Cost reduction and continuous improvement: a longitudinal case study

COST REDUCTION AND CONTINUOUS IMPROVEMENT: A LONGITUDINAL CASE STUDY Be nabe Escoba Pe ez 1 Jose Ma ia Gonzalez Gonzalez 2 An onio Lobo Galla do 3 1 D . Be nabé Escoba Pé ez. P o esso . Uni e si y o Se ille. Dp o. Con abilidad y Economía Financie a. Uni e sidad de Se illa. A da. Ramón y Cajal, 1.41018 – Se illa (España). T no.: 0034 954557608. Fax: 0034 954557569. E-mail: bescoba @us.es. 2 José Ma ía González González. Uni e si y School Assis an . Uni e si y o Se ille. Dp o. Con abilidad y Economía Financie a. Uni e sidad de Se illa. A da. Ramón y Cajal, 1.41018 – Se illa (España). T no.: 0034 954557608. Fax: 0034 954557569. E-mail: [email protected] 3 An onio Lobo Galla do. Uni e si y Assis an . Uni e si y o Se ille. Dp o. Con abilidad y Economía Financie a. Uni e sidad de Se illa. A da. Ramón y Cajal, 1.41018 – Se illa (España). T no.: 0034 954557608. Fax: 0034 954557569. E-mail: [email protected] COST REDUCTION AND CONTINUOUS IMPROVEMENT: A LONGITUDINAL CASE STUDY Be nabe Escoba Pe ez Jose Ma ia Gonzalez Gonzalez An onio Lobo Galla do Abs ac : In oday’s en i onmen one o he op p io i ies o o ganiza ions is o cos s wi hou a ec ing d ama ically o ganiza ion su i al. The e o e, he aim o his pape is p o ide e idence on (1) he impo ance o Managemen Accoun ing in o ma ion o cos educ ion pu poses and (2) he ole o some Con ol Sys em componen s in o de o ca y ou his s a egy. A longi udinal case s udy has been conduc ed o his pu pose a a Spanish subsidia y o a mul ina ional chemical g oup. This chemical plan in oduced a cos educ ion p ojec in he mid 1990s. The mos salien esul s we e on he one hand, he implemen a ion o quali y ci cles and in e nal benchma king p ac ices and, on he o he hand he impo ance o bo h o mal and non- o mal Con ol Sys em componen s in o de o success ully achie e he p ojec ’s objec i es. Key Wo ds: Con inuous Imp o emen , In e nal Benchma king, Con ol Sys ems, Longi udinal Case S udy. COST REDUCTION AND CONTINUOUS IMPROVEMENT: A LONGITUDINAL CASE STUDY Be nabe Escoba Pe ez Jose Ma ia Gonzalez Gonzalez An onio Lobo Galla do 1. INTRODUCTION The de ini ion o he concep o Managemen Accoun ing (Saez e al., 1993; Sie a and Rod iguez, 1997; Mallo e al., 2000), om a b oade pe spec i e le s us o conside i as an in o ma ion sys em capable o p o iding ele an in o ma ion o business managemen , conside ed as an ongoing planning and con ol p ocess aimed a achie ing o ganiza ional goals, which akes place a a gi en social and o ganisa ional se ing we mus ake in o accoun . In his con ex Fe nandez (1994) iden i ied ou p inciples p esen in he new managemen echniques: Con inuous imp o emen , Value addi ion, S a egic ac ion and Non- inancial measu es. Likewise, he al eady no ed ha in o de o achie e ongoing imp o emen a new app oach o Managemen Accoun ing was needed, basically because he a iables o be measu ed and con ol a e subs an ially di e en om he adi ional ones. Mo eo e , he need exp essed by Ripoll and Balada (1993) o managemen accoun an s o be able o design and implemen new accoun ing in o ma ion sys ems be e sui ed o he new en i onmen o business managemen emain ully alid. They made a special emphasis on he use o Managemen Accoun ing as a con ol de ice o imp o e o ganisa ional p ocesses wi h he ul ima e goal o inc eased pe o mance. In o de o a ain such goal and since benchma king in an ins umen used o achie e Con inuous Imp o emen , which consis s o “emula ing he bes known p ac ices in a gi en ield in he ou e o excellence” (Pe ez-Fe nandez, 1996, p.301) 4 . Using i as a 4 I s a ionale lies in lea ning om hose ha achie e he bes esul s in some hing – p ac ice, p ocess, ask – in which he business s i es o imp o e. Thus, he bes way o doing hins is aken as a e e ence, and i is compa ed wha he business is ac ually doing, in o de o ob ain a be e pe o mance (Pe ez-Fe nandez, 1996, p.301). managemen echnique by means o an ongoing p ocess o acking and compa ing he bes business p ac ices, leads us o di e en ou comes, among hem he mos ele an ones, acco ding o Elna han e al. (1996, p. 41), a e imp o ed quali y, educ ion o de ec s, be e p oduc dis ibu ion and om a inancial pe spec i e, inc eased e enues and educed cos s. Howe e , we mus men ion ha in a global en i onmen wi h he esul ing inc eased compe i ion, he abo e-men ioned cos educ ion canno be achie ed o he expense o p oduc quali y, since his would endange he company’s su i al. In his line, B o o (1996, p.659) says ha his su i al will necessa ily equi e achie ing excellence by he implemen a ion o quali y ci cles. Acco ding o Leal (1997), hey mus be p omo ed by he op managemen , which mus y o in ol e he employees wo king in all business a eas, bu such in ol emen mus be olun a y and wi hou inancial pay. No wi hs anding, i would seem con enien o de ice some ype o incen i e, since s a mo i a ion and ac i e in ol emen is c ucial (Ripoll and Balada 1993, p.30). In his same line, his pape pu sues wo main objec i es: One he one hand we in end o b ing up e idences on he impo ance o Managemen Accoun ing in cos educ ion p ocesses by means o he implemen a ion o quali y ci cles and he in oduc ion o benchma king p ac ices wi hin a con inuous imp o emen a ionale. On he o he hand we will y o analyse he ole played by he di e en elemen s o he con ol sys em in acili a ing o hinde ing he implemen a ion o his s a egic ac ion. In o de o achie e hese objec i es, we ha e conduc ed a longi udinal case s udy 5 ollowing he p ocess pe spec i e 6 , in which we ha e analysed he de elopmen o he Ho izon P ojec in Onuba, a Spanish subsidia y o a mul ina ional g oup (Onuba G oup) ope a ing in he chemical indus y. The pu pose o his p ojec was o con ol and educe cos s, especially manu ac u ing cos s, in Onuba G oup, and mean a signi ican change p ocess o he company, cha ac e ised by con inuous imp o emen and he implemen a ion o in e nal benchma king p ac ices. 5 This me hod allows he obse e o con ac di ec ly wi h he eal si ua ion o he o ganisa ion unde s udy, s udy ion dep h all he ele an issues and use mul iple sou ces o e idence o e a long s ay, unde s anding he social, poli ical and his o ic con ex o he e en unde s udy (Yin, 1987; Scapens, 1990). On he o he hand, i allows o iangle he in o ma ion collec h ough hem o in e nal alida ion. 6 Following Pe ig ew (1997), we ha e paid special a en ion o he indi iduals in ol ed, o he g oups hey a e pa o – Managemen Commi ee, depa men s, e c. -, o he o ganisa ion – posi ion wi hin he g oup and in i s So, in he ollowing chap e we will p esen he heo e ical app oach we ha e adop ed o his s udy. The hi d chap e discusses he esul s ob ained in he case s udy, wi h e e ences o he echniques used o collec in o ma ion. The hi d chap e add esses (1) he mos ele an cha ac e is ics o he chemical indus y, he Onuba G oup and i s subsidia y in Spain, needed o p o ide he app op ia e con ex o ou s udy; (2) he Ho izon P ojec , wi h an analysis o he mos ele an objec i es, s ages and ac o s in i s implemen a ion, which will allow us o achie e ou i s objec i e; and (3) Onuba’s con ol sys em, in which we conside he a iables in i s en i onmen , bo h he ones he company can con ol and hose i canno con ol, i s o mal and in o mal elemen s, as well as i s o ganisa ional pe o mance acking and e alua ion sys em, in o de o achie e ou second objec i e. The ou h chap e analysis he ou comes based on a p e iously conduc ed li e a u e e iew. The i h chap e p esen s he inal conclusions we ha e a i ed a and inally, he six h lis s he li e a u e e e ences used. 2. THEORETICAL APPROACH To al Quali y managemen is an in eg a ed managemen philosophy and a se o echniques ha makes emphasis among o he s on con inuous imp o emen , cus ome sa is ac ion, educ ion o ep ocessing, a long e m app oach, inc eased s a in ol emen and eam wo k, p ocess edesign, compe i i e benchma king, p oblem sol ing in g oups, cons an measu emen o ou comes and keeping close ela ionships wi h supplie s (Ross, 1993). Along he same line Ja a and Aspinwall (1999) cha ac e ised To al Quali y Managemen as ollows: Table 1: Cha ac e isa ion o To al Quali y Managemen S a ed by Common sense and con en ional know-how S a ing poin Exis ing p ocesses: Analysis, s anda disa ion and imp o emen F equency o change Con inuous and inc emen al App oach Sys em componen s: P ocesses, indi iduals, ac i i ies Focus on clien Same emphasis on in e nal and ex e nal clien s Le el o change Inc emen al imp o emen o exis ing p ocesses (E olu iona y) ma ke segmen as compa ed o compe i o s, e c. – which has allowed us o de ec he mul iple in e ela ionships exis ing among he di e en le els o analysis. In ol emen To al in ol emen o anyone is essen ial, all indi iduals, wo king g oups and some eams Pa icipa ion Bo om-up (buil wi hin he cul u e) Empowe men Ve y impo an Disad an ages Di icul o achie e exci emen and commi men o e ime, since i in ol es many small imp o emen s Ad an ages App op ia e i low le el o esou ces. P o ides consis en imp o emen o e ime Typical ou each Na ow, wi hin asks. P ocess imp o emen e o s a e made by simple imes o jus a ew asks Risk Mode a e P ima y acili a o S a is ical con ol p ocess Payback ime Slow small con inuous imp o emen Sou ce: Ja a and Aspinwall (1999). As e idenced by Fuen es and Lopez (1999), we canno bu de ine To al Quali y Managemen as a managemen philosophy in eg a ed by a se o ideas, p ac ices and p inciples, since hey ha e been de eloped o e mo e han h ee decades and í em om di e en au ho s and cul u es. As Leal (1997) says, he main consequence o his ac is ha al hough some pape s ha e ied o each an ag eemen on i s de ini ion and con en s, he e a e s ill impo an di e ences among he a ious specialis s. Thus, o example Leal conside s Con inuous Imp o emen o p ocesses as a To al Quali y Managemen ool, whe eas K ie e (1996) says ha B ocka and B ocka (1992) s a ed ha i is jus a way o imp o ing on an ongoing basis. The issue becomes mo e complex wi h he eme gence o he concep o P ocess Reenginee ing. When analysing his ques ion a li le mo e in dep h, we ind ha he mos widely sha ed iew in he li e a u e (Dean and Bowen, 1994; Leal, 1997; Fuen es and Lopez, 1999; Ga cia, 2001; among o he s), pe haps because i is he mos in eg a ed, is he one ha conside s To al Quali y Managemen as a managemen philosophy o app oach ha can be cha ac e ised by i s p inciples, p ac ices and echniques. I s h ee basic p inciples a e: Clien Focus, Con inuous Imp o emen and Teamwo k. In u n, each p inciple can be implemen ed by means o a se o ins umen s, among hem benchma king. Wi h ega ds o Clien Focus, hei sa is ac ion is he mos impo an equi emen o long- e m o ganisa ional success and such sa is ac ion equi es he whole o ganisa ion o ocus on clien s’ needs. Con inuous Imp o emen means a commi men o con inuously examine adminis a i e and echnical p ocesses in a sea ch o he bes me hods and p ac ices. Teamwo k mus imply collabo a ion be ween manage s and all o he employees, among he di e en business unc ions and e en wi h clien s and supplie s (Kelada, 1999). As we can obse e, all h ee p inciples a e closely ela ed o each o he . Focusing on Con inuous Imp o emen , we mus indica e ha i is essen ial o To al Quali y Managemen , since o ganisa ions a e no hing else bu se s o in e connec ed p ocesses and an imp o emen o such p ocesses is needed o achie e an imp o ed o ganisa ional pe o mance. I is usually p omo ed by he Manu ac u ing and Quali y Con ol unc ions (Da enpo , 1993). In p inciple, any ask can be add essed by an imp o emen eam, which is made up by ew people wo king in he same wo kplace and ca y ou imp o emen asks on hei own ini ia i e. No wi hs anding, in mos cases he Top Managemen p omo es imp o emen p og ammes (Fuen es and Lopez, 1999) s uc u ed acco ding o Ruchala (1995) wi h a bo om up app oach, since i s is he wo ke s mos closely link o each speci ic ask who iden i y and implemen imp o emen s in hem and se up he scena io o a mo e global imp o emen o p ocesses. In mos cases benchma king is associa ed o compa ing he company o i s en i onmen , Ha ing on (1991, p.222) p oposed a classi ica ion based on he e e ence used, making a dis inc ion be ween: (1) In e nal, which implies looking in o he o ganisa ion i sel o de e mine whe he he e a e o he cen es implemen ing simila ac i i ies in a be e way and de ine he bes p ac ices obse ed; (2) Compe i i e, which equi es an in es iga ion o p oduc s, se ices and p ocesses o compe i o s in o de o iden i y he bes p ac ices; (3) Wo ld Ope a ions, in which benchma king goes beyond he indus y in which he company ope a es, obse ing gene ic unc ions o p ocesses ha can p o ide us wi h signi ican knowledge, e en i hey a e used in some o he indus y; and (4) o Type Ac i i y, ocusing on some speci ic ac i i ies wi hin a gi en p ocess, ega dless o he indus y in which he company ope a es. Depending upon he ype o pe o mance we in end o emula e, Pe ez-Fe nandez (1996, p.302) makes a dis inc ion be ween di e en ypes o benchma king: (1) S a egic, ela ed, o he ma ke posi ion o compe i o s; (2) Func ional, o he mos ele an p ocesses wi hin a unc ion; and (3) Ope a ional, connec ed o he speci ic aspec s o an o ganiza ional uni . The e o e, benchma king can be conside ed as an analysis echnique ha allows companies o iden i y he di e en a eas in which i can s i e o imp o e, se ing as a e e ence o achie e he bes known p ac ices. So, acco ding o Ea l (1994), we mus unde line he abili y o benchma king o become a s imulus. F om a mo e p ac ical iewpoin , Ruchala (1995) conside s ha benchma king is mos e ec i e when he company has es ablished p e iously inc emen al p ocess imp o emen s. The eason gi en by Fu ey (1993) is ha such inc emen al imp o emen s a e al eady imp o ing he exis ing p ocess, as we mo e along he expe ience cu e, wi h a educ ion o cos s and de ec s (Cha 1). Cha 1: Expe ience Cu e Be o e and Al e Benchma king High Today Cos s Imp o emen o exis ing p ocesses and De ec s Iden i ica ion o inno a ion al e na i es h ough benchma king Low Expe ience gained along he p ocess Sou ce: Fu ey (1993, p.22). Howe e , in o de o implemen benchma king in an o ganisa ion and imp o e i s esul s 7 , we need quan i iable da a we can compa e (Elna han e al., 1996, p. 50), among o he issues, on clien needs, ope a ional p oblems and success o imp o emen a emp s; i has been e en sugges ed ha he o ganisa ions ha collec and analyse in o ma ion mos e icien ly a e he ones ha achie e he bes esul s (Dean and Bowen, 1994). Likewise, acco ding o Banke e al. (1998), wi hin he benchma king p ocess i is essen ial o make he s anda d se ing p ocess mo e lexible, and he e o e ecommends he use o da a en elopmen analysis. Thus, Managemen Accoun ing mus se up a sys em capable o supplying he in o ma ion needed – including quan i a i e non- inancial and quali a i e in o ma ion – o decision-making in such an en i onmen (Iglesias, 1992; Cas ello, 1996; Sie a 7 Ca pine i and Melo (2002, pp. 250-251) ha e p oposed a i e-s age model o he implemen a ion o benchma king p ojec s in o ganisa ions: P oduc and ma ke analysis, analysis o imp o emen a eas, analysis o p ocesses o be imp o ed, measu emen o pe o mance and de ec ion o p io i ies o be imp o ed in he u u e. and Escoba , 1996), which poses a ue challenge o p ac i ione s (Ripoll and Balada, 1993; Gimeno and Lopez, 1999). In ou case, i mus p o ide he in o ma ion needed o implemen his s a egic ac ion, in he sense mean by Fe nandez (1994, p.868) when he s a ed ha i should allow o “cap u ing, measu ing, analysing and communica ing in o ma ion on each and e e yone o he ac i i ies pe o med in he company in o de o e alua e p ecisely he achie emen s made in implemen ing such imp o emen ”. Finally, since mo i a ion and an ac i e pa icipa ion o s a om all company a eas is c ucial in he success o such an ini ia i e (Ripoll and Balada, 1993; Leal, 1997), we mus ake in o accoun ha Managemen Accoun ing, being pa o he o mal elemen s o he O ganisa ion’s Global Con ol Sys em, i is subjec o he in luence o i s in o mal elemen s (Flamhol z, 1983; Flamhol z e al., 1985; Ama , 1991), which can help o p omo e, o doom o ailu e, any ac ion en ailing a change in he o ganisa ion. Among he in o mal elemen s we can unde line o ganisa ional cul u e, leade ship s yle and in e pe sonal ela ionships (Jones, 1992; G anlund, 1998; Blanco and Aiba , 1999; Escoba and Lobo, 2000). 3. THE ONUBA CASE The case s udy was s a ed in June 1997, when he Ho izon P ojec s a ed, and las ed un il Ma ch 2000. The ollowing asks we e ca ied ou h oughou his pe iod: a.- In e iews o membe s o he managemen eam, conduc ed o he Human Resou ces, Technical and De elopmen , Accoun ing and S a Adminis a ion, Dis ibu ion, P oduc ion, Da a P ocessing Cen e, Sa e y and Heal h and Main enance Manage s; o he wo indi iduals in cha ge o epo ing, o he Heads o Cos s, T easu y, Clien Con ol and Adminis a ion, P ojec s, Black and Whi e P oduc ion A ea 8 , Sales and Ma e ials (Cha 2). b.- Di ec obse a ion wi hou pa icipa ion a he Ho izon P ojec , in which a new cos sys em was designed and implemen ed wi h he pu pose o p oducing in o ma ion in o de o imp o e he company’s managemen , by con olling and ying o educe hem. Likewise, a (1) mee ings and daily wo k o he Depa men s o Accoun ing, S a Adminis a ion and In o ma ion Sys ems, mo e speci ically a discussions on T easu y and Clien Managemen , main enance issues, esolu ion o inconsis encies The Ho izon P ojec s a ed as a pilo es in G imsby – one o he Onuba G oup plan s in B i ain. The inal objec i es o he plan we e o achie e (1) a p og essi e educ ion o he p oduc ion cos s un il eaching a 40% cu in ixed cos s and an 8% cu in a iables cos s 9 , (2) quali y imp o emen by means o a con inuous imp o emen policy aimed a achie ing a 40% educ ion in p oduc no mee ing he g oup’s s anda ds and (3) imp o emen o p oduc ion e iciency by educing losses caused by plan p oblems by 40%. This p ojec aimed a cos con ol and educ ion in he company has mean a signi ican change in he wo king p ac ices o Onuba’s employees. The c ucial elemen s used in his o ganisa ional change p ocess a e ideas linked o con inuous imp o emen , in e nal benchma king p ac ices, and abo e all, he change in a i ude o all hose in ol ed owa ds in e nal managemen in Onuba, because o despi e he ini ia i e being p omo ed by he op managemen , i was only he high in ol emen o he employees wo king in p ocess implemen a ion wha made i possible o achie e i s ull implemen a ion and he esul ing imp o emen s. He e we mus highligh he ac ions unde aken by Onuba o p e en po en ial indi idual and g oup esis ances wi hin he o ganisa ion. A e he i s news on he p ojec , i s de elopmen and implemen a ion, he op managemen publicly s a ed i s ull suppo o he p ojec and ied o in ol e he highes possible numbe o employees om di e en ca ego ies and depa men s, aking ad an age o he goo exis ing in o mal ela ions and he eiled h ea o a po en ial sale o he subsidia y by Onuba G oup. Comp ehensi e and de ailed in o ma ion was deli e ed o he employees using di e en in e nal, e ical and ho izon al, communica ion channels, such as he In ane , pe iodical bulle ins, p esen a ion mee ings bo h a company and a unc ion le el, as well as in o mal alks, in which he local op managemen played a e y ac i e ole. A u he impo an measu e o p e en u u e con lic s was he ag eemen eached by he local op managemen and he wo ke s’ ep esen a i es speci ically s a ing ha he e would be no layo s esul ing om he applica ion o he ideas o imp o emen included in he Ho izon P ojec , which educed o a g ea ex en in e nal esis ance o change. 9 The main p oduc ion cos s in Onuba a e: (1) ixed: ma e ials used in main enance, wo k o ce, a el and ex e nal con ac s; and (2) a iable: aw ma e ials, na u al gas, elec ic powe , wa e and o he chemicals. Con inuous imp o emen eams we e es ablished o implemen he p ojec . They we e made up by up o i e wo ke s om di e en a eas o he plan whose pu pose was o de elop, analyse and implemen ideas o imp o emen in each o he asks ela ed o he eam’s speci ic goals. Team componen s we e selec ed by he op managemen among he olun a ies, ollowing bo h objec i e c i e ia, such as hei p e ious expe ience in simila p ojec s and hei knowledge o he di e en asks ele an o he speci ic p ocess o be imp o ed, and poli ical ones, indi iduals wi h o mal au ho i y and epu a ion among he wo ke s. The i s h ee eams we e o med on Ap il 4 h 1997. Al eam membe s wen h ough se e al aining cou ses on di e en eam-wo king and quali y imp o emen echniques – b ains o ming, SWOT analysis, e c. These cou ses we e augh by a consul ancy i m hi ed by Onuba G oup o p o ide counselling especially du ing he ini ial p ojec implemen a ion s ages. Likewise, a pocke guide was p oduced o each eam, which included a summa y o a ailable echniques and ools, as well as a ime plan wi h he main deadlines in e ms o objec i es o be achie ed. Du ing his ini ial s age i was said ha as incen i e, a he end o each pe iod h oughou he implemen a ion o he Ho izon P ojec , he Managemen Commi ee would app aise he ideas p esen ed by each g oup in o de o gi e a p ize o he bes eam, keeping in mind ha implemen ing some o hem would equi e se ing up a new ad-hoc eam o i s implemen a ion. Likewise, his Commi ee was esponsible o e alua ing he di e en p oposals on he basis o he cos and ime sa ings hey would b ing abou , hei o iginali y and he e o hei implemen a ion would equi e. The p ize p omo ed in e nal benchma king p ac ices in Onuba G oup since i consis ed on a ip o a di e en plan o obse e how he bes p ac ices esul ing om he Ho izon P ojec in o he coun ies, and also, o imp o e he ela ionships wi h employees om o he plan s, which would also help o dissemina e a con inuous imp o emen cul u e. The Top Managemen o Onuba pe o med he i s p ojec implemen a ion assessmen in July 1997. F om he 717 ideas gene a ed by he h ee imp o emen eams in he di e en uni s in which he plan was di ided and app o ed by he Managemen Commi ee, 85% ha e been implemen ed by he planned deadlines. Among hem wo g oups s and ou : (1) hose ega ding he educ ion o in e media e componen s necessa y o manu ac u e he inal p oduc , such as Idea 121 whose pu pose was he minimisa ion o eac i es used in coa ings; and (2) hose ocusing on he imp o emen o in o ma ion p oduc ion and communica ion o managemen pu poses, such as Idea 158 se ing up a new in e nal mail sys em. Acco ding o he ini ial planning ou new imp o emen eams we e o med in 1998, allowing o new ideas o be used o achie e he Ho izon P ojec ’s objec i es (Table 3). Bu la e 1998 85% o he app o ed ideas had been implemen ed in Onuba; 345 had been success ully implemen wi hin he planned deadlines, accoun ing o mo e han 6%% o he o al ha had o be pu in place a he end o he Ho izon P ojec by he end o 1999. In o de o implemen such p ac ices in es men s accoun ing o 549 million pese as (3.3 million ¼DSSUR[ZHUHUHTXLUHGIURPZKLFKPLOOLRQSHVHWDV (0.92 million ¼DSSUR[ZHUHDOUHDG VSHQWDWWKHHQGRI Table 3: Si ua ion o he Imp o emen Teams in Janua y 1998. Team Membe s Objec i e Tools 1 5 New iden i ica ion sys em o ma e ials and was e SWOT Analysis GANTT Diag am 2 4 Reduce numbe o wo k o de s by 50% SWOT Analysis GANTT Diag am 3 4 P e en ime losses caused by he issuing o wo k o de s SWOT Analysis GANTT Diag am 4 4 Imp o e he managemen o he elephone cen al SWOT Analysis GANTT Diag am 5 5 Imp o e eliabili y condi ions B ains o ming GANTT Diag am 6 3 Imp o e wo k sa e y signs B ains o ming GANTT Diag am 7 4 Inp o e condi ions o subcon ac o s a ea Decision pending Sou ce: Own D a ing. The ou come in e ms o cos s was ha he plan achie ed sa ings accoun ing o 605 million pese as (3.64 million ¼ DSSUR[ LQ   RI WKH WRWDO VDYLQJV o ecas ed o he end o 1999. By he end o 1998 1500 ideas had been implemen ed in all o Onuba G oup’s plan s. To al sa ings a g oup le el accoun ed o 4750 million pese as (28.5 million ¼ app ox.). No wi hs anding, in he wo ds o he manage esponsible o he Ho izon P ojec “ he g ea es sa is ac ion has been o e i y ha he changes we ha e in oduced ha e no s ayed a he su ace, bu ha e a he led o a subs an ial change in he company’s and he wo ke s’ cul u e and philosophy.” The Ho izon P ojec was con olled a ow le els. On he one hand he e was an in ensi e use o in o mal con ol sys ems, such as con inuous moni o ing o eam esponsible employees by he Top Managemen a mee ings no speci ic o he p ojec and in in o mal alks. On he o he hand, he e was also a o mal con ol o he ou comes achie ed by he eams a he end o he yea . Likewise, he in o ma ion ob ained a each o he plan s was used o compa e and e alua e p ojec implemen a ion a g oup le el. A he end o each yea o he Ho izon P ojec a s udy was conduc ed a Onuba o con ol he imp o emen eams’ pe o mance. All hei membe s illed ou a ques ionnai e and we e in e iewed by he Managemen Commi ee; his helped o iden i y a se ies o s eng hs and weaknesses du ing he i s wo yea s o he p ojec . La e , his Commi ee discussed wi h hose in cha ge o he imp o emen eams po en ial solu ions o o e come some o he weaknesses – lack o ime o mee ings, incompa ible schedules, less collabo a ion by some junio manage s, lack o expe ience in sel -managemen , e c. – as well as o p omo e s eng hs desi able o imp o e be e eam pe o mance – sho e m esul s, en husiasm, lea ning o new ools, imp o ed communica ion be ween employees and be ween di e en co po a e unc ions, e c. The inal esul in Decembe 1999 a he end o he Ho izon P ojec was he implemen a ion o 77% o he ini ially planned ideas, wi h a inancial esul o sa ings accoun ing o 1605 million pese as (9.65 million ¼ DSSUR[   PLOOLRQ ¼ LQ ixed cos s and (4.05 million ¼LQYDULDEOHFRVWV We can s a e ha Onube has achie ed he bes esul s wi hin Onuba G oup o wo easons: (1) I is he only plan ha has comple ed he Ho izon P ojec in he planned ime-pe iod; and (2) i has con i med i s posi ions as cos leade wi hin he g oup, which was con i med by he p ojec manage a Onuba when he decla ed ha “we al eady had he lowes cos s in he g oup be o e inishing he Ho izon P ojec and he di e ence be ween he es o he g oup and us ha e g own bigge .” Finally, as a consequence o he Ho izon P ojec o he quali a i e imp o emen s has been de ec ed and acknowledged by he Top Managemen and eam membe s hemsel es ela ed o he de elopmen o skills and cul u al alues among pa icipan s, such as imp o ed communica ion, implemen a ion o a eamwo k cul u e, p omo ion o ini ia i es, inc eased mo i a ion, wo k in mul i- ask g oups, e c. 3.3. CONTROL SYSTEM IN ONUBA In o de o achie e ou second objec i e, analysing he ole o he di e en componen s o Onuba’s con ol sys em du ing he implemen a ion o he Ho izon P ojec , we will go on o conside he en i onmen al a iables, bo h he ones he o ganisa ion con ols and hose i does no , as well as i s o ganisa ional pe o mance moni o ing and e alua ion sys em. Among he con ingencies Onuba can con ol he ollowing we e analysed: (1) The s a egy ha is condi ioned by he g oups measu ing o ganisa ional pe o mance, by means o he bo om-line and he di idend pe sha e. The e o e Onuba’s objec i es a e exp essed in e ms o bo om-line, cash low and cos educ ion. On he o he hand, such as ma ke s o ope a ion and in es men policy all beyond he policy-making powe s o he local managemen ; size, which in e ms o e enues has expe ienced a sus ained g ow h in ecen yea s, 60% o e 1994 in 1999. Howe e , numbe o employees has gone down om mo e han 500 employees in 1989 o less han 390 in 1998; and (3) echnology, which is pa ially con olled by Onuba. P oduc ion echnology is de e mined by Onuba G oup; howe e , each plan has some ma gin o ac ion o in es in main enance and imp o emen o p oduc ion acili ies. In o he a eas such as Resea ch and De elopmen he e a e di e ences among he plan s. Thus, we can say ha Onuba has de eloped new echnologies o emission and was e ea men ha a e being expo ed o he g oup. Wi h ega ds o he a iables he o ganisa ion canno con ol, we can unde line ha : (1) The en i onmen is mode a ely unce ain; howe e , he e a e some ac o s ha signi ican ly a ec s abili y: changes in aw ma e ial p ices on he one hand side, and he e olu ion o some indus ies, like au omobile on he o he ; (2) om a echnological pe spec i e, “i is a ma u e indus y and i is di icul o imp o e cu en le els”. Howe e , inno a ions in o he suppo echnologies, such as in o ma ion ones and hose used in pollu ing emission and was e ea men s, a e allowing o di e en ia ion wi hin i s segmen ; (3) his indus y is an oligopoly; he wo ld leade accoun s o one ou h o he o al p oduc ion and he i s ou p oduce s accoun ed o 63% o he ma ke in 1998. This si ua ion is e idenced by some aspec s o ma ke ope a ions, such as announcemen s o pigmen p ice inc ease issued almos simul aneously by he main p oduce s (Anonymous, 1999; Tullo, 1999). On he o he hand, (4) he e olu ion o he legal amewo k applied o chemical indus y ope a ions is ending owa ds s ic e con ol o emissions and was e. A u he aspec o be conside ed is he e olu ion o cu ency exchange a es, e en wi h he simpli ica ion b ough abou by he in oduc ion o he eu o. O he mo e global ac o s a e in e es a es, which may d aw in es men s o a sec o ha adi ionally has go ex e nal unding, o he o e all e olu ion o he economy, since expansion cycles in he indus ies supplied by Onuba G oup, such as au omobile, pain s, e c. inc ease hei demand o pigmen . 3.3.1. INFORMAL ELEMENTS OF THE CONTROL SYSTEM They a e highly cohe en ; he local o ganisa ional cul u e e lec s he ac ha he membe s o he Managemen Commi ee ha e been wo king oge he o mo e han 15 yea s, making up a closely kni - oge he g oup. This is why con ol p ocesses ope a e unde a pa icipa o y managemen s yle and luen in e pe sonal ela ionships. In his cul u e he main alues a e commi men o and iden i ica ion wi h he o ganisa ional goals, us among wo ke s which makes i possible o wo k in a iendly en i onmen , and inally, a high awa eness among employees allowing o sel -managemen a he di e en esponsibili y a eas. These alues a e ansmi ed among employees, echnicians and plan ope a o s, by means o luen in e pe sonal ela ionships ha se e as a means o ans e and con i ma ion. This ela ionships esul in mul iple spon aneous mee ings on any wo kday: co ee b eaks, lunch a he can een, e c.; hey a e e y help ul in making he ou comes o many o mal mee ings mo e sa is ac o y o daily ope a ions, as well as in p e en ing con lic s. 3.3.2. FORMAL ELEMENTS OF THE CONTROL SYSTEM The o ganisa ional design is de e mined by Onuba G oup; decisions on s a egy, budge ing and in es men s a e cen alised. No wi hs anding Onuba’s managemen has go a subs an ial au onomy, as long as he objec i es es ablished by he g oup a e me , making e ec i e cen alisa ion much less. Decision-making is highly o mal and bu eauc a ic, some epo s a e e en duplica ed wi h he same in o ma ion in di e en o ma s depending upon who hey a e submi ed o. Likewise, we ha e iden i ied he ollowing mechanisms wi hin Cybe ne ic Con ol Sys ems: Budge ing, In es men Delega ion – E alua ion and Con ol, Cos Con ol, Cash Flow and Wo king Capi al Repo ing, Quan i a i e Non- Financial and Quali a i e Managemen Indica o s 10 , and O ganisa ional Pe o mance Repo ing. The epo s p oduced by means o he abo e mechanisms a e lis ed in Table 2. In gene al e ms, he e is an o e all dissa is ac ion wi h he budge nego ia ion p ocess, because he pa en g oup asks o a p oposal which i la e adjus s downwa ds. He e o, a manage s a ed he ollowing: “We send o London he igu es we conside necessa y o Huel a e e y yea , bu he usually hey cu hem down by 10% o 15% and hen hey a e all yea long pu ing p essu e on us because we do no mee hei budge ”. Likewise, hey decla e ha he e is o e lapping and ei e a ion in he epo s o con ol budge de ia ions, indica ing ha : “We spend he e a lo o ime d a ing epo s, some o he h ee o ou imes, which akes ou a en ion away om wo k, in addi ion o o e whelming us wi h so much con ol o he same hings”. Logically, his si ua ion gene a es con lic s be ween g oup and local managemen , because acco ding o a membe o he Managemen Commi ee “a he end all he Accoun ing and con ol o he di e en plan s o he g oup wo k o London, and i should be he o he way a ound, con ol sys ems speci ically designed o he di e en plan s.” Wi h ega ds o cos calcula ion, budge o ecas s a e d a ed acco ding o unc ional a eas and based on hem ixed and a iable cos s a e es ima ed 11 and hen he o ecas ed mon hly analy ical esul is calcula ed. In o de o con ol and educe cos s speci ic epo s a e p oduced, p o iding in o ma ion o each depa men ’s ixed and a iable cos s, wi h a special ocus on p oduc ion cos s, bo h o he Black A ea and he Whi e A ea. Mo eo e , we mus unde line ha cos s da a a e included in he mon hly and qua e ly epo s d a ed o he local and g oup managemen . 10 Pigmen quali y, ene gy use a es, p oduc ion plan e iciency, absen eeism, sa e y in he wo kplace and con ol o en i onmen al impac a e included in he mon hly epo submi ed o he gene al manage o he plan , he Ope a ions Manage , called T a ic Ligh , whose con en is c ucial o Onuba’s managemen p ocesses. Indeed, al hough i does no bea he name i is ac ually a Command Boa d o he Top Managemen , since i displays i s main cha ac e is ics. 11 The manage s esponsible o his a eas insis ed du ing he in e iews on he di icul y caused in some cases by ha ing o comply wi h such cos classi ica ion c i e ion, one o hem e en said ha “all cos s a e semi- ixed o semi- a iable”. Wi h ega d o his, B o o (1996:659) men ioned ha he inco po a ion o new echnologies had c acked he bases o he me hods adi ionally used in Cos Accoun ing, especially he indi ec cos alloca ion c i e ion based on s anda dised global a es. 3.3.3. ORGANISATIONAL PERFORMANCE MONITORING AND EVALUATION SYSTEMS The a iables used o moni o and asses o ganisa ional pe o mance a e consis en wi h he o ganisa ion’s objec i es and ocus mainly on ou magni udes: P o i s, Cos s, Quali y, and inally Sa e y and En i onmen . As we can see, bo h quan i a i e – mos ly inancial – and quali a i e measu es a e used, wi h a clea p edominance o he o me . This end becomes e en clea e i we analyse mo e agg ega e epo s and he da a bases o Onuba G oup, o example, he so-called: Eu opean Regional O ice (ERO) which includes he alued o he main inancial indica o s in each subsidia y, as well as any de ia ions om hem;; Bes Ope a ing P ac ices (BOP), which includes he quan i a i e da a o he Ope a ions A ea; and Team Eu opean Measu emen (TEMs), o indica o s on sales and dis ibu ion. Based on he in o ma ion p o ided by hese da abases in e nal benchma king p ac ices a e de eloped, esul ing om he sys ema ic compa ison o he igu es achie ed by each o he subsidia ies o he abo e-men ioned indica o s, he s udy o any de ec ed de ia ion and he analysis o he p ac ices ha allow he leading subsidia ies o achie e he bes ou comes, in o de o apply hem ac oss he g oup. In o de o assess he pe o mance o he echnical s a , some 60 junio manage s, he Managemen Commi ee p oduces a pe sonal epo called Pe o mance App aisal, which is basically an assessmen o he wo k pe o med based on he deg ee o achie emen o a se o objec i es ha acco ding a Managemen Commi ee membe a e “ ealis ic, measu able and subjec o e alua ion, e c.”. The epo lis s o each pe iod he objec i es, he esul s achie ed by he employee as compa ed o such objec i es, a classi ica ion o pe o mance acco ding o a six-le el scale – om excep ional o unaccep able -, a global app aisal, he opinion o he indi idual unde e alua ion, objec i es o he ollowing e m, aining ecei ed and expec ed, analysis o he skills e idenced a he job, and inally u u e de elopmen chances o he indi idual unde e alua ion in his cu en job. I s mos impo an aspec is ha i s is possible o achie e and moni o he objec i es se o each job and he ac ha is a pa icipa o y e alua ion each in consensus wi h he employee. 4. ANALYSIS OF RESULTS We will now p oceed o analyse he esul s ob ained in he longi udinal case s udy on he Ho izon P ojec implemen ed in Onuba on he basis on he li e a u e e iew we ha e pe o med and ollowing he s uc u e p esen ed in Cha 4. I includes he main ac o s ha ha e in luenced he de elopmen o he p ojec , he ins umen s used by Onuba o achie e he p oposed objec i es, as well as he esul s ob ained, bo h explici and implici . Cha 4: Global Pe spec i e o he Ho izon P ojec . Sou ce: Own D a ing. Fi s o all, Onuba G oup ope a es in a ma u e indus y wi h a mode a e deg ee o unce ain y and a s ong p ice compe i ion Du ing he 1990s i accumula ed nega i e inancial esul s, which lead i s o me main sha eholde o pu i o sale, e idencing he ele ance o business concen a ion p ocesses in his indus y a wo ld scale, as a s a egic esponse. These condi ioning ac o s led he managemen o conside an inc emen al and e olu iona y p og amme, such as con inuous imp o emen (Ja a and Aspinwall, 1999), de eloped wi hin he wide amewo k p o ided by To al Quali y Managemen , as Leal (1997) p oposed. The e o e, i is an in en ional change p ocess as p oposed by Dean and Bowen (1994), which can be in e ed om i s planned cha ac e . A sign o ha is he p e ious s udy ca ied ou by a consul ancy i m on business managemen and pe spec i e, h ee yea s be o e he Ho izon P ojec s a ed, as well as he implemen a ion o a pilo es a he G imsby plan (Uni ed Kingdom). Nega i e end in Onuba’s esul s Succes ull implemen a ion o he Ho izon P ojec Explici esul s: - Cos educ ion. - Quali y imp o emen Implici esul s: - Employee mo i a ion. - Teamwo k. - Con inuous imp o emen cul u e Imp o emen o inancial si ua ion Elemen s condi ioning change: - Th ea o sell Onuba. - Ag eemen gua an eeing jobs Change acili a o s: - Suppo o Top Mananagemen . - Employee in ol emen . - Widely communica ed. - Con inuous imp o emen eams. - Elemen s o con ol sys em: in o mal and o mal. Ins umen s used: - Quali y ci cles. - In e nal benchma king. The Ho izon P ojec is pa o he s a egic esponse o he Top Managemen o Onuba G oup o ackle he ie ce p ice compe i ion exis ing in he i anium dioxide business a wo ld scale. I s implemen a ion aimed mainly a educing cos s (one o he main indica o s o o ganisa ional pe o mance in Onuba G oup) using benchma king echniques, in acco dance wi h he indings ob ained by Chenhall and Lang ield-Smi h (1998, p.257). Likewise, he P ojec was communica ed o he Local managemen o each o he subsidia ies, which we e made esponsible o i s implemen a ion, since a u he in en ion was o make a compa ed cos con ol o each o hem. This s a egic aspec , oge he wi h hose connec ed o con inuous imp o emen , abides o he p inciples ha acco ding o Fe nandez (1994) shall guide he new managemen echniques. I we analyse i s ou comes, he Ho izon P ojec has been a success since i s explici objec i es o educing cos s and imp o ing quali y ha e been achie ed, bu in he opposi e o de , as p oposed by Elna han e al. (1996, p. 49) i s he e is a quali y imp o emen – non- inancial measu e o o ganisa ional pe o mance – and hen a cos educ ion – inancial measu e o o ganisa ional pe o mance. Fu he mo e, o he implici objec i es ha e been achie ed, among hem he in oduc ion o a con inuous imp o emen and eamwo k cul u e, bo h in Onuba G oup and, especially, in i s Spanish subsidia y. We can men ion se e al ac o s ha ha e con ibu ed o he success o he Ho izon P ojec in Onuba, in e ms bo h o implemen a ion and esul s. Thus, he unce ain y c ea ed by he nego ia ion p ocess aimed a he sale o Onuba G oup esul ing o m i s pe o mance o e he p ecious yea s lead bo h Onuba’s Local Managemen and wo ke s en isage he p ojec as an oppo uni y o u n a ound he inancial si ua ion and ul ima ely, o keep hei jobs. This wo ked as a mo i a ing and con incing ins umen . The implemen a ion o he p ojec ollowed a op-down app oach, s a ing om he Top Managemen and hen down o he lowe le els. In u n, pa icipa ion, p oposal o ideas and hei app o al and implemen a ion s a ed a he lowe le els, hose di ec ly in ol ed in pe o ming he asks, and hen up o he Top Managemen (bo om-up app oach). These p ocesses a e in he line wi h he indings o Ja a and Aspinwall (1999). Mo e speci ically, we can say ha : a. - The Top Managemen o Onuba G oup and Onuba showed a all imes hei ull suppo and commi men o he Ho izon P ojec , making i isible o he employees