly due to the wide range of products. Nevertheless, the division would have done better had it considered trading at retail level too. Lack of PIPEWORK branded products from this division reduces the market impact of PIPEWORK Company. Increasing competitive market with products being demand driven has brought major discrepancies on the quality levels (Patterson et al 2012, p, 110). This further compelled PIPEWORK to sub-contract companies in third world countries which has increased supply of non-conforming products. PIPEWORK is also facing threats from retail organizations bypassing PIPEWORK by placing their own contracts with third world producers. Boilers Division The division makes domestic and industrial boilers whose designs are old fashioned; a fact that has diminished turnover due to cheap and competitive boilers produced in Taiwan and Korea. There is considerable absenteeism accompanied by employee turnover (Schonberger 2008, p, 211). This is attributed to non-satisfaction caused by the repetitive nature of work coupled by a dislike of the dictatorial management style. Apart from the three divisions, corporate functions within PIPEWORK are very wanting. For instance, the purchasing department is run using traditional practices with no computerized system. The staff is poorly paid with no perks or incentives (Blowfield & Murray 2008, p, 124). All the staff including Harry Steadfast Head of the Department has no formal education having learned on the job through experience. It has a 5,000 supplier database with only 3500 doing significant work. Although Steadfast recognizes his own limitations; a fact that has strained his relationship with engineers due to wrong procurements, he is complacent since his retirement is near. This directly de-motivates his staff. They make low value orders coupled with late delivery of supplies. This function has high sickness and stress levels that even concern the Medical Officer. Many contracts with suppliers and retailers are done at their Terms and conditions of Sale and purchase respectively. The stores function shows enormous inconsistencies in stock value. Analysis has indicated that this is due to lax clerical practices. The transport function managed by Waiter Speed has poor records maintenance with most being inaccurate and/or inaccessible. Vehicles maintenance procedures are often doctored to flaw the UK and European law. In the Engineering function, though Cosmo Laing, the Group Chief Engineer is recognized by his peers, he is unapproachable more often than not works in isolation. Although the sales and marketing department has a computerized system, orders take a lot of time to be processed. The Finance and Administration department is headed by Beryl who has had no formal training though she is regarded as competent and honest (Blowfield & Murray 2008, p, 331). Clearance of invoices takes up to 79 days resulting into many invoices being paid without a reference to a copy order. There are three main systems that use a variety of incompatible softwares which are outdated. The Personnel function shows inconsistencies in pay and rewards amongst staff. Company cars are left to the discretion of each Divisional Director, who allocates on a grace and favor basis. Differentials exist within and across the Divisions for both terms and conditions of employment (Imai 2007, p, 322). The most recent case involved a 24 year old graduate earning ?18,000 per annum being recruited and given a company car and paid overtime whereas more senior members of staff were not paid overtime and were carless. Overall analysis indicated that only 5% of the total work force was exposed to any type of training in the last 18 months. The company can consider addressing the above mentioned areas that require improvement using the BPR. BPR means Business Process Reengineering. Business Process Reengineering involves changes in structures and in processes withinthe business environment. The entire technological, human, and organizationaldimensions may be changed in BPR. Information Technology plays a major role in Business Process Reengineering as it provides office automation, it allows the business tobe conducted in different locations, provides flexibility in manufacturing, permits quickerdelivery to customers and supports rapid and paperless transactions. In general it allows an efficient and effective change in the manner in which work is performed. BPR focuses on team building operations around processes and building company mentality to personnel. The objective of the technique is to build customer-orientedeffective organizations. The customer does not care if the accounting department works adequately; he wants to see his order processed as it should be. BPR is branded by three elements: the inputs, the processing of the data or materials and the outcome (Shaw & Mazur 2007, p, 200). The problematicpart of the process is processing. Business processreengineering mainly intervenes in the processingpart, which is reengineered in order to become less time and money consuming. One major disadvantage of BPR is that it may lower workers’ morale since some of them may not adapt to the BPR changes hence become overwhelmed. Just understanding how to reengineer does not ensure success (Imai 2007, p, 114). When clearly thought out and implemented properly, BPR can be a very good way to improve the success of a company. Unfortunately, many companies implement BPR as a fad, forgetting completely about the people involved. Companies that wish to use Business Process Reengineering must determine the best strategy and follow through with the objectives. BPR will not be successful if the company flagellates. It will also not be successful if the company uses BPR over and over again. The reengineering process must come from the top down – the executives must be committed and ready to promote the changes as an example for the rest of the company. Kaizen could also be used as the means for delivering the required improvements for PIPEWORK plc. Kaizen means improvement. Moreover it means continuing improvement in personal life, home life, social life, and working life (Shaw & Mazur 2007, p, 223). When applied to the workplace Kaizen means continuing improvement involving everyone - managers and workers alike (Imai 1986). Within enterprises, two major activities take place on a daily basis - Maintenance and Kaizen. Maintenance relates to following the existing standards and maintaining the status quo, Kaizen refers to improving the standards. Kaizen requires that data is gathered and analysed and the results of the analysis comprehended. A major setback with Kaizen is that it requires commitment from top management. It is also destined to fail where industrial relations are poor. Lastly, most people are sceptical about its possible benefits. From the fore-going evaluation, it would be prudent for the company to use a Kaizen-BPR approach because of a number of reasons (Imai 2007, p, 22). The challenge with lack of a succession plan, lack of morale, computerization of functions and departments and delivery delays would be best addressed using BPR. 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