Learning Outcome 2:
Demonstrate understanding of quality management principles and use quality tools and techniques in the design of efficient and effective operating systems.
Memo: Steel Coal NZ
From: Quality Manager – Sarah Pike
To: Managing Director – Michael Morgan.
I’ve just concluded an internal audit of the mining facilities and site area. I have some serious concerns which I wish to raise with you as follows:
A. There is some serious maintenance issues with the Waratah continuous miners. As you know this equipment is responsible for direct mining of coal from the coal face and is producing coal lumps too big for the coal holding slump. The result of this problem is that the crushing and screening (C&S) area are receiving coal lumps 22% larger than they should be. This is causing damage and downtime to the screening process. So far we have lost an average of 1.5 hours per day over the last 3 weeks. I asked the C&S manager and he told me that he had been talking to the Mining Manager about this for the last couple of weeks but the mining manager appeared “unwilling” to fix the problem.
B. What is equally as worrying is that in the first week of issues, quality control records indicate that this maintenance issue was highlighted 7 times across the 3 shifts by staff. The reporting of issues has died away subsequently as there appears to have been no action taken. I spoke with three mining operators and they acknowledged that the issues where there but that their primary focus was tonnes per hour.
C. As an aside, I’m worried about the follow on effects of the screening damage. It appears that the mercury levels in the wash water from the crushing blade tips are running 5 times higher than usual. I’m going to check with Emma in the Environmental division as I seem to recall that this might have an impact on our wastewater consent.
I think there are serious leadership issues in the mining department and we need to do something fast as the downtime is costing us $55,000 per week. I expect that you will see this on your monthly results at the end of the week.
1. Outline in this situation who is the customer and who is the supplier.
2. Of the three Total Quality Management (TQM) principles, which are the two main principles that have failed and why? List at least two reasons for each failure.
3. Describe the level of trust between the quality manager and the managing director.
4. From a customer/ supplier perspective, what key failure has occurred in the mining department?
Two hours later …
Memo: Steel Coal NZ
From: Managing Director – Michael Morgan.
To: Mining Production Manager – George Holdback.
To: Crushing and Screening Manager – Bill Fitzit
To: Emma Steeds – Environmental Manager Subject: Quality Failures and Wastewater Discharge
Post my walk to the mining and C&S departments, and as discussed, I need immediate action taken by you all to resolve the Waratah continuous miner’s maintenance issues and subsequent problems. I expect that you will involve your staff in solving these problems and that they will be solved in a structured and systematic way. Specifically please apply whatever tools necessary to ensure resolution.
1. George: Waratah continuous miners: Ensure that the plate and pulverising arm tolerances are within specification. I know you have indicated that the problems could be coming from a number of locations including equipment some of your operators and even the way they are being trained, but this must be fixed. Call on Sarah if necessary.
2. Bill/ Emma: Wastewater treatment plant: We seem to be getting high frequency of peaks of Mercury in three or four specific circumstances. While I understand George’s issues, we need to understand why our automated dosing unit is not automatically increasing neutraliser to counteract this problem. I want you to work on the highest frequency issue first.
I expect a report back from you all before the end of the day. I don’t have to remind you of the consequences of sending elevated levels of Mercury through the waste water system.
As an immediate step, if any part of any truckload does not meet C&S specification I want the whole truckload of coal lumps rejected and sent back to mining. Bill, post a full-time person on ore receipt until George gets on top of the problem.
George and Bill, I would like to see you in my office tomorrow morning at 10:00am.
5. Based on Michael’s memo, which of the 7 quality tools should Sarah recommend to George and why?
6. Given the issues described in the wastewater plant, which of the 7 quality tools would you use and why?
7. Describe the type of statistical process control that Michael has instigated and describe what evidence suggests this tool was used.
8. Describe Michael’s commitment to quality. Give at least 3 examples that support this.
9. Outline four (4) areas of either existing or potential cost as a consequence of the manager’s not managing quality properly.
George has been tasked with solving the Waratah continuous miners. If you were Sarah, other than recommending tools to use as in Question 5, describe three actions you would suggest to George as he embarks on attempting to solve the problem.
Learning Outcome 4:
Understand and apply performance measurement and control.
1. Outline George’s biggest problem both philosophically and literally in this case study.
2. Describe at least two critical failures Bill has suffered as a consequence of George’s approach.
Memo: Steel Coal NZ From: Managing Director – Michael Morgan. To: Management Team Subject: Learning outcomes from recent mining/ C&S issue.
From: Managing Director – Michael Morgan. To: Management Team Subject: Learning outcomes from recent mining/ C&S issue.
To: Management Team Subject: Learning outcomes from recent mining/ C&S issue.
Subject: Learning outcomes from recent mining/ C&S issue.
I have some serious reservations about the how we missed the above issues. Here is how I see the situation:
- We seem to have had a complete disconnect between internal supplier and customer between mining and C&S.
- What’s more, when speaking with engineering they have indicated that they were aware of the problem in mining but were concerned about ensuring that we hit month end budget and so had put the problem on ice until next month.
- The in-processing quality control staff appeared to have not been fully trained especially on the critical aspect of escalation.
- Staff have not been paid attention too when highlighting issues.
While these things are not bad enough, we also need a full review of our performance management systems. Please determine the following:
a. What indicators did we have in the DWOR (Daily/ Weekly Operating Report) over the last week that issues existed?
b. Why we have missed such a huge financial variance over the last 3 weeks?
Let’s catch up this afternoon to discuss.
3. Outline areas of failure from a balanced scorecard perspective that Michael is highlighting in this memo and why these have occurred.
4. Discuss new alignment issues highlighted horizontally (between departments) and vertically (between management and staff) within Steel Coal from this memo.
Below are snapshots of the last week’s Daily/Weekly Operating Report.
|Engineering Spend||$ 5,000||$ 4,653||$ 5,200||$ 5,321||$ 4,824||$ 4,251||$ 4,875|
5. Are the results shown consistent or inconsistent with the issues experienced by Steel Coal? List three reasons why or why not.
6. Based on the DWOR results above
a. Discuss why you think management is missing the cost issues and
b. Outline what you can see in the numbers that might point to engagement issues.