AEW Profitability Improvement: A Lean Project Management Approach

Desklib provides past papers and solved assignments for students. This report analyzes a lean project management case study.

Leading lean projects

Table of Contents
Introduction......................................................................................................................................3
Problem Identification.....................................................................................................................4
Check-sheet......................................................................................................................................4
Scatter Diagram...............................................................................................................................6
Assumptions....................................................................................................................................7
Risk management plan.....................................................................................................................7
Risk register.....................................................................................................................................7
Risk register.....................................................................................................................................8
Qualitative and Quantitative Risk assessment.................................................................................8
Risk responses.................................................................................................................................8
Risk implementation........................................................................................................................9
Risk Monitor plan..........................................................................................................................10
Conclusion.....................................................................................................................................11
Reference.......................................................................................................................................12

Introduction
The assignment is associated with the lean project management. There will be a discussion about
the identification of a specific problem in a project and finding out the root cause of the problem.
The assignment will provide insights about the different types of quality tools that can be applied
to a situation to resolve the identified business problem. Based on a given case study, the
assignment will include assumptions and the risk management plan for solving the pre-
determined problems of the business.

Problem Identification
Australian Engineering works Private limited (AEW) is a big company having a larger share of
the market. The company is engaged in the plastic moulding for the telecommunication industry.
All the well-established telecommunication companies are the clients of AEW. The company
was doing good and had established goodwill in the market. But there are certain problems faced
by the company recently. The problems and the root cause of the problems are given below:
Company’s profitability has decreased by 45% and is continuously decreasing.
There are new entrants in the market.
The price of raw material used by the company is high so the prices of the finished goods are
also high.
The customers are switching as they have more options to opt form.
The rivals are supplying the products at better pricing.
The employees left the organization as they are dissatisfied and the organization also have some
internal issues.
Below are the two techniques which are used in the case to analyse the problems:
Check-sheet
This is a list containing some points in an ordered fashion which allow the user to ensure the
correctness of a process while following the entries given in that checklist (Sufang, 2013Check-
sheet is the most effective when collecting data that repeats periodically and there is a scope to
observe and collect it by the same person or at the same location. For tracking the defects that

arise during the manufacturing process of AEW, the check-sheet could be primarily used as a
quality tool.

Project Name: AEW Profitability Analysis
Name of Data
Recorder: Mani Krishna
Location: Australia
Data Collection
Dates:
Event Oc Events TOTA
L
Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7

Currence
People left AEW 1 2 2 5 3 1 3 17
Defective products (in
’00) 1 2 1 1 2 5 1 13
Contracts lost 2 3 2 1 2 4 2 16
Customers lost due to
pricing 1 2 1 1 1 2 3 11
Internal issues 2 1 2 3 2 3 2 15
Employee complaints 1 1 3 2 3 2 1 13
Extra losses 2 3 3 4 1 1 2 16
Manufacturing line
downtime (in hrs.) 1 4 1 1 2 3 3 15
(Source: ASQ, n.d. Template available at: https://asq.org/quality-resources/check-sheet

Scatter Diagram
Scatter diagrams are used to identify the root causes of a problem where numerical data is
involved. While looking at the individual entries, the problems are not possible to be identified
properly because of many other values observed at the same point; but when such data is
combined and observed for the trends of a long time, they could yield some important
information.
Scatter diagrams are used to combine many individual values in order to see a trend that is
contained within that data period.
0 1 2 3 4 5 6 7 8
0
100
200
300
400
500
600
700
800
Chart Title
Competitor 1 Competitor 2 Competitor 3 AEW
(Fig 1: Scatter Diagram)
(Source: By author)
The scatter diagram above shows the prices of the raw material of AEW and the competitors.
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Assumptions
Beneath are the assumptions for the identification of the problem:
There is perfect competition in the market.
The company is focusing on the quantity of the raw material and not the prices which is
increasing the prices of the finished goods.
Customers are price sensitive and want to save money.
Employees of the company expect the best salary in the market.
Risk management plan
Risk register
The risk register is the presentation of the identified problems of the case and the risks associated
with the problems (Deng, et. al., 2016). The case presents that due to the new entrants in the
market, there is a huge decrease in the profits of AEW. The risks associated with the case are
given below:
There will be decreased goodwill of the company.
The company can go bankrupt due to continuous losses.
The employees may also get de-motivated because of the declining profits of the firm.
A decrease in productivity
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Risk register
Risk Trivial low moderate major Extreme
Decrease in
goodwill

Bankruptcy 
De-
motivation of
employees

Decrease in
productivity

Qualitative and Quantitative Risk assessment
Probability vs. impact Matrix
Trivial Minor Moderate Major Extreme
Rare Very low Very low Very Low Medium Medium
Unlikely Very low Very low Medium Medium High
Moderate Very low Medium Medium Medium High
Likely Medium Medium Medium High High
Very likely Medium Medium High High High
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Risk responses
There are various strategies which can be used to respond to the risks in an effective manner. The
strategies to solve the problems of AEW are given below:
Avoidance: The first strategy is the avoidance strategy in which there is the removal of the task
which includes risk for the business.
Acceptance: Acceptance is another strategy in which the risk is accepted, and the risk is planned
in the project. Ways to manage the risk are found out.
Monitor and prepare: This is just like the acceptance strategy, and in this also the risk is
monitored and plans are drawn to mitigate the risks (Fink, 2016).
Mitigation: Mitigation is the risk response strategy in which the probability and impact of the
risk are analyzed, and then the risk is mitigated by formulating effective measures.
Transference: In the transference strategy the effects or impact of the risk is transferred to some
other party.
Risk implementation
The risk responses can be implemented as the following:
The avoidance strategy can be implemented by avoiding the strategy of price skimming. The
company can keep the prices of the products lower than the competitors so that it is able to
capture a larger market share.
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The response of acceptance can be implemented by accepting the changes in the technology of
plastic moulding and incorporating the new technology so that there is innovation in the products
and the customers get innovative products are cheaper costs.
The risk response to mitigation can also be implemented by the company by preparing a
probability and impact matrix of the identified risks (Peixoto, et. al., 2016).
Another risk response of monitoring and preparing can be successfully implemented by AEW by
analysing the root cause of the risk and then taking corrective actions to correct the faulty
activities of the company.
The company can transfer the work of marketing to a marketing agency. This will have a
positive impact on the sales of the company.
Risk Monitor plan
(Fig. 2: Risk Monitor Plan)
(Source: By author)
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