Cases

An Organisation Review for an Electronic Component Manufacturing Company

Challenge

The client company had stagnating sales revenues for past few years (1998-99) and a declining profit margin in 1998-99. There were poorly defined planning systems:

  • Very large range of products increasing the complexity of planning for production
  • High dispatch lead-time for top 50 products contributing to 70 percent of the revenues
  • Mis-match between raw material/ components inventory and raw material/ components required
  • Inadequate information to balance & prioritise capacities

The company had poor communication between employees and the management. There was a lack of clearly a defined organisation structure, reporting relationships, roles and responsibilities and a mismatch between the required and the actual profiles of employees. There was no clearly defined MIS. This resulted in centralised decision making and heavy involvement of top management in routine operations. There was a lack of clearly defined performance evaluation systems.

Our Approach

UC took the following steps to sort out the problems outlined above:

  • Defined an organisation structure, job descriptions and a performance evaluation system and assisted the management in implementing the same -
    • Defined profile for key positions in the organisation and conducted a gap analysis along with the top management to identify the training requirements
  • Defined a spreadsheet based demand management system -
    • A weekly production plan based on the forecasted demand and available inventory on hand for the current month
    • Material/ components requirement plan for the following two months based upon the forecasted sales and bill of material
    • Raw material/ components procurement plan for following two months based upon the materials requirement plan and procurement and processing lead-time
    • Production prioritisation based on the profitability and potential revenues and available capacity
    • Monthly sales and operations meeting between various departmental heads to settle issues of concern and finalise the production and procurement plan
  • Designed formats for top management information requirements and defined the frequenc of reviews and the people responsible to make the required information available
  • Initiated daily meetings between various functions at the manufacturing location for effective co-ordination

Impact

UC submitted their review of the organisation and defined systems and methods to alleviate the problems afflicting the client.