CASE STUDY Turnround at the Preston plant¹³

Introduction

‘Before the crisis, production monitoring was done to please the client, not for problem-solving. Data readouts were brought to production meetings and we would all look at then, but none of us were looking behind the data.’ (Chief Operating Officer (COO), Preston plant)

            The Preston plant located in Preston, Vancouver underwent a major setback, and the plant experienced challenges in its operations. The first problem that it experienced was with its paper curling under the low humid conditions, after the problem with the curl was detected, isolated and rectified, the plant’s operations sprawled out of control when the productivity, scrap and the rework of the re-works level started showing poor signs. It is also reported that the plant had been making losses due to the curl issue, after being acquired by the Rendall group was this loss confirmed.

            To effectively take charge and control the mess, the plant as a first measure worked at isolating the main cause of this problem and started at improving the systems that monitors the processing metrics, this course of action ensured that the system was producing very acceptable products (Anon). It must be noted that before this crisis control was adopted as a contingency measure the plant had only know a rough year making losses to the tune of $10 million per year. The appointment of a new COO can also be regarded as a countermeasure towards increasing productivity at Preston.

            In response to the productivity, scrap and re-work levels that were now poor, the operations manager pulled a fast one and increased the speed of the line to ensure that they had increased the levels of productivity. The only con with what was done here was that the changes were not made with proper discipline, there was no real concept, and there was no real concept of control thus this process also managed to drift away.

            Quantitative analysis has provided the world with some of the best and greatest tools that are available to assist with comprehending and understanding the world at large. The method or process that is available allows analysts to observe and interpret what had happened, what is happening and what is about to happen in a particular scenario, in this case we are looking the plant, Preston (Li, 2017). The first tool that can be used to effect a good turnover at the plant is pricing and Economic Equilibrium. The first person to apply mathematical concepts in the realm of finance in 1952, after his diversification theory, stochastic calculus was applied by Robert Merton in 1969 discovered what prices tell and the effect it has on consumers and producers. As a single indicator, it can condense a number of transactions into a single unit of information thereby reducing the load that exists in copious transactions. This can also be done and said for all other prices that may arise in the production line, the use of calculus and statistics can be used in helping the general stock trading become profitable.

            Expansion of the sphere is also a quantitative analysis tool that can be used to improve turnover in a company. When using very complex algorithms constantly shifting data from financial analysts to help them in the determination of individual corporate investment risks. To effect a good turnover for a company like Preston, analysts can be brought in to use the mathematical and statistical modelling for condensing a vast amount of data that can then be relayed as simple predictive equations. The econometric outputs can easily be arrived at through the identification of the courses of action when Preston wants to make investments and trading. In a company looking to maximize the output and minimize on production, these quantitative analysis tools will come in handy when it is used in the investment management, to trade in derivatives risk management and portfolio optimization.

            One of the quantitative tools that had been helpful in bringing the plant back under control was the decision to track back to the previous set of conditions that the commission had indicated were working in January, in this phase the curl problem were already solved and before the productivity pressures caused the same process to be adjusted. During this time the production also managed working ways which could ensure ways through which unambiguous shut down rules could not interfere with the procedure, instead they could relay some information to the operators that a certain line ought to be stopped if there was any doubt at all of the operations quality.

            Ethics requires that a company carries out itself in a professional manner espoused on their vision and mission statements, the major reason as to why a company exits is for creation of wealth and creating employment comes secondary(“What are ethical considerations? | ALRC”, 2017). An ethical consideration that failed the company was the decision by its managers to give an okay to changes being made without any proper discipline. A concept of control was lacking and this made the process drift.

Reference

(2017). Retrieved 17 August 2017, from http://www.gsdrc.org/docs/open/eirs4.pdf

Li, M. (2017). Quantitative Data Analysis Techniques for Data-Driven Marketing. iAcquire.          Retrieved 17 August 2017, from https://www.iacquire.com/blog/quantitative-data-          analysis-          techniques-for-data-driven-marketing-2

What are ethical considerations? | ALRC. (2017). Alrc.gov.au. Retrieved 17 August 2017, from             http://www.alrc.gov.au/publications/6-ethical-considerations/what-are-ethical-        considerations