A Distressed Electric Motor Company In The European Motor Industry

Synopsis

Business is built upon relationships. So when a reputable electric motors company (EMC) is confronted with losing a large business association, a quick and effective yet longevous arrangement needs to be enforced. The company supply windows for an extensive range of vehicles across the European market in the motor industry and are presently in process of developing new products to their range of commodities. Motors have become prone to failure and the vehicle manufacturers are looking for compensation, whilst also considering the long term effects of selling incompetent goods to their customers. Additional problems have also arisen with machinery's inadequacy to meet production rates and proficiency.

Introduction

Successful businesses meet customer requirements. Customers expect products and services to meet certain standards and if that standard is not met then either the product needs decommissioning, until the criterion is met or the service improved to meet the needs of the client. It has been established that EMC has met all service standards; however the product even though meeting the company's statutory assessments, is not meeting the customers.

Businesses gain an advantage over rivals by producing higher quality goods and services that clearly meet standards of the customer, so the likelihood is that there will be another electric motor company waiting and more than happy to provide their higher quality product to our largest customer. This problem needs to be resolved before this occurs, the highlighted areas of trouble will be discussed and solutions proposed to the board. The main proposition focus will be to find the root cause of the problem and to establish a strong foundation to rebuild the company, promptly and properly for short and long term interests respectively. The rebuilding of rapport with the customer will be very important to enforce that are product will be amended and 100% tested to the highest of standards.

Implementation

As a major client of EMC has been in contact to inform the company that they would like to visit the plant in the forthcoming week to discuss a ongoing quality problem with the motors being produced for electric windows, a structured plan needs to be imposed before the arrival so that EMC can show its commitment to their clients and motivation to improve the quality of the motors. We know that they intend to bill the company for the high warranty charges as a result of the faulty product and are also concerned with the long term consequences.

What are the quality problems?

Quality is defined by the customer. A quality product or service needs to meet the customer's requirements, however not all customers have the same requirements. Two products may be seen as quality products by their different users but for an example, a small manufacturer might be happy using the motor to electrically power a small hatch whereas General Motors would require a motor that is up to international ISO standards. Quality can therefore be defined as being fit for the customer's purpose.

The product has been identified as not meeting the standards of one company but why have no other companies complained experiencing similar faults. It will have to be investigated whether or not it is possible that it is the actual installation of the product or that it is not working in conjunction with another component of the window mechanism.

A motor consists of a many individual components including armatures, commutators, field magnets and a power source. EMC make electrical motors but with so many components are any of the parts bought in and assembled at the plant. If so the faulty part needs to be recognized and the correct procedures carried out and ironically take the same steps as the customer is taking with EMC as the supplier, to correct the defect.

By EMC meeting standards in everything they do they are most likely to give their customers the quality they require. To do this a quality management system can be imposed so that quality can be supervised at every stage within the company and this begins with the senior management. By improving the way that EMC operates it will drive costs down, increase market shares, improve customer satisfaction and reduce the risk of critical situations arising.

Figure 1: Pyramid to show hierarchy of standards

As seen above the highest level ISO is the most complex. It requires the widest level of agreement between those creating the standards. These standards have to satisfy the needs of the different groups represented in all of the countries involved. Businesses across the globe seek to meet international standards to show the world that its products meet this international standard and that it is willing to take part in global manufacture and trade. This is a very beneficial long term interest for EMC to aim for as it would show that their quality equals their high standards.

How will compensation for products be settled?

The charges for the excessive warranty is a big obstruction in getting EMC back on track, production rates are at a low and therefore cash flow has consequently reduced. The customer has received defect parts and the risk of losing them is high. Not all situations can be won in favour of EMC and the company should offer a full reimbursement for all charges to the present day.

What long term interests have been lost and how to regain them?

The second problem that the customer foresees is the long term effects that this could have with them and their customers. Business relationships are built upon trust where one company knows they can rely on the other to provide the quality product they require, this can take ten years to build but only 10 minutes to lose it. To prevent this from happening EMC should instigate a 100% audit of product and process. Shipping of all parts should be stopped and a complete inspection carried out. When each component passes the established criteria it can then be shipped to the customer. EMC will offer the customer a 100% replacement of all his present stock with a guaranteed 100% inspection of parts. This will then send the correct impression of EMC and the responsiveness as a supplier, which in turn could potentially stop the requested visit and take a weight off the company in an already taxing period.