I.

Total Quality Management(TQM)

 Definition:
TQM is a set of management practices throughout the organization, geared to ensure the organization consistently meets or exceeds customer requirements. TQM places strong focus on process measurement and controls as means of continuous improvement. TQM functions on the premise that the quality of products and processes is the responsibility of everyone who is involved with the creation or consumption of the products or services offered by an organization. In other words, TQM capitalizes on the involvement of management, workforce, suppliers, and even customers, in order to meet or exceed customer expectations. Considering the practices of TQM as discussed in six empirical studies, Cua, McKone, and Schroeder (2001) identified the nine common TQM practices as cross-functional product design, process management, supplier quality management, customer involvement, information and feedback, committed leadership, strategic planning, cross-functional training, and employee involvement.

Figure 1: Model of TQM

Some useful messages from results of TQM implementations:

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If you want to be a first-rate company, don't focus on the second-rate companies who can't handle TQM, look at the world-class companies that have adopted it

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The most effective way to spend TQM introduction funds is by training top management, people involved in new product development, and people involved with customers It's much easier to introduce EDM/PDM in a company with a TQM culture than in one without TQM. People in companies that have implemented TQM are more likely to have the basic understanding necessary for implementing EDM/PDM. For example, they are more likely to view EDM/PDM as an information and workflow management system supporting the entire product life cycle then as a departmental solution for the management of CAD data.

Figure 2: The wheel of TQM runs this way

 Principles of TQM
TQM can be defined as the management of initiatives and procedures that are aimed at achieving the delivery of quality products and services. A number of key principles can be identified in defining TQM, including:
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Executive Management Top management should act as the main driver for TQM and create an environment that ensures its success. Training Employees should receive regular training on the methods and concepts of quality. Customer Focus Improvements in quality should improve customer satisfaction. Decision Making Quality decisions should be made based on measurements.

y y y y

Methodology and Tools Use of appropriate methodology and tools ensures that nonconformances are identified, measured and responded to consistently. Continuous Improvement Companies should continuously work towards improving manufacturing and quality procedures. Company Culture The culture of the company should aim at developing employees ability to work together to improve quality. Employee Involvement Employees should be encouraged to be pro-active in identifying and addressing quality related problems.

By these we can figure out the TQM through this way

Figure 3: Factors of TQM  Important aspects of TQM:  TQM leadership from top management: TQM is a way of life for a company. It has to be introduced and led by top management. This is a key point. Attempts to implement TQM often fail because top management doesn't lead and get committed - instead it delegates and pays lip service.  Continuous improvement: Continuous improvement of all operations and activities is at the heart of TQM. Once it is recognized that customer satisfaction can only be obtained by providing a high-quality product, continuous improvement of the quality of the product is seen as the only way to maintain a high level of customer satisfaction.  Fast response: To achieve customer satisfaction, the company has to respond rapidly to customer needs. This implies short product and service introduction cycles

 Actions based on facts: The statistical analysis of engineering and manufacturing facts is an important part of TQM. Facts and analysis provide the basis for planning, review and performance tracking, improvement of operations, and comparison of performance with competitors.  Employee participation: A successful TQM environment requires a committed and well-trained work force that participates fully in quality improvement activities  A TQM culture: It's not easy to introduce TQM. An open, cooperative culture has to be created by management. Employees have to be made to feel that they are responsible for customer satisfaction.  Product development in a TQM environment: Product development in a TQM environment is very different to product development in a non-TQM environment. Without a TQM approach, product development is usually carried on in a conflictual atmosphere where each department acts independently.

Figure 4: Position of TQM in organization

II. Just In Time(JIT)

 ` Definition:
Just-in-time' is a management philosophy and not a technique. It originally referred to the production of goods to meet customer demand exactly, in time, quality and quantity, whether the `customer' is the final purchaser of the product or another process further along the production line.

Figure 5: JIT functioning

It has now come to mean producing with minimum waste. "Waste" is taken in its most general sense and includes time and resources as well as materials. Elements of JIT include:  Continuous improvement.

 Attacking fundamental problems - anything that does not add value to the

 

   

product.  Devising systems to identify problems.  Striving for simplicity - simpler systems may be easier to understand, easier to manage and less likely to go wrong.  A product oriented layout - produces less time spent moving of materials and parts.  Quality control at source - each worker is responsible for the quality of their own output.  Poka-yoke - `foolproof' tools, methods, jigs etc. prevent mistakes  Preventative maintenance, Total productive maintenance - ensuring machinery and equipment functions perfectly when it is required, and continually improving it. Eliminating waste. There are seven types of waste:  Waste from overproduction.  Waste of waiting time.  Transportation waste.  Processing waste.  Inventory waste.  Waste of motion.  Waste from product defects. Good housekeeping - workplace cleanliness and organization. Set-up time reduction - increases flexibility and allows smaller batches. Ideal batch size is 1item. Multi-process handling - a multi-skilled workforce has greater productivity, flexibility and job satisfaction. Leveled / mixed production - to smooth the flow of products through the factory. Kanbans - simple tools to `pull' products and components through the process. Jidoka (Autonomation) - providing machines with the autonomous capability to use judgment, so workers can do more useful things than standing watching them work. Andon (trouble lights) - to signal problems to initiate corrective action.

There are strong cultural aspects associated with the emergence of JIT in Japan. The Japanese work ethic involves the following concepts.  Workers are highly motivated to seek constant improvement upon that which already exists. Although high standards are currently being met, there exist even higher standards to achieve.  Companies focus on group effort which involves the combining of talents and sharing knowledge, problem-solving skills, ideas and the achievement of a common goal.  Work itself takes precedence over leisure. It is not unusual for a Japanese employee to work 14-hour days.

 Employees tend to remain with one company throughout the course of their career span. This allows the opportunity for them to hone their skills and abilities at a constant rate while offering numerous benefits to the company. These benefits manifest themselves in employee loyalty, low turnover costs and fulfilment of company goals.

Figure 6: JIT Model

 Some Key Elements of JIT:

1. Stabilize and level the MPS with uniform plant loading (heijunka in Japanese): create a uniform load on all work centers through constant daily production and mixed model assembly (produce roughly the same mix of products each day, using a repeating sequence if several products are produced on the same line). Meet demand fluctuations through end-item inventory rather than through fluctuations in production level. Use of a stable production schedule also permits the use of backflushing to manage inventory: an end items bill of materials is periodically exploded to calculate the usage quantities of the various components that were used to make the item, eliminating the need to collect detailed usage information on the shop floor. 2. Reduce or eliminate setup times: aim for single digit setup times (less than 10 minutes) or "one-touch" setup -- this can be done through better planning, process redesign, and product redesign. 3. Reduce lot sizes (manufacturing and purchase): reducing setup times allows economical production of smaller lots; close cooperation with suppliers is necessary to achieve reductions in order lot sizes for purchased items, since this will require more frequent deliveries. 4. Reduce lead times (production and delivery): production lead times can be reduced by moving work stations closer together, applying group technology and cellular manufacturing concepts, reducing queue length (reducing the number of jobs waiting to be processed at a given machine), and improving the coordination and cooperation between successive processes; delivery lead times can be reduced through close cooperation with suppliers, possibly by inducing suppliers to locate closer to the factory. 5. Preventive maintenance: use machine and worker idle time to maintain equipment and prevent breakdowns. 6. Flexible work force: workers should be trained to operate several machines, to perform maintenance tasks, and to perform quality inspections. In general, JIT requires teams of competent, empowered employees who have more responsibility for their own work. The Toyota Production System concept of respect for people contributes to a good relationship between workers and management. 7. Require supplier quality assurance and implement a zero defects quality program: errors leading to defective items must be eliminated, since there are no buffers of excess parts. A quality at the source (jidoka) program must be implemented to give workers the personal responsibility for the quality of the work they do, and the authority to stop production when something goes wrong. Techniques such as "JIT lights" (to indicate line slowdowns or

stoppages) and "tally boards" (to record and analyze causes of production stoppages and slowdowns to facilitate correcting them later) may be used. 8. Small-lot (single unit) conveyance: use a control system such as a kanban (card) system (or other signaling system) to convey parts between work stations in small quantities (ideally, one unit at a time). In its largest sense, JIT is not the same thing as a kanban system, and a kanban system is not required to implement JIT (some companies have instituted a JIT program along with a MRP system), although JIT is required to implement a kanban system and the two concepts are frequently equated with one another.

 Advantages and disadvantages of JIT:

 Advantages of JIT  Lower stock holding means a reduction in storage space which saves rent and insurance costs  As stock is only obtained when it is needed, less working capital is tied up in stock  There is less likelihood of stock perishing, becoming obsolete or out of date  Avoids the build-up of unsold finished product that can occur with sudden changes in demand  Less time is spent on checking and re-working the product of others as the emphasis is on getting the work right first time  Disadvantages of JIT  There is little room for mistakes as minimal stock is kept for re-working faulty product  Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed  There is no spare finished product available to meet unexpected orders, because all product is made to meet actual orders however, JIT is a very responsive method of production.

 JIT Implementation Design

Based on a diagram modeled after the one used by Hewlett-Packards Boise plant to accomplish its JIT program.
1) F Design Flow Process
F Redesign/relayout for flow L Reduce lot sizes O Link operations W Balance workstation capacity

- M Preventive maintenance - S Reduce setup Times

2) Q Total Quality Control

C worker compliance I Automatic inspection M quality measures M fail-safe methods W Worker participation

3) S Stabilize Schedule
- S Level schedule - W Establish freeze windows - UC Underutilize Capacity

4) K Kanban Pull System

- D Demand pull - B Backflush - L Reduce lot sizes

5) V Work with Vendors

L Reduce lead time D Frequent deliveries U Project usage requirements Q Quality expectations

6) I Further Reduce Inventory in Other Areas

S Stores T Transit C Implement carrousel to reduce motion waste C Implement conveyor belts to reduce motion waste

7) P Improve Product Design

P Standard production configuration P Standardize and reduce the number of parts P Process design with product design Q Quality expectations

III. Activity Based Costing(ABC)

 ` Definition:
Activity based costing (ABC) assigns manufacturing overhead costs to products in a more logical manner than the traditional approach of simply allocating costs on the basis of machine hours. Activity based costing first assigns costs to the activities that are the real cause of the overhead. It then assigns the cost of those activities only to the products that are actually demanding the activities.

Figure 7: ABC slice the cost thisway

Let's discuss activity based costing by looking at two products manufactured by the same company. Product 124 is a low volume item which requires certain activities such as special engineering, additional testing, and many machine setups because it is ordered in small quantities. A similar product, Product 366, is a high volume productrunning continuously and requires little attention and no special activities. If this company used traditional costing, it might allocate or "spread" all of its overhead to products based on the number of machine hours.

This will result in little overhead cost allocated to Product 124, because it did not have many machine hours. However, it did demand lots of engineering, testing, and setup activities. In contrast, Product 366 will be allocated an enormous amount of overhead (due to all those machine hours), but it demanded little overhead activity. The result will be a miscalculation of each product's true cost of manufacturing overhead. Activity based costing will overcome this shortcoming by assigning overhead on more than the one activity, running the machine.

 ` Importance of ABC:
Activity based costing has grown in importance in recent decades because (1) Manufacturing overhead costs have increased significantly, (2) The manufacturing overhead costs no longer correlate with the productive machine hours or direct labor hours, (3) The diversity of products and the diversity in customers' demands have grown, and (4) Some products are produced in large batches, while others are produced in small batches.

IV. Activity Based Management(ABM)

 ` Definition:
ABM has grown largely out of the work of the Texas-based Consortium for Advanced Manufacturing-International (CAM-I). No longer is ABMs applicability limited to manufacturing organizations. The principles and philosophies of activity-based thinking apply equally to service companies, government agencies and process industries. The acronym itself has evolved from ABC to ABCM (activity-based cost management) to ABM, and the application of ABC evolved from a manufacturing product costing orientation to a management philosophy of activity management applied in industries and organizations other than manufacturing. ABM supports business excellence by providing information to facilitate long-term strategic decisions about such things as product mix and sourcing. It allows product designers to understand the impact of different designs on cost and flexibility and then to modify their designs accordingly. ABM also supports the quest for continuous improvement by allowing management to gain new insights into activity performance by focusing attention on the sources of demand for activities and by permitting management to create behavioural incentives to improve one or more aspects of the business.

Figure 8: Activity of a firm

 Why ABM?
Organisations have begun to look at ABM for a variety of reasons. Among the most commonly cited are:  top-down pressure to reduce costs;  Competitive pressure/market conditions;  organization-wide programme  The introduction of benchmarking;  Regulatory issues  seeking world-class status through process management

 The Outputs of an ABM

Organisations that are designing and implementing ABM will find there are five basic information outputs:      The cost of activities and business processes; The cost of non-value-added activities; Activity-based performance measures; Accurate product/service cost (cost objects); Cost drivers.

 The Principle of ABM Principles" of Activity Based Management:

 Manage the work, not the worker: Eliminating people does not eliminate the root cause of cost. ABM is founded on the principle that activities consume costs and products, services, and customers consume activities. The root causes of an activity are rarely under the control of the people who actually perform the activity.  Define the customer of your activity and process: Determine if customers are satisfied with the cost, quality, service level and response time of your output. Use ABM in concert with Total Quality Management, Business Process Reengineering, Benchmarking, and other tools to improve activities to meet customer's needs.  Attack the competition, not each other: Form cross-functional business process teams. Define process managers. Synchronize activities across functional boundaries to create simple, mistake proof, and flexible processes that meet customer needs.  Insanity is defined as performing last years activities using last years methods yet expecting improved results this year: Benchmark Value-Added activities with the best in the world, implement improvements, and celebrate the results.

 It is more important to do the right thing than to do things right: Minimize or eliminate Non-Value Added wasteful activities. Re-deploy the resources to fund growth or improve profits.  Dont kill the messenger of bad news: Celebrate finding errors and the root causes of activities. Do not celebrate the repetition of errors or variances to plan. Define and resolve the root causes of unnecessary activities, excessive costs and poor quality.  Coasting is always downhill: Continuous improvement of activities and processes is a stepby-step uphill journey to remain competitive. ABM is not a diet. ABM is an unending process of analyze, act, and account.  Eliminate unhealthy comparisons and outdated performance measures: Disregard indirect versus direct headcount statistics and other irrelevant measures. Manage activities, processes, output, and value, not the classification of employees.  Ask yourself annually "What's our business and how's business?": Determine if your activities and performance support the mission statement of the organization. Define activity measures necessary to achieve the strategic plan and budget.  Employees want to do a good job: And they will do a good job, if they enjoy their job. Provide employees with the training and tools necessary to fill their job with 100% ValueAdded activities.

V. Balanced Scorecard(BSC)
 Definition:
The balanced scorecard is a strategic planning and management system used to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organizational performance against strategic goals. The balanced scorecard is a strategic planning and management system that is used extensively in business and industry, government, and nonprofit organizations worldwide to align business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals. It was originated by Drs. Robert Kaplan and David Norton as a performance measurement framework that added strategic non-financial performance measures to traditional financial metrics to give managers and executives a more 'balanced' view of organizational performance. While the phrase balanced scorecard was coined in the early 1990s, the roots of the this type of approach are deep, and include the pioneering work of General Electric on performance measurement reporting in the 1950s and the work of French process engineers in the early part of the 20th century. Kaplan and Norton describe the innovation of the balanced scorecard as follows: "The balanced scorecard retains traditional financial measures. But financial measures tell the story of past events, an adequate story for industrial age companies for which investments in long-term capabilities and customer relationships were not critical for success. These financial measures are inadequate, however, for guiding and evaluating the journey that information age companies must make to create future value through investment in customers, suppliers, employees, processes, technology, and innovation."

Figure 9: Model of BSC

 The four perspectives:

The balanced scorecard suggests that we view the organization from four perspectives, and to develop metrics, collect data and analyze it relative to each of these perspectives:  The Learning & Growth Perspective:This perspective includes employee training and corporate cultural attitudes related to both individual and corporate self-improvement. In a knowledge-worker organization, people -- the only repository of knowledge -- are the main resource. In the current climate of rapid technological change, it is becoming necessary for knowledge workers to be in a continuous learning mode. Metrics can be put into place to guide managers in focusing training funds where they can help the most. In

any case, learning and growth constitute the essential foundation for success of any knowledge-worker organization. Kaplan and Norton emphasize that 'learning' is more than 'training'; it also includes things like mentors and tutors within the organization, as well as that ease of communication among workers that allows them to readily get help on a problem when it is needed. It also includes technological tools; what the Baldrige criteria call "high performance work systems."  The Business Process Perspective: This perspective refers to internal business processes. Metrics based on this perspective allow the managers to know how well their business is running, and whether its products and services conform to customer requirements (the mission). These metrics have to be carefully designed by those who know these processes most intimately; with our unique missions these are not something that can be developed by outside consultants.  The Customer Perspective: Recent management philosophy has shown an increasing realization of the importance of customer focus and customer satisfaction in any business. These are leading indicators: if customers are not satisfied, they will eventually find other suppliers that will meet their needs. Poor performance from this perspective is thus a leading indicator of future decline, even though the current financial picture may look good. In developing metrics for satisfaction, customers should be analyzed in terms of kinds of customers and the kinds of processes for which we are providing a product or service to those customer groups.  The Financial Perspective: Kaplan and Norton do not disregard the traditional need for financial data. Timely and accurate funding data will always be a priority, and managers will do whatever necessary to provide it. In fact, often there is more than enough handling and processing of financial data. With the implementation of a corporate database, it is hoped that more of the processing can be centralized and automated. But the point is that the current emphasis on financials leads to the "unbalanced" situation with regard to other perspectives. There is perhaps a need to include additional financialrelated data, such as risk assessment and cost-benefit data, in this category.

Figure 10: Perspectives of BSC

 Strategy Mapping
Strategy maps are communication tools used to tell a story of how value is created for the organization. They show a logical, step-by-step connection between strategic objectives (shown as ovals on the map) in the form of a cause-and-effect chain. Generally speaking, improving performance in the objectives found in the Learning & Growth perspective (the bottom row) enables the organization to improve its Internal Process perspective Objectives (the next row up), which in turn enables the organization to create desirable results in the Customer and Financial perspectives (the top two rows).  Balanced Scorecard Software The balanced scorecard is not a piece of software. Unfortunately, many people believe that implementing software amounts to implementing a balanced scorecard. Once a scorecard has been developed and implemented, however, performance management software can be used to get the right performance information to the right people at the right time.