Case Study: SNY Pty Ltd

This case study provides insights into some challenges facing a business transitioning from being local to global. There is an internationalised, cross-cultural, work force with highly-skilled to less skilled workers - their interactions have implications for Human Resource Management. There are quality control requirements and these have consequences for their staff and customers. As a part of a multinational company, there is an increasingly complex supply chain. Meanwhile there is the constant demand to remain competitive in the global marketplace.

Background

Originally an Australian start up manufacturing business, SNY Pty Ltd, was founded in the 1980s in Campbelltown, New South Wales, but has now grown to become part of a global company. The founder, Gary Smith, had developed several oil and lubricant products that provide specialised manufacturing solutions for specific heavy industries and he patented these products. These products, once released to the market, were highly sought after as they enabled the heavy industry consumers to be more efficient in manufacturing their products - they made more money! While there is a global marketplace for oil and lubricants (as well as multiple providers) SNY was successful dealing directly with its large clients in its niche market because of its excellent customer service and after sales support. When the owner and founder retired two years ago, Smith on-sold SNY to a large multinational oil and lubricant business and today, SNY Campbelltown sells its specific products and distributes the global company's products.

Organisational Structure and Workforce Composition

The General Manager Juliette Livingstone is part of the global corporation. She was relocated from their Hong Kong office after extensive experiences across the organisation ranging from raw material extraction to pure office-based management. She undertook a restructure and, currently, the SNY workforce is divided into three key groups; management, sales and after-sales service and manufacturing.

The first two groups are highly internationalised as the product is bought and sold in China, India and South-East Asia and, likewise, raw materials for their oils and lubricants are imported from Malaysia and India. The third group of employees - manufacturingare
comprised of labour-hire and permanent workers. In this third manufacturing division there are completely unskilled workers through to highly skilled engineers responsible for quality control.

The scenario

Recently, the higher skilled quality control engineers in manufacturing have become frustrated. There have been some staff changes in senior management and increasingly the engineers are being supervised by people who have little idea of their actual role, the technical skills they have and what they manage or even manufacture on the factory floor. In particular, the engineers are anxious about the potential outcomes of poor day to day decision making - particularly where it creates the potential for costly mistakes, that
is, mistakes involving customer complaints and potential reimbursement of customer manufacturing costs when SNY products don't perform due to quality issues. When quality tests fail and production is stopped, rather than being relieved that this error has been identified, workers on the factory floor actively try to stop quality control being involved in manufacturing by either not taking product samples, hiding product samples or ignoring instructions to stop. Their supervisor, who liaises between his workers and engineers / management, has also been known to ship out products to customers without quality control having time to test and approve the quality - particularly if it is towards the end of the month when bonuses for all floor staff (including him) are calculated.

While the engineers responsible for quality control have outlined their case to senior management, they feel that their roles are perceived as being simpler than they actually are - they are on the factory floor so it is perceived that they are just floor workers who are less skilled and easy replaced. Most of these engineers are from overseas and have migrated to Australia. They accept low wages as a means of getting access to the Australian job market. On paper, these workers do not appear to be skilled as they are paid the same or less than labour hire workers. They often have language skills that do not enable themselves to present a strong case to the highly culturally and linguistically diverse group of senior managers or sales staff.

While the sales team are dependent on the quality of the product, they are unaware of the full consequences of the factory floor conflicts. They are not allowed to be very involved in manufacturing as they cannot know the ‘secret oil and lubricant recipes' in case they move companies and develop a similar product for another competitor. When a problem emerges, however, and a product doesn't work - they are left to explain the situation and manage the customer complaints. The sales team place enormous pressure on the quality control engineers to explain what has happened. The engineers point to the floor staff who then increasingly resent the engineers. Meanwhile the sales team remain stressed and baffled as they try to reach their monthly sales targets.

Key additional information

Senior Management:

• General Manager Juliette Livingstone understands oils and lubricants but, as a British citizen growing up in Hong Kong she really doesn't understand Australian worker context. She sees Australian factory floor workers as lazy compared to the Chinese who worked for her in Hong Kong. In Hong Kong, for example, she felt a greater control over the raw material and finished product supply chain. In Australia everything takes longer to arrive, the Australian dollar varies (making it difficult to determine final costs) and there are fewer customers - the customer has greater control over who they buy from. While she understands the need for quality control, as she has had to manage the consequences of poor product outcomes, she doesn't understand why it is so hard to make a product and get it right! She is sick of it and only visits the factory floor when guests arrive from the main corporate office or customers ask for an inspection.

• Rather than questioning internal operations, when a customer has a quality complaint the General Manager is usually interested in trying to create a scenario, if possible, to explain how the customer might be partially responsible for the poor product outcome (such as installation or use of the products outside of SNY recommendations) to avoid being sued for costs. On the factory floor:

• Factory floor labour hire workers, after a period of time, have the opportunity to become permanent workers but there is a pay drop by doing this as management see ‘guaranteed work' as a value-add worth more than money. However, traditionally, there has been considerable turnover in the manufacturing floor staff - particularly of permanent workers who are paid $18 an hour and have few supervisory positions to move into to earn more money.

• Factory floor workers get paid per hour but also potentially get a bonus for productivity. This initiative was set up by senior management to ensure that each hour of work paid for was producing good company outcomes.

• The factory floor workers do not know each other well; they do not understand how their part of the process contributes to the end product and have few relationships with the quality control engineers or senior management.

• Longer term factory floor workers often have large amounts of organisational knowledge - they know that quality control tests fail for many reasons that won't affect the final product. Some believe that the engineers are deliberately interrupting the manufacturing process. 

ESSAY CONTEXT AND QUESTION:

SNY Pty Ltd is hiring a new manufacturing manager to oversee all manufacturing staff as well as liaise with senior management and sales team. The General Manager has asked you, as one of the final candidates for this position, to write an essay answering the question:

What are the challenges facing SNY's manufacturing and how should the Manufacturing Manager resolve these using key management concepts?