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Applied System Theroy

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Submitted By bingqingyu
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1.0 Introduction
Organizational systems, such as companies and value chains, have been studied in order to enhance the performance of entirety. System theory may help with the analysis of the real problems as well as finding the solutions. Based on the Applied System Theory “A system consist of element s discernible within the total reality (universe), defined by the aims of the investigator. All these elements have at least one relationship with another elements within the system and may have relationships with other elements within total reality” (Dekkers, 2015: 16). As the running of the stimulation of the QPQ company, the concept of Applied System Theory has been applied to the practice. The experiment was divided into two round, which were the trial run and actual run. The processes and the output differed with each other. With the comparison, problem in the systems have emerged and with the analysis of the deficiency, measures have been taken to achieve the development of performance. This report will firstly clarify the details of the trial run and actual run of the QPQ company with data collected, following by the analysis of the problem based on the system approaches raised by Applied System Theory. As the final part of the report, solutions and the recommendation of how to solving the system deficiency will be presented.

2.0 The summary of experiments

2.1 The trial run
There were 11 people attended the experiments totally with the production of one car, but there was no car accepted by the customer for the unqualified quality. The arrangement of the position and produce system shows in Figure 1. Figure 1: The process of the trial run

Due to the limitation of the total member of the group, the manager charged the quality control and was floating among different position during the game and did not show in Figure 1. One car had been produced within 10 minutes but due to the unqualified quality, it had not been accepted by the customers. Thus, the running of the QPQ company suggested to be fail for no profit and the negative equity of the company.
After the trial run, problems had been summarized as follow: 1) Orders came too fast; 2) Suppliers’ unfamiliarity with the material and lead to the low efficiency; 3) All the producers build one car in the same time which contributed to the waste of human resource; 4) The production planning need more staff.

2.2 The actual run
There were 11 people attended the experiments totally. With the estimation of five cars in twenty minutes, three cars were produced and all of the productions were accepted by the customers. The process is similar with the trial run which shows in Figure 1.
However, the difference of the actual run was that several positions had changed the total number of staff based on the experience of trial run. The comparison of the number of staff in different position shows in Figure 2.

Figure 2: The positional comparison of two runs

As it shows in Figure 2, the production planner occupied two people in order to finish the material list quickly to cooperate with the sales. And with the game running, one planner had floated to help with the production for there were no more order from sales but the production was lack of staff. The suppliers increased to three people and worked cooperatively to overcome the confusion made by one single person.
The main improvement compared with the trial run were 1) The sales made the forecast on the production to decide whether accept new orders; 2) The information flowed fluently gave the timely feedback with other positions. However, the deficiency of the suppliers still existed which delayed the materials to the producers.

2.3 The productivity and the profitability
In the trial run of the QPQ company, one car had been produced within ten minutes but due to the low quality, it was refused by the customers, which meant there was no profit. As the cost of company operation existing, the QPQ company was in the negative equity without the profit.
As for the actual run of the QPQ company, three cars had been produced within the limitation time and all of them been accepted to made profit for the company. The details show in Table 3.

Table 3: The profit of actual run
Production Profit (on-time delivery) Required delivery time/ min Actual delivery time/ min Overtime penalty Actual profit
Sedan deluxe 360 5 14 90 270
Pony standard 100 10 13 30 70
Special coast 370 10 18 80 290
Total actual profit 830 200 630

Table 3 suggests that the total profit of actual run was 630 (the profit of different car and delivery time can be find in Appendix 1). But the penalties for the overtime delivery contributed to the loss of the profit, which was 24.1% of total profit. The productivity had increase comparing with the trial run for three cars produced. However the profitability still need to be improved for the penalties and the loss of the profit. The actual profit is only added by the productions sales, but did not deduct the cost of labor and other operation equity.

3.0 The deficiency analysis of the experiments

3.1 Internal elements and external elements
In order to understand the purpose of the system, it is necessary to consider the relations between the external elements and internal elements. According to Dekkers (2015), internal elements defined as the elements which are within the boundary and have at least one relationship to other elements, while external elements stand for the elements that beyond the boundary but have direct relations with internal elements. The suppliers as the department, which has the responsibility to supply the material to the company within the logistics system, can be defined as the external element (Dekkers, 2015: 20). As it shows in Figure 4, the performance of the company not only been influenced by the internal elements (manager, sales, production planning and so on), but also the external element (supplier). Figure 4: The system of QPQ company

Based on the performance of external elements in Figure 4, it can be concluded from the experiments that the supplier is a vital factor that influences the entirety performance of the system. The producers’ efficiency was affect by the suppliers’ efficiency for the materials should be provided to continue the production. However in the trial run, the working progress of producers was delayed by the suppliers’ poor performance, which lead to the low efficiency of the company. Therefore, during the actual run of the company, the number of staffs in supplying had been increased and they working corporately to complete the materials required by the producers. The performance of the suppliers determined the performance of the company in some extent.

3.2 Aggregation strata
The investigator should examine the structure of the system to improve the performance, using aggregation strata is a method to examining the system in the whole perspective (Dekkers, 2015: xvii). According to Figure 5, in the way of “zooming out”, digging details is not necessary for understanding when the system is analyzed or the problem is resolved (ibid). It combines several connected elements into one factor, which represent a typical characteristic of systems theory. By zooming in, the details of the system become visible to analyze the system. Figure 5 shows the main way in zooming out and in. Figure 5: The process of aggregation strata (Dekkers, 2015: xviii)

Back to the QPQ company, details of internal elements should be considered to solve the deficiency. As it concluded from the game, the production should be zoomed in to discuss the structure. In the trial run, four producers corporately to manufactured only one car at the same time, which actually lead to the chaos of the producing environment for the product is too small to operate by four pairs of hands. The structure of the production elements should be improved due to this situation. As for the production planning, one staff could not afford the working demand for the difficulty in complete the material list without help. More staff should be arranged to charge this position to gain the better efficiency.

4.0 Solutions
After examine the system, the next is to find how to change the system. The planning and control is vital in the changing process. According to Slack et al (2013: 290), planning and control involve the ability of the organization’s resources to deliver and produce. That is, it includes scheduling, coordinating and organizing operations activities (ibid). It is more efficiency to analyze the system by divides it. The system of the QAQ Company can be divided into to categories of process, that is, primary process (transformation of the state of the elements) and the secondary process (fulfilling the recourses of the primary process).

4.1 Feedback
Feedback as a control mechanism, mainly affects the output of the process and the adjusting the input of the system, including measuring, comparing, actuating and intervening. It affects when the feedback information comes out with the running of the system, then the system changes to adopt with the new situation. Negative feedback has been generally used in the control of process, which in the responsibility to fulfill the disparity between actual and reference value (Dekkers, 2015).
In the primary progress of the QPQ company, the communication of the information between different elements are vital to control all the process operate frequently, efficiently and effectively. During the actual run, the communication and the information changing among every parts of the system contribute to the control of the orders accepted by the sales. When the producers found that the produce capacity could not afford the orders, this information soon fed back to sales, thus, the sales stopped accepting new orders from customers. Therefore, the materials and other resources were saved to avoid the unnecessary waste. Additionally, the communication between the sales and the production planners lead to the saving too. The actual situation of the working capacity of different elements should be fed back to gain the better performance. According to the actual situation, the feedback as a control mechanism suggests to be more effective and efficient for it provides the system with the timely information to make adjustment.

4.2 Feedforward
As a contract, according to Dekkers (2015: 115), feedforward as a control mechanism emerges when the environment is changing and maintain estimated state of the system before the actual process, rather than takes actions to the existed situation (feedback).
Managers and other members of the system should have the prospection of the system before it actually operating. With the estimation of the productivity and the profitability based on the existing data, changes should be applied before the situation change. Applied this theory with the experiment, before the actual run of the QPQ company, the organization had estimated the production and made the target. In order to achieve the estimation, staffs had been rearranged to gain better efficiency. Additionally, the sales of the system also predicted the producing capacity of the producers to control the flow of new order for delivering the order overtime would cause penalty and the waste of the resource.

5.0 Conclusion and recommendation
The two rounds of QPQ company game reached different result for the different system applied to achieve the profit. There was no qualified production in the trial run and the company did not make profit in the ten minutes. However, with the development applied into the system based on the experience gained in trial run, the profit of actual run reached 630 in twenty minutes. The productivity and profitability had improved. With the analysis based on the elements and aggregation strata, the main deficiency lies on the external element (suppliers) and the relations between different internal elements. Measures should be taken to avoid the disadvantages.
According to the control process theory, feedback and feedforward as the control mechanisms should be used in order to improve the performance of the system. Feedback suggests to be more efficient and effective than feedforward in this environment for it provide the timely information for the change of the situation, thus, help with the system adjustment.

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