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Questions
1. What changes in the work situation might account for the increase in productivity and
the decrease in controllable rejects?
2. What might account for the drop in absenteeism and the increase in morale?
3. What were the major changes in the situation? Which changes were under the control
of the manager? Which were controlled by workers?
4. What might happen if the workers went back to the old assembly line method?
3. SHEENA
Sheena had worked for the same Fortune 500 Company for most 15 years. Although
the company had gone through some tough times, things were starting to turn around.
Customer orders were up, and quality and productivity had improved dramatically from
what they had been only a few years earlier due company wide quality improvement
program. So, it comes as a real shock to Sheena and about 400 of her co-workers when they
were suddenly terminated following the new CEOs decision to downsize the company.
After recovering from the initial shock, Sheena tried to find employment elsewhere.
Despite her efforts, after eight months of searching she was no closer to finding a job than
the day she started. Her funds were being depleted and she was getting more discouraged.
There was one bright spot, though: She was able to bring in a little money by mowing lawns
for her neighbours.
She got involved quite by chance when she heard one neighbour remark that now
that his children were on their own, nobody was around to cut the grass. Almost jokingly,
Sheena asked him how much hed be willing to pay. Soon Sheena was mowing the lawns of
five neighbours. Other neighbours wanted her to work on their lawns, but she didnt feel
that she could spare any more time from her job search.
However, as the rejection letters began to pile up, Sheena knew she had to make an
important decision in her life. On a rainy Tuesday morning, she decided to go into business
for herself taking care of neighbourhood lawns. She was relieved to give up the stress of job
hunting, and she was excited about the prospects of being her own boss. But she was also
fearful of being completely on her own. Nevertheless, Sheena was determined to make a go
of it.
At first, business was a little slow, but once people realized Sheena was available,
many asked her to take care of their lawns. Some people were simply glad to turn - the
work over to her; others switched from professional lawn care services. By the end of her
first year in business, Sheena knew she could earn a living this way. She also performed
other services such as fertilizing lawns, weeding gardens, and trimming shrubbery.
Business became so good that Sheena hired two part-time workers to assist her and, even
then, she believed she could expand further if she wanted to.
Questions
A. In what ways are Sheenas customers most likely to judge the quality of her lawn care
services?
B. Sheena is the operations manager of her business. Among her responsibilities are
forecasting, inventory management, scheduling, quality assurance, and maintenance.
(a) What kinds of things would likely require forecasts?
(b) What inventory items does Sheena probably have? Name one inventory decision she
has to make periodically.
(c) What scheduling must she do? What things might occur to disrupt schedules and cause
Sheena to reschedule?
(d) What kinds of maintenance must be performed?
C. The town is considering an ordinance that would prohibit putting grass clippings at the
curb for pickup because local landfills cannot handle the volume. What options might
Sheena consider if the ordinance is passed? Name two advantages and two drawbacks of
each option.
Discussion Questions:
a) What are the different categories to classify Cost of Quality?
b) Classify these as per the categories listed above.
c) From this information put together the best case possible to impress management
that quality is important and should be stressed. Also give tentative action plan.
It is interesting to see how large automobile manufacturers differ in their opinion about
working with suppliers & standardization of parts. Consider the following.
Tadaaki Jagawa, a Toyota executive vice president said the number one Japanese
automaker received an invitation from Ford to join the Ford Internet-based marketplace,
tentatively called AutoXchange, where automakers & their suppliers hope to do business
more efficiently & cut costs. Ford & GM are in a race to build the largest online marketplace
to achieve greater economies of scale, & both are trying to woo other automakers. The two
companies have urged that creating a marketplace in which hundreds of billions of dollars
in goods & service are traded would give their suppliers access to more business globally,
allowing suppliers & manufacturers to slash costs.
Toyota considers the internet marketplace only a means to efficiency & not an end in itself,
Jagawa said. Because the procurement process involves not only the price but also the
quality, lead time, & delivery of components, Jagawa said Toyota doesnt want to put
competitive components on the open market, such as GM TradeXchange; it would go
against Toyotas philosophy of treating suppliers as partners. We help suppliers cut costs
through a guarantee of a long-term contract; putting those parts on the open market pits us
against suppliers in an adversary relationship.
Jagawa stressed that Toyota is in discussions with GM with open mind. Although it may
mean Toyota would trade only raw material & commonly used parts on either GM or Ford
system, Toyota is interested in making its buying more efficient, he said.
Some of Toyotas talks with GM also involve standardizing components. That would allow
the two companies & GMs other participants to share a common electronic procurement
infrastructure & maximize the online networks effectiveness.
Toyota & Volkswagen are also trying to hammer out an agreement to standardize select
components for vehicles sold in Europe. Jagawa said the two companiess launched the
talks last summer to identify specific parts they can standardize. He added, however, that
the process has been slow because of a wide gap between what the two companies
consider common components. VW put on the table 20 to 30 parts as possible targets for
standardization; we identified several at most, said Jagawa.
Toyota has said it was considering standardizing components & platforms with the German
automaker to cut operating costs in Europe, where the Japanese company has had trouble
reducing costs because of its limited sales volume. Toyota sold fewer than 600,000 vehicles
in Europe last year.
In Toyotas discussion with both GM & Volkswagen, Jagawa said one problem that could
potentially delay an early agreement is their difference over the definition of competitive
components. Toyota considers a wider range of parts competitive, including steering
wheels & in some cases even wire connectors, whereas GM & Volkswagen seem to believe
many components can be standardized without hurting competitiveness. They think we
can compete on things like styling & packaging of vehicles; we believe we compete
component by component in creating vehicles, said Jagawa.
Questions:
a. GM & Ford have quickly pushed the development of large internet sites to create an
environment where suppliers must compete for business. Ford & GM argue that these
internet sites should reduce cost because the negotiations are streamlined. How do you
think the suppliers view these sites?
b. Rather than having vendors compete against one another, Toyota is interested in
treating suppliers as partners. Is Toyota just being old-fashioned in its view?
c. A major reason for differences in opinions may be the differences in what Toyota
considers competitive components. These are the components that would mostly be
bought using the internet trading sites. Who is right? Are steering wheels & wire
connectors competitive components?
Ref : The Management & Control of Quality By James Evans & William Lindsay
H. James Harrington, a noted quality consultant related the following story in Quality Digest
Magazine:
I called to make a flight reservation just an hour ago. The telephone rang five times
before a recorded voice answered. Thank you for calling ABC Travel Services it said. To
ensure the highest level of consumer service, this call may be recorded for future analysis.
Next I was asked to select from one of the following three choices: If the trip is related to
company business, press 1. Personal business, press 2. Group travel, press 3 I pressed 1.
I was then asked to select from the following four choices: If this trip is within the
United States, press 1. International press 2. Scheduled training, press 3. Related to a
conference, press 4. Because I was going to Canada, I pressed 2.
Now two minutes into my telephone call, I was instructed to be sure that I had my
customer identification card available. A few seconds passed & a very sweet voice came on,
saying, All international operators are busy, but please hold because you are a very
important customer. The voice was then replaced by music. About two minutes latter
another recorded message said, Our operators are still busy, but please hold & the first
available operator will take care of you. More music. Then yet another message: Our
operators are still busy, but please hold. Your business is important to us. More bad music.
Finally the sweet voice returned, stating, To speed up your service, enter your 19 digit
customer service number. I frantically searched for their card, hoping that I could find it
before I was cut off. I was lucky; I found it & entered the number in time. The same sweet
voice came back to me, saying, To confirm your customer service number, enter the last 4
digits of your social security number. I pushed the 4 numbers on the keypad. The voice
said: Thank you. An operator will be with you shortly. If your call is an emergency, you can
call 1-800-CAL-Help, or push all of the buttons on the telephone at the same time.
Otherwise please hold, as you are a very important customer. This time in place of music I
heard a commercial about the service that the company provides.
At last a real person answered the telephone & asked, Can I help you? I replied,
Yes, oh yes. He answered, Please give me your 19 digit customer service number,
followed by the last 4 digits of your social security number so I can verify who you are. (I
thought I gave these numbers in the first place to speed up service. Why do I have to rattle
them off again?)
Discussion Questions:
2. What might the travel agency do to improve its customers service experience?
7 TATA NANO: The INR 1,00,000 Peoples Car
When Ratan Tata unveiled the prototype of the Tata Nano car in Jan 2008 at the auto show
in New Delhi, it opened up a new chapter in product development. The compact car, priced
at US$ 2,500 , is a valuable experiment from which much can be learnt about the best
practices in New Product Development.
The product development team at Tata Motors had to meet three requirement for
the new vehicle: (i) be low cost, (ii) adhere to regulatory requirement, and (iii) achieve
performance targets such as fuel efficiency and acceleration capacity. Balancing design
changes with their cost implications is an important challenge in any new product
development project. Each design, therefore, had to cater to these three key requirements.
Clearly, while the cost was very critical, the company was unwilling to make any
compromise in other areas. Fuel economy is a major driver for selling a vehicle in India. It
also was important to ensure that the car could be maneuvered in urban / city areas.
There is considerable value in having multiple stakeholders in a product
development team. Ideas for the Nano came from unexpected sources and they were given
due consideration before a decision was taken. For instance, in addition to the vendor
/suppliers, a small group of auto mechanics was part of the development phase. The group
suggested an additional opening on the rear floor, which would provide access to the
Intake Manifold and the Starter. While the design team was trying to avoid this for cost
reasons, the mechanics insisted on this change.
The design team had to redesign several aspects before the style could be frozen.
The cars body was designed twice and the engine was design thrice. The floor and the
seats were designed 10 times. There were two simultaneous concepts for the cars
dashboard, with detailed design and cost estimate. The Nano team eventually chose the
concept they thought would look more attractive to the customer. The Nano is not over
engineered like, say, the German cars. It is an example of frugal, cost effective and relevant
engineering. Several suppliers got involved in the project at a very early stage. This was
perhaps, one of the ways by which costs were reduced. Electronic Sourcing has been
another approach to cut costs.
Rane Group (Chennai based), which makes Rack-and-Pinion steering system,
focused on reducing the weight of the material used by replacing the steel rod of the
steering with a steel tube. This acted as a major cost saver. Further, the product, which is
made of two parts, was redesigned into one piece to save on machining and assembling
cost. GKN Driveline India, a subsidiary of global auto parts leader, spent a year developing
32 experimental variants for the rear wheel drive system and finally designed a smaller
diameter of shaft which made it lighter and saved on material cost. All the suppliers have
similar stories and most of them were able to meet the target cost.
A good product development exercise has several features: unambiguous and clear
objective for the project, the involvement of multiple stakeholders, the critical role of
suppliers cutting time and cost, and value engineering. We observe several examples of
these in the Nano Project.
Questions:
A) In the context of the case above, discuss the role and contribution of each of the multiple
stakeholders in the Nano Project.