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Setting Objectives

... why customer expectations matter

Energy is the essence of life. Every day you decide how you're going to use it by knowing what you want and what it takes to reach that goal, and by maintaining focus.

Oprah Winfrey, Talk Show Host

Author: V. Narayan

Location: 2.1.2 Automobile Parts Manufacturer


The company designed and built many of the special purpose machine tools (SPMs) they needed for manufacturing their product range. This work was done by a separate division that had a design office, a large machine shop, and an assembly department. The design group was in close contact with the production and process planning departments. Castings and forgings required for these SPMs were made by third-party vendors to the company's specifications and rigorous quality standards. The 500 odd staff in this division occupied one building, approximately 60,000 square feet in area.

The company had a principal in Europe and affiliates around the world, making a similar range of products. The company's European principal decided that SPMs made in this plant were of comparable quality to those made in their European factory. They made a policy decision to increase SPM production in this plant with orders from affiliates being executed here, once additional capacity was established.

The SPM manufacturing, assembly, and testing areas had to be increased significantly. Additional machine tools were required along with overhead cranes, packing and dispatch bays, and a small increase in office space for a larger design group.

Demand for the company's main product range of fuel injection pumps and spark plugs was also rising rapidly. As a result, the company's own production process needed additional factory area. The company decided to relocate the SPM division to a new factory to be built on a green-field site. This would release an additional 60,000 square feet

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in the existing plot to cater to the growth in primary product demand.

They owned a plot adjacent to the existing factory, with a public road dividing them. The plan was to build a new factory building 100,000 square feet in area with its own infrastructure services such as electricity supply, water, and air. The SPM division would thereafter operate as a profit center.

For many years, the company had used a respectable and reliable firm of architects for their civil engineering work. At the time of these events, they were supervising the extension of an existing factory building (described briefly in Chapter 22). While observing this work, I noticed that our own civil engineers and the architects were operating well within their comfort zones.

The architect's designs looked very sound, but it was not clear whether more economic designs were feasible. We could resolve this question by opening the architectural and structural design work to outside bids. After obtaining approval to conduct a conceptual design competition, we invited other qualified architects. The successful submission would meet specified criteria: customer expectations, cost, and adherence to schedule.


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