Posted: September 13th, 2017

Managing Organisational Design and Change

Managing Organisational Design and Change

BHO 0202 Managing Organisational Design and Change/Assessed Case Study: Commercial Technology

Commercial Technology Limited (Comm Tech), produces electronic office and business equipment. The business has been established in its current form for ten years. Ownership at present is shared 50-50 between the company founders and a private equity company. The equity company took its share when it financed the take-over of Comm Tech’s main UK rival five years ago.  In terms of market share Comm Tech is the number three in the UK, number ten in Europe but still has to establish significant sales in the wider world market.  Comm Tech does though have a history of successfully collaborating with world leading suppliers of office equipment. The company has invested heavily over the years in the areas of research and development and in proto-type design. Comm Techs designers and engineers have contributed to the designs of several very successful products.   Comm tech also acts has a sub-contract manufacturer for European and American equipment manufacturers. The business strategy for the last few years has been focused on developing a range of high quality products that would underpin penetration of the wider world markets and shape business growth.  The equity shareholders are particularly focused on growing the business as quickly as possible.

Several months ago Comm Tech launched the Office System 2012 (OS 2012). This is a single, very robust machine that functions as a colour printer, scanner, copier and fax. The OS 2012 has received rave reviews for its innovative design, functionality and price from trade shows and in the technical press. The customer interest that this generated coupled with the business’s existing reputation for quality and an affordable product has lead to a severe backlog in unsatisfied orders. The factory simply could not cope with the volume of demand.

The performance of the product and the factory had been the main item on the agenda at the last executive board meeting.  Some members of the board had been very critical of the senior management team and the way they had prepared for and managed the product launch. There were even suggestions of sub-contracting the product manufacturing to far eastern suppliers. The managing director was tasked with producing a full analysis for Comm Tech, its position in the market place and future potential for growth. The managing director was also told in no uncertain terms to sort out problems in the factory before they had a serious impact on the business.

Before she had attended the last board meeting, Comm Tech’s managing director Janet (Jan) Johnson was extremely concerned with the backlog and put a great deal of pressure on the factory manager, Michael Hartley, to increase production. However, Jan abruptly changed her focus when a new report showed that returns and complaints were running five times higher for new OS 2012 than any other product.  With Comm Tech’s reputation on the line and the new pressure from board members Jan decided that this problem needed immediate attention from a number of perspectives. She decided that the best way forward would be to bring in an outside consultant.
Jan hired Kathy Blake Associates, a well established consultancy group, to look into the problem. Jan and Kathy met and agreed that Kathy should spend a week interviewing key personnel in an effort to learn as much about the problem as possible. Because of the urgency and high profile of the problem Jan promised Kathy that she would have complete access to, and the cooperation of, all employees. Jan sent out an email to this effect to all employees working on the OS 2012 project. She also gave Kathy access to any company documentation that she required.

Kathy started the project by briefing her team of business analysts. They started work on gaining an understanding of the business and its operating environment. Kathy had tasked them with completing a full analysis and producing a report containing this analysis and offering strategic options in time for the next quarterly board meeting.

Kathy decided to focus her attention on the factory performance. She started her work by discussing the quality problems with several of the Production Supervisors. She began with the supervisor of the Final Assembly section, John Allison. John immediately commented:

I received Jan’s email yesterday, and really, the problem with the OS 2012 does not surprise me. One of the problems we have had in final assembly is the casing. Basically, the case is composed of a top and a bottom. The problem is that these two pieces rarely fit properly and we have to force them together. I am sure that this is putting a lot of extra stress on the cases. I have not seen the report on what the quality problems are but I am sure one of them must be stress cracked cases. One thing though, we never had this problem with the old supplier. Just because purchasing can save a few pounds here and there they have switched to an un-tried maker.

The meeting with John lasted around one hour. After writing up notes from these discussions Kathy went off to talk to David Smith, the Production Supervisor. Kathy found David and a production operator examining one of the machines that automatically fixed electronic components onto circuit boards. Kathy introduced herself and asked what the problem was. David responded:

We have been having a bad time making the printed circuit boards for the new     OS 2012 machines. The designers have placed the components very close to     each other. Really they are too near for this type of machine to insert them     properly. We get lots of components with bent leads or components and     boards that are damaged beyond repair.  About 30% of all the boards     coming off the     machine have some problem with them. As a result we spend a     lot of time inspecting and reworking the boards. All of these problems were     compounded when we got the instruction to run the machine 20% faster, that     is, at maximum speed, in an effort to catch-up the backlog. We are now getting     more damaged boards and the machine is breaking down more often, we     probably only get 5 hours production time from an 8 hour shift.
In terms of the problems you are looking at faulty boards or damaged     components are likely to be a major cause. We are doing our best to find and     correct all of the defects, but inspecting and reworking the boards is a very     tedious task. The workers are putting in lots of extra hours to help us out of     the problem. We are all under a lot of pressure to get the boards through to     final assembly.
My biggest regret is that I did not have more input when they were     building the prototypes.  They were all hand built by highly skilled     technicians. Unfortunately, the prototypes were only built to give the designers     feedback on the performance of their design. Had we in production been     involved we could have made suggestions which would have made producing     these things easier.

Kathy finished off the day by talking to the Factory Manager, Michael Hartley. Michael was in complete agreement with John and David and talked at length about the pressures he was under to get product out of the door. He said:

The biggest problem is that no one works together here. Purchasing change     from good to untried suppliers just to save a few pounds and our designers     design products we cannot produce.

Next day Kathy decided to speak to the head of Purchasing, Mary Regan, about the casing problem identified by Final Assembly.  Mary explained that changing suppliers had saved over £2 per unit. Over the projected first year volume of sales this would improve the margin by £250,000, not a saving to be missed. Mary said that:

The production department think the world revolves around them. They should     think about where the savings are really made that keep us all in a job. I know     there are some issues with quality from this supplier and I intend to sort it out     when I visit them next month.

After this conversation Kathy went off to see the Engineering Director. On the way she saw the operator who had been with David the day before. After introducing herself again Kathy decided to have a chat as they walked along. The operator told her:

That he had worked in the Despatch Department until two weeks ago. When     the production job became available, he had been told the original operator     was off sick with stress; he applied just to get a higher wage.  He had not had     time to get the proper training yet, they were so busy. Anyway David kept an     eye on him and had asked the inspectors to do the same. But the inspectors     were always complaining, nothing you did ever pleased them.

Kathy thanked the operator and went off to her meeting with Alan Teal the Engineering Director. Alan began:

I understand you’re here to look at our little quality glitch. In Engineering we     are driven to get everything into a smaller and smaller place. A few years ago     all of the functions of the OS 2012 were in individual products now we have to     fit it all into one box. That means that tolerances are going to be more     exacting and the products are going to be more difficult to make.     Manufacturing really need to get their act together if the business is going to     survive in the marketplace. Engineering did its job. We produced a state of the     art design in a record time, and proved the prototypes to a standard never     achieved before. All manufacturing have to do is put the same effort into     producing them.

Kathy’s final meeting of the day was with Margaret Croft the Quality Assurance Director. Margaret stated that:

Her biggest challenge was trying to convince the rest of the organisation of     the importance of the quality function. Everyone says they are quality focused     but come the end of the month the focus is on getting product out of the door. I     have formal responsibility for quality but I do not have any authority over the     production or assembly areas. The quality inspectors that report to me do     little more than check products and tag the ones that need to go off to rework.     Because of this I am very happy to see you here. I am glad Jan has at last     become concerned about quality and I welcome the opportunity to work with     you.

Kathy ends the day by writing up her notes from the meetings and interviews. She is aware that there are complex issues to be dealt with. That whilst some of them need immediate attention others will require medium and long term solutions.

On returning to head office Kathy consults with her team to gain a view of their progress. She intends to produce an interim report for the company that identifies the main quality and performance issues and suggests possible solutions. Her report will include an immediate action list. A longer term plan for improvement will be included in the final business report for the Comm Tech board

Managing Organisational Design and Change
BHO 0202

Term Two Group Assessment             50% of Module Assessment

Working in groups with 3-5 members
Produce a report of 5000 words

This group assessment covers all knowledge and learning outcomes. It is expected that you will utilise appropriate theory, concepts, tools and techniques introduced in module.  You will also need to review the current external environment that is relevant to the organisation featured in the case study.

Assignment Brief:

?    Read the Commercial Technology Case study
?    Your group should assume the role of a team of business consultants supporting analysis of the situation at Commercial Technology and preparing a report for the company and its board of directors.

You should produce a balanced report that includes:

1.    A description of the company’s current, strategic, quality and operational performance
2.    An analysis and identification of the main issues of strategic and operational concern.
3.    A proposal for short, medium and long term improvements to address the issues you have identified
4.    Details of performance management. Which, how and where, you would suggest using performance measures to help manage the change/improvement programme you have proposed.

Diagrams should be used to facilitate discussion and understanding