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Student Assignment Covering Form
Course/Unit Information
Course MBA Online
Unit No. Unit 11
Unit Name Strategic Quality and Systems Management
Unit code H/602/2327
Batch E11-E41-SQSM1406
Instructor Information
Name Dr. Indranil Bose
Phone +971-559860258
Skype
Email [email protected]
Assignment Information
Full/ Part Assignment Part Assignment
Date Assignment
Issued
20th July 2014
Date Assignment Due Task-2: 5th August 2014
Student Information
(To be filled by the student prior submitting the assignment)
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Name Ramzina Mahamood
Westford Student ID
Edexcel Student ID
Email [email protected]
Date of Submission
Student Declaration
I, ___Ramzina______________ (Name) hereby confirm that this assignment is my own
work and not copied or plagiarized. It has not previously been submitted as part of any
assessment for this qualification. All the sources, from which information has been
obtained for this assignment, have been referenced as per Harvard Referencing format. I
further confirm that I have read and understood the Westford School of Management
rules and regulations about plagiarism and copying and agree to be bound by them.
Students Signature : _____Ramzina________________(signed)
Student Name :Ramzina Mahamood
Date :
2
Learning Outcomes and Assessment Feedback
Name of the
Assessor Zawahir Siddique
Learning Outcomes Assessment Criteria (AC) Assessor Feedback
LO 1 TASK 1
Understand the role
of
‘operations
management’
in an organization
1.1 - explain the importance of
effective operations management in
achieving organizational objectives
1.2 - evaluate the success of existing
operations management processes in
meeting an organization’s overall
strategic management objectives
LO 2
Understand the
importance of
‘managing quality’
in an organization
2.1 - explain the importance of
effective quality management in
achieving organizational objectives
2.2 - evaluate the success of existing
quality management processes in
meeting an organization’s overall
strategic management objectives
LO 3 Task 2
Be able to plan a
strategic quality
3.1 - plan a strategic quality change to
improve organizational performance
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change in an
organization
AC MET
3.2 - define resources, tools and
systems to support business processes
in a strategic quality change
REDO
3.3 - evaluate the wider implications
of planned strategic quality change in
an organization
AC MET
3.4 design systems to monitor the
implementation of a strategic quality
change in an organizationAC MET
LO 4
AC METBe able to respond
to changes in the
marketing
environment Be able
to implement a
strategic quality
change in an
organization
4.1 - implement a strategic quality
change in an organization.
4.2 - embed a quality culture in an
organization to ensure continuous
monitoring and development REDO
REDO
4.3 - monitor the implementation of a
strategic quality change in an
organization
LO 5
Be able to evaluate
the outcomes of a
strategic quality
change in an
Organization
5.1 - evaluate the outcomes of a
strategic quality change in an
organization
REDO
5.2 - Recommend areas for
improvement to a strategic quality
change that align with organizational
REDO
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objectives
Over All Result/Grade
PENDING
Ensure to number
and sequence all the
answers properly.
Internal Verification Report
Internal Verification Done By Date
Assignment Brief
Assessors Decision
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(Please read the instructions carefully)
1. Complete the title page with all necessary student details and ensure that the signature
of the student is marked in the declaration form.
2. All assignments must be submitted as an electronic document in MS Word to the
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Assessment Criteria.
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outcomes of the subject have been met.
7. The answers should include Table of Contents, followed by writing each AC and
thereafter answering the questions in the given sequence.
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case study and certain assumptions can be made while answering questions, when
trying to relate the theoretical aspects with the actual case study happenings.
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and AC’s are the same as provided by the faculty and the format as laid down in the
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separately at the end of the document while retaining the existing comments of
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Example: J67-1406-01_John Smith_XXXX_Assignment-1.
Kindly note that the assignment will be rejected and marked as “REDO” if any of
the above said guidelines are not met.
If the student do not clear the assignment in the first attempt (with all ACs Met), the
following conditions apply:
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fine of AED 250 is applicable.
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3. If the student does not PASS in the Resit-1 attempt, Resit-2 with a fine of
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Quick reference Checklist for the Faculty/Instructor to accept/reject the assignment
before evaluation:
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5. Harvard Referencing System and Citations are strictly followed.
Strategic Quality and Systems Management
Task 1 (covers learning outcomes 1 & 2 )
IntroductionYou are required to choose an organization that can include multi-national, private, or public/ government companies, to understand the role of ‘operations management’ in the organization, as well as to understand the importance of ‘managing quality’ in the organization. To answer the questions given below, choose the organization where you are currently employed or choose any other organization of your choice, which has adequate operational management and quality system, processes.
Questions:
1. What are the objectives of your chosen organization and explain the importance of effective operations management in achieving those organizational objectives (AC 1.1: Explain the importance of effective operations management in achieving organizational objectives).
Coca Cola Bottling Company is the organisation that I have chosen to take for this assignment. My reasons for choosing this company is because it is a manufacturing
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plant that has embraced operations management in many ways and has managed to remain competent due to the quality of products it manufactures.
Coca-Cola history began in 1886 when the curiosity of an Atlanta pharmacist, Dr. John S. Pemberton, led him to create a distinctive tasting soft drink that could be sold at soda fountains. He created a flavored syrup, took it to his neighborhood pharmacy, where it was mixed with carbonated water and deemed “excellent” by those who sampled it. Dr. Pemberton’s partner and bookkeeper, Frank M. Robinson, is credited with naming the beverage “Coca-Cola” as well as designing the trademarked, distinct script, still used today.
The main objectives of Coca-Cola are:
1. To be globally known business conducting its business responsible and ethically.
2. To accelerate it’s potential to sustainable growth to enable it operate in tomorrow’s world.
Operations management is the process of planning, organizing, coordination and controlling resources needed to produce a company’s Goods and services. It is therefore a management function that involves managing people, technology, information, and other resources and the central core transformational function of transforming inputs into the finished goods or services.
Only through effective operations management will Coca-Cola be able to achieve its goals. In order for Coca-Cola to operate as a fully functional industry there was a need for machinery, raw materials, technology and human resource. Through operations management these resources were allocated to various areas e.g. the product be designed, the raw materials needed purchased, necessary machinery and equipment purchased, qualified personnel to produce were hired, inventory was managed and necessary quality control measures was put in place to ensure that the products produces are of high quality. In the long run the business has been able to attain its objective of accelerating sustainable growth in the years to come.
Through operations management Coca-Cola has added value to its transformational process through reducing activities in the manufacturing process, lean production, just in time stocking, coming up with new better product designs, using the latest sate of the art manufacturing machinery and ensuring there products and services is customer oriented. Activities that don’t add values have been eliminated and reengineering is a regular process that has enabled the business attain efficiency and remain competent. Hence, enabling Coca Cola to conduct its business responsibility and in an ethical manner.
2.Explain the various operations management processes implemented in your organization and evaluate how they contribute towards meeting your organization’s overall strategic objectives. (AC 1.2 Evaluate the success of existing operations
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management processes in meeting an organization’s overall strategic management objectives).Inventory control and management is one importance of operations management that Guinness Ghana limited uses in its operations. Managing and controlling the inventory of the company is very critical. Innovative methods, such as Just-in-Time inventory control, are some of the major instruments used by the company to save costs and move products and services to customers more quickly. Generally the importance of operations management on businesses is embedded in every aspect of the organizations activities and therefore has critical role to play in ensuring that organizations achieve their objectives and goal.
All operations produce products and services by changing inputs into outputs. They do this by using the ‘input-transformation-output' process. There are two categories of inputs in any operation's processes: 1) Transformed and 2) Transforming resources Transformed resources are the resources that are treated, transformed or converted in the process, that include a) Materials b) Information c) Customers The other set of inputs to any operations process are Transforming Resources. These are the resources, which act on or carry out the transformation process. There are two main types of transforming resources:
Buildings, All The People Involved In The Operations Process. Equipment, Plant and Technology Of the operation.
The operations function is central to the organization because it produces the goods and services, which are its reason for existing, but it is not the only function. It is, however, one of the three core functions of any organization. These are:
The marketing (including sales) function that is responsible for communicating The organization’s products and services to its markets in order to generate customer requests for service
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Operations management Operations function Operations managers. Three core functions the product/service development function, which is responsible for creating new and modified products and services in order to generate future customer, requests for service
The operations function that is responsible for fulfilling customer requests for service through the production and delivery of products and services. In addition, there are the support functions, which enable the core functions to operate effectively. These include, for example:
a) Accounting and Finance As an auditor you must understand the fundamentals of operations management
b) Human Resources which recruits and develops the organization’s staff as well as looking after their welfare. Remember that different organizations will call their various functions by different names and will have a different set of support functions. Almost all organizations, however, will have the three core functions, because all organizations have a fundamental need to sell their services, satisfy their customers and create the means to satisfy customers in the future.
c) Information Technology is a tool, and there’s no better place to apply it than in operations
d) Management use so many things you learn in an operations class—scheduling, lean production, theory of constraints, and tons of quality tools
Working effectively with the other parts of the organization is one of the most important responsibilities of operations management. It is a fundamental of modern management that functional boundaries should not hinder efficient internal processes. Figure 1.1 illustrates some of the relationships between operations and some other functions in terms of the flow of information between them. Although it is not comprehensive, it gives an idea of the nature of each relationship. However, note that the support functions have a different relationship with operations than an operation has with the other core functions. Operations management’s responsibility to support functions is primarily to make sure that they understand operations ’needs and help them to satisfy these needs.
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The relationship between the operations function and other core and support functions of the
organization
1. Explain the various quality management initiatives implemented at your organization in the last five years and explain how they have contributed to achieve your organization’s objectives. (AC 2.1 Explain the importance of effective quality management in achieving organizational objectives).
Many organizations are taking advantage of Quality Management methodologies (such as Six Sigma) to improve productivity, efficiency, and customer satisfaction. These methodologies require employees to perform set tasks and adhere to structured processes, involving changes to work habits that can sometimes be disruptive to organizations. Familiar, integrated IT tools can streamline Quality Management tasks and reduce user resistance, enabling organizations to get the maximum benefit from Quality Management techniques at lower risk. Microsoft delivers an integrated portfolio of offerings to address the challenges of Quality Management with the benefits of familiarity, ease of integration, and flexibility.
The implementation of Quality Management systems is shown to dramatically improve the performance of organizations. In the United States, the Malcolm Baldrige National Quality Award is the highest honor for performance excellence. Studies by the National Institute of Standards and Technology (NIST) and the U.S. General Accounting Office have found that investing in quality principles and performance excellence pays off in increased productivity, satisfied employees and “Selecting the Right PDA Technology and Avoiding ‘Tool Hype’,” Product Development & Management Association 2003 sponsor insert, January 2004
Benefits of establishing a standardized process for quality management include:
Cost savings - International Standards help optimise operations and therefore improve the bottom line
Enhanced customer satisfaction - International Standards help improve quality, enhance customer satisfaction and increase sales
Access to new markets - International Standards help prevent trade barriers and open up global markets
Increased market share - International Standards help increase productivity and competitive advantage
Environmental benefits - International Standards help reduce negative impacts on the environment
Taking the First Step with PDCA".
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2. What are the strategic objectives of your organization? How are they achieved through effective quality management processes and systems practiced in your organization? (AC 2.2 Evaluate the success of existing quality management processes in meeting an organization’s overall strategic management objectives).
With the help of “Six Sigma” strategy deployed by Ford, company has been able to achieve high quality products to deliver customer & employee satisfaction which is one of the prime strategic objective for the organization. This strategy would help in order to enhance revenue through customer satisfaction and increased profitability with efficient operations at their manufacturing facility. With enhanced level of processes and systems Ford has successfully managed to reduce the wastage of their resources in their production system. This would lead to competitive pricing for Ford with best quality products and high profit margins. Ford has managed to ensure quality process and trained employees who are well motivated and have aligned their objective with organizational objective for ensuring quality and high degree of customer satisfaction. In order to ensure quality Ford has implemented DMAIC, Six Sigma and DFSS processes. Several key quality management tools are also being used by Ford such as Pareto chart, process mapping, root cause diagram and tree diagram etc. There are three factors on which entire quality management process of Ford are focused so as to achieve organizational objectives and can be given as under: Customer: All quality management processes are designed in order to achieve
high degree of customer satisfaction by identifying and delivering customer desirable products & services.
Processes: All processes and policies in the organization have been analyzed for better customer satisfaction and accordingly improvement in processes have been made so that high level of quality can be achieved in organizational context.
Employees: Employee engagement and empowerment is the main focus for organization as this would help Ford to maintain high quality products. Before implementation of the Six Sigma, JIT and other quality management processes within the organization proper training has been imparted to the employees so that they are engaged in organizational endeavors. .Six Sigma processes implemented in Ford helps in implementing quality initiatives successfully and attain organizational objectives. Some of the major elements of Six Sigma implemented by Ford are as under:
Critical to quality: This attribute of Six Sigma is most important for the customers and its success ensure high level of customer satisfaction.
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Defects: Defects would denote the failure of organization in delivering quality standards which were desired by the customer
Process capability: This shows the ability of processes adopted within Ford to deliver quality as per customer requirements
Variation: This denotes the difference within the quality of a expected products and quality as delivered through actual product made by the organization
Stable operations: Stable operations would help in order to provide the predictable processes and improvement in overall operations of the organization
Design for Six Sigma: Design for Six Sigma has been established in order to meet customer needs and Ford has achieved world class quality with suitable implementation of Six Sigma at workplace.
Task 2 (covers learning outcomes 3, 4 & 5)
Case Study: Chery Motor Co.
Background
Chery Motor Co. was founded in 1997 in the underdeveloped Chinese province of Wuhu,
largely to support the local economy. In 1999, automobile production began using SEAT
Toledo chassis, though Chery’s lack of proper licensing prohibited it from selling
automobiles outside of the province. The purchase of 20% ownership by Shanghai
Automotive Industry Association in 2001 allowed the small firm to utilize the SAIC retail
license, thus beginning the rapid expansion of the small Chinese automaker.
Chery’s first car exports were to Syria in 2001, making the company the first to export
cars from the mainland. The company also began efforts to improve production quality
and technology by founding a research institute. Chery hired a number of Japanese
automotive consultants to assist the auto company in achieving the six-sigma/ lean
process standard to her Japanese/Western competitors. These efforts yielded almost
13
immediate results, with Chery being granted ISO/TS 16949:2002 production quality by
2005; the strictest international production quality certification available.
To improve aesthetic design, Chery turned to Bertone and Pininfarina of Italy, the fabled
design consultants to Ferrari and Lamborghini. In addition, Chery contracted with AVL
of Austria to assist in the production of 18 new engine models for integration into new
models.
Record Breaking Results
Sales and exports followed, buoyed by tax breaks and burgeoning domestic demand.
Total automobile sales rose from a meager 2,000 units in 2000 to 305,000 in 2006,
making it the 3rd largest domestic auto company. Foreign exports accounted for nearly
50,000 units, representing a 178% increase from the year prior. Other estimates suggested
similar growth rates for 2007.
To meet growing sales, Chery has invested in a variety of domestic and overseas
production facilities. In 2003, Chery Motor Co. became the first Chinese company to
open a foreign production facility when it began manufacturing several models in Iran.
Similar plants opened in Russia in 2005 and Malaysia in 2006. Primary importing
countries included Russia, Egypt, and other developing markets.
Chinese Auto Industry
The successes of Chery Motor Co ride on the wave of general growth in the Chinese auto
industry. Total Chinese auto exports rose to 340,000, nearly twice the sales results of the
previous year. Much of this growth can be attributed to Beijing, which has set goals to
help the domestic auto and auto parts export industry grow from 0.7% of GDP to nearly
10% over the next ten years.
However, many analysts have suggested that the recent surge in exports and export
mindedness is at least in part attributable to overcapacity in the domestic Chinese market.
According to the National Development and Reform Commission, demand came to just
71.5% of capacity in 2006.1 Other reports indicate that Chinese companies face
1 China Car Industry's Export Ambitions, Businessweek. May 3rd, 2007 14
restrictions to building additional manufacturing plants unless certain capacity utilization
levels are met. Such measures have only further incentivized the need to expand and
grow exporting activities.
Barriers to Growth
The expansion goals of Chery Motor Co. and much of the Chinese auto industry have
been challenged by the quality issues facing auto exports from China. A crash test
conducted by J.D. Power and Associates in early 2007 yielded poor results for a variety
of Chinese automakers, compounded general consumer concern with the quality and
safety of Chinese automobiles. Experts such as Nick Reilly, head of GM's operations in
the Asia-Pacific region, have commented on the logistical, servicing, and reverse duties
issues that would also plague Chinese imports to North America.2 Key to successful
entry would also be an integrated dealership network, a barrier that has proved pivotal to
entrants in times past.
Regarding foreign expansion, Chery President Yin Tongyau said, “North America
and Europe have very tough and demanding safety and emission laws that our
vehicles do not respect yet," Yin said.3 "We need time." According to Yin and
others, Chery’s expansion will come in stages. Current exports are focused on the
emerging markets of the Middle East, Latin America, and others. Improved quality
will also come by utilizing foreign firms as sources of necessary parts. Key
partnerships also offer the resources and expertise to improve manufacturing quality.
Figure 1: Chery Results
2 Cars from China: Not so fast. Fortune. Jan. 27th 20073 “DATELINE”,Turin, Italy. 200715
Total Sales for Chery Motor Co.
Un
its
Figure 2: China’s Production Levels
International Motor Vehicle Program, MIT. May 6, 2005
16
Figure 3: Prices for Chery Automobiles and Comparables
Figure 4: Chery Product Development Lifecycle
Source: The Growth of Independent Chinese Automotive Companies, MIT. 200617
Figure 5: Profile of Chery Automobile Co., Ltd
Chery Automobile Co., Ltd. was founded by five Anhui’s local state-owned investment
companies with a registered capital of RMB 1.752 billion in 1997, the construction of
which commenced on March 18, 1997. In 2006, it accomplished a sales volume of
305,200, an increase of 62% over the same period of the previous year, and had a share of
7.2% of the Chinese car market, ranking 4th in the Chinese passenger car industry, thus
showing its great strength in marching into the first camp of the Chinese car industry
having been long monopolized by Chinese-foreign jointly-funded brands and taking a
commanding lead among independently managed car enterprises.
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Since its products entered the market, Chery has attached great importance to developing
the international and domestic markets, guided by the principle of “stabilizing through
the domestic market, strengthening through the overseas market and developing the
domestic market through the oversea market in a flexible way” and with the strategy of
“going out”, it became China’s first car enterprise exporting complete vehicles, CKD,
engines and vehicle manufacture technology and equipment to foreign countries. So far,
it has exported products to over 50 countries and regions in the world with its car export
volume ranking 1st for four years in a row in China.
Chery now owns a full set of manufacturing and R & D systems, including two car
plants, two engine plants, a gearbox plant, an automobile engineering research institute
and an automobile planning and design institute. It has so far a total staff of 23,000, total
assets of RMB over 22 billion and an annual production capacity of 650,000 complete
vehicles, 400,000 engines and 300,000 sets of gearboxes. Its current products include ten
series (Eastar, Cowin, Tiggo3, A5, V5, QQ3, QQ6, Karry, Riich 2 and A1) of complete
vehicles and their auxiliary engines, gearboxes and key parts and components. By the end
of this year, Chery will become one of the passenger car manufacturers offering most
varieties of products and most complete product series to the market in China.
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As early as at the beginning of its products’ entry into the market, Chery has established
the permanent aim of “customer satisfaction” and the quality principle of offering
customers with zero-defect products and considerate service as the persistent objective of
each employee, and successfully passed ISO9001 International Quality System
Certification in February 2001. Also in October 2002, it took the initiative in passing
ISO/TS16949 Quality Management System Certification of Germany TUV. The
unremitting control of quality made all Chery cars conform to Chinese national standards
in the surprise inspection of the State Bureau of Technical Supervision of China, most of
which were even superior to the national standards.
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Through years of continuous improvement, Chery’s brand and corporate image has lifted
rapidly. In October 2006, “CHERY” was acknowledged as one of the Chinese famous
trademarks by the State Administration of Industry and Commerce of China. In
November of the same year, Chery was honored as the 11th most favorable Chinese
companies by Fortune Magazine, becoming the only Chinese car manufacturer ranking
top 25 in the list.
Source: http://www.cheryglobal.com/about_chery.jsp
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Figure 6: Company Timeline
Milestones
Mar. 1997 The ground-breaking ceremony of Chery No.1 Engine plant marks the
beginning of Chery Automobile Co., Ltd.
May 1999 Chery’s first engine rolled off the production line (CAC480).
Dec. 1999 The first Chery car came off the production line.
Oct. 2001 The first batch of Chery cars were exported to Syria.
Feb. 2003 Chery singed a CKD agreement of producing Chery cars in Iran with
Iranian SKT Group.
Oct. 2004 Chery and Egyptian CIG Group held a grand launch ceremony in Cairo
for Chery QQ model and Fulwin model.
Nov. 2004 Chery signed a cooperative agreement with Malaysian ALADO
Company
Aug. 2005 Chery signed an agreement of intent with an Ukrainian company of
aiming to conduct Chery CKD project in Ukraine.
Oct. 2005 Chery ACTECO series engines are released in China.
Dec. 2005 Chery set up a subsidiary company in Russia, which was the first one
overseas.
Jan. 2006 The agreement of SKD project on manufacturing Chery cars in Russia
was concluded with Russian Avtotor Group.
Mar. 2006 The agreement of CKD project on manufacturing Chery cars in
Indonesia was signed with Indonesian Indomobile Group.
April 2006 The first Chery car produced by SKD assemblage in Russia came off the
production line in Kaliningrad, Russia.
April 2006 Chery cars were launched in Moscow, Russia.
22
June 2006 The official agreement of SKD project on producing Chery cars in
Ukraine was signed with Chery’s counterpart from Ukraine.
June 2006 Chery signed an agreement with Mermerler Group on selling Chery cars
to Turkey.
Aug. 2006 The first Chery car produced by CKD in Indonesia come off the
production line.
Nov. 2006 Fiat Group signed an agreement with Chery of annually purchasing
100,000 units of ACTECO engine.
Mar. 2007 The 800,000th Chery car come off the assemble line.
Mar. 2007 The contract signing ceremony between Chery Automobile Co., Ltd. and
SOCMA, Argentina was held in Beijing.
Mar. 2007 Chery became the champion in monthly sales with its monthly sales of
44,568 units of cars.
July 2007 Chery and Chrysler finalized cooperative agreement in Diaoyutai State
Guesthouse, Beijing, China.
Aug. 2007 Chery and Fiat reached a Memorandum of Understanding to establish a
joint venture for Manufacturing passenger vehicles.
Aug. 2007 Chery, Iran Khodro and Canada Solitac enter into an agreement of joint
venture.
Aug. 2007 The 1,000,000th car of Chery rolled off the assembly line, with the birth
of Chery's new model---A3.
Aug. 2007 Along with the launching ceremony held in Santiago, Chery products
were launched in Chile.
Source: http://www.cheryglobal.com/about_chery.jsp?columnId=11736915090001
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A Partnership with Chrysler
Yin Tongyau and Chery Motors saw their fortunes improve in 2007 as Chrysler began to
see the benefit of a strategic partnership with the young Chinese automaker. Like the
other Detroit automakers, Chrysler had struggled to compete with the low cost compact
cars gaining popularity with rising oil prices. Analysts had also suggested a move to
Chinese manufacturing would help leverage corporate negotiators as they sought to deal
with UAW pension negations.
In partnering with Chery, Chrysler gained access to cost-effective production of B-type
vehicles; the like of which would compete with the Toyota Yaris and Honda Fit for sale
in the North American and European markets. U.S. Sales in this segment had surged 59%
in 2006 to 314,225 units, largely reflecting the increase in petrol prices.
Chery has suggested that co-production with Chrysler will likely begin with the A1, a
compact car that will be sold in Latin America around 2010. Automobiles meant to enter
the U.S. market are likely to enter sometime after that.
The deal is hardly one-sided, with Chery receiving access to the technical and design
expertise of the well-oiled Detroit automaker. In addition, the deal will lead to the
integration of Chery made automobiles with the intensive Chrysler dealership and
servicing network in North America. One fact is certain, both companies see this
opportunity as necessary to accelerating towards future growth in an increasingly
globalized auto industry.
Questions:
3. How did Chery Motor Co. device a strategic quality change process to improve
the organizational performance to compete with the leading global competitors?
(A.C.3.1: Plan a strategic quality change to improve organizational
performance).
a) Establishing a Sense of Urgency – for Chery Motor Company to be able to
device a strategic quality change process there was need to create urgency and its
because the company really needed the change. Being a small company Chery
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was not able to sell automobiles outside of the province because of lack of proper
licensing hence there was ned to change ownership by allowing Shanghai
Automotive Industry Association to purchase 20% of its shared in order to
expand.
b) Creating a Powerful Guiding Coalition – after creating Urgency there was need
for Chery to have a strong leadership and gain support from Shanghai
Automotive Industry and its employees. To lead the change the chance coalition
comprising of Cherry employees and Shanghai had to continue building urgency
around the need for change and lead the change.
c) Creating a Vision for Change - Chery had to come up with a clear vision and
make everyone understand their role in achieving the change so that they can feel
being part of the change. The vision for change was to achieve the six stigma
standard.
d) Communicating the Vision for buy-in– after the quality vision was clear, Chery
had to communicate it frequently and powerfully to the extent of forming a
research institute and turning to Bertone and Pininfarina consultants for help. The
staffs were trained and quality measures were pinned all over the plant to
constantly remind the staff of what the company aims at.
e) Removing any Obstacles – by having a research institute where the staff can be
trained helped the obstacle of the employees saying they cannot perform due to
lack of training. The consultants also acted as a channel for reference whenever
the staffs were not sure on how to tackle a given problem
f) Generating Short-Term Wins - by selling 20$ of its ownership Cherry was able
to export its first car to Syria making it the 1st company to ever export cares from
the mainland. This was a short term win that helped the company believe in the
change that they put in place
g) Build on the Change – by contracting companies such AVL to help in the
production of 18 new engines models for integration into new models it was all
25
in the effort to sustain the change that had taken place and since the to date the
change has been a continuous improvement plan and the company has partnered
with a many other companies
h) Incorporating the changes into the culture – once the Chery had implemented the
change there was need to make it a continuous habit and it is currently a culture
in the organisation to continuously change the quality of its product to suit
customers needs.
4. How can quality tools like Poka Yoke and 5-S be used to support and improve the
business in the strategic quality change process. (AC 3.2: Define resources,
tools and systems to support business processes in a strategic quality change).
a) Quality Circles- By Chery coming up with quality circles, a tea of its employees
who come together to solve problems. This team transfers a problem to the people
close to it e.g. If a problem is from the production of a spare part, the people
closed to the problem are the people in the production team hence they are the
closest people to come up with a solution tt he problem and can do it within the
shortest time possible . This is a tool that can help Cheryl to improve the strategic
quality change process.
b) Fishbone Diagram- this is a visual diagram that provides insight to the root cause
of a problem in. It gives a representation of the main problem and the branches
that could also cause the problem. This tool can be used by Cheryl for quality
improvement of its products
c) 80/20 Rule- by using this rule Cheryl can monitor 20 percent of its strategic
factors to determine 80 percent of the results. This is done by monitoring only
meaningful activities by establishing qualitative and quantitative measures.
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d) Kaizen Continuous Improvement- by taking apart a process and having a clear
understanding on how the process works, how it can be improved and made
better Cheryl will have attained continuous improvement of its processes.
Through this tool Cheryl will be able to add value to its process and at the same
time eliminate waste Productivity
5. Evaluate the wider implications of the planned strategic quality change
intervention by Chery Motor Co. (A.C.3.3: Evaluate the wider implications of
planned strategic quality change in an organization).
Total Quality Management features centrally the customer-supplier interfaces, (external and internal customers and suppliers). A number of processes sit at each interface. Central also is an organizational commitment to quality, and the importance of communicating this quality commitment, together with the acknowledgement that the right organizational culture is essential for effective Total Quality Management.
Understanding processes is essential before attempt is made to improve them. This is a central aspect to Total Quality Management, and also to more modern quality and process improvement interpretations and models such as Six Sigma, moreover; A wide range of tools and techniques is used for identifying, measuring, prioritizing and improving processes which are critical to quality. Again these ideas and methods feature prominently in modern interpretations of Total Quality Management methodology, such as Six Sigma. These process improvement tools and techniques include: DRIVE (Define, Review, Identify, Verify, Execute), process mapping, flow-charting, force field analysis, cause and effect, brainstorming, Pareto analysis, Statistical Process Control (SPC), Control charts, bar charts, 'dot plot' and tally charts, check-sheets, scatter diagrams, matrix analysis, histograms.
One of the most important fundamental component within any successfully developing organization is people without them organization is nothing and all this comes when with people's motivation, commitment and ability to work together in well-organized teams. Conversely, inspire the people to work well, creatively, productively, and the organization can fly. Logically therefore, the development and proper utilization of people are vital to the success of all quality management initiatives.
A Total Quality organization generally benefits from having an effective Quality Management System (QMS). A Quality Management System is typically defined as: "A set of coordinated activities to direct and control an organization in order to continually improve the effectiveness and efficiency of its performance." Customer expectations inevitably drive and define 'performance' criteria and standards. Therefore Quality Management Systems focus on customer expectations and ongoing review and improvement
Performance measure is another important fact to keep the change. There are many ways to measure organizational performance other than financial output or profit. Modern measurement focuses on the essential activities, resources and other factors - many less intangible than traditional indictors - that impact on final outputs. These include modern methods such as Balanced Scorecard
The European Foundation for Quality Management (EFQM) Excellence Model is a useful framework for developing quality and excellence within an organization and this is what Cherry auto has adopted as early as at the beginning of its products’ entry into the market, Chery has
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established the permanent aim of “customer satisfaction” and the quality principle of offering customers with zero-defect products and considerate service as the persistent objective of each employee, and successfully passed ISO9001 International Quality System Certification in February 2001. Also in October 2002, it took the initiative in passing ISO/TS16949 Quality Management System Certification of Germany TUV. The unremitting control of quality made all Chery cars conform to Chinese national standards in the surprise inspection of the State Bureau of Technical Supervision of China, most of which were even superior to the national standards
Managing quality to achieve excellence means managing an organization, business or unit so that every job, every process, is carried out right, first time, every time. To be successful this must be viewed as a holistic approach that affects, and involves, everyone employees, customers, suppliers, shareholders and society. It must be driven from within the organization, as it cannot be imposed from outside and is not a simply a cost-cutting or productivity improvement exercise.
The reputation of any organization is it public, private, small or large is built on the quality and excellence of the products and/or services it provides. Quality management is a very powerful, competitive weapon that any business wishing to be, or stay, successful cannot afford to ignore. Reputations for poor quality last a very long time.
Never-ending improvement is the process by which greater customer satisfaction and, if appropriate, greater market share are achieved. In a commercial organization, these show up on the bottom line.
The expansion goals of Chery Motor Co. and much of the Chinese auto industry have been challenged by the quality issues facing auto exports from China. A crash test conducted by J.D. Power and Associates in early 2007 yielded poor results for a variety of Chinese automakers, compounded general consumer concern with the quality and safety of Chinese automobiles. Experts such as Nick Reilly, head of GM's operations in the Asia-Pacific region, have commented on the logistical, servicing, and reverse duties issues that would also plague Chinese imports to North America. Key to successful entry would also be an integrated dealership network, a barrier that has proved pivotal to entrants in times past. Regarding foreign expansion, Chery President Yin Tongyau said, “North America and Europe have very tough and demanding safety and emission laws that our vehicles do not respect yet," Yin said. "We need time." According to Yin and others, Chery’s expansion will come in stages. Current exports are focused on the emerging markets of the Middle East, Latin America, and others. Improved quality will also come by utilizing foreign firms as sources of necessary parts. Key partnerships also offer the resources and expertise to improve manufacturing quality.
Therefore; in 2001, Cherry was the first company to export quality cars from the mainland to Syria. In order to expand its growth to other countries the company began efforts to further improve the production quality and technology by founding a research institute. The company hired a number of Japanese automotive consultants to assist them in achieving the six sigma i.e: a program designed to define, measure, analyze, improve and control or in other words to reduce defects, lower costs and improve customer satisfaction; and the lean manufacturing process, thus being able to compete in standard to its Japanese and Western competitors.
Implementing 5S Process to support and improve the business in the strategic quality change process 5S is a cornerstone of any lean manufacturing implementation, either applied within your manufacturing environment, office processes or even within a service industry, but what are the benefits of implementing the 5S process? Without 5S your company will not have the right foundations on which to build any form of business improvement philosophy.
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The 5S process is a very simple methodical team based approach to organizing your work space to ensure that it is tidy, arranged ergonomically, efficient and capable of repeatable, quality output. It does this through a simple five stage process, each step starting with the letter “S” hence the name 5S. The 5S process is not one that can be forced onto an area by an outsider, it a process of improvement that is conducted by the people that work within the area itself. They become responsible for and have ownership of all of the improvements and changes that they implement. It is an ongoing process of improvement, not just a once off event to tidy everything up before a customer visit; if you find yourself still having to conduct clean ups prior to visits then you have not implemented 5S!
Benefits of 5S The benefits of 5S for Lean are significant, it is suggested that efficiency gains of the order of 10% to 30% can be achieved, and certainly within my experience of handling many 5S program implementations these levels of success have always been achieved, even in companies that already claim to have implemented 5S. The reasons for these gains in efficiency are many fold and stem from a number of benefits driven by the implementation of 5S; Due to the removal of all but the necessary items in a work area during the first stage of 5S you remove many instances of the waste of waiting and motion as items are easier to find and you do not have to get around unnecessary clutter.
The second stage of 5S results in ensuring that items (components, equipment, tools, machines, people) are located in the most ergonomic and thus efficient (and safer) positions. This eliminates many of the seven wastes of manufacturing. The operators do not have to search for things as the use of shadow boards and clear visual identification ensure that things are immediately to hand and obvious. These items are located as close to where they are needed and at the correct most ergonomic height and orientation to minimize handling. The third stage of 5S ensures that the work place remains clear of clutter and that any signs of malfunction become more obvious leading to actions being taken to prevent more serious breakdowns and other delays. The forth and most important step is that of standardization, wherein you ensure that there are standard ways of working. This ensures that everyone uses the most efficient work method and that there are clear standards. This prevents delays, defects and other wasteful occurrencesThe right tools in the right place, the correct methods and standards, and a motivated workforce means that you will have a far more efficient and less wasteful working environment. The visual management aspects ensure that anyone can see if there are problems such as things missing, in the wrong location and so on. The 5th stage, sustain, ensures that this continues on an ongoing basis and that it remains everyone’s responsibility; this ensures that there is no slippage and that you continue to challenge what you do and make improvements through the constant involvement of your staff. In addition to these benefits, you will have a visually more pleasing environment that will serve as a significant marketing tool from which to be able to sell your company. One of the biggest benefits of 5S is that problems within your processes become immediately obvious. Components that begin to stack up in areas that they should not be in, or empty racks and other visual aspects of your 5S implementation quickly show you exactly where problems are occurring.
To realize the Benefits of 5S it should be implemented in an example area to start with, build an “island or excellence” to gain people’s support and trust as well as to show what can be achieved.You will need an “expert” to facilitate the 5S program with 5S training, either an in-house expert with experience in implementing lean techniques like 5S or you will need to bring in a lean/5S consultant or lean 5S trainer. 5S is not something that you learn in a class room, whilst there 29
should be an overview given to all involved as to how it works plus an explanation of the seven wastes and some company specific objectives, the bulk of the “training” should be at the work place actually conducting the 5S process. In-House 5S Training is the best way forward but don’t forget to ensure that you have all of the 5S training materials that you will need. The five steps of 5S to gain benefits
1. 5S Seiri (Sort, Clearing, Classify) to remove all of the clutter from the work place2. 5S Seiton (Straighten, Simplify, Set in order, Configure) to organize all tools, materials and
equipment in an efficient and ergonomic manner.3. 5S Seiso (Sweep, shine, Scrub, Clean and Check) to clean up the entire area removing all
dirt.4. 5S Seiketsu (Standardize, stabilize, Conformity) to ensure standard ways of working for the
first three stages.5. 5S Shitsuke (Sustain, self-discipline, custom and practice) to ensure that 5S principles are
part of the culture of the business.
Poka-yoke is a Japanese term that means "mistake-proofing". A poka-yoke is any mechanism in a lean manufacturing process that helps an equipment operator avoids mistakes. Its purpose is to eliminate product defects by preventing, correcting, or drawing attention to human errors as they occur.
Poka-yoke can be implemented at any step of a manufacturing process where something can go wrong or an error can be made. For example, a jig that holds pieces for processing might be modified to only allow pieces to be held in the correct orientation, or a digital counter might track the number of spot welds on each piece to ensure that the worker executes the correct number of welds. Shigeo Shingo recognized three types of poka-yoke for detecting and preventing errors in a mass production system.
The contact method identifies product defects by testing the product's shape, size, color, or other physical attributes.
The fixed-value (or constant number) method alerts the operator if a certain number of movements are not made.
The motion-step (or sequence) method determines whether the prescribed steps of the process have been followed.
Either the operator is alerted when a mistake is about to be made, or the poka-yoke device actually prevents the mistake from being made. In Shingo's lexicon, the former implementation would be called a warning poka-yoke, while the latter would be referred to as a control poka-yoke.
Shingo argued that errors are inevitable in any manufacturing process, but that if appropriate poka-yokes are implemented, then mistakes can be caught quickly and prevented from resulting in defects. By eliminating defects at the source, the cost of mistakes within a company is reduced.
A methodic approach to build up Poka-Yoke countermeasures has been proposed by the APS methodology, which consists in a three steps analysis of the risks to be managed:
Identification of the needIdentification of possible mistakesManagement of mistakes before satisfying the need
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This approach can be used to emphasize the technical aspect of finding effective solutions during brainstorming sessions
The wider implications of the planned strategic quality change interventions by
Chery Motor Company were:
a) Rapid expansion – through selling 20% of the company to Shanghai,
Cherry was able to use SAIC retail license to trade outside the province
hence rapid expansion. Chery has expanded to the extent of exporting its
vehicles to over 50 countries. Chery’s growth is also evident on the full set
of manufacturing and R & D systems, including two car plants, two engine
plants, a gearbox plant, an automobile engineering research institute and
an automobile planning and design institute
b) Production Quality Certification – through approaching Japanese
Automotive Consultants to assisting achieving the six stigma/lean process
standards Cherry was granted ISO/TS 16949:2002 which enabled the
company to compete with Japanese and Western Competitors.
c) Growth – over the years Chery has grown so fast and as of 2006 it has
attained a sales volume of 305200 and is ranked 4 th in Chinese passenger
car industry. Currently Chery has a total staff of 23,000, total assets of
RMB over 22 billion and an annual production capacity of 650,000
complete vehicles, 400,000 engines and 300,000 sets of gearboxes.
Clearly an indication of the fast growth due to strategic quality change
initiative.
d) Good corporate image – through the continuous improvement plan at
Cherry, it was acknowledged as one of Chinese famous Trademarks by the
State Administration of Industry and Commerce of China and is also
ranked 11th most favorable companies by Fortune Magazine and making it
the only top car manufacture in china.
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e) Partnership with other manufactures – after Chrysler saw the benefits
Chery is getting as a result of partnering with other companies, it also
approached Chery for partnership and through the partnership it gained
popularity and was able to also export its products into European market.
f) Co- effective production – though partnering with Chrysler, Chery was
able to save on production cost because the cost is shared between the
companies hence more returns on investment. These machinery and
equipment’s in both companies are used to produce spares for either
company hence saving on the machinery cost because what is not found in
Cheryl can be found in Chrysler
g) Customer satisfaction – Cheryl gained its popularity due to maintaining
quality of its product. For it to be awarded the best it’s because customers
complains are minimal hence indicating their satisfaction. These
customers complain are also addressed in the shortest time possible and
measures are put in place to ensure such errors do not appear again.
6. Explain how strategic quality change can be implemented at Chery Motor Co. to
compete with one of the leading global competitors (of your choice) and evaluate
how this implementation process can be monitored. Also propose a quality culture
that can be embedded at Chery Motor to ensure continuous monitoring and
development. (AC 4.1: Implement a strategic quality change in an
organization.), (AC 4.2: Embed a quality culture in an organization to ensure
continuous monitoring and development) & (A.C.4.3: Monitor the
implementation of a strategic quality change in an organization).
a) Define Change Policies - by setting the rules and circumstances in which change will be
implemented, Cheryl will be able to manage its change process. Different procedures can be
formulated to help in handling the change implementation process.
b) Putting individual Roles and Responsibilities – these roles must be set and each person
must know and understand their individual roles in the implementation process. This makes
them feel a part if the process and without roles it is almost impossible to attain results.
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c) Set targets - the targets for Cheryl employees must be Specific, measurable, Achievable,
realistic time bound, extended and rewarding. This is for easier understanding and
implementation of the change agents. If the agents have a clear understanding, it will be
easier for them to implement the process.
d) Monitoring Actions – the results of all the actions undertaken during the change process
must be monitored. If these results are found to be in line with the targets set then it means
the change process is doing well
e) Conduct Meetings – conducting meeting helps one understand the problems
faced by the team and the team member can share their views on the possible
solutions to the problems faced.
f) Review Performance – the performance of all the change agents at Cheryl should
be measured on a regular interval in order to assess if they have achieved the
required performance targets. The best performers should be recognized
through rewards and new targets set and assessed regularly so that the change
process is measured regularly.
7. Identify the systems, designed by Chery Motor and Co. to monitor the
implementation of a strategic quality change in an organization (A.C. 3.4: Design
systems to monitor the implementation of a strategic quality change in an
organization)
a) Feasibility Study- though the feasibility study conducted by Cheryl it saw that the
only way it will be allowed to trade outside the province is through partnership.
This move gave a positive signal to Cheryl giving them a go ahead to invest
further in the business.
b) Setting Or Measuring Outcomes- through partnering with SAIC Chery was able
to export its vehicles to Syria, the saves volume increased and the continuous
improvement on product quality enabled the business to be branded as the 1st
Chinese company by Fortune Magazine. The company also partnered with
Chrysler and other companies hence the outcome gave an indication to Chery that
the move was a good one.33
c) Business Performance Indicators- the sales volumes attained by Cheryl is an
indicator of its performance so is the introduction of other models that have
boosted the sale of Cheryl vehicles. Introduction of passenger vehicles also
indicate the effectiveness of the vehicles manufactured by Cheryl. The more
brands and models being introduced the more the sales volume hence attaining
high business performance.
d) Customer Feedback- through customer feedback Cheryl is able to meet its
customer’s requirements by changing the products styles and improve on its
services. The customer’s feedback so helps them understand what the customers
want and gives them a guide on areas to be improved.
8. Evaluate the outcomes of a strategic quality change at Chery Motor Co. and
recommend areas for improvement to align the change process with
organizational objectives. (AC 5.1: Evaluate the outcomes of a strategic quality
change in an organization) & (A.C. 5.2: Recommend areas for improvement
to a strategic quality change that align with organizational objectives)
Chery Motor Company has proved that quality does not mean expensive by manufacturing and selling cars at a more economically price than their more expensive competitors while retaining the same standards of quality. The management is committed to having a continuing, companywide drive toward excellence in all aspects of their products and services that are important to the customer. Better quality conformance at an early stage of production and focusing on the aesthetics and performance resulted in the total automobile sales to rise from a meager 2,000 units in 2000 to 305,000 in 2006, making it the 3rd largest domestic auto company. The company has a customer service network that spans at least 31 Chinese provinces, autonomous regions, and direct-controlled municipalities.
Investment in domestic and overseas production facilities boosted foreign exports, which accounted for nearly 50,000 units, representing a 178% increase from the year prior. Other estimates suggested similar growth rates for 2007. Additionally, in October 2006, the State Administration of Industry and Commerce of China acknowledged “CHERY” as one of the Chinese famous trademarks. In November of the same year, Chery was honored as the 11th most favorable Chinese companies by Fortune Magazine, becoming the only Chinese car manufacturer ranking top 25 in the list.
Recommendations:
Chery can have more Productions units in countries with lower cost of Production and especially in emerging markets to reduce the cost of exports.
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Acquiring smaller companies that manufacture parts and renders servicing can help improve better servicing base with reduced total cost of ownership.
The company could get employees more involved in product and process improvements in order to avoid quality problems due to process and material.
They need to build a high-morale organization create formal team structures They can build a forum to invite criticism or ideas from Employees/Partners and last but
not the least from their Customers as to what they want to see get better. This can help them to constantly benchmark their quality as opposed to what is
perceived. It can also foster innovation.
Cross-functional training can provide employees an opportunity to find their strengths and contribute to exceed organizational objectives.
Enhancing the processes by assessing quality at various steps of the Production to avoid costly mistakes.
Alliance with International players can help increase their network to the major business units across the globe
References
Evans R. James, W. James, Dean Jr., (1999) Total Quality: Management, Organization
and Strategy. South-Western Educational Publishing
Gopalan M. R., (2000) Total Quality Management ( Busienss Today)
http://www.india-today.com/btoday/20000107/plus6.html,
Kotter, J. And Schlesinger, L. (1979), Choosing Strategies for Change. Harvard Business
Review. Vol. 57, pp. 106
Mind Tools (2010), Implementing Change Powerfully And Successfully [Online]
Available at :http://www.mindtools.com/pages/article/newPPM_82.htm
Senior, B. (1997), Organisational Change London: Pitman Publishing
http://www.iso.org/iso/home/standards/benefitsofstandards.htm
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