Longxi

Problem Statement

LongXi Machinery Works is forecasting an increase in demand for its multi cylinder engines. This increase in demand offers the company the opportunity to deliver more powerful engines to a larger, scalable and more versatile product mix LongXi has identified that it is having quality control issues in manufacturing the Dual Gear Shaft (DGS), an important component of the multi cylinder engine,. In response the company is in the process of creating a new Quality Management Department to not only look at the quality concerns of this component, but also grow quality throughout LongXi Machinery Works.

Analysis Section

Currently LongXi has been using a modified Total Quality Management technique based on the structure of ISO 9000 called “The Method”. LongXi also has a quality reward system where employees are rewarded according to the quality of the product manufactured in their respective departments “The Method” and quality reward system includes guidelines and rules in approaching quality improvements, but relies heavily on inconsistent self and mutual quality inspections. This makes LongXi’s production much more labor intensive than Changchous a major competitor, and relies on older equipment and human judgment. LongXi outsources 80 percent of its engines components, but has resisted any vertical integration of key components including the DGS. They also have resisted the idea of a formal ISO 9000 certification as too costly and time intensive.

Longxi’s main competitor is Changchai Diesel Works. Changchai is also realizing the high demand in multi cylinder engines, and was ISO 9000 certified in 1993. They look to increase their production capacity from 300 units to roughly 60000 units. To realize this demand Changchai has created joint ventures with two diesel engine component manufactures to vertically integrate into their production process and keep a better quality control on the supply of parts. They outsource 83% of their component needs, and have imported new manufacturing techniques from Germany, United States and Japan to improve their manufacturing productivity and quality.

In response to the high defect rate of 44% (occurred on September 1996) for the DGS component, Mr. Lin the head of the quality control is looking to put together a new group to address this and other quality issues called QC 96020. QC 96020 would be responsible for setting up quality processes to look into the manufacturing of the DCS and other high value components. Lin’s first suggestion in forming QC96020 is to get more involvement from top management in QC group activities. Moreover, he believes that top management should have strict control over the quality process by requiring reports from plant’s middle level management detailing QC group actions in order to avoid problems from recurring. In the past, people let mistakes and quality issues to recur because they were not motivated or supervised. Workers are supposed to inform inspectors of other inspections