ACTIVITY 5.3.1 CONTINUOUS IMPROVEMENT THINKING FIRES PRODUCTIVITY Mike Brookes is founder and co-owner of Ambi-Rad. His Midlands, UK-based engineering company is a European leader in warm air-heating systems. 'We used to be a top-down company with all the new ideas coming from the directors,' explains Mr Brookes. At Ambi-Rad, Mr Brookes decided two years ago that it was time for change. He introduced continuous improvement thinking, under which employees throughout the company hierarchy are given more control over decisions and encouraged to come up with suggestions for quality and efficiency improvements. The 150 workers at Ambi-Rad's main plant in the UK are divided into eight groups which are each responsible for specific aspects of making the company's heaters. Team leaders encourage new ideas and act as a link between the shop floor and senior managers. One recent idea came from Jean Cox, an assembly worker at Ambi-Rad. She suggested punching holes in a piece of metal in a different place so as to shorten the overall production process. The proposal was implemented, leading to a small but worthwhile productivity improvement. 'I feel I am much more involved,' says Ms Cox. 'As a problem occurs, rather than carry on regardless, we are now encouraged to think of a way round it.' Suggestions from people like Ms Cox have taken 600000 a year off the company's costs. The continuous improvement scheme has enabled Ambi-Rad to maintain profits at a time of severe difficulties in the engineering business. In the past two years, many comparable UK companies have seen sales and profits hit by the economic recession. 'Because of the new manufacturing ideas we have kept pre-tax profits at 10% of sales, which is really excellent by the standards of other engineering companies,' Mr Brookes says. Mr Brookes wants savings from kaizen-based ideas to reach 1 million annually over the next few years. From a combination of improved competitiveness resulting from this thinking, new products and a stronger export effort, Ambi-Rad plans to increase sales 25% in the next three years, while keeping the profit ratio roughly similar. 20 marks, 40 minutes 1. Define the term 'productivity'. [2] 2. Explain the key features of continuous improvement (kaizen). [4] 3. Explain how team-working has led to a rise in productivity at Ambi-Rad. [4] 4. Evaluate the possible problems to Ambi-Rad of introducing lean production methods like continuous improvement (kaizen). [10]