Situational Audit
The Goodman Company manufactures small rubber automotive parts. They make boots for floor mounted automobile and truck transmissions, boots for brakes, and clutch and accelerator pedals. At the end, these products are sold to assembly plants for new cars and trucks.
The president of the Goodman Company is Mr. Robert Goodman. Joes Smith is the production manager. Under Joe Smith they are three supervisors, one for each shift of work. Shift one is supervised by Mr. Cleverson Anthony, shift two supervised by Mr. Norm Leonard and the third shift by Bob Jackson.
The company has been doing very well given the fact that the plant is fully staffed on each shift. Recently the plant has been working six days a week to keep up with increased orders.
Being the good businessman Mr. Goodman is, the increase in demand for his products prompts him to explore the option of expanding his company. Any increase in production must occur within the present physical plant, because money is not available for a proposed multi-million dollar expansion that was thought about. The purchase of new equipment is also out of the question so Mr. Goodman decides to hire a production analyst in Ms. Ann Bennett to see if greater efficiency can be achieved.
Ann Bennett has a bachelor’s degree in Finance with a concentration in Production Management. She graduated with first class honours.
Before Ann Bennett implemented her changes the entire production process was handled by each worker. Currently the process is done based on a mass production format where one worker will be assigned to do a specific part of the production process. She also changed the payment system from an hourly rate of pay to payment based on a piece rate system. Although these changes seemed like a good idea they proved not to be totally effective since output decreased on the first and second shifts whilst the third shift was able to maintain their level of output.