It would also be good for the company to explore further incentives for production line workers to improve their work rate while maintaining the current quality of output; while they no doubt work hard, the possibility of rewards to a certain output would do no harm to production levels. That said, there would be additional costs for Peugeot, but on the other hand these would hopefully be offset by improvements made in productivity.
The hierarchical structure of Peugeot is pretty flat, which makes communication relatively easier than that of a structure with many levels e.g. matrix structures.
Innovation and continuous improvement is one of Peugeot’s strong points, as they are always looking to improve and find new and better ideas for features in their new and up and coming range of vehicles in the near future.
Tom Peters and R.Waterman, in their book ‘In Search of Excellence’ identified eight key characteristics of good performing companies (above).
Peters later revised his ideas to take into account changes in the business environment.
- Businesses should revolutionise their approach when adapting to external influences on the business environment.
- Businesses should aim to develop new ‘stars’ in their product portfolio. Stars are products with a high market share and a high growth potential.
- Businesses, because they cannot control market events, should try to anticipate changes and continually move forward.
Some businesses found problems after implementing these strategies, downsizing, delayering, reengineering and outsourcing, such as standard-bearers of excellence in 1982, were in trouble five years later. This was two thirds of the companies identified by Tom Peters. Seventy percent of companies claiming they had been reengineered, failed to improve their market position, admitted Michael Hammer.
The method to improve upon efficiency is ‘work study’. This is a method to attempt to find the best or most efficient way of using labour, machines and materials.
Method study involves identifying all the specific activities in a job, analysing them, and finding the best way to do the job. This could be an existing job or a new one. Method study will allow a firm to: -
- Identify an optimum way of carrying out a task.
- Improve the layout of the factory or the workplace.
- Minimise effort and reduce fatigue.
- Improve the effectiveness of processes.
- Improve the use of labour, machines and materials.
- Establish the costs of particular activities to help with accounting.
- Achieve results in the least time.
Once the best work method has been found, which measurement can be used to find the effort needed to carry out a task to an acceptable standard. The result can be used to design incentive schemes and determine staffing levels.
Peugeot may decide to carry out this task by letting a ‘work-study assessor’ watch one of its employee’s hard at work all day. The assessor may watch the employee set up the cutting machine, cut 10 patterns, reset the machine for a different pattern, cut 10 more patterns, and record the findings. The performance may be rated against a scale of 0-100, such as the British Standard Rating Scale (where 100 is the standard performance of an average, experienced, motivated worker).
Improvements in efficiency can be made by making labour more productive and reducing labour costs. So how can we make labour more productive?
The way to improve quality is to have your employees trained as much as possible. It is generally agreed that the efficiency of the workforce is linked to the amount and quality of education and training that it receives. Some businesses have their own training schemes, such as health and safety training; graduate training programmes or Modern Apprenticeships. Some employees follow training courses leading to NVQs.
Another way to improve quality is to get the employees multi-skilled. This is where employees are trained in a variety of operations. It may allow a business to reduce its workforce, as more tasks are carried out by fewer workers.
With the workers being multi-skilled, and carrying out more jobs, this should give them the sense that they have been given more responsibility and this should work as an incentive for motivation. This should increase the productivity and improve the quality of the products being skilled in many areas.
Delayering
Peugeot could reorganise their structure and delayer, which involves a business reducing its staff. The cuts are directed at particular levels of the business, such as managerial posts. Many traditional organisational charts are hierarchical, with many layers of management. Delayering involves removing some of those layers. This gives a flatter structure. In the late 1980s the average number of layers was 7, although some were as high as 14. By the late 1990s this was reduced to less than 5. The main advantage of delayering is the savings made from layering off expensive managers. It may also lead to better communication and a better-motivated staff if they are empowered and allowed to make their own decisions.
If Peugeot were to implement this strategy, they would be making the business stronger, as they are getting rid of staff they no longer require. This will make the hierarchical structure of the business stronger as communication would become simpler, not having so many levels and channels to travel through which before caused communication to get lost. Also Peugeot’s profits may increase, as production costs will be lowered due to a cluster of workers that have been removed from the Peugeot Company.
However, remaining managers may become demoralised after delayering. Also staff may become overburdened, as they have to do more work. Fewer layers may also mean less chance of promotion.
Reengineering
Peugeot many consider reengineering, which was defined by Michael Hammer and James Champy (1993) in their book ‘Reengineering the Corporation’ as: ‘The fundamental rethinking and radical redesign of business process to achieve dramatic improvements in critical contemporary measures such as costs, quality, service and speed’. In this process, for example, it might be that a quality assurance system is overhauled because its success is not very good and a large number of faults are being passed. Many processes may be altered, especially those which are cheap and easy to re-design and change.
Processes that are redesigned might be ones, which are no longer working. For example, a quality assurance system that results in high levels of faulty products, processes which affect the customers, such as lead times, and processes which are relatively easy and cheap to design.
How might reengineering of processes affect a business?
- Process teams, such as an assembly team, will take the place of functional departments, such as the production department.
- Job change from simple tasks to multi-dimensional work. Repetitious assembly line work disappears. It is replaced by individuals working in process teams, responsible for results.
- Workers will be empowered and no longer follow a set of rules laid down by the management. They have to think, interact, use judgment and make decisions. Reengineered processes require workers to have an understanding of their jobs.
- Employees will not be promoted because they have a good performance record, but because they have the ability to do other job. Good performance is rewarded by bonuses.
- Employees must believe they are working for the customers and not the bosses.
- Managers no longer issue instructions and monitor the work of their subordinates. They assist, guide and help staff to develop.
- Organisational hierarchies become flatter. Staff make decisions for themselves so there is less need for managers. Flatter organisations bring executives closer to customers and workers. Success depends on the attitudes and efforts of empowered workers rather than the actions of task orientated managers. Executives must be leaders who can influence and reinforce employees’ values and beliefs.
If Peugeot were to reengineer their processes, then you would see a greater responsibility attached to the production team workers. They would be expected to use their initiative, if the management aren’t setting rules for the workers to follow anymore. This is because it should raise moral, thinking they are now more important as they have more responsibility, but also so they can get rid of the people in charge of the production team, so Peugeot can cut back on production costs (wages). There might not be pay rises as Peugeot expect extra responsibility as standard from its employees, but bonuses will be rewarded for excellent work.
Cutting down external contact points during re-engineering is beneficial because somebody contacting the company’s Finance Department, for example, would only talk to one person in charge of their enquiry and so different staff would not be able to give out incorrect information by mistake. Certainly this would improve efficiency and customers would be impressed with the accuracy of information.
Through the sacking of the unneeded employees, the hierarchical structure becomes flatter and this will improve communication, as the information won’t need to be passed on through so many levels or channels of the hierarchy.
An example of efficiency in the car industry
Ford changed the way they purchased there stock to improve efficiency. Before, they had clerks to check whether the right stock had been bought in. There were three documents that had to be checked by the clerks. If they matched then the clerk in ‘accounts payable’ would pay the supplier. If this wasn’t the case, time was wasted checking them.
Changes occurred and now the invoices have been scrapped and all descriptions were added to a database. Two possibilities existed, they either didn’t match or they did. The payment was made if the description was correct and if there was a discrepancy, the goods were returned to a supplier. The reengineering of the process had a huge effect on efficiency. Ford also cut the number of people working in ‘accounts payable’ from 500 to 125.
Although Peugeot’s current dealership network is undoubtedly of high quality and on a par, if not better than, a number of competitors, it would be good for the company to be radical and create a different type of dealership to attract customers. One such possibility would be to introduce into dealerships new facilities, such as seating accommodation and coffee areas, where prospective customers could sit, relax and contemplate the products on offer. Although coffee for example might be available to those already buying a car, it would otherwise distinguish the company’s dealerships and do much to attract customers and additional favourable publicity.
The key elements in making Peugeot more Productive, producing better Quality and being more efficient are the suppliers/distribution, workforce/culture and the customers.
Suppliers
It would be impossible for Peugeot to make cars in Britain without the support of the large network of companies, based in Britain and Europe, capable of supplying the components and providing the specialists services essential for efficient manufacturing and commercial performance.
All component delivery, both to the factory and to the trackside – from large bumper assemblies to tiny fasteners – is governed by complex computer systems. Smaller parts are replenished and large components for specific all arrive ‘just in time’. The trackside delivery trucks are computer linked and the new ‘smart’ trucks will operate only as programmed.
Distribution
Once a new car is built, Peugeot’s distribution system and national dealer network takeover. The new car, specially waxed to protect it on its journey, will be delivered to the dealer via the GEFCO organisation, the transport and distribution arm of the Peugeot Group
Workforce
Despite the major advances in robotics and computerisation in recent years, people are still the most important resource when it comes to car building.
And in the same way the machines and computers have to be programmed, serviced and maintained, people require motivation, training and re-training to perform efficiently.
At Peugeot, systematic training and personal development is a permanent feature of employee life. Learning new skills and adopting those skills to new developments in technology are regarded as a lifelong activity, not just something undertaken at the beginning of working life.
As well as the traditional forms of skills training, the company has pioneered the teaching of the French language to enable British employees to communicate more effectively with their French counterparts. At one time, as many as 500 employees engaged in some form of language training from basic to almost fluent level.
Customers
The customers are the most important element of the business world to me as without the customers buying the products, there would be no demand for the products, therefore no supply needed and that would put a few thousand people out of a job. This may be a big assumption but in theory it is true. So to keep the customers happy, the likes of Peugeot have to look at customer wants and needs to buy make the customer want to buy the product.
Peugeot Motor Company Competitors Penetration - % (1995-2000))
Looking at the table, we can see that Ford, Vauxhall and Rover have all peaked in their market share and start decreasing in 1995. Where as PSA are still in climbing the market share table as there figures for the five years are still steadily increasing. This puts PSA in a solid third spot, as Rover is in fourth place with 4.7%. That’s a 7.6% difference between third and fourth spot. There may come a time where Peugeot take pole position if the market share of Ford and Vauxhall comes on decreasing and Peugeot’s marketing share keeps increasing.
If feel that Peugeot are getting good market share percentages because of their sales targets. This is a quote from the Peugeot website: -
“Peugeot held its number three position in the UK market up to the end of August this year, with the 206 still the UK’s top-selling retail car. At the same time total volume of Peugeot car sales grew one percentage point faster than the UK market – 6.19% compared with 5.2%”.
If Peugeot do want to keep up their market share then they will have to increase sales somehow. This can be done by doing some market research into what customers want in their perfect car. A nationwide questionnaire could be developed to gather ideas from people who would be interested in buying a Peugeot vehicle or existing Peugeot car owners. The questionnaire must be purely based on customer wants, anything else and the people will just throw the questionnaire in the bin, as they will think it’s a waste of time.
Peugeot must be innovative in order to gain the competitive advantage over its rivals. By doing this, it should enable Peugeot to gain more customers, as they would be the only car company who have the new features on their cars. This would hopefully then increase sales and market share, which is one of Peugeot’s main objectives.
If a customer buys a car from Peugeot, most of the time the customer will do a repeat buy when the old car has gotten old an warn. This is because the customer knows the cars are reliable, comfortable and very stylish. Also with repeat buys, you know what you are getting yourself into, meaning there will be no surprises.
How do we know that dealers are providing the standards that Peugeot demand? The answer is the Lions Standards Programme, a sophisticated scheme developed over several years to award dealers who are achieving the highest levels customer service. Dealerships undergo intensive assessments, often carried out without their knowledge by ‘mystery’ customers and telephone enquires.
Like any responsible modern manufacturer, PSA Peugeot Citroen is publicly committed to protecting the environment by eliminating pollution at the source and conserving precious natural resources.
PSA Peugeot Citroen plants, wherever they may be, have to comply with environmental legislation, which enforce strict standards inside as well as outside the factory. At Ryton, substantial investment has been made in pollution control equipment and sophisticated ‘air scrubbing’ machinery in the paint shop to limit emissions into the surrounding atmosphere. Inside the factory every effort is made to maintain a clean, safe environment for employees to assemble an uncontaminated product. All forklift trucks, for instance, are electrically powered so as to eliminate exhaust pollution and minimise noise.
PSA Peugeot Citroen is also committed to the principle of ‘sustainable development’. That means: -
- Using only renewable resources, which do not damage the environment either now or in the future.
- Using fewer materials.
- Creating less waste.
Typical examples of this policy in action are: -
- The 6,000 tonnes of concrete and steel re-enforcement resulting from the demolition of old buildings were crushed by special machines and re-used in the building of the new extension at Ryton.
- Almost 70,000 wooden pallets used every year by forklift trucks to move components around the factory are recycled, while a further 21,000 beyond repair are converted into chipboard.
So we can see that Peugeot use every effort to be as environmentally, economically and as efficient as possible and I feel they have worked hard to get themselves in that position and they deserve all the rewards and profits they get.
Customer Service
When we talk about the repeat custom, this isn’t just a case of the customer going up to the salesman and saying, “right I want another car like that please”. There is a certain amount of doubt in the customers’ mind as to whether he or she should buy the same car again and it is the sales person’s job to ensure the customer and to entice him/her into buying the car again. Just by simply smooth talking and mentioning all the benefits of the car might do the trick, even though these are low order skills of a sales person.
Fleet and business clients are an important part of Peugeots overall customer base. In recent years more than half the Peugeots sold in Britain have gone to companies or organisations, such as local authorities and police forces. To make sure that fleet customers receive after sales attention, their company drivers need, the Peugeot dealer network maintain groups of sales and service specialists dedicated to fleet customers.
It would be wise to send a number of ‘mystery shoppers’ into dealerships – people posing as customers who can report to the company on the level of service they received and make any general observations without the individual dealerships knowing. Although each ‘mystery shopper’ would not be known, the company would inform its dealership network that mystery shoppers would be visiting in order to make sure that they gave customer service their best effort. Even if they did this, possibly mystery shoppers would not be sent in and the improvement in service would lead to notable cost savings in terms of salaries for those ‘mystery shoppers’.
After Peugeot Parts Centre based at tile Hill in Coventry provides sales support for new owners and Peugeot’s 1.5 million existing customers, where speed and efficiency are key factors. Everyday over 40,000 requests for spare parts are processed. Emergency orders are guaranteed to be delivered to dealers by the following morning.
One further improvement would be the introduction of voluntary questionnaires for customers who have bought the company’s products; they would be able to rank the quality, model features and service, etc. Constant research based on these findings into improvements that could be delivered and then plans to implement these improvements would contribute further to enhancing customer service
Customers are also provided with after sales, service and repair support by the Peugeot network of around 370 dealers. All dealers are equipped with DIAG 2000; a computer based diagnostic system designed especially for Peugeot. The system can ‘interrogate’ electronically the increasing number of control units and engine management systems used in modern vehicles. A growing proportion of Peugeot dealers also offer ‘Express Fit’ repair and installation of spare parts.
Another example for improvement would be for the company to introduce a door-to-door service from all of its dealerships. Nissan, for example, drives a courtesy car to the customer’s house, delivers it and then drives the customer’s car back to the dealership for the service before returning back and collecting the courtesy car. Such a gesture is no doubt well appreciated by customers and would do much for any car company to add to their overall customer service rating and reputation.
Peugeot has already taken a great number of steps to ensure their finest customer service levels are achieved consistently, but these additional suggestions can surely help to improve matters further.
Benchmarking can be related to customer service as Peugeot could investigate finding out what makes the difference, in the customer’s eyes between ordinary customer service and excellent.
Then Peugeot could find out how the best companies meet those standards. Then Peugeot could apply both standards and their own to meet the new standard and possibly exceed that excellent customer service standard.
Due to Peugeot previous innovations, they were very successful in winning awards for the company, such as the ‘car of the year’ award; the 206 won the ‘best used car’ award. Also Peugeot were able to produce a world record, producing half a million 206s in three years. As we can see from Peugeot’s previous success they are very innovative and progressive in the car industry. Using every new technological advantage possible to create that competitive advantage over their rivals. And with policies like “eight airbags as standard” Peugeot are a tough act to follow. Especially with such high regards to recycling and safety to the environment.
