Root Cause Analysis And Continuous Improvement Plan For Precision Engineering Works Private Limited (PEW)

Discussion

Precision Engineering Works Private Limited or PEW is an original equipment manufacturing company that specializes in manufacturing of plastic moulding parts, which are supplied to the telecommunication industry. Precision Engineering Works or Pew is headquartered in Mumbai, a city in Maharashtra, India . PEW are providing their services to the telecommunication industry for almost around 30 years, they caters their service to the leading telecommunication servers providers. Because of the reliability and reputation of PEW in the, market, they have developed to become a successful organization in the industry. However, because of certain issues and factors faced by Precision Engineering Works Private Limited, there are some problems, which have emerged for PEW. The problems of Precision Engineering Works Private Limited include reductions of profits by a significant margin and loss of experienced employees. Both the problems have a serious implications for the company PEW. The report identifies the root causes of the problems PEW are currently facing by application of proper tools. The tool that that have been used for the identification of root cause analysis of the problems of Precision Engineering Works Private limited is 5-Whys.  The paper also develops a continuous improvement plan for the company PEW, which would ensure that the problems are not repeated in the future .The Quality management system that has been used in the paper to devise the Continuous Improvement Plan for PEW is Six Sigma method.  The report also highlights the competencies required from the management of PEW and the employees so that they can bring about the proposed changes effectively.

Problem Statement  

Precisions Engineering Works or PEW observed that their share of profits or profitability have dropped drastically and it decreased by 45%. This is a growing concern for PEW, which requires immediate actions.

Root cause analysis 

Root cause analysis or RCA is a technique of identification of root causes of a problems of faults  in an organization (Latino,  Latino & Latino , 2016) .The root cause factors are factors whose elimination would prevent the final unwanted outcome of the company or organization. Several causes lead to the emergence of problems for Precision Engineering Works Limited or PEW. The roots cause of the problem needs to be identified by PEW (Cromar, 2013). The continuous improvement plan has been developed below so that the problems are not repeated in future. The core competencies have also been discussed below. Some of the tools required for the identification of root causes of the problem for PEW are:

Five Whys Tool 

The Five whys tool is one of the tools that are used to find root cause of any problem (Serrat, 2017). In this tool, five questions are asked and solutions are tried to be found .This five questions leads to the identification of root cause of the problem. In this case, the problem has been identified as the drastic drop of share of profits which is estimated around 45%. The questions asked in five why tools are:

• Why 1:  Why has the profitability of PEW reduced by around 45%?

Because , PEW is finding it difficult to win new contracts from the customers and clients of telecommunication industry and due to less number of experienced employees.

• Why 2: Why is it becoming difficult for PEW to get new contracts?

Problem Statement

Because of the emergence of new suppliers in the market who are taking away the contracts .

• Why 3: Why are the emerging suppliers winning the contracts?

Because, they are offering better pricing than PEW.

• Why 4: Why there is lack of experienced employees in PEW?

 Because all the experienced employees are opting to join new suppliers, that have emerged in market.

• Why 5: Why are new suppliers emerging in the market?

Because ,this industry is deemed as very lucrative.

Brainstorming Tool

In this tool process, a group gathers as many ideas as possible in order to identify the root cause of the problem (Okazaki et al., 2015). The steps of using brainstorming tool in this problem scenario are:

• A team is formed which comprise of Business improvement consultant and the members from PEW.
• A facilitator is engaged for brainstorming, who needs to be impartial and should keep the session steady.
• Two people should be assigned who would write the ideas of identifying the problems related to the decrease of profitability of PEW. All the ideas need to be gathered together.
• It should be ensured that the aim should be quantity of the idea and not the quality of the ideas, which are to be gathered for identifying the problems of PEW.
• It should also be ensured that the ideas, which are gathered, are not judged as all the ideas related to the identification of cause of problems of PEW would be entertained.
• The session should be stopped when the ideas, which are gathered, are sufficient.

Tree Diagram Tool 

The tree diagram is also used as a tool for the root cause analysis of Problems in an organization. The tree diagram tool used for the scenario in the company PEW are shown below:

Flowchart Diagram Tool

Flowcharts organize the information about a particular process by depicting it in a graphical form. In this case, the root cause have been identified that lead to the problems in the company, PEW, using Flow Chart diagram.

Figure 2: Flowchart Diagram

(Source: Created by Author)

SWOT Analysis Tool 

The SWOT analysis is also a toll for the identification of root cause of a problem in an organization (Eva et al., 2014). The SWOT analysis that has been used for the identification of the root cause in the scenario of the company PEW is shown below:

 Table 1: SWOT Analysis

(Source : Created by Author )

Fishbone Diagram Tool 

A Japanese Quality Control Expert, Dr .Ishikawa developed the fishbone diagram. The Fishbone diagram is an important tool to identify the root cause of a problem (Reilly et al ., 2014) . The Fishbone diagram that has been used for the determination of the root causes of the problem is shown below:

Figure 3: Fishbone Diagram

(Source: Created by Author)

Affinity Diagrams Tool

The affinity diagram is an important root cause analysis tool that helps to organize the information and amalgamate together the gathered information (Tenera & Luís Carneiro, 2014). After the ideas are generated, they are grouped together using Affinity diagram tools. The affinity diagram to identify the root cause for the problem encountered in PEW is shown below:

A continuous improvement plan can be defined as the group of activities that have been designed with the aim to bring continuous improvement to any organization in terms of products, services and process by reviewing these factors constantly (Singh & Singh, 2015). A continuous improvement plan is necessary in the company PEW, in order to ensure that the problems and issues which the Company, Precision Engineering Works Limited or PEW is facing are not repeated in the future. To devise the continuous improvement plan of PEW, the Six Sigma Model is followed.

The Six Sigma model makes use of the DMAIC model for the improvement of the quality of process and systems (Pyzdek & Keller, 2014).This also increase the customers satisfaction, which results in increase of sales. It curtails the variations in the process and results in reduction of problems for an organization. Proper implantation of Six Sigma methodology leads to desirable output or outcome for any organization. The DMAIC model, which is used in Six Sigma model, consists of five phases (Ramanan, Kumar & Ramanakumar,  2014). The five phases includes define, measure, analyze, improve and control (Evans & Lindsay, 2014). The first phase defines the problem, the second phase details the way to measure the problem and ways of improvement. The third phase includes the analysis of the factors resulting of the problem. The fourth phase suggest the improvements and its implementation .The fifth phase emphasizes the need of ensuring that the improvements will sustain.

Root Cause Analysis

The Six Sigma plan for devising the continuous improvement plan of the company, Precision Engineering Works Private Limited or PEW is shown below:

 Figure 5: Six-Sigma Plan

(Source: Created by Author )

The core competency of an organization defines the strength of an organization. C.K Prahalad and Gary Hamel developed the concept of core competency. It provides the infrastructure for an organization to build, grow and grab new opportunities and also cater value to the customers .The competencies of any organization cannot be replicated easily even if new competitors emerge in the market which poses threat to the organization. Generally a company have multiple core competencies .The core competencies are also called the core capabilities. It results in creation of environment that provides advantages that are competitive for the organization. The core competency generally meets three criteria, which are:

• A wide variety of markets can be potentially reached by the application of theory of core competency.
• It should contribute to the customers, who must benefit from the provided output products.
• The core competencies of any particular organization is difficult to replicate or copy by another organization.

The core competencies that are needed by Precision Engineering Works Private Limited or PEW are as follows:

• Ability to Inspire and Motivate – Considering the mass scale departure of experienced employees from Precision Engineering Works Private Limited or PEW, it is necessary for them to inspire and motivate the experienced employees so that they are not lured by the rival companies in the market (Green et al ., 2014). If the experienced employees start leaving the company in large number, new employees would take time to adjust and hone their expertise in PEW, which would negatively influence the organization. The leaders in the management of the company should emphasize on relationship building ,should be a role model of the employees and communicate a better picture of the future prospects in the organization .
• Ability to analyze issues and Solve Problems –Precision Engineering Works Limited or PEW should ensure that the issues which PEW are facing are detected promptly and solved as well before they lose their markets. Considering the emergence of new suppliers in the market, it is understandable that the company will encounter several issues and problems considering the competitiveness in the industry. They management of the organization ,PEW should use proper systems to detect the issues and problems affecting the organization (Goetsch  & Davis, 2014).They should ensure that the problems and issue are solved without delay .Proper measures and developments of proper plans are also necessary to ensure that the problems and mistakes are not repeated in the future .
• Technical and Professional Expertise –The management leaders in the company, Precision Engineering Works Private Limited or PEW, should exhibit their technical and professional expertise and prowess for the betterment of the company (Susskind & Susskind, 2015) .They garner respect from their abilities to assess the issue and problems faced by the companies when chips are down . They use their expertise to analyze the situation and come out with solutions to the problem by using their extensive knowledge in the field. It is the duty of the authorities and higher level management of the company PEW , so that they can motivate their experienced employees so that they do not leave the company during crisis period .The management leaders should contribute significantly so that the goals and objectives of the company are achieved . It should be ensured that the leaders of management are well aware of the latest happenings, challenges and the innovations that are occurring in the field and apply their expertise and their extensive knowledge for the success of the organization.
• Proper Implementation of Business Strategy –It is very important for the organization, Precision Engineering Works Limited or PEW to devise proper business strategy and implement efficient marketing plans. It has been observed that the due to inappropriate pricing of products by the company, PEW, they are not able to gain contracts from the clients of the telecommunication industry. These contracts are taken over by the new emerging supplier organization as a result, these organizations get the opportunity to penetrate the market. Due to these factors, the company, Precision Engineering Works Limited or PEW had suffered a drastic drop in the profitability, which is estimated around 45 percent. Thus, it is necessary for the management and the authorities of the company to adopt proper business approaches that would not result in undesirable outcome like decrease in profitability .On the contrary they should devise plans and undertake strategies so that they can gain competitive edge over the rivals and the newly entered companies in the market.
• Situational Leadership Style –Considering the scenario of PEW the manager of the company should follow situational leadership style (McCleskey, 2014). Accessing the situation of PEW ,where the company is experiencing a decrease in profitability ,some changes should be immediately made after assessing the situation so that the company can overcome the adverse situation.

Conclusion 

From the paper, which pertains to the problem encountered by the company, Precison Engineering Works Private Limited or PEW, it can be concluded that the problem they are facing is directly affecting the profits of the company. This is a serious issue of concern, which needs to be solved and fixed immediately. By using several tools , the root cause of the problem has been analyzed and identified .The paper also  provides a  detailed continuous improvement plan by using the Six Sigma method tools that needs to be implemented by the employees and the management of the company ,PEW so that the problems are not repeated in the future . The paper also details the competencies, which are required by the employees and the management leaders of the company, PEW so that they can contribute to the company and bring about positive change to the organization.

References 

Cromar, S. (2013). Root Cause Analysis. In From Techie to Boss (pp. 135-161). Apress, Berkeley, CA.

Eva, M., Hindle, K., Paul, D., Rollaston, C., & Tudor, D. (2014). Business analysis. D. Paul, D. Yeates, & J. Cadle (Eds.). British Computer Society.

Evans, J. R., & Lindsay, W. M. (2014). An introduction to Six Sigma and process improvement. Cengage Learning.

Goetsch, D. L., & Davis, S. B. (2014). Quality management for organizational excellence. Upper Saddle River, NJ: pearson.

Green, A. E., Albanese, B. J., Cafri, G., & Aarons, G. A. (2014). Leadership, organizational climate, and working alliance in a children’s mental health service system. Community mental health journal, 50(7), 771-777.

Latino, R. J., Latino, K. C., & Latino, M. A. (2016). Root cause analysis: improving performance for bottom-line results. CRC press.

McCleskey, J. A. (2014). Situational, transformational, and transactional leadership and leadership development. Journal of Business Studies Quarterly, 5(4), 117.

Okazaki, A., Mateo, J., Werner, E., Hendricks, R., Woodbury, A., Sun, T., & Cameron, G. (2015). U.S. Patent No. 8,954,431. Washington, DC: U.S. Patent and Trademark Office.

Pyzdek, T., & Keller, P. A. (2014). The six sigma handbook(Vol. 4). New York, NY: McGraw-Hill Education.

Ramanan, L., Kumar, M., & Ramanakumar, K. P. V. (2014). Six sigma–DMAIC frame work for enhancing quality in engineering educational institutions. International Journal of Business Management Invention, 3(1), 36-40.

Reilly, J. B., Myers, J. S., Salvador, D., & Trowbridge, R. L. (2014). Use of a novel, modified fishbone diagram to analyze diagnostic errors. Diagnosis, 1(2), 167-171.

Serrat, O. (2017). The five whys technique. In Knowledge solutions (pp. 307-310). Springer, Singapore.

Singh, J., & Singh, H. (2015). Continuous improvement philosophy–literature review and directions. Benchmarking: An International Journal, 22(1), 75-119.

Susskind, R. E., & Susskind, D. (2015). The future of the professions: How technology will transform the work of human experts. Oxford University Press, USA.

Tenera, A. M. B. R., & Luís Carneiro, P. (2014). A Lean Six Sigma (LSS) project management improvement model. SELECTED PAPERS FROM THE 27TH IPMA (INTERNATIONAL PROJECT MANAGEMENT ASSOCIATION), 912-920.

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