Identifying And Mitigating The Root Cause Of Decreased Profitability In A Telecommunications Industry Equipment Manufacturer

1. As a business improvement consultant, you and your team (including members from PEW) have only three (3) months to correct the situation. You would need to:
i. Identify the root cause(s) that lead to the problems using appropriate tools and techniques.
ii. Develop a continuous improvement plan to ensure the problems and issues are not repeated.
iii. Elaborate on the competencies required from PEW management and employees to effectively bring about the change.

2. You must show evidence of using at least seven (7) tools and techniques that you have learnt from this unit to address question (i) above.
3. You may refer to the Project Quality Management from PMBOK, PRINCE2 or any other quality management systems such as ISO9000 series, TQM (Total Quality Management), Six Sigma / Lean Six Sigma etc to devise your continuous improvement plan.
4. Your submission should be made using Microsoft Office documents and submitted as a separate 2,500 - 3,000 word Microsoft WORD document

Introduction to Precision Engineering Works

Precision Engineering Works isan organization or the company which manufactures theequipment used in the telecommunication industry. The company is operating for 30 years and is a known name in the industry (Arcidiacono,Costantino& Yang, 2016). The client of this company are renowned names in the telecommunication industry. However, it has been seen that the company is losing the consumer base and as a result the profit percentage has been decreased to 45%.

There are certain factors for the happening of the situation (Mkhaimer,  Arafeh&Sakhrieh, 2017). The number of competitors in the market has been increased and the price of the products of the PEW is higher compared to the other products made by the other company. The main objective of this paper is to identify the root causes of the problem faced by PEW (Tenera,  &LuísCarneiro, 2014). The conduction of the root cause analysis has been done using seven different tools and techniques (Gijo& Antony,2014).

The understanding of those tools and the techniques are discussed in this paper. Apart form that the identification of the root cause will help to mitigate the problems (Timan et al.,2016). The plan for the smart management of the business and the strategy for the implementation of the improvised plan has been taken in this context(Seppänen, Modrich& Ballard,2015).  The main objective of this paper is to identify the main cause regarding the decrease of the profitability of the PEW. In this context proper management of the resources and the leadership quality has been discussed.

Discussion 

Root cause analysis for the identification of the problem:

The problem of the Pew is the decrease of the profitability of the selling. Regarding this there are two causes has been identified. The supply of the equipment for the telecommunication industry is an emerging field of the business (Svensson et al.,2015). In this context, many organizations are investing money for this business (Perry III et al.,2016). Naturally the numbers of the competitor of the business is growing and the Pew is facing serious challenges in the competitive market(Mkhaimer,  Arafeh&Sakhrieh, 2017). Apart form that the prices of the products made by the Pew is relatively high compared to the products of the other company.

In order to identify the main cause of the problem root cause analysis can be done. In order to do the root cause analysis seven techniques has been followed.

Problem: The profitability of the company is decreasing.

Factors Contributing to Decreased Profitability

Tool used for the root cause analysis: Five whys tool is used for the root cause analysis.

Usage of the tool: In order to analysis the business situation five questions has been asked.

Why the company is loosing the consumer base?

The company is loosing the consumer base as the market is becoming competitive.

Why the organization can not stand out in the competition?

The organization can not stand out in the competition as the pricing strategy is not proper in the organization.

Why the strategy is not proper in the organization?

The strategy is not proper in the organization as the market analysis is not done in a proper way.

Why there is no pricing strategy in the organization?

There is no pricing strategy in the organization and the company is understanding its significance. Hence the organization is going to implement the proper pricing strategy.

Why the numbers of the competitor is increasing in the market?

The number of competitor is increasing in the market as the industry regarding this business is emerging.

Problem : The company is losing the profitability.

Tool used for the root cause analysis: The tool, that can be used for the root cause analysis is the fishbone diagram.

Usage of the tool in root cause analysis: The main feature of the fishbone diagram is that the head of the diagram leads to the main effect or them problem (Holweg&Maylor, 2018). The sub problems are associated with the main head. Brainstorming process can be used for finding the main cause of the effect. Thus it is also known as the cause effect diagram.

In this case the main problem is the decreasing of the profitability for PEW (Goffnett, Lepisto&Hayes,2016). The sub causes associated with it are the high price of the products of the Pew and the increase of the numbers of the organizations in the market, making the market competitive. The identification of the root cause can be done through the brain storming process.

It has been identified that the main cause regrading this is the high price of the products of the PEW.

Problem: Decreasing profitability of PEW.

Tools used for the root cause analysis: The too, used for the root because analysis in this context is brainstorming.

Usage of the tool: In the process of the brain storming the opinions of the members in the discussion board is taken (Conger, 2015). The decision making process is developed through the discussion about the various aspects of the problem.

Root Cause Analysis of the Problem

In this case, the brainstorming process indicates that the main cause of the loosing of the consumer base is the high price of the products.

Problem: the loss of the profitability of the company.

Tool used for the root cause analysis process: The tool that is used for the root cause analysis is the current reality tree.

Usage of the tool in the process: The current reality tree indicates the current situation of the business through the various aspects of the organization (Worley &Doolen, 2015). The future analysis tree can be obtained from the current analysis tree which provide the improvised picture of the organization after solving of the problem.

In this context the current analysis tree indicates that there is a absence or the lack of the proper pricing strategy for PEW. The future analysis tree can be developed through the implementation of the smart pricing strategy at PEW.

Problem: The decreasing profitability of the PEW.

Tools used for the root cause analysis: The too, which is used for the root cause analysis in this context is the Kaizen tool.

Usage of the tool for the root cause analysis: The main advantage of the Kaizen tool is that this enables the small group to evaluate the business situation and the analysis of the root cause(Naveen et al.,2018). The finding of the root cause will help to detect and mitigate the consequence of the root cause.

In this case the identified root cause for decreasing the profitability of the Pew is the high price of the products.

Problem: Decreasing the profitability of the PEW

Tool used for the root cause analysis: In this context tool used for the root cause analysis is check list.

Usage of the tool in the root cause analysis: The check list collects relevant data from the different sources and the analysis of the data gives the current situation of the business (Formoso et al.,2015). This also indicates the possible areas for the improvement by identifying the causes of the main problems.

According to the check list method the main cause for the identified problem is the high price of the products made by PEW.

Problem: The decreasing profit of the Pew.

Tools used for the root cause analysis: The tool which is used for the root cause analysis in this case is the data table.

Usage of the tool in the root cause analysis: The data table collects the relevant data regarding the organization (Antony, Rodgers &Cudney, 2017). The analysis of the data indicates the present causes of the identified problems in the organization. It is needed to be seen that the collected data are correct and relevant with the problem.

Assumptions During Root Cause Analysis

The use of the data table is applied in the context of Pew and it has been seen that the main cause of the identified problem is the high price of the product of the PEW.

Assumptions:

There are certain assumptions are made while doing the root cause analysis. Some of the assumptions are-

The quality of the product will not be the parameter for the enhancement of the selling of the products.

The consumers are only concerned about the price of the product.

There are limited number of competitors for the Pew in the market.

The innovation in the products will not affect the status of the selling of the products.

Continuous improvement plan:

Identified problem:

The problem is the decrease in the profitability of the PEW. The causes have been identified through the root cause analysis (Furterer, 2016). It has been found out that the decrease in the sale of the products is caused by high price of the products.

Action plan:

Certain actions or steps can be taken in order to mitigate the identified problem. In this case the implementation of the pricing strategy can be taken care of. The identification of the action taken in this context can be classified into two categories- long term and short term.

Long term action: The long term action is concerned with the implementation of the pricing strategy for the PEW( Vidyasagar,2016). This will take time and the impact of the implementation of the pricing strategy can be beneficial in the long run for the company. In order to do this certain business plans are needed to be considered in a proper way.

Short term action: the short term action can be taken by revising the price of the products. The price of the products can be lower down by taking the expert advice.

Resources required:

In order to implement the plan in a proper way the certain amount of the resources are required. The resources can be both human resource and the resources like time and the money (Tyagi et al.,2015). In order to carry out the analysis of the market the business analysts can be recruited (Borse&Attarde, 2016).

Apart from that the implementation of the emerging technology can be done in the organization. In order to do this the technical experts are needed to be recruited (Al Hattab&Hamzeh, 2015). The project manager is needed to be implemented as the implementation of the smart pricing strategy will be done through the development of the project (Ko,2017). In order to handle the project in a proper way project manager is needed to manage the different steps in the project.

Continuous Improvement Plan for PEW

Follow up and actions taken for the implementation:

Certain follow up and action is needed to be taken in order to evaluate the progress of the implementation. It is needed to be ensured that the business analyst are evaluating the market condition and is using the data from evaluation for making the blueprint of the pricing strategy. Apart from that it is needed to be ensured that the collaboration between the technical department and the business department is happening in a proper way.

Competencies:

Management of the strategy and the business:

In order to implement the business plan and the strategy in a proper way the project management plan is needed to be followed. There are various methodologies for the implementation of the project. Some of the project management methodologies are PRINCE2 and agile. The PMBOk acts as the guide for the development of the project. According to the PMBOK there are five steps for the development of the project.

According to the PMBOk the project stars with the initialization phase where the gathering of the requirements are done in a proper way. For the implementation of the pricing strategy in the organization the gathering of the data regarding the market condition is done. This step is followed by the design and the implementation process(Sunder,2016). The design and the implementation process is concerned with the making of the right pricing strategy for PEW. The execution is done based on the collected data. The monitoring and control of phase in the development of the project is concerned with the evolution of the performance of the project. The project closes only after it serves its purpose.

Technical management:

The organization can adopt the use of the advanced technology. In order to implement the emerging technology the organization need the team of the technical experts. The technology can be implemented for the improvement of the quality of the products and the mitigation of the overhead cost of the production. In order to use the emerging technology in a proper way the management of the technology is important.

Leadership:

            There are many kinds of leaderships which can be adopted for the managing of the project at Pew. The main quality of the leader is to motivate the employees to achieve the organizational goal. In this case the adaptation of the democratic leadership can be taken. In the democratic leadership the opinions of all the members in the discussion is considered. However, the final decision is made by the project leader himself or herself. In this process the employees can feel that they are also associated with the decision making process for the organization. Apart from that the idea of the brain storming is also supported by the process of the democratic leadership.

Conclusion

The paper has discussed about the various aspects of the root cause analysis. In this context the case study of the Pew has been taken. The root cause analysis has been done for the identified problem in the organization. The PEW is losing the consumer base which is not desirable for the organization. The root cause analysis has been done in order to identify the possible causes of this problem. The client of this company  are renowned names in the telecommunication industry. However, it has been seen that the company is losing the consumer base and as a result the profit percentage has been decreased to 45%.

There are certain factors for the happening of the situation (Mkhaimer,  Arafeh&Sakhrieh, 2017). The number of competitors in the market has been increased and the price of the products of the PEW is higher compared to the other products made by the other company.  It can be said from the above discussion that the cause s for the happening of the problem is the increase in the number in the organizations selling the same products to the consumers and the smart pricing strategy of the other companies.

Certain mitigation plan have been proposed in order to resolve the issues in the PEW. In order to do this the action plan has been discussed in the paper along with the strategy for the business and the management. It can be said with the proper implementation of the project management plan and the proper allocation of the human resources can be beneficial for the Pew to achieve the objective in this case.

References

Al Hattab, M., &Hamzeh, F. (2015). Using social network theory and simulation to compare traditional versus BIM–lean practice for design error management. Automation in Construction, 52, 59-69.

Antony, J., Rodgers, B., &Cudney, E. A. (2017). Lean Six Sigma for public sector organizations: is it a myth or reality?. International Journal of Quality & Reliability Management, 34(9), 1402-1411.

Arcidiacono, G., Costantino, N., & Yang, K. (2016). The amse lean six sigma governance model. International Journal of Lean Six Sigma, 7(3), 233-266.

Borse, G. U., &Attarde, P. M. (2016). Application of six sigma technique for commercial construction project-A review. International Research Journal of Engineering and Technology, 3(6), 2323-2328.

Conger, S. (2015). Six sigma and business process management. In Handbook on Business Process Management 1 (pp. 127-146). Springer, Berlin, Heidelberg.

Formoso, C., Bølviken, T., Rooke, J., &Koskela, L. (2015). A conceptual framework for the prescriptive causal analysis of construction waste. IGLC. net.

Furterer, S. L. (2016). Lean Six Sigma in service: applications and case studies. CRC press.

Gijo, E. V., & Antony, J. (2014). Reducing patient waiting time in outpatient department using lean six sigma methodology. Quality and Reliability Engineering International, 30(8), 1481-1491.

Goffnett, S. P., Lepisto, L., & Hayes, R. (2016). Using the socio-economic approach to management to augment Lean Six Sigma. International Journal of Productivity and Performance Management, 65(1), 80-97.

Holweg, M., &Maylor, H. (2018). Lean leadership in major projects: from “predict and provide” to “predict and prevent”. International Journal of Operations & Production Management, 38(6), 1368-1386.

Ko, C. H. (2017). Lean building design model. Procedia Engineering, 182, 329-334.

Mkhaimer, L. G., Arafeh, M., &Sakhrieh, A. H. (2017). Effective implementation of ISO 50001 energy management system: Applying Lean Six Sigma approach. International Journal of Engineering Business Management, 9, 1847979017698712.

Naveen, K., Sunil, L., Sanjay, K., &Abid, H. (2018). Facilitating lean manufacturing systems implementation: role of top management. IJAME.

Perry III, D. A., Olson, B., Blessner, P., & Blackburn, T. D. (2016). Evaluating the Systems Engineering Problem Management Process for Industrial Manufacturing Problems. Systems Engineering, 19(2), 133-145.

Seppänen, O., Modrich, R., & Ballard, G. (2015, July). Integration of last planner system and location-based management system. In 23rd Annual Conference of the International Group for Lean Construction. Perth, Australia(pp. 29-31).

Sunder M, V. (2016). Lean six sigma project management–a stakeholder management perspective. The TQM Journal, 28(1), 132-150.

Svensson, C., Antony, J., Ba-Essa, M., Bakhsh, M., &Albliwi, S. (2015). A Lean Six Sigma program in higher education. International Journal of Quality & Reliability Management, 32(9), 951-969.

Tenera, A. M. B. R., &LuísCarneiro, P. (2014). A Lean Six Sigma (LSS) project management improvement model. SELECTED PAPERS FROM THE 27TH IPMA (INTERNATIONAL PROJECT MANAGEMENT ASSOCIATION), 912-920.

Timans, W., Ahaus, K., van Solingen, R., Kumar, M., & Antony, J. (2016). Implementation of continuous improvement based on Lean Six Sigma in small-and medium-sized enterprises. Total Quality Management & Business Excellence, 27(3-4), 309-324.

Tyagi, S., Cai, X., Yang, K., & Chambers, T. (2015). Lean tools and methods to support efficient knowledge creation. International Journal of Information Management, 35(2), 204-214.

Vidyasagar, A. (2016). The Art of Root Cause Analysis. Quality Progress, 49(1), 48.

Worley, J. M., &Doolen, T. L. (2015). Organizational structure, employee problem solving, and lean implementation. International Journal of Lean Six Sigma, 6(1), 39-58.