Continuous Improvement Plan: Latino Engineering Company Analysis

This report presents a comprehensive continuous improvement plan designed for Latino Engineering, a manufacturing organization facing declining customer orders and increased complaints. The plan, based on Six Sigma principles, addresses key issues such as defective products, inefficient order processing, poor customer service, and long turnaround times. It includes a detailed root cause analysis identifying problems in order processing, design and development, and production. A needs assessment highlights the need for improved order management, reduced turnaround time, enhanced service delivery, and quality control. The proposed improvement actions include centralizing order management, implementing an application for order tracking, improving customer profiling, and utilizing concurrent engineering to streamline processes. The plan outlines a clear implementation timeline, communication strategies, and expected outcomes, aiming to reduce customer complaints and improve overall operational efficiency within three months. The report emphasizes the importance of addressing these issues to prevent further customer attrition and ensure the company's long-term profitability.

Continuous Improvement plan
Table of Contents
Introduction......................................................................................................................2
Problem Description..................................................................................................................2
Project Rationale.......................................................................................................................2
Objectives..........................................................................................................................2
Timeframes.......................................................................................................................3
Challenges.........................................................................................................................3
Continuous Improvement Plan.........................................................................................4
Root Cause Analysis..................................................................................................................4
Needs Assessment......................................................................................................................6
Improvement Actions................................................................................................................6
Implementation Plan.........................................................................................................8
Communication Plan........................................................................................................9
Conclusions.....................................................................................................................10
References.......................................................................................................................11
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Continuous Improvement plan
Introduction
Latino engineering is a manufacturing organization that sells specialized engineering
equipments to companies in New South Wales, Australia. The company has 300 employees
and it has been taken over by another organization. The services of Latino include designing,
development, and manufacturing of equipments and they are served to industries like
construction, utilities, infrastructure, and oil & gas.
Problem Description
An investor organization has acquired Latino Engineering a year back but the company
started to face some major challenges within a year of acquisition such as a decline in the
customer orders and increase in the customer complaints. Customers frequently complained
about the delivery of defective or wrong equipments, poor follow ups, long turnaround time,
and non-responsive team.
Project Rationale
Because of the increasing complaints from customers, the number of orders received by the
company is reducing and this is causing major concern to the company as it is affecting its
bottom line profitability. The company needs to take appropriate steps to resolve issues faced
by the company. The company needs an improvement in its existing processes and a solution
for all the operational problems it is facing. For this, a continuous improvement plan using
six sigma approaches is suggested which help the company would come out of the existing
problems in the next three months by reduction of customer complaints. The six-sigma
method is chosen as it effective in situations where the time available for making
improvements is very less which is true for the current case. The company needs a fast
improvement plan with methods that are proven to be effective and can get the company
make rapid improvements. The company has already lost some of its customers and thus, if
the improvements are not done fast, it would face the risk of losing more customers in near
future (Dewar, et al., 2017).
Objectives
Objectives of the plan include:
 Reduction in the defective parts or equipments that are manufactured by the
organization
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Continuous Improvement plan
 Improvements in the order processing systems such that problems like wrong
deliveries and delayed deliveries can be reduced
 Improving the customer service turnaround time and feedback system of the company
to enhance customer satisfaction.
Timeframes
If the continuous improvement plan is approved, the process of execution of the plan would
behind by 1st Jan 2018 and would be finished by 31st Mar 2018
Action Steps Milestones
Identify root causes behind the issues 5th Jan 2017
Develop proposal for continuous development using six sigma 10th Jan 2017
Get approval for the continuous development 15th Jan 2017
Initialize continuous development project by preparing resources for
adopting six sigma
20th Jan 2017
Identify activities to be completed for the continuous improvement 25th Jan 2017
Get continuous improvement plan approved 27th Jan 2017
Eliminate defects in equipments 5th Feb 2017
Improve order management process 20th Feb 2017
Improve follow up system for designing and development 28th Feb 2017
Reduce turnaround time 15th Mar 2017
Improve service delivery 25th Mar 2017
Testing 30th Mar 2017
Project Closure 31st Mar 2017
Challenges
The company is facing certain challenges at present that have to be managed. These include:
 The customers of the company are receiving defective products from the company.
This could be due to the inability of the manufacturing unit to produce defect free
products. These defects can be because faults in designing or faults in manufacturing.
To know if a product is defect free, the organization needs to test it for the variation in
quality or the output against some benchmark. In case of the company’s inability to
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Continuous Improvement plan
appropriately differentiate between normal and defective products or making
predictions about possibility of producing defective products, the company finds it
challenging to deliver a defect free product (Sarma, 2017).
 The operational efficiencies of the company has declined causing decline in the
productivity. Wrong deliveries, defective product delivery, and misplaced orders are
some of the issues that have resulted from these inefficiencies in the company
(MindTree, 2017).
 The company staffs are not able to follow up with the customers of the company
effectively in the stages of designing and development. This has resulted in
dissatisfaction among customers of the company (Mitchell, et al., 2012).
 The Turnaround time of the services of the company is more than what is expected by
its customers and thus, customers have been complaining about the same. The
company is using a variety of different applications for managing different stages of
supply chain. The people working in the organization need to exchange information
between these channels which is difficult because of lack of integration between
them. This increases the communication time and thus, the order processing time
affecting the efficiency of the services negatively (Tripathy & Kumar, 2013).
 In certain cases, wrong products have been delivered to the customers of the
organization which reflects that there are problems in data and information
management causing inaccuracies that affect deliver system of the organization.
Continuous Improvement Plan
A continuous development plan has been made based on the principles of six sigma for the
company. The plan includes root cause analysis, needs assessment, and improvement actions.
Root Cause Analysis
The problems that the company is facing current have resulted from specific causes at
different stages of product development as explained below:
Order processing: Inefficiencies in deliveries can result from inaccuracy of data that is
generated in the order management process. Some factors that can cause such an influence on
the deliveries and order processing include value of products, consignment size, and delivery
contracts. Some causes behind wrong or delayed deliveries could be wrong address receipt,
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Continuous Improvement plan
missing address, inability to get contact details of the recipient, order entry errors, and sales
order modifications (Maxwell & Mason, 2012).
Designing & development: The customers are complaining about the follow ups from the
company staff during the designing and development phases. The difficulties in follow up
could be a result of inefficiencies in information management which would make it difficult
for the employees to keep track of order status and thus, they may not be able to resolve the
queries of customers on time. Common problems that could affect information management
during the designing and development phases include change control, product complexity
management, and information management. These challenges have to be resolved such that
the customer satisfaction is improved (George, Graham, & Lennard, 2007).
Production: There can be several causes behind production of defective products in different
stages of the product development. A defect is a level of variation in a product which is not
acceptable. For identifying defects, organization must have the knowledge about the
acceptable limits. These limits make the measurable targets or benchmarks defined by the
equipment industry. Thus, benchmarking can help identify the root causes of the defects in
equipments produced. These benchmarks would be defined by expert achievers in the
engineering equipment industry (Aronovich, Allain, Sommerlatte, & Collins, 2010).
Turnaround time is the time between the order receipt and product delivery to the customer.
Organizational processes that add to the turnaround time include:
 Checking stock availability
 Designing of equipments
 Creating list of equipment parts
 Purchase or production decision
 Identifying part or products to be procured from vendors
 Informing vendor about product requirements
 Receiving order from vendors
 Parts assembling (USAID , 2013)
 Product testing
 Order dispatch to customer premises
 Transportation
 Product delivery
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Continuous Improvement plan
Needs Assessment
Following improvements are needed in the organization:
 A control needs to be established over the order management process in the company
such that the order processing related problems such as order duplication, wrong
deliveries, and order processing errors can be reduced.
 The turnaround time is very high as complained by the customers which are causing
dissatisfaction in them. Thus, there is a need for the improvement in the process cycle
which needs to be reduced such that the turnaround time can be enhanced.
 There are problems in service deliveries that are causing errors like delays, wrong
deliveries as well as affecting the ability of the employees to assist customers on time.
This causes dissatisfaction in the customers because of lack of productivity in the
staff. Thus, there is a need to improve the service delivery in the company.
 Presence of defects in the products delivered show that the organization is unable to
maintain the quality standards of the product in designing and manufacturing thus, it
is essential that the company established quality management practices that can
reduce the instances of delivery defective products (EYGM Limited, 2012).
Improvement Actions
Some steps would help company resolve the issues discussed in the previous section. For
establishing control over the order management, the organization needs to have a right
structure in place with right people with right capabilities employed on right profiles. For
this, the first thing that can be done is change of structure by centralization of the office such
that a single place would be utilized for managing the complete order lifecycle. This includes
management of product catalogue, pricing, and related information. With centralization in
place, the company can expect to get the following benefits:
 The cost of order processing would reduce with reduction in the errors in quotation
and order processing documents.
 This would increase the number of orders that people can handle in duration and thus,
improve the operational efficiency of the system.
 The centralization would reduce the order cycle time which would reduce the
turnaround time for order processing.
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Continuous Improvement plan
 As the business processes and information systems would be integrated as well as
some processes would be automated, there would be a significant reduction in the
turnaround time (Ray, Das, & Bhattacharya, 2011).
Besides these, some more steps can be taken to further make improvements in the system
such as:
 The company can implement an application that can help staff record and forward
order information. This application would be able to automatically allocate the task to
people based on the order information and the personnel availability which would
save time and notify people responsible for work thereby speeding up the work and
reducing the turnaround time further
 The accuracy of ordering processes needs to be increased and the business processes
need to be made more consistent such that service quality is also enhanced.
 Customer profiling can be used by the managers for understanding the buying patterns
which would help them understand the needs and preferences of the customers of the
company. This understanding would help managers make strategies for up selling and
cross-selling such that the company would be able to increase its sales from per
customer and thus, enhance revenues (Marden & Young, 2015)
 There can be several ways that would be used by the company for reducing the
processing time such as:
o Some of the activities involved in order processing can be carried out
simultaneously rather than doing them sequentially. This would reduce the
waiting time for subsequent activities thereby saving sometime in the order
management process.
o Concurrent engineering can be used by the organization for integrating teams in
such a way that they can perform multiple tasks at the same time. Some tasks that
may be done simultaneously by teams include conceptualization, process
mapping, bills creation, and designing. With the use of concurrent engineering,
the cycle time can be reduced by 80% (Infibnet, 2015).
o The activities sequence can be modified for further reduction in the processing
cycle. For instance, if the documentation for submissions and approvals of
multiple processes are sequenced between departments such that they flow to and
fro between them multiple times, it can take a significant time just for approvals
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Continuous Improvement plan
and submissions. However, if most documents are approved at the same time
rather than doing them in sequential manner, some of the processing time would
be saved and the turnaround time would be reduced
o Interruptions while working such as personal phone calls, calls from customers
asking for order status or for registering complaint can be distracting and would
consumer time. If the company can implement and IVR system that takes calls
from customers for general queries and only when the customer needs to have
discussions with the staff, the calls are connected, the cycle time would reduce as
there would be fewer interruptions in the work (Genesys, 2008).
Implementation Plan
The continuous improvement plan would enhance the operational efficiencies of the
organization and would reduce the turnaround time in the company which would enhance
customer satisfaction. The company has only 3 months to make it possible. Before the
improvement processes can be exercised, it is essential that the company is prepared to adapt
to the new processes and thus, the project would begin with the training of employees on six
sigma practices as it is the base of the development project. For implementation of the plan,
the organization can take the Awareness-Motivation-Competency-Implementation approach
in which first, the employees are informed to create an awareness about the changes expected
in the system with the implementation of the continuous improvement processes. Once the
staff is aware of what is happening and what is expected, they have to be motivated and
trained to develop the needed competencies. After they are trained on six sigma practices,
actual implementation of the improvement activities would be carried out. Development of
competencies in people is a very important step as lack of competencies can cause a failure of
the project (Peñaranda, Romero, & Molina, 2007).
Awareness: The awareness of the six sigma processes and its expected outcomes have to be
created in the organization employees so that they understand how the new processes would
affect their work and improve it if they learnt the new methods. Some methods that would
help create awareness include suggestion boxes, poster campaigns, benchmarking results
posting, newsletters, screen savers, etc (Desai & Shrivastava, 2008).
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Continuous Improvement plan
Motivation: As the improvement process would need more work to be done by the
employees at the stage of learning and adoption, the senior managers need to keep their
subordinates motivated so that they contribute effectively. For this, managers can use rewards
and recognitions in response to the contribution from the juniors to encourage them to
perform better. A complete cultural transformation would be required in the company to
implement the plan and this would mean that people have to change the ways they work
today which needs a high level of motivation in them (Miski, 2014).
Competency: The competencies of the employees have to be improved with trainings that
would enhance the capabilities of the staff to deal with the improvement processes. The
competency enhancement would also enhance the processes in the company. A strong
foundation can be built which would ensure that the implementation of the continuous
improvement plan is effective. Employees have not used six sigma practices earlier and thus,
are not already required with necessary skills. Thus, training programs would help them
develop required skills and understand the new processes for implementation of the
improvement plan. The trainings of employees can be conducted on topics like waste
elimination, defect identification, lean practices, DMAIC phases, designing, quality
management and productive maintenance (Buonomo, 2007).
Implementation: Once the foundation for the implementation is build through training of
employees on six sigma practices, the company would be ready for the execution of the
activities planned for which the right environment has to be created. This would include
collection of data and its evaluation such that needed improvements can be made accordingly.
For this, company can use software tools that would help in tracking project activities,
managing workshop information and trigger improvement processes. A monitoring and
reviewing system also needs to be established such that results obtained are continuously
checked to ensure that they are up to the mark (Reijns, 2010)
Communication Plan
Six sigma practices provide a variety of methods and strategies for communication within the
company between employees and outside the company between employees and customers or
suppliers. Some of these methods can be used by the company for establishing
communication in the improvement project such as:
 Meetings between employees
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Continuous Improvement plan
 Town hall gatherings
 Top management sending memos to employees for informing
 Staff presentations
 Recording of minutes of the meeting
 Q&A sessions
 Company posts by employees on intranet
 Training manuals and guides on six sigma practices
 Emails
 Phone calls
 Milestone achievement events for recognition and motivation
 Survey for gathering feedback from employees
 Suggestion systems for improvements
 Brown bag lunches
Depending on the requirements of each stakeholder, appropriate communication method can
be used (GE, 2016).
Conclusions
This report was prepared to present a plan for the continuous improvement of a
manufacturing organization that is facing major challenges causing decline in their sales and
revenues resulting form customer dissatisfaction. The objective of the plan is to identify the
root cause of the problems faced by the company and develop a plan for soving them using
specific methods. Some of the problems that were identified included high turnaround time;
follow up inefficiencies, defective product manufacturing, and ineffective delivery processes.
A continuous improving plan was suggested which would help company resolve these
problems by enhancing the process cycle time efficiency and the efficiency of the system
which would reduce the errors and defects in the manufacturing system. Some of the
improvements suggested included change of process sequence, simultaneous execution of
multiple tasks, and use of technology for tracking and processing information.
References
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Aronovich, D., Allain, L., Sommerlatte, A., & Collins, E. (2010). Measuring Supply Chain
Performance. John Snow, Inc. .
Buonomo, V. (2007). Lean Six Sigma for all. ASQ: Rochester Institute of Technology.
Desai, T. N., & Shrivastava, D. R. (2008). Six Sigma – A New Direction to Quality and
Productivity Management. World Congress on Engineering and Computer Science (pp. 1047-
1052). San Francisco, USA: WCECS.
Dewar, C., Blackburn, S., Nielsen, A. B., Irons, E., Keller, S., Meaney, M., . . . Wood, C.
(2017). How do I transform my Orgnanization's Performance? McKinsey & Company.
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(2012). Productivity in mining: now comes the hard part. EY.
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Peñaranda, N., Romero, R. M., & Molina, A. (2007). Implementation of Product Lifecycle
Management Tools using Enterprise Integration Engineering and Action-Research.
Colombia: Tecnológico de Monterrey.
Ray, S., Das, P., & Bhattacharya, B. K. (2011). Improve Customer Complaint Resolution
Process Using Six Sigma. Indian Statistical Institute.
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