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Terry Hill's framework: Corporate and business objectives

Friction materials is enjoying a new rent of life as seen by their potential to make substantive profit partly due to the renaissance of the motorbike (scooter) as a way to obtain transportation by the center aged. Thus the organization objectives are:

  • Gain market show in the OE market through produce and supply of DBP in 24 months.
  • Entering china and taiwan market as an extended Term Strategy to increase profitability and to wrestle for International Market Show in 3 years
  • Superior Product Performer in doing so securing the contract on an extended term Basis
  • Improve Research and Development for the OEM for incremental business.
  • Increase ROCE to 30% 3 years.
  • Increase PROFIT PERCENTAGE to 30% in 3 years.
  • Increase ROI to 40% in 3 years.

Order Winners and Qualifiers Criteria

Discussion of the Conditions and the Implication for Operations


This holds true for the street motorcycle processing company as showed by their attention to depth and their strong Quality Policy and culture. Hence, it is pertinent for Friction materials to keep up their already lofty levels of Quality to have the ability to tap into the ocean of opportunities of OEM.

For the AM, it is a guide to the actual customers of the characteristics mounted on the brand. With a Quality rating on the market, the brand image does help win a few of the customers over to the product range.

For the SM, Brand Image could play a role in the decision of the DBP because the customers may want the best quality DBP because of their automobiles which would help in marketing (person to person). This is a strong basis for our key competency being retained rather than outsource.


For the OEM, Cost is the major order victor here as the business should be highly competitive on cost to defend against potential rivals from the market. But with the chance of Research and Development for new ways of making DBP, Friction Materials would be able to charge pre

For the AM, Cost is highly competitive as well. The company must be capable of geting DBP to the marketplace at affordable prices as the company has to be highly competitive on cost to defend against potential competitors from the market.

For the SM. Cost is not competitive and almost not relevant. The cost of the DBP should be affordable enough rather than charge ridiculous volumes though the customer is happy to cover the value of the DBP.

Q & QQ

QQ: Performance quality overall flexibility in design dependability and volume level are very sensitive order qualifiers in a way that a drop in one of the characteristic specification could cost them the order. These requirements are key with their receiving over the OE market thus we've a QQ which denotes (order loser). On the long run (three years on) a few of the beliefs would change because Friction could have received a certain volume of market share and the way of the market would have a tendency to shift. For instance with a discovery in R&D, the worthiness of design versatility and cost would change. This implies that

For design flexibility, it would be a new order winner, a display of our competency and so they would be able to charge advanced price, or at least increase the price of source.

Cost will be a dominant order winner as rivals would seek to operate a vehicle down cost hence stiff competition.

On the other palm, Q is not as delicate as QQ. You would not lose the order if you cannot meet the demand. For Instance the sturdiness of the DBP is a qualifier because it must have the ability to perform for a period of time but not too much time to be considered absurd. 24 months is good but no-one would want to design DBP for a decade so if living of 2 years is gained then it is okay.

For example delivery speed is not required as you would have agreed to sign the offer to provide at an agreed period failing that you would be fined.


SWOT Analysis


Credible company network

Modern managerial input

Good debtor to creditor days

Good current Percentage; shows cash flow

Ability to broaden current location

Centralized location to advertise and to slots for export

Fully depreciated machine cost, hence they machine cost 0

Skilled Labour power as is seen in Specialist Manufacture

Brand Image reputation for quality

Close romance with the tool specialist fabricators.


Inventory levels

Friction between top management (cronton and whitson)

Long changeover period on press machine

Poor workers management

Poor use of work deals leading to unused natural materials

Underutilization of MRPII systems

Inability to do online payment

Poor space utilization

Over reliance on access into OE market


Potential global innovator in OEM

Local sourcing of materials (when they gain public status)

DBP direct distributor to industry manufacturer's thus increasing market share

Expansion of development range


Competitive Labour Market

Stiff competition from the A long way East

Potential Environmental threat on noise and throw away disposal


Expansion of Market channeled to an increase in both local and global resources of DBP.

Revolutionize the OEM to a Quality competitive market based on cost management.

Improve Research and Development capabilities

After sales customer feedback as a way of getting nearer to the client and increasing on quality and performance.



This is the level of incorporation in a source chain for the various levels of the source process. Maybe it's onward or backward integration. A vertical integration could be to bolster the scientific front predicated on competition or for to emerging markets.

Make / Buy: The make or buy evaluation is a strategic examination that helps top management to choose what they would like to produce, what they want to stop producing or what they would like to outsource to an authorized. In practice, key competence is not outsourced because that is the uniqueness of the merchandise; if you ignore it, you could just be setting up future competition for your company.

The various decisions used and the reason why are the following;

For the supply of raw materials; a single supplier was preferred. This might prevent re-testing for the grade of the provided materials as the tests phase requires a little while to receive the right combine for the required braking performance. This would increase lead time and consequently reduce the capacity to deliver in time. In addition, it helps decrease the deviation in quality that can occur from multiple sourcing

For the blending operation, this is the core competence and may be harmful to the development and the organization objectives of the business.

For the Press Operation, the Press tool produce is done by an area specialist firm. This could lead to delays in taking on the tool fabrication hence accumulating lead times for the OEM. When the look team finishes the design, they might have to wait for the Press fabricators to be available to work. Communication gap is also a menace to the easy running of the design of the tool for the OEM. The specialist organization is also susceptible to take over by large BP manufacturers who are immediate competitors as soon as competitive gain is lost to them, it influences the market talk about of the OE and therefore the power for Friction Materials to be competitive. Thus the decision is to Vertically Integrate the neighborhood Specialist; this can help build competitive advantage in the OE market.

For the cooking operation, it would be kept internal. Outsourcing baking increases the time the operation takes; from 3 time to a potential 5-6 time. The expense of transportation, labor and the repayment of the procedure together with the time trade-off make it very complicated and unsuitable for outsourcing. The chemical properties of the brakes at high temperature ranges could be modified during transportation and therefore may lead to a failure in screening which results in the company losing the order. Hence, it is a critical operation in-house and not outside.

For the machining procedure, the decision is to be kept in house. This is because an computerized 100% dimensional check is necessary after machining. In the event that you machine in house, there is a greater chance of achieving that precision than to outsource to a specialist that could be overlook little details that could lead to test failure. Because the machines are jogging at full capacity, an extra machine is necessary for the OEM production. The machine would be second hand quality as accustomed to the business. The fully depreciated machines make extra budget available for this purchase and would in no time be fully depreciated as well. Thus we nearly are paying less to do more.

For the painting, the operation would be carried out in house. Associated with to be in control of the products produced. Also the painting operation is a low skilled task hence a contract staff could be used for the sole goal of painting. This helps specialization on the long term and reduces costs credited to travelling and materials handling. In addition, it reduces labor cost as the business is only destined by the contractual arrangement without benefits.

For the packaging, the short term objective is always to continue in-house but re-brand the great deal size to be able to provide more DBP. This reduces the responsibility of experiencing to pack several hundred of DBP anytime. The lot sizes could be increased and standardized as there is no obligation to provide with the current range of boxes but simplifies the existing packaging operation. This helps reduce the number of boxes supplied for packaging and therefore enough time and cost of transport and materials handling.

However the long-term plan is always to source for a packaging company that could agree to package deal as close to our creation site as it can be. This helps free up space for increased production and other value added work.


The design of the procedure would take into consideration the item to be produced, change the several possible ways to produce it and come up with the best & most successful way of producing it. The attribute of the operation is determined by the 4 V"s













The OE market will involve long production works with product specs and low variety, there may be need to put into action a high volume low variety developing process which is the category of the OE market.

Volume: This is the creation capacity within a particular time frame. The volume is set preceding to production to be able to plan for capacity. The existing forecast of 150, 000 in the first time is a higher volume set alongside the normal few hundreds that are currently produced. Therefore it is a high amount process procedure and satisfactory capacity should be provided as required.

Variety: this is described as the various combinations of products that a production process can accommodate. There is limited deviation in the demand of DBP for the OEM because of the standardized requirements. Basic changes can be produced in the look but it is virtually the same vertebrae and technology that can be used. This depicts a minimal variety production.

Variation popular: This is actually the potential of the creation process to improve with little notice to the causes of demand and offer or product design and specs. Orders are requested per year prior to production thus a well balanced demand profile which makes effective capacity utilization probable. It is therefore a low variance demand development.

Visibility or Customer Interaction: this could be described as the level of participation of the customer in the creation process. The best goal of any development of the process is to meet the customer. Because the customer is not likely to be at the stock each and every time, we accept a low presence production process. This has no bearing on the type or quality of DBP produced as the company would be ratified fit for the development of the OEM before proper production can start.


The current location of Lutterworth is perceived as a central location both to the potential and to the international market. The town has a abundant history of developing work and it is in a central location for transport of finished goods and raw materials and evaluate to the manufacturing plant very easy. Additionally it is close to a huge motorcycle manufacturer who's the possible client. This is an ideal location for an evergrowing company and the speed of development could become attractive for immigrants because of the appearing facilities.


Product Profiling

The product profiling strategy is an research understands certain requirements for development and the characteristics available for every single process to meet production standards. A comparative examination helps in process choice the layout structure to look at.

Original Equipment Produce would be achieved through the batch creation process. The procedure type helps utilize the standardized creation format scheduled to low variety. In addition, it helps enhance the efficiency of creation and spreads the overhead costs over more devices.

The Specialist Make is a jobbing type process as the Aftermarket creation is Batch Development therefore we get a flow line production process; it would impede our development process. Thus if for OEM, a move lines is chosen then Specialist Manufacture must be outsourced to pay for the complexity of the creation process. Nevertheless the Specialist production is the central competence of Friction Materials and to forget about it would be synonymous to throwing your market show away. When a competition comes by and vertically combines that section of your enterprise, then there's a potential buy-out of Friction Materials.

Therefore it was wise to employ a flexible Bach development process currently that could transfer to a flow development process with enough investment to justify the resources necessary to change it.

Process Choice












Alex and Terry Hill 2009








Fixed Position



Feasible Flow





Regular Flow

Dr Watt 2010

However, for a long-term capacity planning, financial commitment and option of funds will make OEM become more flow line suited. This occurs when there is a huge size to justify the investment and good forecast of your emerging market hence a growing demand and an appropriate market share to regulate. The OEM batch process is inclined towards the circulation line creation section.

Process Choice













Alex and Terry Hill 2009


A capacity strategy is a review of the way the personnel would work effectively with the resources and equipment available. For the OEM, there is a predictable demand known per year prior to creation, hence an even capacity strategy typifies the development. There is no business lead or lag in creation and demand hence the make to order plan.


The capacity is set at 3000DBP per week at standard working week of 40hours. This can help both capacity and workers utilization and a good budget schedule. If there is a big change in capacity planning, transfer hour or overtime can be used to compensate for such. However this plan is for the current production aim for of 150000.



These are specialists in the region of recruiting people for various job functions. From a making viewpoint, an IE is the right person for this task. It is because he has been trained to understand the right work contents the workforce required to achieve maximum capacity utilization and the performance measurement attached to each job function. However the HR specialist knows how to connect the salary structure and the power (both money and material) attached to him.

Therefore the strategy would be to make use of the unskilled labor force and train those to a basic least skill level required to do the basic non skilled functions like printing, packaging and painting and machining while we use a higher wage composition to lure the skilled workers; should we need them. The unskilled staff could be non permanent workers or long lasting workers depending on requirements as the skilled personnel would be made long term to increase key competency.

Periodic training like safeness and their specific job functions would be necessary to update the level of skill and technology across panel.



It is a framework that converts the eye-sight of the business into performance options that may be interpreted and checked. The mission affirmation should thus be seen as the action plan that drives the business on the voyage to the destination it hopes to accomplish in future.






Fig : The balanced Score Card

Slack, chambers & Johnston 2007

Strategic Objectives

Strategic Measurements

Core outcomes

Performance Drivers



Increase Profitability

Increase Revenue

Project Cost

Reduced Cost

Compete Predicated on Cost

Operational Efficiency



Increased market share

Share of segment

% existence in the OE sector

Customer satisfaction

Customer feed back

% satisfaction, positive feedback



Revenue mix

Research and Development


Prototype designs success rate

Increase ROCE


Higher utilization of resources


Learning and growth

Employee capability

Staff productivity

Reduced scrap rate

Upgrade of facilities

Systems Audit

Improved pattern times

Adapted Balanced Scorecard, Kaplan and Norton 1996

Financial perspective

Growth: The imagine every business is progress; and so is Friction Material. The development of the business is the gate way to expansion in other markets and could be described as a element in increasing the marketplace share which has been establish as at 2 years.

Increased Profitability:

The profitability of a company is its potential to fulfill the demand of development; outcome, overheads and cost of development and still make a margin. Most businesses are set-up with an aim to make money; either main or secondary. Friction Materials made revenue this season and the OEM is a lee-way to ensure constant volumes of creation and with a high efficiency system, the OEM would be the source of revenue for the business. This is because the OEM has a huge potential to carefully turn the fortunes of the company around from a little company to a Large company with huge revenue and large market show. In an emerging market like the OEM, the first to enter the marketplace usually dominates a great percentage of the market share. It is therefore essential for Friction Materials to maintain the market among the pioneer members. The OEM would create huge income as they may have a huge volume of production thus lowering the price accrued to the production costs and overheads and therefore drives down the expense of production and therefore increases profitability

Profitability of the OEM is essential to the existence of the business as it can help to generate a cash through production that could be ploughed back to the procedure of the other product range and with great decision making and investment procedures; the business will be transformed into a World Innovator in the production of DBP.

Profitability of the business also helps it meet its personnel determination; paying of salaries and add-ons to the personnel for increased determination. In case a business is not profitable, the management of the business could struggle to pay wage and this would ultimately effect on the shop floor minimizing the productivity of the employees; as most workers would lack the motivation to continue work without pay. Eventually the customers; the motor bike manufacturers would get damaged as Friction Materials could conclude not reaching the demand concentrate on and are enforced heavy fines. Gradually the business would lose its competitiveness and may end up being bankrupt if it continues to fail to meet up with the target. The agreement would be terminated and the creation would be hampered. The end result may be the administration of the business, since it cannot meet its basic obligation.

Cost Reduction

Sustaining growth is all about getting together with the expectation of the shareholders, those in charge of the investing money and time to the success of the business. In Sustaining the growth of the company, good asset utilization and cost reduction insurance policies like getting depreciated machines to work effectively, helps to decrease the overheads and unwanted cost mounted on the daily performing expenses of the company. The OEM is a cost-competitive market and imploring a technique to operate a vehicle down cost is rewarding. Trade-offs associated with low cost production should be properly weighed before decisions are created else it might eventually cost more; both for the price tag on rework and the surplus and unnecessary man-hours used. For example, if the cost of a standard back again plate is $10 so you get a dealer for $6, it is possible that the manufacturer may not be in a position to meet production target. If you work with him for your materials and he does not deliver, in panic, you might need to get another supplier who would end up charging you more than it could cost and you might have to perform extra man-hours to hide for development time lost. All these may cost more compared to the stable $10 who's guaranteed to deliver when needed.

Customer Perspective

Increased market share

The market show is some of your business sector where you dominate. In reality, big companies like McDonalds have almost all the market show between them departing the remaining for smaller companies. The idea is that every company sells a specific volume of the product in the market. Companies with dominating shares sell high quantities of stock periodically.

Friction Materials has market share as one of its targets because it seeks to be always a profitable business. If they can churn out large quantities of DBP and exhaust their creation capacity in conditions of sales; then they would be able to get the overhead cost powered low. This can help put the Cost reduction strategy in check and increases the viability for revenue making. A large market share increases the brand image of the business and opens gates for wider reach to the Far Eastern and Global marketplaces on a whole. It also helps improve the probability of dominating the neighborhood market.

Based on the operational capabilities of the business and the accessibility into the OEM market, Friction Materials could boast of a sizeable market share as far as other factors are advantageous. With percentage market talk about dominance, plans like marketing drive sales promos and exhibition events like automobile fares can be used to boost their brand image and finally sell the merchandise to the market. The market talk about volume determines the quantity of profit and level of DBP that may be sold over a period.

Customer satisfaction

"Customer is ruler", should be behind the mind of each staff of Friction Materials. This is because the customer makes it possible for the employee to be paid; if the DBP's are not quality ones or the customers are not satisfied, they could easily consider a competitor and this affects the market share of the business.

Since we regard the client as ruler, and production is dependant on customer needs; it is crucial that Friction Materials delights its customer base by going the extra mile to meet with them, to have a personal experience with them. This helps the company get in touch with prospective customers and at exactly the same time get a good knowledge of the performance of the DBP in the market and ways to improve the current production requirements and designs without changing the standard specs requirement for produce.

It also helps identify potential regions of advantages and weaknesses as growing opportunity that abound but have not been completely utilized.

For the OEM to achieve success, the client must be delighted extremely and content with the unique features of the DBP else Friction Materials would lose earth to their challengers and may lose their competitive edge to poor human being relationship. Therefore the company should make the client the purpose of the development process and in pleasing a customer that might be a potential chain of clients. It is extensively said that it costs a lot to get a new customer in comparison to retaining one of these. Thus it is more profitable to secure already existing customer base by delighting them very while looking for incremental business than to consider more business and overlook current customer platform.

Internal Process Perspective

Research and development

For Friction Materials to stay relevant in the OEM, the R&D team would be likely to create and develop new lines for creation. The ability to meet this necessity is one of the essential tasks of Friction Materials as an OEM. It is therefore an essential requirement of the company that needs to be restructured. Currently, there is no team for R&D and since it is a significant necessity by the service provider, a fresh R and D division be formed. The design engineer as well as the local specialist organization that was integrated must be included in this team to interact for the improvement of the business. An excellent R & D allows breakthroughs which can deliver huge revenue. Such as this is the Astra Zeneca R & D who charge high quality price for discoveries in their R&D that are able to sail through to the production stage.

R&D also enhances skill level of the company and needs the competitiveness to an increased level. Thus it reaches a spot where they could re-define the quality characteristics of performance of DBP as seen by the 5 seconds telephone response employed by Zenith bank to attend to customer enquiries.

High ROCE:

A high ROCE for Friction Materials signifies a good balance of worker power. The ROCE is a financial tool used to understand the amount of effective utilization of resources. If the employees are trained well and given the right resources to work with and appropriate bonuses and benchmarks to go with, then they would be well motivated to attaining company targets. If the targets are attained, they can be used as benchmarks to be built upon. With a reliable expansion rate in ROCE, investment on recycleables, machines and staff would be justified.

Productivity, efficiency and proper arranging of the creation process will be the hallmark to obtaining a high ROCE.

An Acid test percentage can be used to measure the liquidity of the company, the greater liquid a firm is; the more powerful it is. Thus using a benchmark as a source of strength makes the very best management of the company a focused one.


Employee ability reskilling people

Upgrade of facilities buying new machines


The organizational composition of Friction Materials should change from a process established leadership to an operating matrix organizational structure where the operations personnel have easier usage of top management for decision making and insurance policy formulation.

For a tiny company like Friction Materials, the Organizational hierarchy is very apparent. Way too many management port-folios or positions; as sometimes appears here, creates a communication problem in a way that escalating problems or issues as seen on the shop floor could take a while before it reaches the appropriate desk which makes flexibility suprisingly low.

If friction arises between the professionals, it might trickle right down to the shop floor. Besides you can find unclear description of roles and responsibilities which is a potential devastation due to possession of responsibility for inability or harm. Thus rather than creating an operations unit, these are creating a potential silo. This hampers effective communication between the operations crew.

The dual role for the sales director may be damaging to the progress of the company as there could be sub-optimization of the sales office and biased decision making; should he be in competition with another supervisor.

There should be considered a common emphasis of top-management on the route, aims and goals and the eye-sight should be distributed collectively. Time out on team development and holiday trips could be scheduled to help foster romantic relationships of employees of Friction Materials. Having grudges against people is possible of life, but when it affects the efficiency of the business, it becomes doubtful.

Job assignments and functions should be well identified and the performance; measured. This can help make the staff responsible for the day to day activities and may improve productivity. An excellent reward and reimbursement scheme (extra) could be employed but it must be properly structured to avoid sub-optimization of departments or resources.


The planning and control system of Friction Materials Ltd is the MRPII but is underutilized at this time as there is no skilled clerical employee that are designed for the software. The clerical personnel need to proceed on a adaptable training timetable to learn the latest version and request of the MRP II system. There also needs to be a web order and portal system where purchase purchases and obligations can be made and decrease the over reliance on calling order or fax as there could be ambiguity in communication.

The capacity planning top features of the MRP II system had not been used and the WIP documents for an on-going production process is not recorded rendering it almost impossible to be able to plan for satisfactory capacity and plan for recycleables hence the high inventory levels.

A kanban move system can be integrated for the development of the OE market to meet development targets until a full scale execution of the JIT way; when the company can get suppliers to supply the quantity of raw materials required. The JIT source however is dependant on large volumes which the OEM is guaranteed to get in not too faraway future.

Inventory levels for the OEM should tend to zero as Friction Materials would not make unwanted DBP's than required. This can help to eliminate done goods material having cost and time and frees up space for potential enlargement of the development lines for the OEM.

It is also worth focusing on that the suppliers for the OEM comply with standard. This helps reduce the rate of failing that could effect credited to poor materials selection. A bargain would be the extra cash that this costs. However in getting the DBP Right First Time, we'd have preserved up more costing aiming to re-work the brake pads, poor public image in producing sub-standard DBP and heavy fines as result of the inability to conform to product specs.


The Quality plan and standard of the company makes them a feasible for option for creation of OEM however there are types of procedures that require to be in place. The strict quality specification imposed on the OEM takes a good QC process audit to ensure conformance to standard. You will discover 3 basic quality types

Quality Control

Quality Assurance and

Total Quality Management

A Quality Control system is one that compares the end-product with the Preset Specs standard. It really is an immediate audit process for DBP that do not meet the required specs. An inspection of the products through arbitrary sampling would be required now but for higher amounts; a statistical process control could be applied to keep an eye on higher demand.

Quality Assurance focuses on the many sub-divisions of the OEM to ensure conformance to quality and performance. This helps ensure that the DBP is fit for Purpose and the product quality is RTF (Right FIRST-TIME). Quality certification of conformance like the ISO 9000: 2001 can be attained by the business in recognition of the lofty Quality Benchmarks.

For the permanent planning TQM can be integrated at Friction Materials to continuously enhance the Quality Requirements of the Development Process.


The ability to add new designs of DBP in to the market is a possibility for incremental business. The design team would have to be impressive enough to envision new designs of DBP. Therefore that the design team and the developing team have to be in sync to produce designs which is often machined and produced fit for purpose. If both of these departments work independently, like a efficient -silo, then there exists probability that the look would be difficult to machine and too little information might impede product performance.

The design of the device tooling necessary for the CNC procedure is actually a critical factor in productivity. A vertical integration might be considered for future years to reduce enough time between design of the DBP and enough time it requires to fabricate tooling. The OEM DBP is an emerging market and so the Specialist support might be a new competitive edge in the design of the tooling for the DBP. This might help enhance the technological base of the company and would make it a formidable rival in the DBP market.

Capacity would need to be designed for to test-run new product design that does not affect the current creation rate of the company. This can be done by transfer work patterns and over time to compensate for enough time used for screening. An alternative in the near future is always to use the Additive Part Creation process to create a prototype for assessment. Though it needs an enormous capital to implement, it reduces the test time and escalates the flexibility of responding to a changing demand market. To be always a world head, Friction Materials could try this way for processing of DBP.

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