- Lean production
- Process of streamlining operations and processes to reduce waste
- Leads to improved quality and reduced costs
- Forms of waste: materials/resources, time, energy, human effort
- Principles to be followed:
- Waste minimisation – remove processes that don’t add value
- ‘Right first time’ – zero defects
- Flexibility
- Continuous improvement
- Supply chain management – develop good working relationships
- Methods of lean production
- Kaizen/continuous improvement
- Productivity/efficiency gains from small/continuous improvements
- Involves forming small groups/Kaizen groups
- Identifies changes and improvements to establish steady flow of small improvements
- Easier to manage change if it is small; less resistance
- Continual improvements in quality and eliminate waste
- Different from quality circles since suggestions can come from anyone
- Just-in-time (JIT)
- Inventory management system based on stocks being delivered as and when they are needed for the production process
- Buffer stocks are not required/no storage
- Finished goods are delivered as soon as they are produced
- Advantages
- Reduces costs of holding stock
- Working capital may be used elsewhere
- Businesses become more responsive to the needs of customers
- Improves motivation by promoting employee participation
- Reduces wastage
- Improves relationship with suppliers
- Disadvantages
- Reliance on external suppliers
- No room for error
- Less economies of scale
- Inflexible and cannot cope with fluctuations in demand
- Admin and transaction costs will increase due to frequent ordering
- Quality control can be an issue
- Relies on sophisticated technologies
- Requires commitment of workers
- Kanban
- Variation of JIT
- Scheduling system that aligns inventory levels with consumption
- Rate of demand controls rate of production
- Utilizes kanban cards which signals the need to restock products or inventory when used
- Advantages
- Reduce wastage
- Flexibility in production
- Problems in production are evident by checking the kanban
- Improves flow
- Disadvantages
- No room for error
- No buffer stock means quality problems/defects will be harder to address
- Large variations in demand can cause problems
- Ineffective when there is no variation in products
- No room for error
- Andon
- Refers to any visual system that shows the status of production
- e.g. worker will change a signboard to red to indicate a problem
- Used when personnel are far away from each other or attend to many different machines
- Advantages
- Allows for quick communication in production floor
- Problems can be resolved faster
- Employees are more involved
- Production status can be observed easily
- Disadvantages
- May require training for operators to use andon system
- Relies on operators to be responsible
- Kaizen/continuous improvement
- Cradle to cradle manufacturing and design
- Design and manufacturing approach that seeks to eliminate waste
- Takes the entire product life cycle into account
- Inputs and outputs are seen as nutrients
- Technical nutrients – recyclable with no loss of quality
- Biological nutrients – consumable or compostable
- 5 key features:
- Material health (e.g. source, toxicity)
- Material reutilization
- Use of renewable energy
- Water usage and discharge
- Social responsibility
- Quality control and assurance
- Quality
- Features of a product that fulfils its purpose and meets user expectations
- Perceived value for money
- Importance:
- Essential in satisfying customers
- Provides competitive advantage
- Reduces likelihood of bad reputation due to poor products
- Competition makes this even more relevant
- Four driving forces:
- Higher disposable income
- Higher customer awareness
- Gov’t legislation
- Competition
- Costs of poor quality:
- Reputation of the business
- Costs to repair/fix
- Physical harm to customers
- Compensation claims
- Methods to measure quality
- Reject rates
- Level of product returns
- Customer complaints
- Level of customer satisfaction
- Degree of customer loyalty
- Market share
- Quality control
- Inspecting, testing and sampling of the quality of work
- Advantages
- Defects do not reach customers
- Saves reputation
- Cheaper specialized QC inspectors can find several issues
- Disadvantages
- Does not prevent mistakes made
- Individuals are not accountable for quality of work
- Lack of quality culture
- Quality assurance
- Process of guaranteeing a product’s quality at the first time
- Informs/convinces customers that there is a specific standard
- Serve as a competitive advantage vs. other businesses
- Advantages
- Involves employee participation (more ownership and recognition)
- Improves staff morale
- Generation of new ideas
- Break down certain cultures (them vs. us)
- Less wastage and production costs
- Disadvantages
- Time-consuming
- Requires training
- Quality
- Managing quality
- Total Quality Management (TQM)
- Process that requires dedication of all employees in the organization to commit to achieving quality standards and minimizing waste and defects
- Embeds quality in every business operation and process
- Management by example
- Empowers employees to improve quality to have zero defects
- Advantages
- Motivation/empowered employees
- Reduces wastage and costs
- Improves image
- Possible competitive edge through quality assurance
- Limitations
- Added costs (such as market research)
- Costs to improve quality
- Requires all members to be committed
- Somewhat bureaucratic
- Time lag before benefits are seen
- Quality circles
- Small groups of people that examine issues relating to quality
- Consists of volunteers from various departments
- Often uses circle or all channel network
- Directly involved in executing solutions
- Advantages
- Increased efficiency
- Productivity
- Profitability
- Limitations
- Demotivation by teamworking and extra workload
- Benchmarking
- Comparing products, operations, and processes to similar businesses
- Stages:
- Identify area
- Measure internal performance using set criteria
- Identify most appropriate competitors to benchmark with
- Measure external performance of rivals
- Use comparative data to find main weakness of firmr
- Set standards for quality improvements
- Implement change
- Evaluate outcome and check for improvements
- Can be either historical or interfirm benchmarking
- Advantages
- Close performance gap
- Eliminates guesswork
- Allows perception of customers to be heard
- Help lower costs and improve competitiveness
- Disadvantages
- Costs and time implications
- Can discourage innovation
- Time and finance must be used to implement change
- Total Quality Management (TQM)
- National and international quality standards
- National and international quality awards are given to businesses that show their products meet certain quality standards.
- Purpose:
- Promote quality awareness within organization
- Recognize quality achievements
- Attract high calibre employees
- Strengthen firm’s competitiveness
- International Standards Organization (ISO)
- One of the most powerful NGOs in the world by providing a single set of quality standards
- ISO Standard for Quality Management: ISO 9000
- Endorses businesses that have done quality management.