made.
All these graphs have convinced me that Calsonic are on their way to achieving 100% of their objectives. I think that they are going about achieving them well and are on the right track to success.
Appendix 1,2 and 3 are the graphs that help me decide whether Calsonic were meeting their objectives
MEASURING SUCCESS
Calsonic measure their success in many different ways, using graphs and diagrams. One of the main ways Calsonic measure their success is by benchmarking their business against Japans business.
Benchmarking is a technique for comparing the performance of one organisation with another. If an organisation is to improve, it must be able to set standard and monitor its progress. It needs a
goal or target for which to aim at. They use graphs to show how the organisation in Japan are performing and how they are measuring up to them, often on these graphs, Japans business is a lot nearer to the target than the Llanelli plant are.
With Calsonic, this means identifying which organisation is the best in their field (Japan), finding out why they are the best and then doing better themselves. Calsonic will be learning by looking a Japans company.
Although, this is a great way for Calsonic Llanelli to measure their success, and become a better organisation, there are some disadvantages, which come along with benchmarking.
Calsonic keep Graphs including the Process Defects and the Customer Defects, which I displayed in the appendix to help them measure their success. If there are less process defects, then the are doing well. And if the customer defects graph is low then they probably have a lot of customer loyalty and only a few complaints.
Below is a list of advantages and disadvantages.
ADVANTAGES
- Imitating and improving on ‘best practice’ can lead to cost reduction. This would be great for Calsonic because a reduction in costs would lead to an increase in profits
- Benchmarking gives Calsonic a clear target to aim at. Japan is the best in the market and is a good organisation for Llanelli to follow.
- Enables genuine comparisons of the business to be made. The Llanelli plant will be able to see how they are doing in comparison to Japan and then can improve on the bad points of the business.
DISADVANTAGES
- Badly performing companies can find benchmarking against the ‘best practice’ demoralising. If the Llanelli plant where looking really poor against Japans business, then this can lower morale and they may end up performing worse again.
- The organisation must be willing and financially able to improve. It is very expensive to fund improvement, luckily for the Llanelli plane, they have Japan to support them and pay for the improvements needed. But this money that Japan supplies is only up to a point, if the Calsonic plant is not improving then Japan will stop supplying them with money.
- Some companies may be unwilling to reveal the secret of their success. If the Llanelli plant were trying to benchmark against another business in the market, the other business may be unwilling to reveal the secret to their success. But because the Japans organisation owns the Llanelli plant, they are willing to tell Llanelli all their strategies in order to help them improve.
Calsonic also measure their success in many different ways, I have shown these other ways in a brainstorm below.
EXPLANATION OF THE ABOVE DIAGRAM
LOOKING AT THEIR COMPETITORS - If they look at the other organisations in the market and see how they are doing, they can then compare their own business to the others to see if they are better than the others are. They will get the financial accounts from their competitors annual reports to compare profit figures.
LOOKING AT THEIR MARKET SHARE - If they look at how much of the market share they own, if it is a large percentage then they are doing well in the market, but if it is only a small percentage then they need to improve. Their aim will be to get as much market share as possible to give them more power in the market.
CUSTOMER SATISFACTION (COMPLAINTS/LOYALTY) – If their customers are satisfied with their products then there is no problem, if there are complaints, then they look into the complaints and try to improve them. This will help them keep their existing customers and persuade new customers to set up contracts.
FINANCIL PROFIT – How much profit they bring in. if they are top producers then their financial profit should be large. They will compare their profit figures over the past years to see if the are getting better or worse.
FUNCTIONS OF THE BUSINESS
HUMAN RESOURCES
The main purpose of the Human Resources department is to recruit, train and develop staff to a high level of achievement. They make sure the firm has all the manpower it needs to meet the tasks determined by the board of directors.
This means finding, (advertising for) the right people – this could mean advertising locally for production workers and on a wider scale for management and team leaders. Checking their credentials thoroughly, following up references, all of which must be received in writing and possibly starting workers on trial periods to see how they perform before offering them longer term contracts.
Training is an essential part and Calsonic believe that workers should be offered as much training as possible. At present employees are offered training in the key skills needed for their particular area or workplace. They feel it is most important to develop employees to their full potential to create teams of workers to achieve high levels of morale and motivation.
The Human Resources department covers attendance as well as many other employee aspects. An employee is only allowed a certain number of days off a year. They are allowed days off for being ill but must have a doctor’s note to certify their illness. The Human Resources department keeps track of every employee to make sure that they are not missing work for any unknown reason, they record the attendance records on graphs like the one shown in the appendix
Calsonic takes Health and Safety very seriously. Any accidents must be reported and at the end of each year, weak areas of the plant are reported in a monthly magazine and the strategies are reassessed to improve that particular area.
In the appendix is a graph showing all the accidents, which occurred in 1999, 2000 and 2001. Shown are the accidents that required hospital treatment and time being taken off work.
The Human Resources department is helping Calsonic meet their objective number 6 of involving the employees more, this department helps the employees gain their NVQ’S and other qualifications. They are working well with the employers and make sure that they are on the right line to achieving these qualifications. If the Human Resources department keep working the way they are, then all the employees will have gained some kind of qualification whilst working at Calsonic. The appendix shows a graph kept by the HR department, which sows the skill development, and the number of NVQ’s awarded each year.
FINANCE
The finance department records all business transactions in order to measure the financial performance of the business. Accurate accounts will be presented to the board at prearranged intervals to enable management decisions to be made.
The finance department looks after and keeps the financial records as well i.e. profits and loss, balance sheets, forecasts and financial accounts.
With these records, they can forecast the future and decide what to spend the next year’s money on. They advise the Board of Directors on budgeting and how they can save money. They also organise the finance needed for any expansion. This helps to achieve the objective number 1 of increased profit by presenting the financial information for future decision making, future expansion and developments which helps meet objective number 5.
MARKETING DEPARTMENT
The marketing department will be responsible for:
Market research – collecting data, analysing it and presenting it for discussion. The marketing department visit their customers to find out what specifications they require for their radiators. They also visit potential customers to find out what their needs are and why they currently do not have contracts with Calsonic. By doing this the marketing department can work out what needs to be done to get new customers. They also get radiators made by the competition and take them apart to find out why they may be better. With all this information they can discuss with the production department how to produce radiators to meet car manufacturers needs.
Another role of the Marketing Department is to ensure Customer service and care – they will do this by visiting their customers to make sure they are completely satisfied and that their needs are seen to. If the customers have problems with the radiators, the Marketing Department must ensure that the Production Department are notified and come up with a solution and a better radiator.
Sales – Calsonic only use personal selling to promote their goods. This is where the marketing reps will visit customers and potential customers to promote their radiators and say why they should draw a contract out with Calsonic. They will use special pricing strategies to attract new customers and persuade them to move from one company to Calsonic.
Sales administration – The Marketing Department are also responsible for Sales administration, this includes – processing orders, preparing quotations and than invoicing for work completed. They do this to keep quality high, they make sure they are invoicing customers at the right time and with the right price. They can keep customers happy and keep customer loyalty by doing this.
If the marketing department want to fulfil all these responsibilities, they will have to work very closely with the finance and production departments.
A business, which has sales and/or market share as its prime objective, would give priority to this function, so improving the customer’s impression of the business.
HOW CALSONIC USE THE 4P’S OF MARKETING.
Products – Calsonic Llanelli Radiators are very customer oriented and change the design of their radiators to suit different customers e.g. (Rover radiators are different to Ford radiators)
Price – The price of Calsonic’s radiators, vary immensely for the different customers. They will do special pricing for special customer’s e.g. – if Vauxhall buy 1000 radiators, they will produce them at a lower price than usual. They do these pricing strategies to keep their customers happy and to gain customer loyalty, also if new potential customers are in sight, Calsonic may offer them a discount on their first order.
Place – Calsonic use once stage distribution, straight from the producer to the customer, this is because they use personal selling. This is easier for the customer as there is no middleman (wholesaler) and therefore, orders are received more quickly.
Promotion – Calsonic use personal selling as their selling point. They rely on the word and mouth of there customers. This is their only promotion strategy and attracts customers by giving them discounts in pricing and quality produce.
RESEARCH AND DEVELOPMENT
The research and development team is a large and important part of a business, it enables the organisation to compete successfully and achieve
a permanently sustainable edge over its competitors by becoming more efficient and profitable and giving customer’s added value.
In order to achieve the above the research and development section includes:
- Development of new products, materials and processes.
- Improving existing products.
- Finding new uses for products.
- Testing products for strength, quality, safety, etc.
The Research and Development team helps Calsonic meet objective number 4. They do this by asking customers what they want from a radiator, then with the new ideas, they research them to check they are viable and than develop them and test them for problems. This department keeps new ideas running to the production department, and is working well to meet Calsonic’s objectives.
PRODUCTION DEPARTMENT
The production department assembles the radiators and other components – producing the goods that are bought by the customer.
Production is responsible for providing sufficient goods to meet the customer demands – they must also:
- Maintaining and improving quality – Calsonic do this by using Total Quality Management (TQM). This is where the whole business uses Quality Assurance and will use quality circles to find other areas that need improvement. This helps Calsonic to add value, by make sure that their radiators are top quality produce. This also helps the business meet objective number
- Maintain and control the machinery and equipment.
- Ensure new stocks of components to ensure that there is no break in the production line while waiting for new items to be delivered, and ensure that enough goods are produced to complete each order to the specified delivery dates.
- They must meet any specific requirements of customers (tailoring goods for individual customers)
- They must at all times control costs and work efficiently.
- Calsonic use Just in Time production (JIT), this is when they will make the radiators just in time to be sold. The advantages of this are that they won’t have to rent large warehouses to store them. This lowers costs and increases profits, therefor helping Calsonic meet objective number 1.
- Also, Calsonic use batch production, this is where they produce in batches. Because each radiator is different for each make of car, it is better to produce in bulk this way. It is therefore cheaper for Calsonic as they can benefit from economies of scale, where the can buy in bulk for cheaper.
Above is a copy of the typical brazing line used to add value to Calsonic’s radiators. This is part of the production process and is helping Calsonic meet objective number 3 of improving quality of their products.
The brazing line adds value to Calsonic’s radiators by cleaning the up and making the look the best of quality.
With the production line at Calsonic being run 24 hours a day, they have to keep an eye on two things. One being the changeover time of the products used to make the radiators and the other, the machine downtime. If these two processes take longer than they should, instead of making a profit, Calsonic would be losing it. In the appendix are the graphs from last year of the changeover time and the machine downtime these graphs show how they have reduced costs and increased profits, therefore helping to meet objective number 1.
Although all the functions of the business work individually to achieve the companies objectives, they are also working as part of a large team together.
To achieve the 6 objectives targeted, each individual worker, in each department of the business has to work together as a team.
The human resources department find the right people for the right jobs. Doing this they employ only the beat workers for each job. They find the hard working and the enthusiastic for the roles on the production teams, which help Calsonic make the best radiator in the market. They cover the training processes and keep and eye on every worker to make sure they are doing their job efficiently.
The marketing department is also really important in meeting the company’s objectives. This department carries out market research, to find out what the customers want from a car radiator. With the research collected they can discover and design the best possible radiators.
The research and development team works in conjunction with the marketing department. They use the information collected by the marketing department to develop new designs, test them for strength, quality and safety. This way, Calsonic are able to produce the best quality radiators and meet the Calsonic target.
The production department produces the radiators. They work as a team, on the production line putting all the parts of the radiators together. This is the most important function, if something goes wrong along the production line, then the whole system fails. Luckily, the production line workers are all properly trained and are all very good at their individual jobs.
All the workers in every department help to meet Calsonic’s objectives
And are all working hard towards their individual targets.
MANAGEMENT STYLE AND CULTURE
Calsonic is run under a Democratic Management style, this is where managers take great care to involve all the members of the works teams in discussions and decision making. The mangers find out everyone’s opinions and then make their decisions.
This approach can work really well with small, highly motivated teams but it can fail when a group cannot come to a mutual agreement and therefore will need guidance and direction.
There are some pros and cons, which come with this type of management style, but they can always be worked around. The largest problem is when a team cannot make a decision that everyone agrees with, when this
happens, there can be some disagreements and a decision has to be made, which can leave some workers unhappy.
This type of management style has a positive effect on Calsonic’s workers, there are no secrets kept from the workers and everything is very open.
Calsonic has a decentralised structure, which means that the managers at Calsonic get to make their own decisions. If the structure was centralised, then all the important decisions would be made by the parent company in Japan and the managers would have no say. Thankfully, the managers in the Llanelli plant are not run under a centralised structure, so as long as everything is running well, they will be allowed to make their own decisions. Like the management style of the business, a decentralised structure comes with disadvantages and advantages, these are:
ADVANTAGES
- Local managers who know customers can make local decisions.
- More people can gain experience of management.
- Head office and regional managers can concentrate on wider issues.
- There is great democracy and freedom this improves morale and motivation.
DISADVANTAGES
- Can be more difficult to supervise and control all the units.
- Conflict can rise between the separate parts.
- Unless strict guidelines are laid down, policies can be interpreted differently by individual managers.
Calsonic is currently set out in a hierarchical structure but they are slowly and informally moving into a matrix structure.
The organisational structure, culture and management styles of Calsonic are designed to work together well. Because of the flexible management style, the workers are well informed of the goings on at Calsonic, this keeps them happy and motivates them to work well and to the best of their ability to achieve their target. This helps to increase the quantity of the work they produce and also the quality. By doing this they will help the firm reduce their costs and increase sales. The better the quality the more potential customers will switch to their radiators. This will also lead to a higher level of profit.
The structure of the business motivates every member of Calsonic. The managers are allowed to make their own decisions, this keeps them happy and the morale high.
The culture is open and it fits in nicely with the matrix structure. The managers ask the workers for opinions which they are happy to give because they are use to communicating openly with each other. The matrix structure needs people from different departments to work together, this is successful at Calsonic because they are all use to communicating with each other in improvement teams. The culture is one where everyone is equal, they share the same toilets, canteen and car parking, and the workers do feel valued by the company. This means better decisions are made so costs fall and profits rise.
USES OF ICT COMMUNICATION
Calsonic use many different forms of ICT communication in their organisation, and they find each and every way of communicating very
important towards their success. Below is a list of the communication used, followed by a description of each.
INTERNAL USES OF COMMUNICATION
EMAIL - This is the transfer of text, graphics and other information between computer users. It keeps reports, documents and letters confidential and is much different from bulletin boards. This type of communication can be one-to-one, one person sending a private message to another, or one-to-many, where one person can send a message to many people connected to the same network.. The advantages of this is that it is quick and easy to communicate with others although they will be unable to communicate with the workers on the production line as they will not have computers.
MEETINGS - This is where the company calls meetings with the staff, so that everyone can get their say in decision making. It can happen every week or even a few times a day. This way, everybody can be together sharing ideas but there could be quarrels and disagreements.
INTRANET – This is a system similar o the Internet, but is used for sharing information entirely within an organisation
GRAPHS - This is a print based use of communication. By using these graphs, it is easy for a company to see how they are doing in the market.
With theses graphs they can see their progress or stagnant. The problem with this is that the graphs maybe demoralising if Calsonic are not performing well.
ELECTRONIC HEAD SETS – These are used in the factory at Calsonic. It is terribly noisy in the factory because of all the large machinery. Visitors on tours of the factory use these headsets. The tour leader speaks into a microphone and his/her voice is transmitted into the headphones of the visitors. These are very useful as they are not static uses of communication, you can walk around whist using them, although, there might be a problem with reception.
TELEPHONES – These are used to communicate between people. They are very useful and are easy to use. Every office and company have at least one. The advantages of telephones are that they are really simple to use and you get instant communication, although, again the workers on the production line and in the factory will not have them.
ELECTORNIC WHITE BOARD – Used in meetings to communicate through graphs and pictures and during off-the job training. The computer images are projected onto the screen of radiators so the managers can explain what they are saying more easily, so better learning will take place. Also this work can be saved so the managers have got the work again to use, they don’t have to prepare it again.
EXTERNAL USES OF ICT COMMUNICATION
ELECTONIC DATA INTERCHANGE (EDI) – This is a form of electronic mail which allows the passing of invoices, orders and other trade transactions directly between company computers. This type of communication avoids the problems which come with traditional paper-based communication systems in which documents are printed out by the sender, posted and keyed in again by the receiving company.
VIDEO CONFERENCING – This is used by Calsonic to keep in constant contact with the parent company in Japan. There are TV screens in the Llanelli plant and also in Japan. Therefore the leaders from Japan can keep in contact and make sure the business in Llanelli is running well. There are six different video conferencing machines in site at Calsonic and were very expensive, but all of them are needed and come in great use. This type of communication will be very useful, it will save costs for Calsonic as they won’t have to travel back and fore to Japan. It is instant contact with Japan although it is impersonal and unofficial.
ELECTONIC DATA INTERCHANGE (EDI) – This is a form of electronic mail which allows the passing of invoices, orders and other trade transactions directly between company computers. This type of communication avoids the problems which come with traditional paper-based communication systems in which documents are printed out by the sender, posted and keyed in again by the receiving company.
Each of these forms of communication have upgraded the communication side at Calsonic. Although the video conferencing equipment would have been expensive, in the long run it will save a lot of money for Calsonic as they will not have to travel back and fore to Japan. They will be able to communicate more quickly and efficiently which will increase efficiency and customer satisfaction.
Calsonic can now deal with their suppliers more quickly and accurately, which is essential if they are doing JIT production. They can also communicate with their customers more quickly which could help to secure contracts which will increase sales and profit. In the short-run all this technology is expensive but in the long run it will help them get more sales as it saves time so the workers can get more jobs done.
QUALITY ASSURANCE
Although quality has always been very important to a company, it is only in the last 20years that it has become really essential for a competitive company, it allows one company to gain a permanent position over its competitors. Nearly all business put quality as the main criteria needed for survival, placing it above cost and delivery time. It is also another way that Calsonic are able to add value to their radiators as they are improving the quality of the product the customer is receiving.
Firstly, Quality Control (QC) was the most important type of quality. This is where the company increases standards by inspecting, sampling or testing for quality at various points along the production line. This was a great test for quality although if a problem was found at the end of the production line, it might have to be thrown away which would end up costing a lot in scrap. This may also be demoralising for the production workers, if the find out it was one person causing the problem, the other workers may be demotivated to work alongside that worker again, therefore causing problems on the production line.
The next type of quality control was called Quality Assurance (QA) this was where, ever worker was responsible for insuring the quality of their part of the product as the production line went along, if a problem was then found, the production line would stop until the problem was then solved. This would save a little money but would still be costing a lot in scrap materials. This type of quality assurance would also be demoralising for the workers.
The better type of quality control is Total Quality Management (TQM), this is where everything is checked for 100% quality. Calsonic brought this into their factories as it was seen as a more efficient way to check the quality of their radiators and ensure good quality with every product. They will check the suppliers of the materials to make sure there are 0% defects and will then check every where along the process line to insure 100% quality at all times. They will even make sure that the delivery is efficiently directed so that there will be no customer complaints. Every member of the organisation is involved from the highest executive in the boardroom to the factory workers, sales assistants and clerical staff. The commitment to quality is instilled into everyone from the moment they join the organisation.
This process saves money on scrap as everything is checked as they go along, so reducing costs which helps to increase profits. Also the high reputation of the radiators will persuade other car manufacturers to buy from them. This is the highest and the best way of quality assurance.
In 1988, Calsonic, (formerly know as Llanelli Radiators) introduced a quality assurance programme, run by the NQA (National Quality Assurance) to give themselves the certificate of the ISO 9001 manufacturing quality management. This showed that Calsonic were of the standards of the NQA and that they were above average in the production section of their business. After achieving this they were entitled to display the UKAS quality management logo on all their business products. This again helps them to add value to their radiators.
With this certificate under their belt, they then increased their sales, as customers would choose the NQA standard over anything else.
Accredited to ISO 9001 Calsonic regards quality as the foundation of its continuing success. “We are committed to deliver excellent products and services to all our customers, both internal and external, on time, every time”.
Some years later, in 1998, all divisions of Calsonic then achieved the certificate of QS900, again adding more value to their products.
All of the quality control systems described above will help add value to Calsonic’s products, with these accreditation’s, Calsonic can achieve a higher place on a competitive market and will help to attract more customers and increase their profits.
It is difficult to find an alternative type of quality assurance as Calsonic use all the most up to date and effective methods. They could bring back the old quality assurance technique of an inspector at the end of the production line who will thoroughly check each radiator for faults. Although this will increase the costs for Calsonic as they will have to train and pay the new inspectors which will reduce profits, it may help Calsonic in the long run by making sure there are no faults with the radiators. Another drawback of this is that it may increase scrap and increases costs as if the a problem occurs with the radiator at the beginning of the production line but isn’t noticed till the end of the line, the radiator will have to be scrapped which will decrease profits.
A quality inspector will mean extra work for the Human Resources department who will have to recruit and train them, and it may demoralise the other workers, so they will have to look at other ways to motivate them. The Production department will also have to get use to having an inspector at the end of the line. I think Calsonic are better off using TQM, it is obvious that it is working for them because they are ranked 9th in the industry, they must be making good quality radiators otherwise they would lose their customers.