Intro

FABRITEK, 1992

Recommendations:

1. Make changes to the current premium pay policy:

In the Current premium pay policy the pay is determined by the “total output” instead of the “total good output”. Though most of our workers work efficiently and always produce quality products at 133% efficiency. But such a policy has high tendency for workers to easy misalign their goals. Some workers might become more aggressive and only concentrate producing more quantity than quality products. An increasing rejection rate is highly unacceptable so we have to revise the current policy to reflect pay on the number of total good units produced.

We can calculate the average good units produced per machine based on the standard machine time required to machine the pieces, and determine a benchmark for all the processes. Revising the policy will help us align our objectives with that of the workers as any rejected piece will be the responsibility of the whole team. This is will also help solve any ethical issues arising because of the misalignment of the goals.

1. Keep Moreno:

It is not advisable to remove Moreno from the Pilgrims team at this stage of the project. Though Moreno’s incentives may be wrong, he is still one of the most productive workers of our company. It would be difficult to replace him with somebody who doesn’t understand the process and requires training. This will again cause huge delays. Since part of our contract terms states timely shipment of the products it is very essential to stick to the tight schedule as we do not have any cushion and cannot use other equipment to increase capacity.  Keeping Moreno in the team and employing some strict measures such as random audits and time evaluations will ensure that he is not bypassing any of the process steps.

1. Move Moreno to Grinding:

In the short-term moving Moreno to drilling and grinding section will be ideal to keep him in check. Since it is the last step of the process he will not be able to produce excess units as they have to first go through the milling section. This way everybody is happy and the production rate can be stabilized and the inspector who has usually inspects multiple products will have time to complete them.

1. Increase Capacity:

This being a trail order is causing a lot of problems because of the capacity constraints and because of the peak season for machine milled products. If we get Pligrims contract on a regular basis then we have to think about expanding our capacity and investing in additional equipment and hiring new workers.