LongXi is geared to increase its market share for small multi-cylinder diesel engines but the growing quality concern over production of critical parts is jeopardizing LongXi’s growth in the agricultural sector market. Continued quality issues with our DGS, a critical part within LongXi’s Small Multi-Cylinder Diesel Engine has resulted in breakdown, engine failure and loss production at several customers. Customer complaints are increasing and we need to react to and eliminate our quality concerns. We must develop ways to improve quality in house. Our QC group is well established therefore we are recommending that we collect and analyze data relative to why the DGS is failing and from that data collection, make improvement to correct the recurring quality problems.
Customer relations for LongXi Machinery Works are highlighted in the company’s background. We are one of several medium sized companies that share 55 per cent of the market share not occupied by larger single-cylinder engine manufacturers. Our primary market is the agricultural machinery sector of China. Since our inception, our competitive priority was in manufacturing various single and multi-cylinder diesel engines. These engines served four primary customers. Due to changes in China’s agricultural machinery sector that increased buying power, sales of diesel-powered agricultural machinery is seeing a ten percent continual growth over a five year period. Because of this growth, our sales estimate equate to 85 percent of the overall 10 percent growth over the same five year period.
The attached table shows a comparison to one of our primary competitors – Changchou Diesel Engine Works (Changchai). As you can see from the comparison table, LongXi is a much smaller company to Changchai. Changchai is one of the four large manufacturers that account for 45 percent of the market and we are one of the several smaller companies that equate for the remaining 55 percent.
The duo-gear shaft (DGS) is manufactured at LongXi using a batch manufacturing process in which small quantities of parts are process at a time. The process flow for the DGS starts in the warehouse where raw material is sawed to the desired length. Three of six machines are used to prepare the raw material for the DGS. Based on the initial step in the process flow, using the six available machines will allow more parts to flow through the process which would increase operating cost, but would significantly reduce process time. This process change could help in reducing the overall cost of the DGS unit.
The next operation in the manufacturing process is the machining process. This process consists of Grinding, Lathe and Drilling machines. Only the lathes and the drilling machines are used in this area of the machining department in the initial phase of the machining process. The lathe process is the first process in the machining department. After the lathe process, parts are stacked on each operator’s tool box until the material handler moves them to the drilling operation. After each machining process the parts are transported via carts by a material handler to the next process. Typically, in other machining operations, the lathe and drilling process could be combined into one operation where the parts would be cut to length and the holes would be drilled using the same machine. This would require significant capital investment by LongXi but it would reduce wait and transportation time between processes. This would also eliminate the need for operators to stack parts on their tool boxes.
Thermal Treatment Department
The thermal treatment process is the most important process in respect to the overall quality of the DGS part. As stated, thermal treatment is...