Using the Six Sigma Five Whys Root Cause Analysis
A root cause refers to the immediate cause of an unexpected turn of events in a business or project. Quality forms the backbone of any business engaging in the production of goods or services. Good quality helps in retaining existing customers, winning back lost customers and attracting new customers (Bar-Isaac & Shapiro, 2013). When quality is compromised customers turn to competitors for alternative product or services and employees find opportunities at the new suppliers’ side more appealing and rewarding than at their previous jobs. In return, profit margins scale downwards as the customers shift to alternative suppliers.
Precision Engineering Works Private Limited has been specializing in the production of plastic molding parts for the telecommunication industry. In the thirty years, the company has been in existence, they have won a commendable reputation in the industry. However, this success has attracted competition from other companies which has led to diminishing returns in the performance of the PEW Company. The company has lost most of its customers to competitors, has failed to win new customers and is experiencing hardships in trying to win the lost customers. Most of the company experienced employees have also quit PEW and joined their new competitors.
Using the six sigma five whys of the root cause analysis we will analyze the root cause of failure in the PEW Company to retain existing customers (Ashok Sarkar, Ranjan & Ghosh, 2013).
- Why was the company not able to retain its existing customers? Poor customer relationship
- Why was the relationship with the customer poor? unmotivated workforce
- Why was the workforce not motivated? Failure by the company to recognize employee contributions
- Why did the company fail to recognize employee contributions? Lack of individual performance evaluations
- Why was there a lack of individual performance evaluation? Poor leadership in the management.
- Prince 2 Methodology of Quality Management Problem Analysis
From prince2 methodology of quality management, PEW Company might have been using a very rigid project product description (Basu, 2014). During the 30 years, the company has been in existence, the customer’s expectation and preference in the product quality might have changed. However, the company failed to notice the change in customer expectation and therefore continued to use the same product acceptance criteria (Young & Poon, 2013). The company ought to be regularly engaging the customers on the acceptance criteria with a view to making sure that it meets the customer’s expectations. The company might not be using at all any project product description. This has led to unacceptable products, user dissatisfaction in the company’s products and failure in controlling customer’s expectation changes.
With the emergence of new companies in the same field, the customers may have found the other companies to be using flexible project product descriptions. This means that the other companies regularly engage the customers about their expectations and involve the customers in designing the product acceptance criteria. In the ISO 9000 Principles of Quality Management, the company should have stressed its focus on the customer (Aba & Badar, 2013). PEW focused on only the needs of the existing customers but failed to factor in the changing needs of the future customers. The organization objectives were not aligned to the customer’s needs and expectation and this brought about a poor relationship between the company and the customers (Hoyle, 2017).
Quality Management and ISO 9000 Principles
With the emergence of new suppliers, customers found the new suppliers more understanding of their expectations and their objectives more aligned with their needs. As a result, it became easier for the new suppliers to win the PEW’s old customers and to win and retain new customers in the market industry. The leadership of PEW has contributed immensely to the deterioration of performance. The absence of a clear vision for the company might have led to the setting up of over-challenging goals to poorly equipped and under-empowered employees (Heras?Saizarbitoria & Boiral, 2013). This in return might have demoralized the employees leading to the majority of them opting to join the new players in the market.
Using the Rapid Problem Resolution and Diagnosis technique, a team composed of existing customers, the top leadership of PEW, several employees and a technical team from my company will be established within the first month. Using brainstorming sessions, the team will gather data by collecting each member’s contributions and together analyze the data to identify consistencies and variations in thoughts and opinions (Mrugalska, Akielaszek-Witczak & Stetter, 2014). After analyzing the findings, a diagnostic plan will be created in the second month to identify the root cause of PEW’s poor performance based on the findings of the analyzed data. Lastly, the identified root cause of poor performance will be fixed and monitored in the third month to ascertain that it was indeed the root cause and it has been permanently sealed.
Current reality tree problem analysis methodologies provide a means of analyzing several organization problems and systems simultaneously (Kum & Sahin, 2015).
First step: Listing the problems or unexpected turn of events
- The continued failure of PEW to retain existing customers
- Zero new customers enrolled in the companies supply chain
- Impossibilities in winning back lost customers from PEW to new suppliers
- Loss of experienced employees in favor of new entrants in the supply market
- The emergence of new suppliers
- New suppliers offering their products at comparatively low prices than PEW
- Decline in profitability by almost 45% in the PEW Company
- If PEW continuously has failed to retain existing customers, then their products and service do not meet customer needs and expectation.
- If there are no new customers enrolled in the company’s supply chain, then their competitors are more appealing to the customer’s preferences
- If the company cannot win back lost customers to new suppliers, then the major determinant of the customers’ choice of supplier (price and service delivery) hasn’t changed both at PEW and with the new suppliers.
- If the company continues to lose their experienced employees to new suppliers in the market, then they are poorly empowered, under-equipped and their contributions neither recognized nor appraised due to poor returns and incompetent leadership.
- If new suppliers keep emerging, then there is a deficit gap in meeting the customer’s expectations and needs with the existing suppliers.
- If the new suppliers are offering their products and services at low prices compared to PEW, then the cost of production in PEW is higher than with the new suppliers.
- If the profitability levels keep declining consistently at an almost average margin, then no action has been taken to remedy the root cause of the problems bedeviling the company.
From this analysis, it can be clearly seen that the root cause of the problems facing the PEW Company is the failure of the PEW leadership to align their objectives and long-term goals to the customer needs and expectations (Zeng & Skibniewski, 2013). The loss in profitability margins has been occasioned by failure to retain and win new and lost customers. This has impacted on the employee’s empowerment and equipment by reducing the resources at hand hence resulting to insensitiveness of the leadership on the changing needs of the employees. In a bid to keep up with the employees and customers product quality expectation, the company might have kept their prices at a comparatively higher margin as compared to the new suppliers while at the same time negating some costs such as employee’s performance evaluation and appraisal.
Leadership and Employee Empowerment
The Ishikawa diagram is used to structure a brainstorming session aimed at identifying the possible causes of a problem in the activities and processes of an organization (Winter et al., 2016). In our case study, the problem statement will be the poor performance or declining performance of the PEW Company. A team made up of top PEW leadership, customer’s representative, and employee’s representatives and the consultant team will brainstorm on the major categories of possible causes of the problem (see the appendix diagram 1).
The operations management tools in industrial engineering have been of great significance in improving efficiencies and increasing the gains realized from processes. In the present economic world, the incorporation of sustainability into the supply chain management systems of organizations is key in ensuring that the organizations keep up with competition in a dynamic market environment (Brandenburg & Rebs, 2015).
The project quality management knowledge area contains the requisite information to ensure that desirable outcomes in a project are achieved (Pemsel & Wiewiora, 2013). In PEW Company, the desired outcome might be in form of market superior goods or services, low costs of production, lesser time in production processes, increase in turnover rates, and positive customer feedback. Quality may be defined as the extent to which a product or service satisfies the customer’s expectations and needs (Mesquida & Mas, 2014). In the Project Management Body of Knowledge (PMBOK), there are three steps that can be implemented to manage the quality of products and services in the PEW.
First, a team of stakeholders picked across the board will come up with a quality management plan. The quality management plan will outline the desired deliverables of the production process after the end of the three months (Ojeda & Reusch, 2013). The plan also spells out the implementation process of policies and guidelines in order to achieve the organization’s and customer’s aligned quality objectives.
The main stakeholders in this project will be; PEW’s top leadership, customer representative, employee representative in the production and supply chain department and the technical team from the consultant firm. The project manager will be the leading consultant. The objectives of this project will be to identify and rectify the root cause of the decline in profitability in PEW, and the inability to retain customers and failure to win new ones. This project will also investigate the causal factors for the loss of the company’s experienced employees to new entrants in the market and ways of mitigating these problems and ensuring that the sustainability of the reached upon solutions is enhanced (Heravi, Coffey & Trigunarsyah, 2015).
Using Rapid Problem Resolution and Diagnosis Technique
The first step of the quality management plan will be to design the Project Brief (Sanjuan & Froese, 2013). The views of the customers on the quality expectations will be collected from the representative of the customers and documented in a Project Product Description. However, throughout the three months, this project will run, the team will be regularly checking for possible changes in the customers’ expectation. This is because the expectations might change with time due to changes in other external factors (Matos & Lopes, 2013).
The second step of the project will be to define the acceptance criteria of the product (Sanjuan & Froese, 2013). PEW top leadership and the customer representative will agree on the project product description. This will be done in strict conformity to the established standards by organizations such as IEEE and ANSI. The third step will be to prepare the strategy for managing the quality. Here, we will ascertain that the product to be developed meets the acceptance criteria. A framework for the quality management in line with the organizational standards and guidelines will be developed.
The fourth step will involve breaking down the final product and the management products into specialist products. We shall then create a product description for each specialist product which will outline the scope and quality standards of each product. The quality tolerance levels and methods to be implemented will be defined. Quality responsibilities will be placed on the shoulders of the producer, the reviewer, and the approver. The producer will bear the responsibility of developing the product under the set quality standards. The reviewer will be responsible for cross-checking the developed product against the quality standards described in the product description. The approver goes through the reviewers’ recommendations and approves or disapproves the product (Drob & Zichil, 2013).
The last step involves tracking and controlling the quality of the management and specialist product to prevent faults or defects in the final product (Milunovic & Filipovic, 2013). All the information in this process will be recorded and stored in a quality register to enable the top leadership of the PEW to manage control. A quality review technique will be developed and implemented in a quality review session where all stakeholders will be in attendance.
A chair, reviewer, presenter, and an administrator will be selected from amongst the team members in the project to oversee the session. The chair will be responsible for the overall conduct of the review. The presenter will present the product and attend to questions from attendants. The reviewer is responsible for checking the quality threshold of the product and suggesting improvements or corrections where need be. The administrator will be responsible for recording and keeping the files of the review session.
Current Reality Tree Problem Analysis Methodologies
The PDSA cycle is an action-oriented learning scientific method for taking control and continuously improving processes or products in a project (Taylor et al., 2013). In the plan step, a goal is identified and action is taken. In the do step, the action plan is implemented. The study step ensures that the deliverables are monitored and areas that need further improvement captured and noted. The act step is the last step and in this step, the goals can be readjusted, methods changed and the whole process reformulated.
The team will also use the customer segmentation and cluster techniques to put together previously lost and potential customers in cluster groups based on their preferences and characteristics (Güçdemir & Selim, 2015). The customer preferences and characteristics will assist the production team in ensuring that the products they produce meet the quality preference of each cluster group. Using the lean and sigma six approaches the product quality will be defined from a customer-oriented perspective. A quality product from this approach is one that meets the customers’ preference and need and also one that can be provided to the customer at the right price and time (Sarvari, Ustundag & Takci, 2016).
The PEW leadership should have a clear direction and vision for the company to enable it to implement system-wide strategies and plans for quality improvement and sustainability. Lack of a clear vision and direction for the company hinders the integration of customer needs and expectation with the company goals and objectives (Manders, De Vries & Blind, 2016). The employees should be equipped and empowered to ensure that monitoring and evaluation of programs that promote the effectiveness of processes and product quality s achieved. This will require the company to procure simple but effective technology to monitor and evaluate programs.
The PEW management should involve its employees in the continual improvement process. The leadership should put into place a performance management system that identifies and recognizes the best performing and the worst performing employees (Deepa, Palaniswamy & Kuppusamy, 2014). Good performance should be recognized and rewarded appropriately to ensure that the employees are motivated to work hard to achieve desirable results. This will prevent the company’s most experienced employees being lost to new suppliers.
The employees should be accountable and responsible for the failures and success of the company programs and processes. The company should place each employee in the departments that they can perform at their level best based on their academic portfolios and experience background. All the employees should be in a position to digest and fully understand process evaluation and review results so as to improve performance and sustain the continuous improvement of quality management (Lam, O’Donnell & Robertson, 2015). However, the leadership should allow the employees some limited and regulated space for errors and failure.
The Continuous Improvement Plan
Conclusion
Most of the performance problems facing the PEW Company are mainly related to the poor relationship between the customer and the company (Hayat, 2017). Lack of an effective quality management strategy in the company has impacted on the product and service quality expectation of the customer negatively. The products being produced by the company may be partially meeting the customers’ objectives, only taking into consideration the company’s goals and may be outdated due to the dynamic nature of customer needs and expectation.
The company may be using a quality management plan that only identifies faults in the company processes and programs but doesn’t describe how to control and prevent future occurrence of this faults. Incompetence within the team players entrusted with the responsibilities of maintaining the quality of products and processes may be another problem.
However, with the right competencies, the quality management plan will cure the problems facing the company (Carter et al., 2013). Within the first month of the project, the project team will be established and the root causes of poor performance identified. In the second month of the project, a quality management plan will be instituted and implemented under a close scrutiny from the project team members. In the last month, the quality management plan will be evaluated and controlled. The quality management activities will be executed and assessment made on the performance of the project and the end product acceptability to customers. Necessary changes will be factored in the continuous improvement plan.
At the end of this project, the customer’s quality expectations and needs will be streamlined with the company’s goals and objectives, the management will be in a position to prevent further loss of their experienced employees after understanding the root cause and implementing the requisite measures, and be in a position to reverse the decline in profit margins due to loss of their customers and failure to attract new customers. The company will also be able to keep up with the competition from the new emerging suppliers.
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