Modelling and Quality Improvement

A Case Study in Enterprise Modelling and Quality Improvement
1.0 Background
Etcetera, Inc. is a manufacturer of specialty key tags. They have a product line of metal
and plastic key tags, some of which have standard symbols and messages; some items may
be customized. Their primary market is college book stores and similar off-campus stores,
and they produce their standard products with symbols for this market. Custom products have
standard symbols with additional messages; these are typically purchased by campus
organisations to promote or commemorate special events.
The company has been in business for 15 years, and has been moderately successful.
There are 175 employees, 120 of whom are in production or production-related jobs. The
company has grown steadily over the years. It has developed a reputation among its major
customers for timely delivery and good products at a reasonable cost. The company had
€8,000,000 in gross sales last year, an all-time high. The company is a family-owned
business. There are rumours that the president and major owner is considering retiring within
the next few years.
This company is at a crossroads, and the management seem to recognise it. They are
considering both expansion and major reorganisation. They are also becoming concerned
with competition. Since the product line involves relatively simple technology, it is certainly
possible that competitors could become a factor. Existing competitors tend to operate within
the regions that they serve, so competition within a region is virtually non-existent. In fact,
most of the competitors in this market act as if they belong to an exclusive club, and so far
there has been a congenial and amiable relationship among the companies that share this
market.
Recently, however, a key tag producer in another part of the country was purchased by a
group of Canadian entrepreneurs, ostensibly to procure a production facility to support a
similar market among Canadian colleges. This has the owners worried. Not only has a
stranger joined the club, but the plans of the new company are not clear. There is a possibility
that an infusion of capital into the newly purchased company would lead to an attempt to take
market share.
This potential attack on market share, possibly coming during a reorganisation of the
company, has the Etcetera owners concerned. They would like to sell their holdings and move
to Keowee Key, but they feel an almost paternal responsibility to the company. While they
believe the company is secure in the short term, they would like to leave it in a state conducive
to success in the long term. A few of the owners have attended seminars on quality at trade
group meetings and professional society meetings, and the others have read of changes
taking place in many industries. They have decided that quality is the key to retaining market
share.
2.0 Meetings with Key Personnel
It is a truism that the people in the system know how to run it, and are your best resource for
finding improvements. A first step is to talk with some key people. They can show you how
the system operates, share their own ideas, and be of invaluable assistance in your study. At
the same time, you must recognise that they are products of their environment and education. 2
Some things you learn from them might be incorrect, some might be untrue, and almost all will
have inherent biases. Part of your job will be to discover the facts of the situations.
With some knowledge of the company and its products and processes, you have identified
a few key people, by position if not by name. You have interviewed these people. The
outcome of these meetings are detailed below. There provide a subjective evaluation of
conditions and attitudes. Much of what you’ve heard may be opinion or anecdotal; these need
to be confirmed or rejected based on real data.
2.1 Irving Magnate, President
Irving Magnate has been with the company since its formation. He worked for his father,
Theodore Roosevelt Magnate (known as “Old T. R.”), in Magnate Stampings in various
capacities for 25 years. When Etcetera was formed, Irving was company controller and Old
T. R. was president and CEO. Irving became president at Old T. R.’s retirement ten years
ago. Irving Magnate is also the ownership spokesman; the other family owners are involved
in other enterprises (some are retired), and leave the operation of Etcetera to Irving. For all
practical purposes, Irving Magnate is authorized to make all decisions, including
reorganisation of the company. Irving’s style of management could best be described as
“enlightened paternalism”. He thinks of himself as a surrogate father to the employees, and
these feelings are reciprocated. He is very concerned about the fate of the company and its
employees after his retirement, and this has led him to investigate reorganisation into an
employee-owned enterprise.
He has read extensively on issues in quality, and recently attended a seminar presented
by a well-known consultant. He has come to the conclusion that quality is the key to retaining
market in an environment that is potentially more competitive that what now exists. Being both
open-minded and conservative (not necessarily a contradiction), he is receptive to change,
but wants it justified and a new stability reached before reorganisation.
The meeting takes place in Irving Magnate’s office at the plant. He offers you coffee, and
engages in casual conversation while he serves it. Upon returning to his desk, however, he
becomes all business, and asks “Where do we start?”
“Mr. Magnate, I want to begin by asking about your commitment to this process one last
time. The likelihood is that our study will result in changes being made, both short-term and
long-term. The study itself will be disruptive to some extent, and we should not start unless
you are fully committed and your employees will understand and accept what we are doing.
Starting this job and then stopping it short could be worse than doing nothing. Are you fully
committed, and have you communicated your commitment to the company?”
“First, please call me Irv. We are like a family here. You have a better parking place than
I do, because visitors park near the lobby, and all employees, including me, park in the lot first
come first served. But to answer your question, I am fully committed. From what I have read
and heard, I think I understand the importance of my commitment. I appreciate your bringing
up some possible negatives, but I believe they are worth the risk. I have discussed this with
the VP of Manufacturing and the Quality Manager, and we would like to defer notifying the rest
of the company until we can tell them more about what to expect. I would like for you to tell
me that as soon as you can.”
“Fine. I would like to talk to a few of your people today, and I can tell you what to expect
by the end of the day.”
“All right. I will draft an announcement with your help, and have it distributed tomorrow.
Now, how else can I help you