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This case study, although simplified, has been derived from a real world industrial situation. The names of the personnel have been changed and confidential information modified or removed.
The Cranfield Agricultural Tractor Company (CAT) has been in existence for 100 years, originally producing a limited range of agricultural tractors. It now produces many products and product variants used in agriculture, building and construction, and mining. The company has ambitions to grow further, particularly through overseas expansion, but is concerned about the working capital that will be required to double the size of the company extrapolating from the current situation. As a result the CEO, Hannibal Lecter, has announced that the Cranfield Agricultural Tractor Company will adopt 6 sigma. Deployment champions have been appointed and over 30 black belts are now in position and the company is now training its own master black belts.
Although the company as a whole is rather profitable, one of the products – the small hydraulic articulated teleloader – has been a problem product since its introduction 3 years ago. There are 3 platforms (X, Y and Z) being assembled on one assembly line. The management team has struggled to make this product profitable; there is now a mandate from corporate headquarters that the product team has one financial year to turn the situation around. Failure to do so will result in withdrawal of the investment required to update the design and to keep it in the market place. Ultimately this will result in the removal of the product from the market and disbandment of the product team.
The product manager, Freddy Kruger, has sponsored a 6 sigma project to establish what the real problems are and appointed a 6 sigma blackbelt, Norman Bates, to look at the situation. Norman immediately advocated carrying out a value stream mapping exercise. Norman made requests for greenbelts from the product team and now has 2 people in training on the project.
The team have just completed their draft current state value stream map, by actually walking as much of the flow of the product as possible, counting machines and parts where appropriate, and complementing this with information from systems. They are now debating what to present back to Freddy Kruger.
They agree that the task is large and needs breaking down into manageable chunks. Their aim is to identify the chunks, prioritise them and describe what sort of tools they may try and apply for each chunk or project.
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Six-sigma is considered as an organizational strategy that helps to determine the cause of errors and eliminate defects and failures in its processes which focuses on outcomes which are crucial for customer satisfaction. It is used to measure quality that assists in eliminating defects with the application of statistical measures. A defect identified in organizational processes and its outcomes has a direct influence on the level of customer satisfaction. The key objective of utilizing six-sigma is to use it as a measurement-based strategy focusing on process improvement and variation reduction (Antony 2004). DMAIC – Define, Measure, Analyse, Improve and Control, is being used as an approach for problem-solving and process improvement (Mast & Lokkerbol 2012). This report discusses the issues of The Cranfield Agricultural Tractor Company (CAT) in the define, the measure and the analyze phases as well as the problem statement to assist the six sigma project team to address it.
The Cranfield Agricultural Tractor Company (CAT) began its operations as an original equipment manufacturer of a limited range of agricultural tractors. Over 100 years into operation, currently it produces various products catering to agriculture, building and construction, and mining industries. CAT has the vision to grow its businesses, especially through expanding its operations overseas. However, the major concern is mobilizing the working capital, which is required to double the size from its current position. To facilitate this, CAT’s CEO, Hannibal Lecter has announced that the company will adopt the six-sigma approach. Six-sigma champions are appointed with this regard to support the company in identifying problem areas and rectify them.
Though CAT as an organization is operating successfully, its profitability is hindered by one of its products – the small hydraulic articulated teleloader. From its introduction in the market three years ago, this product is identified to be problematic. Despite management’s effort, this product failed to make its mark within the market. Hence, the corporate headquarters has mandated the product team to turnaround the profitability of the product within the financial year. Otherwise, the budget allotted to the product will be withdrawn that will be required for the design update and retain it in the market. Failure to meet the target will result in the removal of the product from CAT’s portfolio and the disbandment of the product team. According to the product team, there are three platforms (X, Y and Z) of this product which are currently assembled in a single assembly line.
The product manager has sponsored a six-sigma project with the appointment of a black belt as a project manager to determine the real problems hindering the product. Further, two greenbelts are involved in this project. This team has conducted a value stream map of the current position of the production.
In general, companies select lean manufacturing to focus on cost reduction with the elimination of non-value-added activities through the application of a management concept in determining and removing waste along with each activity of the production process which may be related to energy consumption; time is taken, motion and other resources used across a product’s value stream (AR & al-Ashraf 2012). Value stream mapping (VSM) is considered as an effective tool to plot the entire manufacturing process of an organization. VSM follows a three-step method to assess the entire process flow. The first step comprises of the creation of diagram depicting the actual material and information flows and the present state of operations of the entire process while walking down the production line (Chen & Meng 2010) (Appendix A). The other steps would be the creation of a map detailing the future state to determine the root causes of waste and process improvements that act favourably on the financial impact of the assessed process. These improvements will then be carried out as part of the implementation plan. This helps in determining the potential six sigma projects within the production process. In this case, through VSM, the project team has identified the flow of the product, machines and parts involved and information from systems. Their aim is to break down the result into manageable pieces and determine suitable tools to sort out the issues faced during the course of this project.