Abstract
With the rise in globalisation of companies, the value proposition provided by different
companies to the customer and end users require ever closer control of operational and
product costs. These cost control measures are often driven by process improvement
measures where the product and service offerings are closer aligned to the needs of the
customer. Several improvement programs exist, and the research presented in this paper aims
to apply such an improvement program to an Engineered To Order (ETO), department with
the aim of discovering the critical metrics that align to the internal customer needs and then to
improve the benchmarked performance.
It was found a strong use of the popular Six Sigma DMAIC (Define, Measure, Analyse,
Improve, and Control) processes, that was developed by Motorola, within service industries
such as healthcare, and proposed that the output of an engineering department is a service
that allows downstream business processes to conduct their own work. This is in contrast to
the established concept that an engineering department outputs physical products such as
drawings. The altered approach allowed the use of service related metrics to be applied to the
benchmarking and improvement programs within the ETO office.
To establish the uses of information generated by the ETO department, a stakeholder analysis
was conducted. This analysis was used to direct a deeper level investigation into the quality
and lead time impacts of the departmental output, where historical performance was
benchmarked. These benchmarked values were compared to identified time frames, and
quality performance against the internal quality processes. This analysis found that quality
was well within company and customer satisfaction levels, whereas the benchmarked
turnaround time was excessive, with an average turnaround time of more than the allowed
target. Further analysis into project complexity and witing or processing time was also
conducted to establish the area of greatest improvement potential.
Root causes for the contributors to the unsatisfactory performance were established and a
historical analysis of prior late projects was conducted to determine the frequency of each
contributor. This data was then used to develop a corrective pilot program, where a new
paradigm was tested and the performance recorded to be compared against the benchmark
performance and the proposed target.
The new process focussed on ensuring that work within the ETO office is easily captured as
it enters the department, and that the required information to complete the work package was
present before work was started. Once in the department, work would be ranked according to
a combined factor that accounts for the expected lead time, and the value that the project
would add to the company’s turnover. The next highest priority work package then selected
by the team themselves, once a current work package is completed. This is a significant
change from the existing paradigm, where all work enters the department through a single
source, and the work is assigned by the engineering manager.
This new approach yielded improvements of 73% overall when compared to the historical lead
time benchmark numbers, but deeper analysis pointed to greater percentage improvements
in the reduction of waiting of projects, and reductions in the processing time of jobs of the
various complexities undertaken by the ETO office. Improvements ranged from 30% for the
processing of simple projects, through to 98% reduction in waiting time for medium complexity
projects. These improvements are to be sustained by the formalisation of the work assignment
procedure and the processing method.
The application of DMAIC processes within an ETO department illustrates how improvement
programs can be utilised to streamline the effectiveness of a company as a whole, and do not
require substantial financial investment while returning significant returns on the time invested.
It also allows for a focussed approach, where the value chain is critically analysed, and to
determine the effect of how each step adds value in the development of products that meet
the customer needs. While the process improvement is isolated to the ETO department, the
total value proposition of the company is improved.