Pom Material Mid Ii Final

Waste management is all the activities and actions required to manage waste from its
inception to its final disposal. This includes amongst other things, collection, transport, treatment
and disposal of waste together with monitoring and regulation. It also encompasses the legal and
regulatory framework that relates to waste management encompassing guidance on recycling etc.
The term normally relates to all kinds of waste, whether generated during the extraction of raw
materials, the processing of raw materials into intermediate and final products, the consumption
of final products, or other human activities, including municipal (residential, institutional,
commercial), agricultural, and social (health care, household hazardous wastes, sewage sludge).
Waste management is intended to reduce adverse effects of waste on health, the environment or
aesthetics.
Waste management practices are not uniform among countries (developed and developing
nations); regions (urban and rural area), and sectors (residential and industrial).
Types Of Waste:
Did you know that waste can actually be classified into five different types? Moreover, some
types of waste are recyclable whereas others are not. Recycling can be confusing, so I’m not surprised to
see many Brisbane residents failing to grasp the concept.
If you one such resident, by knowing the different types of wastes you’ll be able to better understand
what you can and cannot recycle.
1. Liquid Waste
Liquid waste is commonly found both in households as well as in industries. This waste includes dirty
water, organic liquids, wash water, waste detergents and even rainwater.
You should also know that liquid waste can be classified into point and non-point source waste. All
manufactured liquid waste is classified as point source waste. On the other hand, natural liquid waste is
classified as non-point source waste.
Tt is best get in touch with waste removal experts, such as 4 Waste Removals, to dispose of liquid
waste properly.
2. Solid Rubbish
Solid rubbish can include a variety of items found in your household along with commercial and
industrial locations.
Solid rubbish is commonly broken down into the following types:
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Plastic waste – This consists of bags, containers, jars, bottles and many other products that can be found
in your household. Plastic is not biodegradable, but many types of plastic can be recycled. Plastic should
not be mix in with your regular waste, it should be sorted and placed in your recycling bin.
Paper/card waste – This includes packaging materials, newspapers, cardboards and other products.
Paper can easily be recycled and reused so make sure to place them in your recycling bin or take them to
your closest Brisbane recycling depot.
Tins and metals – This can be found in various forms throughout your home. Most metals can be
recycled. Consider taking these items to a scrap yard or your closest Brisbane recycling depot to dispose
of this waste type properly.
Ceramics and glass – These items can easily be recycled. Look for special glass recycling bins and
bottle banks to dispose them correctly.
If you still cannot grasp the concept of recycling, then an incredibly easy and efficient way to dispose
solid rubbish is by hiring a Brisbane waste removal company, like 4 Waste Removals, to take care of your
recycling for you. We will removal all of your rubbish and ensure it is disposed of properly.
3. Organic Waste
Organic waste is another common household. All food waste, garden waste, manure and rotten meat are
classified as organic waste. Over time, organic waste is turned into manure by microorganisms. However,
this does not mean that you can dispose them anywhere.
Organic waste in landfills causes the production of methane, so it must never be simply discarded with
general waste. Instead, look to get a green bin from the Brisbane council, or hire a green skin bin or
garden bag for proper waste disposal.
4. Recyclable Rubbish
Recyclable rubbish includes all waste items that can be converted into products that can be used again.
Solid items such as paper, metals, furniture and organic waste can all be recycled.
Instead of throwing these items in with regular waste, which then ends up in landfills, place them in your
yellow recycling bin or take them to your local Brisbane recycling depot.
If you’re unsure whether an item is recyclable or not, look at the packaging or the diagrams on the lid of
your yellow recycling bin. Most products will explicitly state whether they are recyclable or not.
5. Hazardous Waste
Hazardous waste includes all types of rubbish that are flammable, toxic, corrosive and reactive.
These items can harm you as well as the environment and must be disposed of correctly. Therefore, I
recommend you make use of a waste removal company for proper disposal of all hazardous waste.
The Seven Causes of Waste:
Lean manufacturing has defined seven causes of waste, all companies have experienced one or
more of the waste types described below.
Companies that fail to control such wastes are companies that sooner or later will be out of
business. Control of the “seven wastes” is a must for any organization or company that is planing to
succeed.
1- Overproduction OP:
Overproduction causes consumption of raw materials that otherwise could be used on actually
demanded products, OP causes inadequate use of personnel, plus product and material accumulation

in the production floor that difficult the manufacturing process and inventories.
2- Unnecessary Inventories:
Results in captive monetary resources that are not producing profit, increases tax liability, make
use of valuable storage space that can not be used for other purposes, accumulated not sold inventories
are at high risk of being damaged or rendered obsolete.
3- Unnecessary Transport of Materials or Equipment:
Facilities that do not permit good floor manufacturing layouts, process and other factors can
cause unnecessary transport of materials and equipment wasting labor and energy resources
that do not add value to the product.
4- Inadequate or Obsolete Manufacturing Process:
Inadequate, necessary or obsolete manufacturing process causes low productivity and defects
prone operation, for example movement of people that do not add value to the product.
5- Defects or bad Quality from Process or Design:
Poorly designed product or lack of good manufacturing instructions or training can causes
reworks, waste, bad quality products, customer low rating and products returns.
6- Waiting Time for Materials, Tools or Persons:
This lack of synchronization among all these production elements, during process or sourcing
causes delays on production and idle personnel and machinery.
7- Bad Process Design and Layouts:
Causes unnecessary actions or movement of people, tools, materials or equipment.
STAGES IN WASTE MANAGEMENT
The various stages involved in Waste management are:
[1] GENERATION: This is the stage when materials becomes waste and is discarded. The generation
rate is often defined as the weight of material discarded as solid waste by one person in one day
[2] STORAGE: House storage, keeping solid waste in place or containers which is the responsibility of
the individual members of the household while, Command storage, is the responsibility of the refuse
collection agency.
[3] COLLECTION: This has to do with transportation of the solid waste from the point of storage to the
point of disposal, two stages are involved in the collection stages; The direct collection, which makes
uses only one means of transportation i.e. the Solid waste is picked up from the point of storage in a
truck that takes it to the disposal site, The second stage collection Carries the solid waste from the
storage facility to the Transfer station, at the transfer station, the waste is loaded into the secondary
stage, to transport the refuse to the Disposal site.
[4] DISPOSAL: The final destination of solid waste, usually it is dumped on land at a tip, this may be
done in an engineered and hygienic Way: - sanitary landfill or controlled tipping, or in a careless Way: -
open tipping or crude dumping.
Four Key Aspects Of Watste Managemente
 Wast Processing
 Waste Minimization
 Waste Disposal
 Waste Recycling
HOW IS WASTE MANAGED?
Waste must be managed from the point of generation to the point of disposal through careful
control of the following functional elements:
 Waste avoidance (not making waste in the first place)
 Waste minimization (reducing waste, reusing, sorting and recycling)
 Generation (when waste is made)
 On-site storage (where waste is stored temporarily when it is first produced)
 Collection (how waste is picked up)
 Transport and Transfer (how waste is moved)

 Processing and materials recovery (how waste is treated or made useful)
 Disposal (how waste is finally discarded)
Quality assurance and quality circles

Quality control: An approach to prevent the defects rather than detecting the defects
Objectives:
The ultimate aim of quality control is to provide products, which are dependable, satisfactory and
economical. A quality control system is designed to ensure economical production of products of
uniform quality which is acceptable to the customer. Quality control aims at preventing the
defects rather than detecting the defects.
Benefits of quality control
 Minimum scrap or rework due to reduced defectives
 Reduced cost of labour and material as a result of reduced defectives
 Uniform quality and reliability of product help in increasing sales turnover
 Reduced variability resulting in-higher quality and reduced production bottle
necks
 Reduced inspection and its costs
 Reduced customer complaints
 Increased quality consciousness among employees
 Higher operation efficiency.
Quality Assurance:
Quality assurance refers to customers that the products, parts, components, tools, etc
contain specified characteristics and are fit for the intended use. It is concerned with determining
the procedures to be used and the frequency of checks to ensure that the system is meeting the
specification incorporated in the product design.
Forms of quality assurance
Many forms of assurance are performed within functional departments. The three forms
of companywide quality assurance.
 Quality audit
 Quality survey
 Product audit
Quality audit
A quality audit is an independent review conducted to compare some aspect of quality
performance with a standard for that performance. the ISO 8402 – 1986 aspects : quality audit is
a systematic, independent examination and evaluation to determine quality for suitable
objectives.
Purpose of quality audit
 Plans for attaining for the products
 Whether products are fit for use and safety for the user.
 Standard and regulation defined by government agencies, industry associations and
professional societies are followed.
 There is conformance to specifications. 
 Procedures are adequate and are being followed. 
 The dare system provides accurate and adequate information on quality to all concerned.
 Deficiencies are identifier and corrective action is taken. 
 Opportunities for improvement are identified and appropriate personnel alerted.

Quality Surveys:
Audits, as described above, are concerned almost exclusively with conformance of
various sorts: conformance of plans to good planning and conformance of executive to plan.
Such audits answers to some vital questions and must be regarded as an essential element of
quality assurance. These audits are, however, not sufficient to provide full assurance to upper
management that all is well with respect to quality since they commonly are not concerned with
such matters as:
 Relative standing in the market place with regard to quality. 
 Analysis of users’ situations with respect to cost, convenience, etc., over the life of the
product.
 Opportunity for reducing costs of poor quality. 
 Challenge product development, design engineering and other monopolistic departments
on quality adequacy cost etc.,
Product Audit
Product audit is an independent evaluation of product quality to determine its fitness for
use and conformance to specification.
The purpose of product auditing is to
 Estimating the quality level as delivered to customers.
 Evaluating the effectiveness of the inspection decisions in determining conformance to
specifications.
 Providing additional assurance beyond routine inspection activities. 
Quality circles
A group of employees who perform similar duties and meet at periodic intervals, often
with management, to discuss work-related issues and to offer suggestions and ideas for
improvements, as in production methods or quality control, called quality circle.
Therefore the main objectives of QC are:
• To improve quality and productivity.
• To reduce the cost of products or services by waste reduction, safety, effective utilization
of resources, avoiding unnecessary errors and defects.
• To identify and solve work-related problems and interfere with production as a team.
• To tap the creative intelligence of people working in the org. and make full use of human
resources.
• To improve communication within the organization.
• To improve employees loyalty and commitment to the organization and its goals.
(Promoting Morale of employees)
• To build a happy, bright, meaningful work environment.
• To satisfy the human needs of recognition, achievement and self development.
 The benefits of introducing a quality control circle program in the work place are many. 
• Heightened quality awareness reveals faults in the system that might obstruct good
practices.
Basic Organizational Structure of QC:
A quality circle should have an appropriate organizational structure for its effective and efficient
performance. The structure may vary from one org. to another, but it is useful to have basic
framework as a model:
In a typical organization, the structure of a QC may consist of the following elements:
1. Steering committee – Gen. manager / works manager, rep. from top management, rep. of

human resource development and a rep. of employees’ union.
2. Coordinator: an administrative officer / personnel officer from middle level
management.
3. Facilitator: senior supervisory officer / foreman. A facilitator may manage up to 10
circles. A facilitator is usually from one of the three departments – quality control,
production or training.
4. Circle Leader: circle leaders may be from the lowest level of supervisors. A circle leader
organises and conducts circle activities.
5. Circle members: line and / or staff workers ( circle members should attend all meetings
as far as possible, offer suggestions and ideas, participate actively in group processes, and
attain training seriously.
How to implement quality circle:
• Firstly, the management is informed about the quality control circle process that is being
planned.
• A committee is formed, and key persons such as a coordinator and in-house coach are
selected.
• The scope is defined, and areas of application identified.
• First-line supervisors in the identified areas are given QCC presentations. It is important
to make these impressive, and valuable tips on the subject are available.
• This is followed up with extensive training for coordinators and middle management on
the process and their roles.
• Employees are invited to become members of a circle, and trained suitably once they sign
up. Thus, a circle is formed and begins work. These may give rise to other circles.
• Problems are discussed and solved in a systematic manner in the QCCs. It is very
important that solutions are implemented as quickly as possible, to maintain the
momentum. Usually QCC programs must operate in all sections of the company i.e., in
the offices, service operations and manufacturing.
But remember, while the size of the company is not important to a program's success, the
following factors certainly are:
• Voluntary participation
• Management support.
• Employee empowerment.
• Training programs.
• Team work.
• Problem solving skills
Statistical Quality Control & Control Charts For Variables
Meaning of Statistical Quality Control

It is desirable that the process itself is adjusted in such a way that the number of
defectives remain within acceptable limits. This is based on preventive priniciples.in such a
situation, one can even dispense with inspection of individual components/prodects so long as
one are assured tha the defectives with not exceed pre determined caluse with a specified
confidence level. The method used for this purpose is called Statistical Quality Control (SQC).

Statistical Quality Control (SQC)
Is a method of monitoring, controlling, and improving a process through statistical
analysis Statistical quality Control, also called statistical process control, uses statistical to
determine when processes or product quality deviate from specifications.
Advantages of Statistical Quality Control
Statistical Quality Control is one of the tools for scientific management and has following
main advantages over 100 per cent inspection:
 Reduction in Costs: Since only a fractional production time out is inspected hence cost of
inspection is greatly reduced. 
 Greater Efficiency: It requires a lesser time and boredom as compared to the 100 per cent
inspection and hence the efficiency increases.
 Accurate Prediction: Specifications can easily be predicted for the future which is not
possible even with 100 per cent inspection. 
 Early Detection of Faults: The moment a sample point falls outside the control limits, it
is taken as a danger signal and necessary corrective measures are taken. Whereas in 100
per cent inspection unwanted variations in quality may be detected after numbers
defective items have already been produced. Thus by using the control charts we can
know from graphic picture that how the production is proceeding and where corrective
action is required and where it is not required.
Approaches of Statistical Quality Control

There are following two approaches of statistical quality control:
1. Statistical Process Control (SPC): Statistical process control involves inspecting a random
sample of the output from a process and deciding whether the process is producing products with
characteristics that fall with a predetermined range. SPC answers the question of whether the
process is functioning properly or not.
2. Acceptance Sampling: Acceptance sampling is the process of randomly inspecting a sample of
goods and deciding whether to accept the entire lot based on the results. Acceptance sampling
determines where a batch of goods should be accepted or rejected. SPC can be defined as the
application of statistical techniques to control a process. The focus being on the process and the
product as it is being produced.
Statistical Process Control (SPC)
Introduction
Statistical process control is defined as the application of statistical techniques to
determine whether a process is functioning as desired. World-class companies’ early inspection
with Statistical Process Control to monitor quality and detect and correct abnormalities. Using
statistical process control, the process is monitored through sampling.
SPC uses control charts to determine if a process is within controlled parameters.
 If is determined that a process is ‘out of control’.
 SPC provides the opportunity to investigate and determine the cause of this condition.
 When the root cause of the problems is determined, a strategy can be identified to correct
it.
 Adjustments can be made to the process so that process is unable to produce defective
parts.
Control Charts for Variables
Two charts are used together:

R-chart ("range chart") and X barchart ("average chart")
Both the process variability (measured by the R-chart) and the process average (measured by the
X bar chart) must be in control before the process can be said to be in control. Process variability
must be in control before the X bar chart can be developed because a measure of process
variability is required to determine the -chart control limits.
R-Chart for Process Variability:
UCLR = D4(R)
LCLR = D3(R)
where is the average of past R values, and D3 and D4 are constants based on the sample size
Chart for Process Average:
UCLR = X bar + A2(R)

LCL = X bar - A2(R)
where X bar is the average of several past values, and A2 is a constant based on the sample size
Control charts for attributes Meaning of Control Chart

A Control Chart is a statistical technique for controlling the quality of a product being
manufactured. It was first devised by Dr. Walter A.Shewart after whose name these chart are
also called Shewar charts. In a relatively short period, this technique of quality control has found
wide acceptance particularly in the USA and Europe.
The main advantage of a control chart is that it can predict the rejects when they are
likely to occur, which enables corrective action to be taken before a defective product is actually
product is actually produced. It is based upon the fact that variability does exist in all the
respective processes.
Characteristics of Control Charts
A control Chart is a time-ordered diagram to monitor a quality characteristic, consisting of:
 A nominal value, or centre line, the average of several past samples.
 Two control limits used to judge whether action is required, an Upper Control Limit
(UCL) and a Lower Control Limit (LCL).
 Data points, each consisting of the average measurement calculated from a sample taken
from the process, ordered overtime
Types of Control Charts

If the quality characteristic Q is capable of quantitative measurement, the control chart is
known as control chart for variables and if the quality characteristics Q cannot be measured
quantitatively, the control chart is known as control chart for attributes. The items can only be
classified as defective or non-defective, etc. Control charts are Two Types:
Control is maintained through the use of control charts. The charts have upper and lower control
limits and the process is in
control if sample measurements are between the limits.
Control Charts for Attributes
P Charts - measures proportion defective.
C Charts - measures the number of defects/unit.
Control Charts for Variables
X bar and R charts are used together - control a process by ensuring that the sample average and
range remain within
limits for both.
Basic Procedure
1. An upper control limit (UCL) and a lower control limit (LCL) are set for the process.
2. A random sample of the product or service is taken, and the specified quality characteristic is
measured.
3. If the average of the sample of the quality characteristic is higher than the upper control limit
or lower than the lower control limit, the process is considered to be "out of control".
CONTROL CHARTS FOR ATTRIBUTES
p-Charts for Proportion Defective
p-chart: a statistical control chart that plots movement in the sample proportion defective (p) over
time
Procedure:
1. take a random sample and inspect each item
2. determine the sample proportion defective by dividing the number of defective items by the
sample size
3. plot the sample proportion defective on the control chart and compare with UCL and LCL to
determine if process is out of control
The underlying statistical sampling distribution is the binomial distribution, but can be
approximated by the normal distribution with:
mean = u = np (Note - add the bars above the means used in all the equations in this section)
standard deviation of p: sigmap = square root of (p(1 -p ) / n)
where p = historical population proportion defective and n = sample size
Control Limits:
UCL = u + z sigmap
LCL = u - z sigma p
z is the number of standard deviations from the mean. It is set based how certain you wish to be
that when a limit is exceeded it is due to a change in the process proportion defective rather than
due to sample variability. For example:
If z = 1 if p has not changed you will still exceed the limits in 32% of the samples (68%
confident that mean has changed if the limits are exceeded.
z = 2 - limits will be exceeded in 4.5 (95.5 % confidence that mean has changed)
z = 3 - limits will be exceeded in .03 (99.7% confidence)
c-Charts for Number of Defects Per Unit

c-chart: a statistical control chart that plots movement in the number of defects per unit.
Procedure:
1. randomly select one item and count the number of defects in that item
2. plot the number of defects on a control chart
3. compare with UCL and LCL to determine if process is out of control
The underlying sampling distribution is the Poisson distribution, but can be approximated by the
normal distribution with: mean = c
standard deviation = square root of c
where c is the historical average number of defects/unit
Control Limits:

UCL = c + z c
LCL = c - z c
Acceptance Sampling Plans
Acceptance sampling is based on the premise that a sample represents the whole lot from
which the former is drawn. In this method samples are taken out and are carefully inspected to
detect the defects.
On the basis of number of defects found, the lot is accepted or rejected. If defects are
few, lor is accepted. It is rejected when defects are more. Thus acceptance sampling is used to
take decisions regarding acceptance or rejection of a lot without having to examine the entire lot,
thereby providing economyof inspection.
Acceptance sampling technique
Acceptance sampling inspection can be either sampling by attributes or sampling by
variables.
Sampling plans for attributes or variables: quality control inspectors are normally forced
to resort to sampling inspection of lots because of the cost of 100% inspection andlor the
destructive nature of inspection or testing which rules out 100% inspection.
Types of acceptance sampling plans
 Single sampling plan
 Double sampling plan
 Sequential sampling plan
Single sampling plan:
A single sampling plan for a single sample is specified by two numbers n and c. the
number of items that should be included in a single random sample from the lot being inspected
is the sample size n the acceptance sampling c specifies the maximum number of defectives that
may be permitted in the sample if the lot is to be accepted. If the number of defectives found in
the sample is more than c the entire lot will be rejected or inspected 100 %.
Double sampling plan

In double sampling, one small sample is drawn initially. Two acceptance numbers c1 and
c2 (i.e c2>c1) are selected.if the number of defectives (c1) in the first sample of size (n1) is less
than or equal to c1the lot is accepted. If the number of defectives (c1) is greater than (c2) the lot
is rejected.if the number of defectives (c1) more than c1 but less than c2 a second large sample
of size n2 (i.e n2>n1) is taken and inspected. If the number of defectivs in the second sample is
c2, then the total number of defectives (c1+c2)from the two samples with compared with c2.
If c1+c2 >c2 the lot is rejected and if c1+c<- c2 the lot is accepted.
Sequential sampling
In sequential sampling plan units are randomly selected from the lot and tested one by
one. After each one is tested a reject, accept or continus sampling decision is made. Ths process
continues until the lot os accepted or rejected
Suppose when unitsar erandomly drawn and inspected, the first defective is the 15 th unit,
which is in the “continue sampling” zone in the figure and so we continue to sample further units
from the lot. If the second defective is the 25 th unit which is again in the continue sampling
zone and we still continue sampling if the 4 th defective is the 40th unit which put us in the reject
lot zone, therefore the lot is rejected.
Multiple Sampling Plans:

A lot is accepted or rejected based upon the results obtained from several samples (of parts)
drawn from the lot.
i. A multiple sampling plan accepts or rejects a lot upon the results obtained from several samples (of
component parts drawn from a lot).

ii. Multiple sampling plan procedure.
Characteristics of multiple sampling plan:

 A multiple sampling plan involves smaller first samples than single or double sampling
plans.
 A multiple sampling plan is comparatively difficult to design and explain, and expensive
to administer.
 It involves a higher overhead cost as compared to single and double sampling plans.
 It involves more record keeping.
 In theory, multiple sampling may often permit lower total inspection than double
sampling for a given degree of protection because of smaller sample sizes required.
 New methods, which simplify multiple sampling, such as automatic sampling boxes may
result in greatly improved efficiency in administering multiple sampling plans.
Purchase Management
Objectives
 To maintain uninterrupted flow of materials to support the development schedules.
 To procure materials economically at a cost consistent with the quality and service required.
However, generally all purchases may be attempted at the lowest cost.
 To provide the necessary expertise, advice, information to the Curators and Education Officers
with regard to the best quality of material available in the market, supplier’s capability and
performance etc. To develop and maintain good buyer-seller relationship.
 To promote source development.
 To maintain NCSM’s reputation and credibility in the market by fair dealings and prompt
payments.
Functions :
The main functions of the Purchase Department are defined as follows:
1. Procurement of stores through indigenous and foreign sources as required in accordance with the
rules in force.
2. Checking of requisitions/purchase indents.
3. Selection of suppliers for issue of enquiries.
4. Issuing enquiries/tenders and obtaining quotations.

5. Analysing quotations and bids etc., and preparation of comparative statement (quotation charts).
6. Consultation with the Indentor for selection and approval of quotations and with Accounts
Officer for pre-audit.
7. Negotiating contracts.
8. Checking legal conditions of contracts. Consulting Administrative Officer or Secretary, NCSM –
where necessary.
9. Issue of Purchase Orders.
10. Follow-up of purchase orders for delivery in due time
11. Verification and passing of suppliers’ bills to see that payments are made promptly.
12. Correspondence and dealing with suppliers, carriers etc., regarding shortages, rejections etc.,
reported by the Stores Department.
Important Steps in Purchasing and Receiving Procedure of Materials
Purchasing procedure varies with different business forms, but all of them follow a
general pattern in the purchase and receipt of materials and payment of obligations. The
important steps in purchasing and receiving procedure are as follows (Fig.9.1).
STEP-I: Purchase Requisition:
A form known as purchase requisition is commonly used as a formal request to the
purchasing department to order goods or services. The purchase requisition serves three general
purposes:
 It fixes the responsibility of the department/ personnel making the
purchase requisition
 It can be used for future reference.
 It automatically starts the purchasing process and informs the purchasing
department of the need for the purchase of materials.
Usually, purchase requisitions are prepared by the storekeepers for regular stores items
which are below or approaching the minimum level of stock or to replace stock of materials and
parts in stores. Purchase requisitions may also originate with department heads that require
special equipment or materials not stocked as regular item
The production control department can also give requisitions for the purchase of
specialized materials. A typical purchase requisition contains details, such as number, data,
department, quantity description, specification, signature of the person initiating the requisition,
and signature of one or more officers approving the purchase Copies of the purchase requisition
are sent to the purchasing department and accounting department.
STEP-II: Purchase order:
After the requisition is received duly approved, the purchasing department places an
order with a supplier, offering to buy certain materials at stated prices and terms. For routine
purchases, the order is placed through established supplier. In other cases, the purchasing
department may ask for bids or send out requests for quotation before placing the order.
The objective is to secure the highest quality materials at the lowest price and due
consideration is given to terms and delivery dates. The purchase order is formal contract for the
supply of materials.
The order should clearly state the materials required and the price and provide
information, such as delivery period and the department for whom the materials are purchased
(Fig.9.3.).
The vendor supplier returns an acknowledgement of order accepting it. This vendor may
inform of any changes in the order about which both parties should agree in the form of an
amendment to order. Copies of the purchase order are sent to the departments concerned, the
sender of the purchase requisition, and the stores department advising them to expect the
materials as specified and where to send them upon receipt. Copies, of the purchase requisition
and the purchase order are sent to the accounting department, to be used in checking the
supplier’s invoice when a voucher is being prepared for payment.
STEP-III: Receiving Materials:
The receiving department performs the function of unloading and unpacking materials
which are received by an organisation. In this task, the receiving department does many
activities, such as counting materials received, making physical inspection of goods received,
comparing goods received with the description on the purchase order, making a record of goods
received, notifying the purchasing department of discrepancies discovered and damage in transit.
Both the condition and quality of the materials may need checking and for materials or
parts with a high degree of accuracy and performance, a formal inspection may be necessary.
This will need an inspection report which is sometimes incorporated in the receiving report,
indicating the items accepted and rejected, with reason. Two functions are performed by the
receiving report.
(i) It notifies the accounting department that the materials have been received and that a voucher
can be prepared for payment.
(ii) It determines and places initial responsibility for materials on the receiving clerk and the
receiving clerk continues to have this responsibility until delivery is made to the store room. In
some business firms, the store department functions as the receiving department also.
Several copies of the receiving report or goods received note (Fig. 9.4) are prepared; one
going to each department interested in the arrival of materials, including stores, buying and
accounts departments.
STEP-IV: Approval of Invoices:
Invoice approval is an important step in a materials control programme. It indicates that
goods according to the purchase order have been received and payment can now be made.
However, if the goods or equipments received are not of the type ordered, or are not in
accordance with specifications, or damaged, the purchasing department issues a return order
indicating that the goods are to be returned to the supplier.
When the invoices of goods are received by the purchasing department, the process of

gathering the relevant documents connected with each purchasing and the preparation of the
voucher begin. In some business firms, this task is done by the purchasing department and in
some firms the accounting department performs this task.
A good system of materials control, however, requires that purchase invoices should be
verified by a responsible centre other than the purchasing department to avoid any possibility of
collusion or malpractice. For the purpose of verification, the basic information is communicated
to the checking responsibility centre in the form of a copy of the purchase order for price,
quantity, description of goods, delivery period of time, payment terms and special conditions.
STEP-V: Making Payment:
After the purchase invoice total is approved, the process of making payment begins.
Payment depends on the terms agreed upon on any particular order, and any term which differs
from normal practice should be considered individually.
When it is found that items written on the invoice qualify for payment, a remittance advice is
prepared after providing for deduction of discounts, if any. A cheque is drawn for the net
amount.
The cheque is sent to the supplier with a copy of the remittance advice so that he receives
a clear indication of the composition of the payment. The necessary accounting entries are made
in individual bought ledger accounts.
Types Of Inventory control systems
Inventory control systems are technology solutions that integrate all aspects of an
organization’s inventory tasks, including shipping, purchasing, receiving, warehouse storage,
turnover, tracking, and reordering. While there is some debate about the differences between
inventory management and inventory control, the truth is that a good inventory control system
does it all by taking a holistic approach to inventory and empowering organizations to utilize
lean practices to optimize productivity and efficiency along the supply chain while having the
right inventory at the right locations to meet customer expectations.
That being said, there are two different types of inventory control systems available today:
perpetual inventory systems and periodic inventory systems. Within those systems, two main
types of inventory management systems – barcode systems and radio frequency identification
(RFID) systems – used to support the overall inventory control process:
 Main Inventory Control System Types:

 Perpetual Inventory System
 Periodic Inventory System
 Types of Inventory Management Systems within Inventory Control Systems:
 Barcode System
 Radio Frequency Identification (RFID) System
Inventory control systems help you track inventory and provide you with the data you need to
control and manage it. No matter which type of inventory control system you choose, make sure
that it includes a system for identifying inventory items and their information including barcode
labels or asset tags; hardware tools for scanning barcode labels or RFID tags; a central database
for all inventory in addition to the ability to analyze data, generate reports, and forecast demand;
and processes for labeling, documenting, and reporting inventory along with a proven inventory

methodology like just-in-time, ABC analysis, first-in, or first out (FIFO), or last-in-first-out
(LIFO). Read on to learn more about the four types of inventory control systems.
Perpetual Inventory System
When you use a perpetual inventory system, it continually updates inventory records and
accounts for additions and subtractions when inventory items are received, sold from stock,
moved from one location to another, picked from inventory, and scrapped. Some organizations
prefer perpetual inventory systems because they deliver up-to-date inventory information and
better handle minimal physical inventory counts. Perpetual inventory systems also are preferred
for tracking inventory because they deliver accurate results on a continual basis when managed
properly. This type of inventory control system works best when used in conjunction with a
database of inventory quantities and bin locations updated in real time by warehouse workers
using barcode scanners.
There are some challenges associated with perpetual inventory systems. First, these systems
cannot be maintained manually and require specialized equipment and software that results in a
higher cost of implementation, especially for businesses with multiple locations or warehouses.
Periodic maintenance and upgrades are necessary for periodic inventory systems, which also can
become costly. Another challenge of using a perpetual inventory system is that recorded
inventory may not reflect actual inventory as time goes by because they do not use regular
physical inventory counts. The result is that errors, stolen items, and improperly scanned items
impact the recorded inventory records and cause them not to match actual inventory counts.
Periodic Inventory System
Periodic inventory systems do not track inventory on a daily basis; rather, they allow
organizations to know the beginning and ending inventory levels during a certain period of time.
These types of inventory control systems track inventory using physical inventory counts. When
physical inventory is complete, the balance in the purchases account shifts into the inventory
account and is adjusted to match the cost of the ending inventory. Organizations may choose
whether to calculate the cost of ending inventory using LIFO or FIFO inventory accounting
methods or another method; keep in mind that beginning inventory is the previous period’s
ending inventory.
There are a few disadvantages of using a periodic inventory system. First, when physical
inventory counts are being completed, normal business activities nearly become suspended. As a
result, workers may hurry through their physical counts because of time constraints. Errors and
fraud may be more prevalent when you implement a periodic inventory system because there is
no continuous control over inventory. It also becomes more difficult to identify where
discrepancies in inventory counts occur when using a periodic inventory control system because
so much time passes between counts. The amount of labor that is required for periodic inventory
control systems make them better suited to smaller businesses.
Barcode Inventory Systems

Inventory management systems using barcode technology are more accurate and efficient than
those using manual processes. When used as part of an overall inventory control system, barcode
systems update inventory levels automatically when workers scan them with a barcode scanner
or mobile device. The benefits of using bar-coding in your inventory management processes are
numerous and include:
 Accurate records of all inventory transactions

 Eliminating time-consuming data errors that occur frequently with manual or paper systems
 Eliminating manual data entry mistakes
 Ease and speed of scanning
 Updates on-hand inventory automatically
 Record transaction histories and easily determine minimum levels and reorder quantities
 Streamline documentation and reporting
 Rapid return on investment (ROI)
 Facilitate the movement of inventory within warehouses and between multiple locations and from
receiving to picking, packing, and shipping
Radio Frequency Identification (RFID) Inventory Systems
Radio frequency identification (RFID) inventory systems use active and passive technology to
manage inventory movements. Active RFID technology uses fixed tag readers throughout the
warehouse; RFID tags pass the reader, and the movement is recorded in the inventory
management software. For this reason, active systems work best for organizations that require
real-time inventory tracking or where inventory security has been an issue. Passive RFID
technology, on the other hand, requires the use of handheld readers to monitor inventory
movement. When a tag is read, the data is recorded by the inventory management software.
RFID technology has a reading range of approximately 40 feet with passive technology and 300
feet with active technology.
RFID inventory management systems have some associated challenges. First, RFID tags are far
more expensive than barcode labels; thus, they typically are used for higher value goods. RFID
tags also have been known to have interference issues, especially when tags are used in
environments with a lot of metal or liquids. It also costs a great deal to transition to RFID
equipment, and your suppliers, customers, and transportation companies need to have the
required equipment as well. Additionally, RFID tags carry more data than barcode labels, which
means your system and servers can become bogged down with too much information.
When choosing an inventory control system for your organization, you first should decide
whether a perpetual inventory system or periodic inventory system is best suited to your needs.
Then, choose a barcode system or RFID system to use in conjunction with your inventory
control system for a complete solution that will enable you to have visibility into your inventory
for improved accuracy in scanning, tracking, recording, and reporting inventory movement.
Inventory Control System JIT, VMI

Inventory management involves the development and administration of policies, systems
and procedures which will minimize total costs relative to inventory decisions and related
functions such as customer service requirements, production scheduling, purchasing and traffic.

Inventory control, on the other hand is defined in a narrower sense than inventory management
and pertains primarily to the administration of established policies, systems and procedures.
Inventory control techniques are employed by the inventory control organization within
the framework of one of the basic inventory models like fixed order quantity system or fixed
order period system. It represents the operational aspect of inventory management and help
realize the objectives of inventory management control.
Several techniques of inventory control are in use and it depends on the convenience of
the firm to adopt any of the techniques. The techniques most commonly used are the following.
 ABC classification
 HML classification
 VED classification
 SDE
 FSN
ABC Analysis
One of the widely used techniques for control of inventories is the Always Better Control
analysis. The objective of ABC control is to vary the expenses associated with maintaining
appropriate control according to the potential savings associated with a properlevel of such
control.
ABC control technique divides inventory into three categories A,B and C based on their
annual consumption value. The inspiration behind the ABC analysis has been drawn from
Vilfredo Pareto an Italian economist and socialigist(1842-1923) who generated some highly
debatable concepts of economics and sociology. One that is most interesting to a student of
inventory management concept known as Pareto’s Laws.
The following procedure is suggested for developing an ABC analysis.
1. List each item carried in inventory by number or some other designation
2. Determine the annual volume of usage and rupee value of each item
3. Multiply each items annual volume of usage by its rupee value.
4. Compute each items percentsge of the total inventory in terms of annual usage in rupees
5. Select the top 10 percent of all items which have the highest rupee percentages and classify
them as A items
6. Select the next 20 per cent of all items with the next highest rupee percentages and designate
them B items
7. The next 70 percent of all items with the lowest rupee percentages are C items
HML classification
The High, Medium and Low classification follows the same procedure as is adopted in
ABC classification. Only difference id that in HML classification unit value is the criterion and
not the annual consumption value. The items of inventory should be listed in descending orderof
unit value and it is up to the management to fix limits for three categories example high items are
above rs 2000, medium items are rs 1000 to 2000 and less than rs 1000 low items.
VED classification:
The VED analysis is done to determine the criticality of an item and its effect on
production and other services. It is specially used for classification of spare parts. If a part is
vital, it is given V classification if it is essential then it is given E classification and if it not so
essential the part is given D classification. For V items a large stock of inventory is generally
maintained while for D items minimum stock is enough.
SDE classification
The SDE analysis is based upon the availability of items and is very useful in the context
of scarcity of supply. In the analysis S refers to scarce items generally imported and those are in
short supply D refers to difficult items which are available indigenously but are difficult items to
procure. Items from distant places fall in D category. E refers to items which are easy to acquire
from local markets.
FSN Analysis
Fast moving, slow moving and non moving. Here classification is based on the pattern of
issues from stores and is useful in controlling obsolescence.FSN analysis is helpful in identifying
active items which need to be reviewed regularly and surplus items which have to be examined
further. Non moving items may be examined further and their disposal can be considered.
SOS Analysis
S stands for seasonal items and OS stands for Off seasonal items. It may be advantageous
to buy seasonal items at low prices and keep inventory or buy at high price during off seasons.
Based on the fluctuation in prices and availability, suitable decision has to be taken regarding
how much to purchase and at what prices.
XYZ analysis
XYZ analysis helps to control average inventory value by focusing efforts to reduce the
inventory of X items which are usually 10 % of the number of items stored, but accounting for
70 % of the total inventory value. Similarly Y items are 20 % of the number of items stored and
account for 20% of the total inventory value. The remaining 70 % of the items accounting for
10% of the total inventory value are Z items.
Just-in-time (JIT)
Introduction
Just-in-time (JIT) is easy to grasp conceptually, everything happens just-in-time. For
example consider my journey to work this morning, I could have left my house, just-in-time to
catch a bus to the train station, just-in-time to catch the train, just-in-time to arrive at my office,
just-in-time to pick up my lecture notes, just-in-time to walk into this lecture theatre to start the
lecture. Conceptually there is no problem about this, however achieving it in practice is likely to
be difficult!
So too in a manufacturing operation component parts could conceptually arrive just-in-

time to be picked up by a worker and used. So we would at a stroke eliminate any inventory of
parts, they would simply arrive just-in-time! Similarly we could produce finished goods just-in-
time to be handed to a customer who wants them. So, at a conceptual extreme, JIT has no need
for inventory or stock, either of raw materials or work in progress or finished goods.
Obviously any sensible person will appreciate that achieving the conceptual extreme
outlined above might well be difficult, or impossible, or extremely expensive, in real-life.
However that extreme does illustrate that, perhaps, we could move an existing system towards a
system with more of a JIT element than it currently contains. For example, consider a
manufacturing process - whilst we might not be able to have a JIT process in terms of handing
finished goods to customers, so we would still need some inventory of finished goods, perhaps it
might be possible to arrange raw material deliveries so that, for example, materials needed for
one day's production arrive at the start of the day and are consumed during the day - effectively

reducing/eliminating raw material inventory.
Adopting a JIT system is also sometimes referred to as adopting a lean production

system. More about JIT can be found here, here, here and here.
JIT philosophy
 elimination of waste in its many forms

 belief that ordering/holding costs can be reduced
 continuous improvement, always striving to improve
Elements of JIT
 regular meetings of the workforce (e.g. daily/weekly)

 discuss work practices, confront and solve problems
 an emphasis on consultation and cooperation (i.e. involving the workforce) rather than
confrontation
 modify machinery, e.g. to reduce setup time
 reduce buffer stock
 expose problems, rather than have them covered up
 reveal bad practices
 take away the "security blanket" of stock
Benefits
The benefits of JIT are:
 better quality products

 quality the responsibility of every worker, not just quality control inspectors
 reduced scrap and rework
 reduced cycle times
 lower setup times
 smoother production flow
 less inventory, of raw materials, work-in-progress and finished goods
 cost savings
 higher productivity
 higher worker participation
 more skilled workforce, able and wiling to switch roles

 reduced space requirements
 improved relationships with suppliers
Vendor-Managed Inventory (VMI)

Vendor-managed inventory (VMI) is a family of business models in which the buyer of a product
provides certain information to a supplier (vendor) of that product and the supplier takes full
responsibility for maintaining an agreed inventory of the material, usually at the buyer's consumption
location (usually a store). A third-party logistics provider can also be involved to make sure that the buyer
has the required level of inventory by adjusting the demand and supply gaps.
As a symbiotic relationship, VMI makes it less likely that a business will unintentionally become
out of stock of a good and reduces inventory in the supply chain. Furthermore, vendor (supplier)
representatives in a store benefit the vendor by ensuring the product is properly displayed and store staff
are familiar with the features of the product line, all these while helping to clean and organize their
product lines for the store. VMI can also decrease the magnitude of the bullwhip effect.
One of the keys to making VMI work is shared risk. In some cases, if the inventory does not sell,
the vendor (supplier) will repurchase the product from the buyer (retailer). In other cases, the product may
be in the possession of the retailer but is not owned by the retailer until the sale takes place, meaning that
the retailer simply houses (and assists with the sale of) the product in exchange for a predetermined
commission or profit (sometimes referred to as consignment stock). A special form of this commission
business is scan-based trading, where VMI is usually applied but its use is not mandatory.
This is one of the successful business models used by Walmart and many other big box retailers.
Oil companies often use technology to manage the gasoline inventories at the service stations that they
supply (see Petrolsoft Corporation). Home Depot uses the technique with larger suppliers of
manufactured goods. VMI helps foster a closer understanding between the supplier and manufacturer by
using electronic data interchange formats, EDI software and statistical methodologies to forecast and
maintain correct inventory in the supply chain.
Vendors benefit from more control of displays and more customer contact for their employees;
retailers benefit from reduced risk, better store staff knowledge (which builds brand loyalty for both the
vendor and the retailer), and reduced display maintenance outlays.
Consumers benefit from knowledgeable store staff who are in frequent and familiar contact with
manufacturer (vendor) representatives when parts or service are required. Store staff have good
knowledge of most product lines offered by the entire range of vendors. They can help the consumer
choose from competing products for items most suited to them and offer service support being offered by
the store.
At the goods' manufacturing level, VMI helps prevent overflowing warehouses or shortages, as
well as costly labor, purchasing and accounting. With VMI, businesses maintain a proper inventory, and
optimized inventory leads to easy access and fast processing with reduced labor costs.
What is Vendor Managed Inventory?
Vendor Managed Inventory (VMI) is a streamlined approach to inventory management and order
fulfillment. VMI involves collaboration between suppliers and their customers (e.g., distributor, retailer,
OEM, or product end user) which changes the traditional ordering process.
The goal of VMI is to align business objectives and streamline supply chain operations for both
suppliers and their customers. The business value is a direct result of increased information flow:

The system monitors actual activity with measurements against those objectives. The system must report
the same information to both the supplier and the customer so that the process is highly transparent.
Information should always be available to both parties on demand. Ideally, the VMI system should also
provide
How Doesexception alerts to both parties when measurements get outside an acceptable range or when a
VMI Work?
problem with the data appears.
The basic Vendor Managed Inventory (VMI) process can be described in terms of the following steps:
data communications,
Important calculations, monitoring and reporting.
Considerations
As with most mission-critical operational systems, “the devil is in the details” when it comes to
performing VMI. In order for this seemingly simple process to run smoothly, several important
capabilities are required:
 Close monitoring of data transmission and data validity (e.g. excessive quantities)
 The flexibility to use multiple customer and supplier data formats (e.g. EDI, XML, flat files, etc.)
 The flexibility to use multiple data communication methodologies (e.g. Value Added Networks, AS2,
FTP, etc.)
 The ability to quickly adapt when customer or supplier business systems change
Data Communications and Calculations
The VMI process starts with the customer sending a Product Activity Report (1). This report contains
demand information such as sales and transfers, along with inventory position information such as on-
hand, on-order and in-transit for the items that changed since the last report.
The VMI software analyzes the data and creates recommended replenishment orders (2). The
recommendations are based on algorithms which use factors such as forecasts, frequency of sale, and
dollar velocity of sales. Ideally, these processes include:
 Periodic (e.g. weekly) review and calculation of order points and order quantities based on movement
data and special information such as promotions, seasonality, etc.
 Frequent (e.g. daily) comparison of on-hand inventory to order point and generation of recommended
replenishment orders
The supplier's planner reviews the recommended orders and any exception conditions before approving
appropriate orders (3). The VMI system then sends:
 A Purchase Order to the supplier (4)
 A Purchase Order Acknowledgment to the customer (5)
Monitoring and Reporting
When trading partners begin VMI, they start by agreeing upon objectives for:

UNIT - IV
Basic concepts of Quality
Quality may be defined as the sum total of features of a product which influence its ability
to satisfy a given demand.
Basically, the quality of products and services is not defined or determined by producing
firms, it is determined by customers. The quality of product or service is a customers perception
of the degree to which the product or seervice meets his or her experience.
Dimensions Of Product Quality

 Performance: how wll the product or service perform and meet the customers intended
use.
 Features :The special characteristics that appeal to customers
 Reliability: The likelihood of breakdowns, malfunctions, or need for repairs. Higher the
reliability lesser will be the likelihood of breakdowns and malfunctions and better will be
the quality of the product.
 Servicibility:The speed, cost and convenience of repairs and maintenance. Higher the
servicibility better will be the quality of the product.
 Appearance: The effect or human senses, the look, feel, taste, smell or sound.
 Customer service:The treatment received by customers before, during and after the
sale.
 Safety: how well the product protects users before, during and after use.
Quality control:
Objectives:
 Minimum scrap or rework due to reduced defectives.
 Reduced cost of labor and material as a result of reduced defectives
 Uniform quality and reliability of product help in increasing sales turn over.
 Higher operation efficiency
 Better utillisaton of resources
 Better customer satisfaction and employee satisfaction
Quality Assurance:
Quality assurance is the activity of providing the evidence needed to establish confidence
that the quality related activities are being performed effectively.’it encompasses quality
planning, quality control, quality improvement, quality audit and reliability.
Ensuring quality
It involves action on several fronts. To be specific, quality control involves the following
steps:
Control of engineering quality:
1. Assist in the evaluation of customer requirements to arrive at a clear understanding of the
product quality objectives.
2. Review design documentation for conformance to design standards and practice and for
identification of potential quality problems.
3. Validate the accuracy and completeness of design proof tests and qualification tests

4. Control of purchased material quality
5. Assist in the evaluation and selection of potential suppliers or sub contractos.
6. Review purchase order and subcontracts for correctness and completeness of quality
requirements.
7. Assure that purchased material conforms to the requirement of purchase orders and
specifications.
8. Control of manufacturing quality
9. Evaluate and approve manufacturing equipment, processes, testing and test equipment.
10. Assure that measuring and test equipment is properly calibrated and maintained
11. Establish points of inspection and tests at selected points in the production processes
12. Actions supporting the product after delivery
13. Assure that product service specifications are clear and correct
14. Assure that spare parts conform to quality requirements
15. Assure that repair and modification are performed inn accordance with company quality
requirements.
Juran’s quality Trilogy
The famous Quality Trilogy was first developed and written by Joseph M. Juran. As you all
know, Juran is a management consultant and an Engineer, specialized in Quality management.
The Quality Trilogy explained by Juran is: Any organization taking up a journey in Quality
Management will have to have three Processes in place, which are: i) Quality Planning ii) Quality Control
and iii) Quality Improvement. Though the above three may sound similar, they have different objectives
and serve different purposes of Quality Management.
Philosophy:
 Top management commitment
 Costs of quality
 Quality triology
 10 steps for quality improvement
 Universal breakthrough sequence
Costs of quality
1. Prevention costs : costs of quality planning, new product review, training, process
planning, quality data and improvement projects
2. Appraisal costs: costs of incoming inspection, process inspection, finished goods
inspection, quality laboratories and calibration of instruments.
3. Internal failure costs: costs of scrap, rework, down grading, retest, downtime.
4. External failure costs: costs of warranty, returned goods, customer complaints,
allowances to customers for substandard quality products.
Quality triology
 Quality planning
 Quality control
 Quality improvement
Juran’s Quality Trilogy

The Quality Trilogy explained by Juran is: Any organization taking up a journey in Quality
Management will have to have three Processes in place, which are: i) Quality Planning ii) Quality Control
and iii) Quality Improvement. Though the above three may sound similar, they have different objectives
and serve different purposes of Quality Management.

Let us have a look at these components one by one:
Juran’s Quality Trilogy Components
Quality Planning:
As with all management activities and processes, Quality journey begins with planning the
activities that needs to be done to adhere to the Vision, Mission and Goals of the organization and to
comply with customer and compliance requirements.Quality Planning comprises of i) Understanding the
customer, ii) Determining their needs, iii) Defining the product/service features, specifications
iv)Designing the product/service v) Devising the processes that will enable to meet the customer needs.
Quality Control:
Once the processes are defined, the responsibility is now with operations, to adhere to the
processes and specifications required by the product/service. For this purpose periodic checks and
inspection has to be done, metrics need to be tracked, to ensure that the process is in control and meets
specifications and the metrics need the set target. Wherever there is a defect a corrective and preventive
action needs to be done, and root cause has to be arrived at. Also the deviation in the metrics and process
audit results need to be monitored and corrected for meeting the required target as specified by the
processes.
Quality Improvement:
However robust the process design and the product features are, there are chances that it may fail
to meet customer requirements and design targets. It might be due to some special causes that are present
in the system and might be due to change in business scenarios, customer requirements, market
completion and many more forces. The role of Quality Improvement is to identify and prove the need for
improvement from the exiting performance levels even though they meet the target and devise means and
ways to achieve the new target and implement them successfully.
All the three processes are interlinked and will affect one another in due course of the journey.
Thus the processes are corrected individually and streamlined to help each other in Quality Management
journey, the end objective.
Deming’s 14 principles
The concept of quality is at the core of many of our ideas about effective management and
leadership, and programs like Total Quality Management and Six Sigma have been at the heart of
many companies' success.
We know now that quality needs to be built into every level of a company, and become part of
everything the organization does. From answering the phone to assembling products and serving the end
customer, quality is key to organizational success.
This idea is very much a part of modern management philosophy. But where did this idea
originate? Before things like globalization and technological advances became so important,

competitive pressures were typically much lower, and companies were usually satisfied with focusing
their quality efforts on the production process alone. Now, quality is often thought to start and end with
the customer, and all points leading to and from the customer must aim for high-quality service and
interaction.
The 14 Points
1. Create a constant purpose toward improvement.
 Plan for quality in the long term. 
 Resist reacting with short-term solutions.
 Don't just do the same things better – find better things to do. 
 Predict and prepare for future challenges, and always have the goal of getting better.
2. Adopt the new philosophy.
 Embrace quality throughout the organization. 
 Put your customers' needs first, rather than react to competitive pressure – and design products
and services to meet those needs. 
 Be prepared for a major change in the way business is done. It's about leading, not simply
managing.
 Create your quality vision, and implement it.
3. Stop depending on inspections.
 Inspections are costly and unreliable – and they don't improve quality, they merely find a lack of
quality. 
 Build quality into the process from start to finish. 
 Don't just find what you did wrong – eliminate the "wrongs" altogether.
 Use statistical control methods – not physical inspections alone – to prove that the process is
working.
4. Use a single supplier for any one item.
 Quality relies on consistency – the less variation you have in the input, the less variation you'll
have in the output.
 Look at suppliers as your partners in quality. Encourage them to spend time improving their own
quality – they shouldn't compete for your business based on price alone. 
 Analyze the total cost to you, not just the initial cost of the product.
 Use quality statistics to ensure that suppliers meet your quality standards.
5. Improve constantly and forever.
 Continuously improve your systems and processes. Deming promoted the Plan-Do-Check-
Act approach to process analysis and improvement.
 Emphasize training and education so everyone can do their jobs better.
 Use kaizen as a model to reduce waste and to improve productivity, effectiveness, and safety. 
6. Use training on the job.
 Train for consistency to help reduce variation. 
 Build a foundation of common knowledge. 
 Allow workers to understand their roles in the "big picture."
 Encourage staff to learn from one another, and provide a culture and environment for effective
teamwork. 
7. Implement leadership.
 Expect your supervisors and managers to understand their workers and the processes they use.
 Don't simply supervise – provide support and resources so that each staff member can do his or
her best. Be a coach instead of a policeman. 
 Figure out what each person actually needs to do his or her best.
 Emphasize the importance of participative management and transformational leadership.
 Find ways to reach full potential, and don't just focus on meeting targets and quotas.
8. Eliminate fear.

 Allow people to perform at their best by ensuring that they're not afraid to express ideas or
concerns.
 Let everyone know that the goal is to achieve high quality by doing more things right – and that
you're not interested in blaming people when mistakes happen. 
 Make workers feel valued, and encourage them to look for better ways to do things. 
 Ensure that your leaders are approachable and that they work with teams to act in the company's
best interests.
 Use open and honest communication to remove fear from the organization. 
9. Break down barriers between departments.
 Build the "internal customer" concept – recognize that each department or function serves other
departments that use their output.
 Build a shared vision. 
 Use cross-functional teamwork to build understanding and reduce adversarial relationships.
 Focus on collaboration and consensus instead of compromise. 
10. Get rid of unclear slogans.
 Let people know exactly what you want – don't make them guess. "Excellence in service" is short
and memorable, but what does it mean? How is it achieved? The message is clearer in a slogan
like "You can do better if you try."
 Don't let words and nice-sounding phrases replace effective leadership. Outline your expectations,
and then praise people face-to-face for doing good work.
11. Eliminate management by objectives.
 Look at how the process is carried out, not just numerical targets. Deming said that production
targets encourage high output and low quality. 
 Provide support and resources so that production levels and quality are high and achievable. 
 Measure the process rather than the people behind the process.
12. Remove barriers to pride of workmanship.
 Allow everyone to take pride in their work without being rated or compared.
 Treat workers the same, and don't make them compete with other workers for monetary or other
rewards. Over time, the quality system will naturally raise the level of everyone's work to an
equally high level. 
13. Implement education and self-improvement.
 Improve the current skills of workers. 
 Encourage people to learn new skills to prepare for future changes and challenges.
 Build skills to make your workforce more adaptable to change, and better able to find and achieve
improvements. 
14. Make "transformation" everyone's job.
 Improve your overall organization by having each person take a step toward quality.
 Analyze each small step, and understand how it fits into the larger picture. 
 Use effective change management principles to introduce the new philosophy and ideas in
ISO 9000- 2000

Total quality management was practiced by many firms in the 1980’s, TQM became truly
pervasive in the 1990’s.The quality movement was augmented with the institution of Malcom
Balgride National Quality Award in 1986 under the direction of American Society of quality
control and the National Institute of Standards and Technology.
The ISO 9000 certification standards putforth by the International Organisation for
Standardization now play a major role in setting quality standards for global manufacturers in
particular.

Quality systems
A quality system is defined as “the collective plans, activities and events that are provided to
ensure that a product, process or service will satisfy given needs,
ISO 9000
A set of international standards on quality management and quality assurance, critical to
international business. ISO means equal (isotherm lines of a weather map show equal
temperatures) organizations certified under the ISO 9000 standard are assured to have quality
equal to their peer organizations. the standards have been adopted in the US as the ANSI/ASQC
9000 1994 series but are commonly referred to as ISO 9000. The standards are recognized by
over 100 countries including India and Japan.
Six sigma
Six Sigma is a set of techniques and tools for process improvement. It was introduced by
engineer Bill Smith while working at Motorola in 1986. Jack Welch made it central to his
business strategy at General Electric in 1995.] Today, it is used in many industrial sectors.
It seeks to improve the quality of the output of a process by identifying and removing the
causes of defects and minimizing variability in manufacturing and business processes. It uses a
set of quality management methods, mainly empirical, statistical methods, and creates a special
infrastructure of people within the organization, who are experts in these methods. Each Six
Sigma project carried out within an organization follows a defined sequence of steps and has
specific value targets, for example: reduce process cycle time, reduce pollution, reduce costs,
increase customer satisfaction, and increase profits.
The term Six Sigma (capitalized because it was written that way when registered as a
Motorola trademark on December 28, 1993) originated from terminology associated with
statistical modeling of manufacturing processes. The maturity of a manufacturing process can be
described by a sigma rating indicating its yield or the percentage of defect-free products it
creates. A six sigma process is one in which 99.99966% of all opportunities to produce some
feature of a part are statistically expected to be free of defects (3.4 defective features per million
opportunities). Motorola set a goal of "six sigma" for all of its manufacturing operations, and this
goal became a by-word for the management and engineering practices used to achieve it.
Six Sigma doctrine asserts:
 Continuous efforts to achieve stable and predictable process results (e.g. by reducing
process variation) are of vital importance to business success.
 Manufacturing and business processes have characteristics that can be defined, measured,
analyzed, improved, and controlled.
 Achieving sustained quality improvement requires commitment from the entire
organization, particularly from top-level management.
 Features that set Six Sigma apart from previous quality-improvement initiatives include:
 A clear focus on achieving measurable and quantifiable financial returns from any Six
Sigma project.
 An increased emphasis on strong and passionate management leadership and support.
 A clear commitment to making decisions on the basis of verifiable data and statistical
methods, rather than assumptions and guesswork.
The term "six sigma" comes from statistics and is used in statistical quality control,
which evaluates process capability. Originally, it referred to the ability of manufacturing
processes to produce a very high proportion of output within specification. Processes that operate

with "six sigma quality" over the short term are assumed to produce long-term defect levels
below 3.4 defects per million opportunities (DPMO). Six Sigma's implicit goal is to improve all
processes, but not to the 3.4 DPMO level necessarily. Organizations need to determine an
appropriate sigma level for each of their most important processes and strive to achieve these. As
a result of this goal, it is incumbent on management of the organization to prioritize areas of
improvement.
"Six Sigma" was registered June 11, 1991 as U.S. Service Mark 1,647,704. In 2005
Motorola attributed over US$17 billion in savings to Six Sigma.
Other early adopters of Six Sigma include Honeywell (today's Honeywell is the result of a
"merger of equals" of Honeywell and Allied Signal in 1999) and General Electric, where Jack
Welch introduced the method. By the late 1990s, about two-thirds of the Fortune
500 organizations had begun Six Sigma initiatives with the aim of reducing costs and improving
quality.
In recent years, some practitioners have combined Six Sigma ideas with lean
manufacturing to create a methodology named Lean Six Sigma. The Lean Six Sigma
methodology views lean manufacturing, which addresses process flow and waste issues, and Six
Sigma, with its focus on variation and design, as complementary disciplines aimed at promoting
"business and operational excellence". Companies such as GE, Verizon, GENPACT, and IBM
use Lean Six Sigma to focus transformation efforts not just on efficiency but also on growth. It
serves as a foundation for innovation throughout the organization, from manufacturing and
software development to sales and service delivery functions.
The International Organization for Standardization (ISO) has published in 2011 the first
standard "ISO 13053:2011" defining a Six Sigma process. Other "standards" are created mostly
by universities or companies that have so-called first-party certification programs for Six Sigma.
Difference between related concepts[edit]
Lean management and Six Sigma are two concepts which share similar methodologies
and tools. Both programs are Japanese influenced, but they are two different programs. Lean
management is focused on eliminating waste and ensuring efficiency while Six Sigma's focus is
on eliminating defects and reducing variability.
Methodologies
Six Sigma projects follow two project methodologies inspired by Deming's Plan-Do-
Check-Act Cycle. These methodologies, composed of five phases each, bear the acronyms
DMAIC and DMADV.
 DMAIC is used for projects aimed at improving an existing business process.
 DMADV is used for projects aimed at creating new product or process designs.
DMAIC
The five steps of DMAIC

Main article: DMAIC
The DMAIC project methodology has five phases:
 Define the system, the voice of the customer and their requirements, and the project goals,
specifically. 
 Measure key aspects of the current process and collect relevant data; calculate the 'as-is' Process
Capability. 
 Analyze the data to investigate and verify cause-and-effect relationships. Determine what the
relationships are, and attempt to ensure that all factors have been considered. Seek out root cause
of the defect under investigation.
 Improve or optimize the current process based upon data analysis using techniques such
as design of experiments, poka yoke or mistake proofing, and standard work to create a new,
future state process. Set up pilot runs to establish process capability. 
 Control the future state process to ensure that any deviations from the target are corrected before
they result in defects. Implement control systems such as statistical process control, production
boards, visual workplaces, and continuously monitor the process. This process is repeated until
the desired quality level is obtained. 
Some organizations add a Recognize step at the beginning, which is to recognize the right
problem to work on, thus yielding an RDMAIC methodology.
DMADV or DFSS[edit]
The five steps of DMADV
The DMADV project methodology, known as DFSS ("Design For Six Sigma"), features five
phases:
 Define design goals that are consistent with customer demands and the enterprise strategy. 
 Measure and identify CTQs (characteristics that are Critical To Quality), measure product
capabilities, production process capability, and measure risks. 
 Analyze to develop and design alternatives
 Design an improved alternative, best suited per analysis in the previous step
 Verify the design, set up pilot runs, implement the production process and hand it over to the
process owner(s).
Total Quality Management - Meaning and Important Concepts

To understand the meaning of “Total quality management”, let us first know what does Quality
mean?
Quality refers to a parameter which decides the superiority or inferiority of a product or
service. Quality can be defined as an attribute which differentiates a product or service from its
competitors. Quality plays an essential role in every business. Business marketers need to
emphasize on quality of their brands over quantity to survive the cut throat competition.
Why would a customer come to you if your competitor is also offering the same product? The
difference has to be there in quality. Your brand needs to be superior for it to stand apart from the
rest.
Total Quality Management
Total Quality management is defined as a continuous effort by the management as well as
employees of a particular organization to ensure long term customer loyalty and customer
satisfaction. Remember, one happy and satisfied customer brings ten new customers along with
him whereas one disappointed individual will spread bad word of mouth and spoil several of your
existing as well as potential customers.
You need to give something extra to your customers to expect loyalty in return. Quality can be
measured in terms of durability, reliability, usage and so on. Total quality management is a
structured effort by employees to continuously improve the quality of their products and services
through proper feedbacks and research. Ensuring superior quality of a product or service is not the
responsibility of a single member.
Every individual who receives his/her paycheck from the organization has to contribute equally to
design foolproof processes and systems which would eventually ensure superior quality of
products and services. Total Quality management is indeed a joint effort of management, staff
members, workforce, suppliers in order to meet and exceed customer satisfaction level. You can’t
just blame one person for not adhering to quality measures. The responsibility lies on the shoulder
of everyone who is even remotely associated with the organization.
W. Edwards Deming, Joseph M. Juran, and Armand V. Feigenbaum jointly developed the concept
of total quality management. Total Quality management originated in the manufacturing sector,
but can be applied to almost all organizations.
Total quality management ensures that every single employee is working towards the
improvement of work culture, processes, services, systems and so on to ensure long term
success.
Total Quality management can be divided into four categories:
 Plan
 Do
 Check
 Act
Also referred to as PDCA cycle.
Planning Phase
Planning is the most crucial phase of total quality management. In this phase employees have
to come up with their problems and queries which need to be addressed. They need to come up
with the various challenges they face in their day to day operations and also analyze the problem’s
root cause. Employees are required to do necessary research and collect relevant data which would
help them find solutions to all the problems.
Doing Phase
In the doing phase, employees develop a solution for the problems defined in planning phase.
Strategies are devised and implemented to overcome the challenges faced by employees. The
effectiveness of solutions and strategies is also measured in this stage.
Checking Phase
Checking phase is the stage where people actually do a comparison analysis of before and after
data to confirm the effectiveness of the processes and measure the results.
Acting Phase
In this phase employees document their results and prepare themselves to address other
problems.
What is Kaizen ? - Five S of Kaizen
“Kaizen” refers to a Japanese word which means “improvement” or “change for the better”.
Kaizen is defined as a continuous effort by each and every employee (from the CEO to field
staff) to ensure improvement of all processes and systems of a particular organization. Work

for a Japanese company and you would soon realize how much importance they give to the
process of Kaizen. The process of Kaizen helps Japanese companies to outshine all other
competitors by adhering to certain set policies and rules to eliminate defects and ensure long term
superior quality and eventually customer satisfaction.
Kaizen works on the following basic principle.
“Change is for good”.
Kaizen means “continuous improvement of processes and functions of an organization

through change”. In a layman’s language, Kaizen brings continuous small improvements in the
overall processes and eventually aims towards organization’s success. Japanese feel that many
small continuous changes in the systems and policies bring effective results than few major
changes.
Kaizen process aims at continuous improvement of processes not only in manufacturing

sector but all other departments as well. Implementing Kaizen tools is not the responsibility of
a single individual but involves every member who is directly associated with the organization.
Every individual, irrespective of his/her designation or level in the hierarchy needs to contribute
by incorporating small improvements and changes in the system.
Following are the main elements of Six Sigma:
 Teamwork
 Personal Discipline
 Improved Morale
 Quality Circles
 Suggestions for Improvement
Five S of Kaizen
“Five S” of Kaizen is a systematic approach which leads to foolproof systems, standard policies,
rules and regulations to give rise to a healthy work culture at the organization. You would hardly
find an individual representing a Japanese company unhappy or dissatisfied. Japanese employees
never speak ill about their organization. Yes, the process of Kaizen plays an important role in
employee satisfaction and customer satisfaction through small continuous changes and eliminating
defects. Kaizen tools give rise to a well organized workplace which results in better productivity
and yield better results. It also leads to employees who strongly feel attached towards the
organization.
Let us understand the five S in Detail:
1. SEIRI - SEIRI stands for Sort Out. According to Seiri, employees should sort out and organize things well.
Label the items as “Necessary”, ”Critical”, ”Most Important”, “Not needed now”, “Useless and so on.
Throw what all is useless. Keep aside what all is not needed at the moment. Items which are critical and
most important should be kept at a safe place.

2. SEITION - Seition means to Organize. Research says that employees waste half of their precious time
searching for items and important documents. Every item should have its own space and must be kept at its
place only.
3. SEISO - The word “SEISO” means shine the workplace. The workplace ought to be kept clean. De-clutter
your workstation. Necessary documents should be kept in proper folders and files. Use cabinets and
drawers to store your items.
4. SEIKETSU-SEIKETSU refers to Standardization. Every organization needs to have certain standard rules
and set policies to ensure superior quality.
5. SHITSUKE or Self Discipline - Employees need to respect organization’s policies and adhere to rules and
regulations. Self discipline is essential. Do not attend office in casuals. Follow work procedures and do not
forget to carry your identity cards to work. It gives you a sense of pride and respect for the organization.
Kaizen focuses on continuous small improvements and thus gives immediate results.
Productivity- factors affecting productivity

The terms Production and Productivity are often used interchangeably. But there is
difference between the two. Production refers to the total output .productivity .refers to the
output relative to the inputs. Stated more clearly, productivity refers to the amount of goods and
services produced with the resources used. Productivity is measured with the help of a formula
which runs as follows:
Productivity = quantity of goods and services produced

----------------------------------------------------
Amount of resources used
There are two variables in measuring productivity – the amount of production and the
amount of resources used. Productivity varies with the amount of production relative to the
amount of resources used it can be increased in several ways:
1. Increase production using the same or a smaller amount of resources
2. Reduce the amount of resources used while keeping the same production or increasing it
3. Allow the amount of resources used to increase as long as production increases more.
4. Allow production to decrease as long as the amount of resources used decreases more.
5. Factors effecting Productivity
6. Real growth can come only through capital investment in newer and better machines,
equipments and facilities.
7. Human element is the next factor which effects productivity
8. Employees performance depends upon their ability and motivation, where ability depends
on quality of people hired and trained.
9. Work environment is one of the fator for productivity
10. Production, planning, production control, inventory control, operations research, cost
control, budgetary control, marketing research etc are the other factors for improving
productivity.
Measurement & Improvements In Productivity
Measurement of productivity
Productivity refers to the output relative to the inputs. Inputs in any production process
comprise capital, labor, materials and energy. Productivity of each resource can be measured
separately. Such measurement give partial productivity. Productivity calculated by considering
total factor basis isd multi factor approach

Productivity is a classic economic metric that measures the process of creating goods and
services. Productivity is the ratio of the amount of output from a team or organization per unit of
input. Conceptually productivity is a simple metric. In order to calculate the metric, you would simply
sum up the number of units of item produced and divide it by the amount “stuff” needed to make those
units. For example, if a drain cleaning organization of three people cleans 50 drains per month, their
labor productivity per month would be 50/3 = 16.6 drains per person. The metric is a sign of how
efficiently a team or organization has organized and managed the piece of work being measured. There
are four types of productivity. Each type of productivity focuses on a different part of the supply chain
needed to deliver a product or a service. The four types are:
 Labor productivity is the ratio output per person. Labor productivity measures the efficiency of the labor
in the transformation of something into a product of higher value. In software development terms, labor
productivity is a measure of the efficient use of the effort needed to write and implement the code.
 Capital productivity is the ratio of output (goods or services) to the input of physical capital. Improving
physical capital (known as capital deepening) typically yields an increase in output. In software
development, physical capital includes the equipment, buildings or other items like computers needed to
develop and implement the code. 
 Material productivity is the ratio of output to the input of materials (also known as natural resources). In
software development, there are very little material or natural resources that are used. Material
productivity plays a larger role when considering the manufacture of hardware/software packages, such as
an ATM.
 Total Factor productivity (TFP) is not a simple ratio of output to input, but rather it is a measure that
captures everything that is not captured as labor, capital or material productivity. Factors included in total
factor productivity include attributes
Partial productivity = output in a given period

------------------------------------
Labor hours used in the period
Total productivity = output in a given period
-------------------------------------------------------------------
Labour+ capital+ materials+ energy used in the same period
Labour productivity
1. Output per man-hour
Labour productivity = output

----------------------
Man-hours used
2. Labour hours per unt of output
Labour productivity = total labour hours used

------------------------------------
Output
3. Added value per unit of labour cost
Labour productivity = added value for the product

-----------------------------------
Total wages

FACTORS AFFECTING PRODUCTIVITY
There is quite a variety of factors which can affect productivity, both positively and negatively. These
include:
1. capital investments in production
2. capital investments in technology
3. capital investments in equipment
4. capital investments in facilities
5. economies of scale
6. workforce knowledge and skill resulting from training and experience
7. technological changes
8. work methods
9. procedures
10. systems
11. quality of products
12. quality of processes
13. quality of management
14. legislative and regulatory environment
15. general levels of education
16. social environment
17. geographic factors
The first 12 factors are highly controllable at the company or project level. Numbers 13 and 14 are
marginally controllable, at best. Numbers 15 and 16 are controllable only at the national level, and 17 is
uncontrollable.
Total Productive Maintenance (TPM)
Total productive maintenance (TPM) is an approach which brings the concept of total
quality management in the practice of preventive maintenance. It involves the concept of
reducing variability through employee involvement and excellent maintenance records.
Total productive maintenance is a method designed to eliminate the losses caused by
breakdown of machines and equipment by identifying and attacking all causes of equipment
breakdowns and system down time.
Specific action of TPM require the following
(i) Restoring equipment to a like-new condition
(ii) Having operators involved in the maintenance of the equipment or machine
(iii) Improving maintenance efficiency and effectiveness
(iv) Training the labor force to improve their job skills
(v) The effective use of preventive and predictive maintenance technology
TPM aims at Zero breakdown or Zero down time. The philosophy of TPM is that if
equipment is in good condition and producing what it is designed to produce, most problems
then arise only from human error.
Total in Total Productive Maintenance means
(i) Total employee involvement
(ii) Total equipment effectiveness
(iii) Total maintenance delivery system
Objectives
One of the main objectives of TPM is to increase the productivity of plant and equipment
with a modest investment in maintenance. Total quality management (TQM) and total productive
maintenance (TPM) are considered as the key operational activities of the quality management
system. In order for TPM to be effective, the full support of the total workforce is required. This
should result in accomplishing the goal of TPM: "Enhance the volume of the production,
employee morale and job satisfaction."
The main objective of TPM is to increase the Overall Equipment Effectiveness of plant
equipment. TPM addresses the causes for accelerated deterioration while creating the correct
environment between operators and equipment to create ownership.
OEE has three factors which are multiplied to give one measure called OEE
Performance x Availability x Quality = OEE
Each factor has two associated losses making 6 in total, these 6 losses are as follows:
Performance = (1) running at reduced speed - (2) Minor Stops
Availability = (3) Breakdowns - (4) Product changeover
Quality = (5) Startup rejects - (6) Running rejects
The objective finally is to identify then prioritize and eliminate the causes of the losses. This is
done by self-managing teams that problem solve. Employing consultants to create this culture is
common practice.
Principles
The eight pillars of TPM are mostly focused on proactive and preventative techniques for
improving equipment reliability:
1. Focused Improvement
2. Autonomous maintenance
3. Planned Maintenance
4. Quality maintenance
5. Cost Deployment
6. Early Equipment Management
7. Training and Education
8. Safety Health Environment
With the help of these pillars we can increase productivity. Manufacturing support.
Implementation
Following are the steps involved by the implementation of TPM in an organization:
- Initial evaluation of TPM level,
- Introductory Education and Propaganda (IEP) for TPM,
- Formation of TPM committee,
- Development of master plan for TPM implementation,
- Stage by stage training to the employees and stakeholders on all eight pillars of TPM,
- Implementation preparation process,
- Establishing the TPM policies and goals and development of a road map for TPM
implementation.
According to Nicholas,[6] the steering committee should consist of production managers,
maintenance managers, and engineering managers. The committee should formulate TPM
policies and strategies and give advice. This committee should be led by a top-level executive.
Also a TPM program team must rise, this program team has oversight and coordination of
implementation activities. As well, it's lacking some crucial activities, like starting with partial
implementation. Choose the first target area as a pilot area, this area will demonstrate the TPM
concepts.[6] Lessons learned from early target areas/the pilot area can be applied further in the

implementation process.
Difference from TQM
Total quality management and total productive maintenance are often used interchangeably.
However, TQM and TPM share a lot of similarities, but are considered as two different
approaches in the official literature. TQM attempts to increase the quality of goods, services and
concomitant customer satisfaction by raising awareness of quality concerns across the
organization.
TPM is based on five cornerstones: The product, the process that allows the product to be
produced, the organization that provides the proper environment needed for the process to work,
the leadership that guides the organization, and commitment to excellence throughout the
organization.
In other words, TQM focuses on the quality of the product, while TPM focuses on the
equipment used to produce the products. By preventing equipment break-down, improving the
quality of the equipment and by standardizing the equipment (results in less variance, so better
quality), the quality of the products increases. TQM and TPM can both result in an increase of
quality. However, the way of going there is different. TPM can be seen as a way to help
achieving the goal of TQM
Industrial Safety: Definition, Need and Programmes for Industrial Safety!

Definition:
The importance of industrial safety was realized because of the fact that every year millions
occupational/ industrial accidents occur which result in loss of production time equivalent to
millions of man hours, machine hours etc.
Of these about one-fifth production time is lost by those actually injured due to temporary and
permanent disablement and the remaining production time is lost by fellow operators/ people in
helping the injured, in taking care of the damage caused by accident etc. the loss to the industrial
unit would appear much more alarming when death cases due to accidents are considered.
It is therefore essential to identify/examine the causes of industrial accidents and take steps to

control them. Many disciplines are concerned with this safety approach. Industrial engineering is
one field which deals with design of efficient work place, equipment and industrial layout
design. Other disciplines which can contribute to safe working environment are psychology,
sociology and Medicare science.
The following steps may be taken to effectively and efficiently eliminate an unsafe working
environment:
(1) Elimination if possible of the causes of accidents.
(2) If it is not possible to eliminate the cause of accidents, make arrangements to shield the
hazardous place by guards, enclosures or similar arrangements.
Need for Safety:
In view of above discussion, need and concern for safety is therefore need of the hour. There
are some direct costs/ effects of an accident but there are certain indirect costs involved in it also
e.g. machine down time, damage to machine, ideal time of nearby equipment and horror created
among workers, loss of time etc. in aid cost compensation, legal implications and allied costs etc.
So safety measures would not only eliminate/ avoid above cost but would mean performing their
moral responsibility towards workmen/operators also.
An accident is by virtue of unsafe factor he results of an unsafe condition it may be the
combined effect of two. An unsafe act results in the form of operator/people doing thing without
proper authority, misuse of safety devices, ignoring warnings and precautions etc.
An unsafe condition may be present in various forms e.g. faulty or defective electrical fittings,
inadequate maintenance of gang way. Use of defective tools etc. So to prevent the occurrence of
accidents, unsafe acts have to be avoided/ eliminated or checked.
Unsafe acts:
For rectification of the causes because of unsafe acts attention must be paid to following factors:
(1) Personnel adjustment:
If a foreman/supervisor identifies that a worker is unfit either physically or mentally or a job/
task, he should be quickly taken off the work in consultation with the personnel department.
(2) Method/technique used:
Some techniques requiring change should be replaced by safe methods.
(3) Operator training:
Job method may be safe or unsafe but the operator must be trained to perform the job.
(4) Publicity and education about accident prevention:
The workers/ people are led by the skill, energy and leadership of foreman/supervisor. So it is
the duty of these people to educate the workmen about prevention of accidents. The aim is to
teach them to become safety conscious so that they are able to recognize an unsafe act or
situation and act in such a manner that accident is avoided.
The unsafe conditions:
To avoid accidents due to unsafe conditions, various provisions have been discussed in the
“Factories Act” these may be concerned with moving parts of prime movers, electrical
generators and transmission machinery: fire protection devices, control of dangerous fumes,
lifting of excessive weights and safe guards over lighting machines, chains and ropes etc.
Thus safety in industry helps:
(i) Increasing the production rate.
(ii) Reducing the cost of production.
(iii) Reducing damage to machinery and equipment.
(iv) Preventing unwanted suffering and pain to employees of the organization.
(v) Preventing premature/untimely death of talented workers who may be an asset to the
enterprise and society.
Safety Programmes:
A safety programme intends to identify when where and why accidents occur. On the same
lines a safety programme aims at reducing accidents and associated losses. A safety programme
is initiated with the assumption that it is possible to prevent most work connected accidents.
A safety programme is a continuous process and tries to be decrease the influence of personal
and environmental factors which cause accidents. Normally a safety programme consists of
providing safety equipment’s and special training to workmen or employees.
Indian standards Institute has done commendable job in this context and lays down as follows:
(i) Safety precautions to be taken during manifesting operations.
(ii) Standards for proper lighting, ventilation and proper layout of the industrial unit.
(iii) Standards and specifications of safe industrial operations and practices etc.
(iv) Requirements for effective maintenance of tools and equipment’s.
(v) Guidance on safe cutting and welding processes.
(vi) Guidance on use of powered industrial trucks, belt conveyors and fire protection
equipment’s.
(vii) Safety requirements for personal protective equipment’s.
(viii) Classification of hazardous chemicals and provision of accident provision tags.
(ix) Markings for handling and lebelling of dangerous items/ goods.
(x) Standards for safety:
(a) In industrial building
(b) Safety procedures to be followed in electrical work
(c) in use of electrical appliances in hazardous area and explosive atmosphere.
(xi) Specifications for protective clothing, safety helmets face shields and safety equipment for
eyes ears lags hands and feet etc.
Objectives Of Stores Management

The purchased materials are taken to store for preservation if they are meant for stock. Non
stock items are directly taken to the assembly lines from the inspection. Preservation or storage is
another aspect of materials management. Storage can contribute to effective operations.
Stores is defined as supplies of goods. And storage is defined as the act of storing the
goods. Some people use the term store-keepng which has the same meaning as storage.
In popular usage the term stores is used to cover all aspects of preservation of goods i.e
building, supplies and the act of storing.
Stores or storage is the function of receiving, storing and issuing materials. It involves
supervision or the clearance of incoming suppies, to ensure that they are maintained in good

condition, safely and in readiness for use when required while they are in storage and issuing
them against authorized requisitions.
Importance
Efficient storage of stores yields the following results
 Ready aceesibility of major materials permitting efficient service to users
 Efficient space utilization and flexibility of arrangement
 A reduced need for materials handling equipment
 A minimization of materials deterioration and pilferage
 Ease of physical counting
Functions
 To receive aw maerials and account for them
 To provide adequate and proper storage and preservation to the various items
 To meet the demands of the consuming departments by proper issues and account for the
consumption
 To minimize obsolescence surplus and scrap through proper codification, preservation
and handling
 To ensure good housekeeping so that materials handling, materials preservation, stocking
receipt and issue can be done adequately
 To assist in verification and provide supporting information for effective purchase action
Requirements For Efficient Management Of Stores

Stores layout is a fundamental factor in determining the efficient performance of stores
department
(i) Provisions for easy receipt, storage and disbursement of materials, nearness to point
of use
(ii) Minimum handling and transportation of materials good accessibility for handling
equipment and personnel
(iii) Adequate capacity provision for flexibility for future expansion
(iv) Efficient utilization of floor space and height
(v) Clear identification of materials, quick location of items and ease of physical
counting
(vi) Protecting against waste, deteroration, damage and pilferage
(vii) Design the buildings physical appearance to create goodwill and to invite business.
(viii) Arrange storage for fast and easy customer order processing
(ix) Use compatible storage or display equipment to create good interior appearances
(x) Install good lighting to prevent theft, parts damage and errors in stocking
(xi) Plan for easy shelf life rotation to permit first-in-first-out control
(xii) Segregate rebuilt, re-manufactured, used and new merchandise
(xiii) Include safety as a part of the favility plan
(xiv) Maintain a periodic house-keeping and re-arrangement
Types of stores layout
 Whatever the location followed, stock may be kept on one side of the aisle in which case
it is called comb type layout
 If the goods may be placed on either side of the aisle in which case the method is called
tree type layout
Types of Inventory
Inventory is defined as a stock or store of goods. These goods are maintained on hand at or near
a business's location so that the firm may meet demand and fulfill its reason for existence. If the
firm is a retail establishment, a customer may look elsewhere to have his or her needs satisfied if
the firm does not have the required item in stock when the customer arrives. If the firm is a
manufacturer, it must maintain some inventory of raw materials and work-in-process in order to
keep the factory running. In addition, it must maintain some supply of finished goods in order to
meet demand.
Sometimes, a firm may keep larger inventory than is necessary to meet demand and keep the
factory running under current conditions of demand. If the firm exists in a volatile environment
where demand is dynamic (i.e., rises and falls quickly), an on-hand inventory could be
maintained as a buffer against unexpected changes in demand. This buffer inventory also can
serve to protect the firm if a supplier fails to deliver at the required time, or if the supplier's
quality is found to be substandard upon inspection, either of which would otherwise leave the
firm without the necessary raw materials. Other reasons for maintaining an unnecessarily large
inventory include buying to take advantage of quantity discounts (i.e., the firm saves by buying
in bulk), or ordering more in advance of an impending price increase.
Generally, inventory types can be grouped into four classifications: raw material, work-in-
process, finished goods, and MRO goods.
RAW MATERIALS
Raw materials are inventory items that are used in the manufacturer's conversion process to
produce components, subassemblies, or finished products. These inventory items may be
commodities or extracted materials that the firm or its subsidiary has produced or extracted.
They also may be objects or elements that the firm has purchased from outside the organization.
Even if the item is partially assembled or is considered a finished good to the supplier, the
purchaser may classify it as a raw material if his or her firm had no input into its production.

Typically, raw materials are commodities such as ore, grain, minerals, petroleum, chemicals,
paper, wood, paint, steel, and food items. However, items such as nuts and bolts, ball bearings,
key stock, casters, seats, wheels, and even engines may be regarded as raw materials if they are
purchased from outside the firm.
The bill-of-materials file in a material requirements planning system (MRP) or a manufacturing

resource planning (MRP II) system utilizes a tool known as a product structure tree to clarify the
relationship among its inventory items and provide a basis for filling out, or "exploding," the
master production schedule. Consider an example of a rolling cart. This cart consists of a top that
is pressed from a sheet of steel, a frame formed from four steel bars, and a leg assembly
consisting of four legs, rolled from sheet steel, each with a caster attached.
WORK-IN-PROCESS
Work-in-process (WIP) is made up of all the materials, parts (components), assemblies, and
subassemblies that are being processed or are waiting to be processed within the system. This
generally includes all material—from raw material that has been released for initial processing
up to material that has been completely processed and is awaiting final inspection and
acceptance before inclusion in finished goods.
Any item that has a parent but is not a raw material is considered to be work-in-process. A
glance at the rolling cart product structure tree example reveals that work-in-process in this
situation consists of tops, leg assemblies, frames, legs, and casters. Actually, the leg assembly
and casters are labeled as subassemblies because the leg assembly consists of legs and casters
and the casters are assembled from wheels, ball bearings, axles, and caster frames.
FINISHED GOODS
A finished good is a completed part that is ready for a customer order. Therefore, finished
goods inventory is the stock of completed products. These goods have been inspected and have
passed final inspection requirements so that they can be transferred out of work-in-process and
into finished goods inventory. From this point, finished goods can be sold directly to their final
user, sold to retailers, sold to wholesalers, sent to distribution centers, or held in anticipation of a
customer order.
Any item that does not have a parent can be classified as a finished good. By looking at the
rolling cart product structure tree example one can determine that the finished good in this case
is a cart.
Inventories can be further classified according to the purpose they serve. These types include
transit inventory, buffer inventory, anticipation inventory, decoupling inventory, cycle inventory,
and MRO goods inventory. Some of these also are know by other names, such as speculative

inventory, safety inventory, and seasonal inventory. We already have briefly discussed some of
the implications of a few of these inventory types, but will now discuss each in more detail.
TRANSIT INVENTORY
Transit inventories result from the need to transport items or material from one location to
another, and from the fact that there is some transportation time involved in getting from one
location to another. Sometimes this is referred to as pipeline inventory. Merchandise shipped by
truck or rail can sometimes take days or even weeks to go from a regional warehouse to a retail
facility. Some large firms, such as automobile manufacturers, employ freight consolidators to
pool their transit inventories coming from various locations into one shipping source in order to
take advantage of economies of scale. Of course, this can greatly increase the transit time for
these inventories, hence an increase in the size of the inventory in transit.
BUFFER INVENTORY
As previously stated, inventory is sometimes used to protect against the uncertainties of supply
and demand, as well as unpredictable events such as poor delivery reliability or poor quality of a
supplier's products. These inventory cushions are often referred to as safety stock. Safety stock
or buffer inventory is any amount held on hand that is over and above that currently needed to
meet demand. Generally, the higher the level of buffer inventory, the better the firm's customer
service. This occurs because the firm suffers fewer "stock-outs" (when a customer's order cannot
be immediately filled from existing inventory) and has less need to backorder the item, make the
customer wait until the next order cycle, or even worse, cause the customer to leave empty-
handed to find another supplier. Obviously, the better the customer service the greater the
likelihood of customer satisfaction.
ANTICIPATION INVENTORY
Oftentimes, firms will purchase and hold inventory that is in excess of their current need in
anticipation of a possible future event. Such events may include a price increase, a seasonal
increase in demand, or even an impending labor strike. This tactic is commonly used by retailers,
who routinely build up inventory months before the demand for their products will be unusually
high (i.e., at Halloween, Christmas, or the back-to-school season). For manufacturers,
anticipation inventory allows them to build up inventory when demand is low (also keeping
workers busy during slack times) so that when demand picks up the increased inventory will be
slowly depleted and the firm does not have to react by increasing production time (along with the
subsequent increase in hiring, training, and other associated labor costs). Therefore, the firm has
avoided both excessive overtime due to increased demand and hiring costs due to increased
demand. It also has avoided layoff costs associated with production cut-backs, or worse, the
idling or shutting down of facilities. This process is sometimes called "smoothing" because it
smoothes the peaks and valleys in demand, allowing the firm to maintain a constant level of
output and a stable workforce.

DECOUPLING INVENTORY
Very rarely, if ever, will one see a production facility where every machine in the process
produces at exactly the same rate. In fact, one machine may process parts several times faster
than the machines in front of or behind it. Yet, if one walks through the plant it may seem that all
machines are running smoothly at the same time. It also could be possible that while passing
through the plant, one notices several machines are under repair or are undergoing some form of
preventive maintenance. Even so, this does not seem to interrupt the flow of work-in-process
through the system. The reason for this is the existence of an inventory of parts between
machines, a decoupling inventory that serves as a shock absorber, cushioning the system against
production irregularities. As such it "decouples" or disengages the plant's dependence upon the
sequential requirements of the system (i.e., one machine feeds parts to the next machine).
The more inventory a firm carries as a decoupling inventory between the various stages in its
manufacturing system (or even distribution system), the less coordination is needed to keep the
system running smoothly. Naturally, logic would dictate that an infinite amount of decoupling
inventory would not keep the system running in peak form. A balance can be reached that will
allow the plant to run relatively smoothly without maintaining an absurd level of inventory. The
cost of efficiency must be weighed against the cost of carrying excess inventory so that there is
an optimum balance between inventory level and coordination within the system.
CYCLE INVENTORY
Those who are familiar with the concept of economic order quantity (EOQ) know that the EOQ
is an attempt to balance inventory holding or carrying costs with the costs incurred from ordering
or setting up machinery. When large quantities are ordered or produced, inventory holding costs
are increased, but ordering/setup costs decrease. Conversely, when lot sizes decrease, inventory
holding/carrying costs decrease, but the cost of ordering/setup increases since more orders/setups
are required to meet demand. When the two costs are equal (holding/carrying costs and
ordering/setup costs) the total cost (the sum of the two costs) is minimized. Cycle inventories,
sometimes called lot-size inventories, result from this process. Usually, excess material is
ordered and, consequently, held in inventory in an effort to reach this minimization point. Hence,
cycle inventory results from ordering in batches or lot sizes rather than ordering material strictly
as needed.
MRO GOODS INVENTORY
Maintenance, repair, and operating supplies, or MRO goods, are items that are used to support
and maintain the production process and its infrastructure. These goods are usually consumed as
a result of the production process but are not directly a part of the finished product. Examples of
MRO goods include oils, lubricants, coolants, janitorial supplies, uniforms, gloves, packing
material, tools, nuts, bolts, screws, shim stock, and key stock. Even office supplies such as
staples, pens and pencils, copier paper, and toner are considered part of MRO goods inventory.
Safety Stock Inventory Control

Safety stock (also called buffer stock) is a term used by logisticians to describe a level
of extra stock that is maintained to mitigate risk of stockouts (shortfall in raw material or
packaging) due to uncertainties in supply and demand. Adequate safety stock levels permit
business operations to proceed according to their plans. [1] Safety stock is held when there is
uncertainty in demand, supply, or manufacturing yield; it serves as an insurance against
stockouts.
Safety stock is an additional quantity of an item held in the inventory in order to reduce
the risk that the item will be out of stock, safety stock act as a buffer stock in case the sales are
greater than planned and or the supplier is unable to deliver the additional units at the expected
time.
With a new product, safety stock can be utilized as a strategic tool until the company can
judge how accurate their forecast is after the first few years, especially when used with a material
requirements planning worksheet. The less accurate the forecast, the more safety stock is
required to ensure a given level of service. With a material requirements planning (MRP)
worksheet a company can judge how much they will need to produce to meet their forecasted
sales demand without relying on safety stock. However, a common strategy is to try and reduce
the level of safety stock to help keep inventory costs low once the product demand becomes
more predictable. This can be extremely important for companies with a smaller financial
cushion or those trying to run on lean manufacturing, which is aimed towards eliminating waste
throughout the production process.
The amount of safety stock an organization chooses to keep on hand can dramatically
affect their business. Too much safety stock can result in high holding costs of inventory. In
addition, products which are stored for too long a time can spoil, expire, or break during the
warehousing process. Too little safety stock can result in lost sales and, thus, a higher rate of
customer turnover. As a result, finding the right balance between too much and too little safety
stock is essential.
Safety stocks are mainly used in a “Make To Stock” manufacturing strategy. This
strategy is employed when the lead time of manufacturing is too long to satisfy the customer
demand at the right cost/quality/waiting time.
The main goal of safety stocks is to absorb the variability of the customer demand.
Indeed, the Production Planning is based on a forecast, which is (by definition) different from the
real demand. By absorbing these variations, safety stock improves the customer service level.
Creating a safety stock will also prevent stock-outs from other variations, like an upward trend in
customer demand.
Safety stock is used as a buffer to protect organization from stockouts caused by
inaccurate planning or poor schedule adherence by suppliers. As such, its cost (in both material
and management) is often seen as a drain on financial resources that results in reduction
initiatives. In addition, time sensitive goods such as food, drink, and other perishable items could
spoil and go to waste if held as safety stock for too long. [1] Various methods exist to reduce
safety stock, these include better use of technology, increased collaboration with suppliers, and
more accurate forecasting [2][3] In a lean supply environment, lead times are reduced, which can
help minimize safety stock levels thus reducing the likelihood and impact of stockouts. [4] Due to
the cost of safety stock, many organizations opt for a service level led safety stock calculation;
for example, a 95% service level could result in stockouts, but is at a level that is satisfactory to
the company. The lower the service level, the lower the requirement for safety stock.
An Enterprise Resource Planning system (ERP system) can also help an organization
reduce its level of safety stock. Most ERP systems provide a type of Production Planning
module. An ERP module such as this can help a company develop highly accurate and dynamic
sales forecasts and sales and operations plans. By creating more accurate and dynamic forecasts,
a company reduces their chance of producing insufficient inventory for a given period and, thus,
should be able to reduce the amount of safety stock that they require. [1] In addition, ERP systems
use established formulas to help calculate appropriate levels of safety stock based on the
previously developed production plans. While an ERP system aids an organization in estimating
a reasonable amount of safety stock, the ERP module must be set up to plan requirements
effectively
Value Analysis:
Value Analysis is one of the major techniques of cost reduction and control. It is a
disciplined approach which ensures the necessary functions for the minimum cost without
diminishing quality, reliability, performance and appearance.
It is a creative approach to eliminate the unnecessary costs which add neither to quality
nor to the appearance of the product. It is a systematic application of techniques to identify the
functions of a product or a component and to provide the desired function at the lowest total cost.
These are the days of providing the customer with really best quality products at least cost
which is possible through value analysis which proves wrong rightly “Best and Cheap” or “Best
is never cheap” or “Cheap is Costly”.
What is Value Analysis?
Before understanding the meaning of phrase “value analysis” or “value engineering”, let
us know about value. ‘Value’ is one of those terms having good many connotations and even
contradictory definitions.
‘Value’ is a word that is very often used by individuals without being clearly understood.
Forget about common people. Even different departments of the same organisation have
different opinions of the ‘value’ of the product that the company manufactures.
The designer equates value with reliability; purchase people with price paid for them; production
personnel with that of cost from the angle of manufacture; sales people with what customer is
willing to pay.
In the field of value investigation, value refers to economic value, which itself can be
sub-divided into four types as cost value, exchange value, use value and esteem value.
“Cost Value” is the measure of sum of all costs incurred in producing the product. The ‘cost
value’, therefore is the sum of raw-material cost, labour cost, tool cost and overheads expended
to produce the product.
Thus, value analysis is a systematic application of established techniques to identify the
functions of a product or component and to provide the desired functions at the lowest total cost.
It is a creative approach to eliminate unnecessary costs which add neither to quality no to the

appearance of the product.
It is a rational and structured process consisting of:

 Functional analysis to define the reason for the existence of a product or its
components,
 Creatively analysis for generating new and better alternatives and
 Measurement for evaluating the value of present and future concepts.
Value Analysis and Value Engineering:
‘VA’ and ‘VE’ are closely related terms so much so that many people use them
interchangeably. Though the philosophy understanding the two is the same the identification of
unnecessary costs yet they are different. The difference lies in the time and stage at which the
technique is applied.
“Value Analysis” is the application of a set of techniques to an existing product with a
view to improve its value. Thus, it is remedial process. “Value Engineering” is the application of
exactly the same set of techniques to a new product at the design stage project concept or
preliminary design when no hardware exists to ensure that bad features not added. Thus, it is a
‘preventive’ measure. In that sense, ‘VE’ is fundamental and VA is collateral because
‘prevention is better than cure.”
Phases of Value Analysis:
As an exercise, the phases of value analysis are:
1. Phase of Origination:
In the first phase, a value analysis study team is constituted. The project is selected and clearly
defined. The team examines in detail the product and its components to understand thoroughly
their nature.
2. Phase of Information:
After familiarisation, a functional analysis is carried out to determine the functions and uses of
the product and its components. The cost and importance of each function are identified. A value
index is calculated on the basis of cost benefit ratio for each function. A list is being prepared in
which the items of functions are arranged in decreasing order of value.
3. Phase of Innovation:
This is the creative phase concerned with the generation of new alternatives to replace or
removing the existing ones.
4. Phase of Evaluation:
Each and every alternative is analysed and the most promising alternatives are selected. These
alternatives are further examined for economic and technical feasibility.
The alternatives finally selected must be capable of performances the desired functions
satisfactorily. These must meet the standards of accuracy, reliability, safety, maintenance and
repairs, environmental effects and so on.
5. Phase of Choice:
In this phase, report is prepared. This report contains a summary of the study, conclusions and
specific proposals. The decision makers choose the alternative. The programs and action places
are then developed to implement the chosen alternative.
6. Phase of Implementation:
The chosen alternative is put to the actual use with the help of the programs and action plans so
developed in advance.
7. Phase of Review:

The progress of analysis changes in continuously monitored and followed up in order to provide
assistance, to clarify any misconceptions and to ensure that the desired results are achieved.
Merits of Value Analysis:
Value analysis is really a very valuable technique of cost reduction and quality
improvement. The specific merits of its are:
1. Improvement in Product Design:
It leads to improvements in the product design so that more useful products are given shape.
Now in case of ball points, we do not have clogging, there is easy and even flow of ink and
rubber pad is surrounding that reduces figures fatigue.
2. High Quality is maintained:
High quality implies higher value. Thus, dry cells were leaking; now they are leak proof; they are
pen size with same power. Latest is that they are rechargeable.
3. Elimination of Wastage:
Value analysis improves the overall efficiency by eliminating the wastages of various types. It
was a problem to correct the mistakes. It was done by pasting a paper. Now, pens are there and
liquid paper is developed which dries fast and can write back.
4. Savings in Costs:
The main aim of value analysis is to cut the unwanted costs by retaining all the features of
performance or even bettering the performance. Good deal of research and development has
taken place. Now milk, oils, purees pulp can be packed in tetra packing presuming the qualities
and the tetra pack is degradable unlike plastic packs.
5. Generation of New Ideas and Products:
In case of took brushes, those in 1930’s were flat and hard, over 60 to 70 years brushes have
come making brushing teeth easy, cozy and dozy as it glides and massages gums.
6. Encourages Team-Spirit and Morale:
Value analysis is a tool which is not handled by one, but groups or teams and an organization
itself is a team of personnel having specification. A product is the product of all team efforts.
Therefore, it fosters team spirit and manures employee morale as they are pulling together for
greater success.
7. Neglected Areas are brought under Focus:
The organizational areas which need attention and improvement are brought under the spot-light
and even the weakest gets a chance of getting stronger and more useful finally join’s the main
strain.
8. Qualification of Intangibles:
The whole process of value analysis is an exercise of converting the intangibles to tangible for
decision making purpose. It is really difficult to make decisions on the issues where the things
are (variables) not quantifiable.
However, value analysis does it. The decision makers are provided with qualified data and on the
basis of decisions are made. Such decisions are bound to be sound.
9. Wide Spectrum of Application:
The principles and techniques of value analysis can be applied to all areas-man be purchasing,
hardware, products, systems, procedures and so on.
10. Building and Improving Company Image:
The company’s status or image or personality is built up or improved to a great extent.
Improvement in quality and reduction in cost means competitive product and good name in
product market; it is a good pay master as sales and profits higher and labour market it enjoys

reputation; it capital market, nobody hesitates to invest as it is a quality company.
Limitations:
Like any other cost reduction technique, value analysis has its own limitations. The most
common limitations are that the man made excuses are the blocks in implementing these plans of
value analysis.
The most common excuses given are:
(a) Lack of motivation
(b) Resistive to change
(c) Inertia
(d) Lack of knowledge and patience
(e) Attitude of ‘It will not work in India
(f) We are very small or very big
(g) This has been tried earlier and failed
(h) The change is too big
(i) ‘Let competitors try before we try’
(j) Difficulty of teams meeting or team meeting for getting consensus.
These limitations are man-made and can be over-come one the company divides to
implement. However, they should be educated of the plus and minus points and the main
beneficiaries are those that are to be told and they are to be taken into confidence
Difference Between Bin Card and Stores Ledger
bin card vs stores ledgerBin Card implies a document which records the quantity of material
received by, issued to and remained in stores. Conversely, Stores Ledger is a ledger account (accounting
record), that maintains the record of the transit of goods in and out, the stores, both in quantitative and
monetary terms.
Perpetual and Periodic Inventory System are two systems that record the movement of stock
maintained by the stores department. Perpetual Inventory System keeps a record of every now and then of
materials. It comprises of Bin Card and Stores Ledger, to keep track of various items.
Stores ledger is similar to bin card, except that stores ledger contains receipts, issues, and balance

of materials in monetary value along with their quantity. Take a read of the article to know difference
between bin card and stores ledger.
Comparison Chart
BASIS FOR
BIN CARD STORES LEDGER
COMPARISON
Meaning Bin Card implies a quantity record Stores ledger alludes to a subsidiary ledger,
of the receipts, issue and balance that keeps track of each and every
of materials in stores. transaction relating to materials in the
stores.
What is it? It is a recording document. It is an accounting record.
Responsibility Storekeeper Cost accounting department
Location Kept inside the stock room. Kept outside the stock room.
Details Contains quantitative details only. Contains both quantitative and monetary
details.
Interdepartmental Are not shown in bin card. Indicated in stores ledger.

transfer
Entries Entries are posted when Entries are posted after transaction took
transaction takes place. place.
Recording Transactions are recorded Summarized transactions are recorded.

individually.
Definition of Bin Card

In cost accounting, bin card is used to mean a document that keeps a record of the items held in stores.
Bin implies a container or space to keep materials, and with each bin, a card is placed, that comprises of
details of material received, issued and returned. Moreover, it contains details relating to the number of
items, their description and relevant notes (if any).
Bin card is used to quantitatively record the items received, issued and remained in the stores. As and
when the transaction takes place, the entry is made in the bin card, after which the materials are taken
to/given from stores.
At the time of receiving materials, the quantity is entered in the receipt column of the bin card from
material requisition note (MRN), and on the transfer of goods to various departments, the entry is made in
issue column of the card.
Definition of Stores Ledger

Stores ledger may be defined as a record maintained by the cost accounting department of the enterprise.

It is an assemblage of cards or sheets, which are maintained to keep a record of quantity and cost of
material received, transferred and remained in stock. It comprises of an account for each item in the stock
room that keeps the record of:
Quantity
Type
Rate
Amount
Stores Ledger is a subsidiary ledger to the cost ledger (main). It is used to keep track of all receipt and
issue transactions concerning materials. And to do so, entries are made in respective columns for various
transactions. Recording of additional information for quantity on order and reserved can also be done.
Key Differences Between Bin Card and Stores Ledger

The basic differences between bin card and stores ledger are elaborated below in the following points:
 Bin card can be understood as quantity record of the receipts, issue, and balance of each item in
the stock room. In contrast, stores ledger is an accounting record of each and every transaction
regarding the materials in the stock room.
 In cost accounting, bin card refers to a recording document, whereas stores ledger indicates an
accounting record.
 It is the responsibility of the store keeper to maintain bin card. On the other hand, the enterprise’s
cost accounting department maintains stores ledger.
 Bin card is maintained inside the warehouse or stores, but stores ledger is always kept outside the
stores.
 Bin card only consist of quantitative details, i.e. only the quantity of material received, issued,
returned and those in stock are recorded. Conversely, stores ledger keeps a record of both
quantity and cost of material received, issued and at hand.
 Transactions relating to interdepartmental transfers are not recorded in bin card, as they are only
entered in stores ledger.
 In Bin Card entries are recorded as and when the transaction occurs, i.e. first the entry is made,
and then goods are given from or taken to the stock room. As against this, entries are posted in
the stores ledger after the transaction is accomplished.
 In the case of bin card, each transaction is recorded separately, but in stores, ledger transactions
are tracked in summarized form.
Conclusion
Perpetual Inventory System is mainly used by the firms for material control. The effectiveness of this
system relies on stores ledger and bin cards, and the quantity balances of these two. There are instances
when quantity balances of bin card and stores ledger do not tally, due to various reasons like an
arithmetical error, posting in wrong document/sheet, non-posting of a transaction in any of the two, etc.

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Waste management is all the activities and actions required to manage waste from its

[VIIT – MBA – POM] Page 1

[VIIT – MBA – POM] Page 2

[VIIT – MBA – POM] Page 3

Quality assurance and quality circles

[VIIT – MBA – POM] Page 4

[VIIT – MBA – POM] Page 5

Statistical Quality Control & Control Charts For Variables

Meaning of Statistical Quality Control

[VIIT – MBA – POM] Page 6

Approaches of Statistical Quality Control

[VIIT – MBA – POM] Page 7

Chart for Process Average:

UCLR = X bar + A2(R)

Control charts for attributes Meaning of Control Chart

Types of Control Charts

c-Charts for Number of Defects Per Unit

[VIIT – MBA – POM] Page 9

Double sampling plan

Multiple Sampling Plans:

[VIIT – MBA – POM] Page 11

Characteristics of multiple sampling plan:

[VIIT – MBA – POM] Page 12

Important Steps in Purchasing and Receiving Procedure of Materials

[VIIT – MBA – POM] Page 14

Types Of Inventory control systems

 Main Inventory Control System Types:

[VIIT – MBA – POM] Page 15

Perpetual Inventory System

Periodic Inventory System

Barcode Inventory Systems

 Accurate records of all inventory transactions

Radio Frequency Identification (RFID) Inventory Systems

Inventory Control System JIT, VMI

[VIIT – MBA – POM] Page 17

So too in a manufacturing operation component parts could conceptually arrive just-in-

[VIIT – MBA – POM] Page 19

Adopting a JIT system is also sometimes referred to as adopting a lean production

 elimination of waste in its many forms

 regular meetings of the workforce (e.g. daily/weekly)

The benefits of JIT are:

 better quality products

[VIIT – MBA – POM] Page 20

Vendor-Managed Inventory (VMI)

What is Vendor Managed Inventory?

[VIIT – MBA – POM] Page 22

Data Communications and Calculations

[VIIT – MBA – POM] Page 23

Dimensions Of Product Quality

[VIIT – MBA – POM] Page 24

Juran’s Quality Trilogy

[VIIT – MBA – POM] Page 25

Juran’s Quality Trilogy Components

[VIIT – MBA – POM] Page 26

[VIIT – MBA – POM] Page 27

ISO 9000- 2000

[VIIT – MBA – POM] Page 28

[VIIT – MBA – POM] Page 29

The five steps of DMAIC

The five steps of DMADV

Total Quality Management - Meaning and Important Concepts

[VIIT – MBA – POM] Page 32

Kaizen works on the following basic principle.