• BMT 6 Decision Trees

• 5.2 Operations methods

• 5.3 Lean Production and Quality Management

• 5.6 Production Planning

5.2

Job production involves customizing a product from start to finish.

Its tailor made to meet specific requirements of a client.

Batch production- involves simultaneously producing a limited number of identical products.

Often used when the level of demand is not clear.

Mass production is the manufacturing of large amounts of standardized products

Unit cost of production is usually low

An essential part of mass production is specialization people are used at each workstation to carry out a different function essential to the overall production process, resulting in high levels of productivity.

Mass production was first commercialized by Henry Ford

Unlike batch production the standardized products in mass production are produced on a large scale.

Mass customization - large-scale mass production of goods but with the flexibility to adapt the output to the varying needs of different customers.

Businesses are likely to use two methods of production as this would allow them to gain benefits from each method of production.

Job production and the service sector tend to be labour-intensive

Capital intensity is typically found in batch, mass and flow production

5.3

Lean production is a philosophy or organizational culture about REDUCING WASTE and INCREASING EFFICIENCY in the production process.

Usually minimizes costs without compromising costs

Reducing waste is important for businesses (Muda in Japaese)

Over processing: ADDITIONAL WORK DOES NOT ADD VALUE TO THE CUSTOMER (duplication of tasks, more features then we need an example being the amount of apps that the iPhone has downloaded already)

Time delays in production process (machinery, poor training, excess movement between workstations)       

Humam effort might underperform creating the need to repeat tasks

Energy an example being leaving lights on

Resources and materials:

Underproduction (resulting in shortages and loss of potential customers)

Overproduction (leading to stockpiling or overstocking)

INCREASING EFFICIENCY

Efficiency means using resources more productively in order to generate output

Measures of productivity

•Sales per person

•Output per worker

•Output per machine hour

•Average costs per unit of output

Greater efficiency can be achieved in a number of ways, such as:

•Improved level of motivation in the workplace.

•Improved technologies and capital equipment.

•Improved training and development for all employees.

2 methods of lean production:

•Continuous improvement (Kaizen)

•Just-in-time (JIT)

Continuous improvement (Kaizen)

Process of making continuous small, incremental improvements to various production processes to achieve greater efficiency.

The reason for small changes is because employees are usually more receptive to small and incremental changes, rather than highly disruptive or unsettling changes.

For Kaizen to work, all staff members are required to believe in the approach, and put in the necessary effort and commitment to eliminate waste and to make efficiency gains

Example - 1 employee is 1 minute late for work each day of the week = 5 minutes per week = 4 hours per year non-productive

Just-in-time (JIT) is a lean method of stock control whereby materials and components are scheduled to

arrive precisely when they are needed in the production process.

Hence, JIT aims to eliminate buffer stock requirements by ensuring raw materials and components are

received just before they are needed.

JIT works on the principle of firms placing regular orders with their suppliers

For example, many of the world’s largest supermarkets use fully automated JIT delivery systems.

They depend on computerized systems such as scanners at the checkouts that link to their stock control

and ordering systems, which automatically place orders with suppliers. This helps to ensure the

supermarkets are adequately stocked, as empty shelves would mean lost sales and unhappy customers

By contrast, a just-in-case (JIC) stock control system requires businesses (such as Coca-Cola) to have large quantities of stock in the event that it is needed for an unexpected order or in case there is a problem with the supply chain (such as a late delivery of stock)

Cradle to cradle (C2C) design and manufacturing refers to a sustainable, waste-free production

model

 all material inputs can be recycled or reused or are consumable or compostable.

C2C products are made using environmentally friendly and sustainable materials, which can then be

stripped down and reused after the original product is no longer required (such as textiles and glass

products).

It is important to adopt Circular Business Models

Quality means that a product is fit for purpose, i.e. the good or service meets or exceeds the needs of its

customers.

For example, quality service in a restaurant could mean a combination of:

•Polite, welcoming and knowledgeable waiting staff

•Timely delivery of food and drinks

•Meals that are cooked and served well

Quality control

the most traditional form of quality management

inspector periodically checks output for possible defects

Quality controllers aim to ensure the products comply with quality standards

For mass produced products, QC is usually conducted in a systematic way, such as once every hour

or every 100th unit of output.

For highly expensive products, such as a Ferrari or Bugatti, each one is checked to ensure quality

standards are met

Quality assurance

is a lean approach to quality management (right the first time)

QA focusses on empowering all staff to check their own work throughout the production process,

rather than relying on quality controllers to inspect the final output.

This approach to quality management considers quality in every operations decision in order to

prevent mistakes, from product design to the level of customer service and timely distribution to

customers

Quality assurance (QA) is a form of total quality management (TQM) that involves all workers taking responsibility for maintaining quality standards throughout the production process. TQM aims to achieve zero defects by preventing mistakes being made in the first place. Instead, QA focuses on getting things done right, first time round. A key advantage of QA and TQM is that the organization's corporate reputation is likely to improve as the firm has a “right first time” approach to production, so defects are minimal if at all existent. However, quality assurance is both time consuming and costly as it strives for zero defects, i.e., perfection. In contrast, quality control has an accepted reject or defect rate given that it may not be realistically possible to check each and every unit of output. Essentially, QA is proactive and preventative, whereas QC is reactive (to faults and defects in the production process).

Disadvantages of lean production and TQM

The drawbacks, or negative impacts, to organizations that pursue lean production and TQM include the

following:

•The necessary costs of staff training and development in order to achieve greater efficiency, lower waste

and improved quality.

•There are also fees that need to be paid to third-party accreditation authorities, such as the International

Organization for Standardization (ISO) for quality assurance.

•Waste management costs have to be considered. For many businesses, the costs of recycling are higher

than using less environmentally friendly production processes.

•Ultimately, lean production and a culture of TQM can only work if employees are truly devoted to the

philosophy. Some workers may not want to take on extra responsibilities, and it can create stress or

conflict which harms working relationships.

•It can take time to change a corporate culture to embrace TQM and lean production.

Lean production and TQM are interrelated approaches to quality management.

Lean production focuses on eliminating waste and achieving greater efficiency.

Total quality management (TQM) focuses on quality assurance and quality improvements

The positive impacts of lean production and TQM on an organization include the following arguments:

•Lean production and TQM help to improve the quality of an organization’s goods and services.

•Having a clear focus on lean production and quality can help to improve the firm’s competitiveness.

•It encourages closer working relationships with suppliers (for lean production), and customers and

employees (TQM).

•Being efficient and being responsible for producing quality goods and services can help to motivate

employees.

•Efficiency gains, higher productivity, and reduced waste all help to reduce costs for the organization, at

least in the long run.

•Being lean (high efficiency and low or no waste) and offering high-quality products can enhance the

reputation of the business. It then becomes easier for businesses to attract and retain customers, as

they trust the organization, its products and brands.

The importance of quality standards

provide certification or recognizable mark of quality assurance that the product has met certain minimum

standards to meet the needs of customers

The most internationally recognized quality awards are from the International Organization for Standardization

(ISO). For example, ISO 9000

can provide the organization with major marketing advantages, appeal to new customers, retain existing

customers, and attract new recruits to the organization.

However, the costs of complying with national and/or international quality standards can be extremely high.

These include the costs of on-going staff training and development, as well as the costs of obtaining

certification and licenses for quality management.

5.6

The supply chain sequence of activities from the production of a good or service to it being delivered to the end customer.

Supply chain management involves a firm working with all its suppliers in order to maximize efficiency, be

they locally and/or globally based.

The logistics involved must also be cost effective for the business to be profitable.

A local supply chain = short distances between producers, suppliers, and consumers (same city, district,

country)

Local supply chains can be more efficient in terms of time and involves less transportation. This has positive

impact on the economy and environment, such as less pollution and shorter supply chains. Furthermore, local

supply chains are less prone to disruptions and tend to be more sustainable than global supply chains.

A global supply chain = international network (long distances between producers, suppliers, and

consumers across different countries)

Hence, this involves the international trade of goods and services. For example, supermarkets import fruits

and vegetables grown in other countries and continents. These products will have been harvested and

packaged ready for transportation over hundred or thousands of miles across international borders

Stock control has two types

JIT (Just in time) JIC (Just in case)

Stockpiling holding too much stock

Stock outs – holding insufficient stocks