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Chapter 26: Lean prodction and Quality Management

HRYN red AL Business A level English 47 cards

Cards in this deck (47)

  1. 1Lean ProductionProducing goods and services with the minimum of wasted resources while maintaining high quality.
  2. 2Cutting out anything in the production process that adds complexity, cost and time and doesn’t add value to the customer. The 7 main sources of waste in industry are:- Excessive transportation of components and products
    - Excessive inventory holding
    - Too much movement by working people eg to get supplies of components
    - Waiting time – delays in the production process
    - Overproduction – producing ahead of demand
    - Over-processing – making goods that are too complex as they could have been designed more simply
    - Defects – products that don’t come up to quality standards and have to be rejected or corrected
  3. 3how can aim of reduced waste be achieved. By adopting 3 following features of lean production: What are htey?simultaneous enginnering
    cellproduction
    flexible specialisms
  4. 4Simultaneous EngineeringProduct development is organized so that different stages are done at the same time instead of in sequence.
    A method of developing new products by ensuring that essential design, market research, costing and engineering tasks are done at the same time as each other – not sequentially. As most products become more advanced and complicated, it could take longer and longer to develop new designs. The problems with this are that during this period, competitors may launch their new products earlier and technology may advance during the design stage, rendering the new product obsolete as soon as it’s launched on the market. Network analysis assists.
  5. 5Cell productionsplitting flow production into self-contained groups that are responsible for whole work units.
  6. 6cell production - how work what does success depend on?A form of flow production, but instead of each individual worker performing a single task, the production line split into several self-contained mini production unities – cells which produces a complete unit of work. Each cell has a team leader and below that a single level of hierarchy made up of multiskilled workers. The performance of each cell is measured against pre-set targets. Will include output levels, quality and lead times. Cells are responsible for the quality of their own complete unties of work – links with total quality management (TQM). Success depends on a well-trained and multiskilled workforce prepared and able to be flexible and accept a more responsible style of working.
  7. 7The cell produciton system has led to waht 3 things?- Significant improvements in worker commitment and motivation because there is teamwork and a sense of ownership of the complete unit of work
    - Job rotation within the cell
    - Increased productivity
  8. 8Flexible SpecialismsInstead of making the same unchanged product for several years, lean production recognizes that both technological advances and changing consumer tastes can lead to very short production runs ie electronics
  9. 9Changing from one design of product to another requires flexible working in 3 main areas:1. Flexible employment contracts that allow non-core workers to be called in or not employed as demand conditions change
    2. Flexible and adaptable machinery – often computer controlled – that can be quickly switched from one design to another
    3. Flexible and multiskilled workers able to perform different jobs on different product ranges
  10. 10What are hte benefits of flxeible specilismsThe great benefits of this flexible approach will be seen in quicker responses to consumer demand changes, wider ranges of products offered to customers, reduced stock holdings as goods can be made to order, and higher productivity. Sometimes referred to as time-based management as it aims to cut out all wasted time during the development and production process.
  11. 11KaizenJapanese term meaning continuous improvement.
    The philosophy behind this idea is that all workers have something to contribute to improving the way their business operates and the way the product is made. Kaizen suggests in many cases workers actually know more than managers about how a job should be done or how productivity may be improved. Unlike ie Theory X approach with the objective of managers is to keep production up to the market and then look for one-off improvements in the form of inventions or to make investments in machines to increase productivity. Another key feature of Kaizen is that improvements in productivity don’t just result from massive one-off investments in new technology. A series of small improvements over time, amount to as big an improvement in efficiency as a major new investment.
  12. 12The following conditions are necessary for kaizen to operate: 4- Management culture must be directed towards involving staff and giving their views and ideas importance – managers must accept than, in many areas of the business, work experience will count for as much as theoretical knowledge
    - Team working – suggesting and discussing new ideas to improve quality or productivity is best done in groups. These kaizen groups are likely to be drawn from the work team or cell and should meet regularly – this requires management to provide the time and necessary training – to discuss problems they have identified. Recommendations for change could then be put forward to managers, or each group may be empowered to put their own ideas into practice
    - Empowerment – will allow speedier introduction of new ideas and motivate employees to come up with even more ideas. Link with Herzberg and job enrichment. If every idea and suggestion has to be put to managers – who could either ignore it or accept it after consideration – staff would become fed up with process
    - All employees should be involved
  13. 13What are the limitations to the kaizen approach? 4- Some changes cannot be introduced gradually and may need a radical and expensive solution
    - There may be very real resistance from senior managers to such a programme due to their existing culture. Kaizen will only work effectively if there is genuine empowerment of the groups involved – authoritarian managers would find this impossible to accept
    - At least in the short term there may be tangible costs to the business of such a scheme, ie staff training to organize meetings and lost output as a result of meeting time
    - Most important advances tend to be made early on during the kaizen programme – later changes can be less significant and this has led some observers to believe that there could be diminishing returns from kaizen
  14. 14What ar ehte main advantages of lean produciton? 5- Waste of time and resources is substantially reduced or eliminated
    - Unit costs reduced, leading to higher profits
    - Working area is less crowded and easier to operate in
    - Less risk of damage to stocks and equipment
    - New products launched more quickly
  15. 15What 2 condtiosn are necessary for cucessful adapting a business towards lean produciton?finance -the purchase of new and advanced capital equipment is expensive. Without machinery that can be quickly adapted to different products, lean production will be impossible. Small production runs and fast switch-over times are essential to make waste and stock reduction a real possibility. Retraining of staff in the multiskills needed to product a range of different products is expensive.
    Management of change-If a new culture will need to accept much more worker involvement ie through kaizen groups and more worker empowerment. Staff need to realize the crucial importance of their reliability and dedication – as so few stocks are held and no buffers exist, the commitment of the workers to the success of lean production is essential. Real lean depends just as much upon flexible and cooperation staff as it does upon machines.
  16. 16When may lean produciton not be suitable? 5- Businesses have real difficulty in forecasting demand and so are running on virtually 0 stocks. Would be a major problem if demand rose unexpectedly
    - Production processes are very expensive to start up after a break in production
    - Firms use it as a device for making extensive redundancies. Can result in job losses – one aspect of increased efficiency. However, a faltering business that attempts to adopt lean production merely as an attempt to cut job numbers will be unlikely to gain the much needed support of the workforce
    - Businesses depend on customer service as their unique selling proposition. A less lean approach may give customers more choice of finished product and more certain delivery dates
    - The costs of new technology and retraining may be so substantial that some businesses may have to survive on making existing systems more efficient rather than fully embracing lean production principles
  17. 17Quality ProductA good or service that meets customers’ expectations and is therefore ‘fit for purpose’.
    Consumer expectations will be very different for goods and services sold at different prices. It doesn’t have to be made with the highest quality materials to the most exacting standards – but meet consumer requirements for it. Doesn’t have to be expensive. How can consumer expectations or requirements be established by a business? The most common methods would be using market research and analyzing results of consumer feedback data.
  18. 18Quality StandardsThe expectations of customers expressed in terms of the minimum acceptable production or service standards.
    Top tip: quality must be explained in reference to the expectations of the target market consumer – is relative. The level of quality selected by any business must be based on the resources available to it, the needs of the target market and the quality standards of competitors.
  19. 19The advantages of producing quality products and services are: 5- Easier to create customer loyalty
    - Saves on the costs associated with customer complaints, ie compensation, replacement and loss of consumer goodwill
    - Longer life cycles
    - Less advertising may be necessary as brand will establish a quality image through the performance of products
    - A higher price – a premium price – could be charged for such goods and services. Quality can be profitable
  20. 20Quality ControlThis is based on inspection of the product or a sample of products.
  21. 21Quality Assurance– A system of agreeing and meeting quality standards at each stage of production to ensure consumer satisfaction.
  22. 22What rae the 3 stages to effective quality control?1. Prevention: most effective way of improving quality. Quality should be designed into a product. If design of product follows requirements of the customer and allows for accurate production
    2. Inspection: has high costs and these could be reduced by 0-defect manufacturing that is the aim of total quality management – used to be most important
    3. Correction and Improvement: correcting faulty products and correcting the process that caused the fault in the first place – will improve quality in the future
  23. 23inspecting for qualitytraditionally, it was at the end of the production process. Some may take place at different stages of the process. Quality inspection is expensive – qualified engineers have to be used and such checks can involve damaging the product. A sampling process must be used and this cannot guarantee that every product is of the appropriate quality.
  24. 24Problems related to inspection of quality: 4-looking for problems and therefore a negative culture. Can cause resentment among workers as inspector believe have been successful when find faults. Workers are likely to look upon inspectors as management employees who are there just to check on output and find problems with the work. Workers may consider it satisfying to get a faulty product passed by this team of inspectors. Level of mistrust can’t be good for working relationships and the overall morale of the firm
    - The job of inspection can be tedious, so inspectors become demotivated and may not carry out their tasks efficiently.
    - If checking take place only at specific points in the production process then faulty products may pass through several production stages before being picked up – could lead to a lot of time being spent finding the source of the fault between the quality checkpoints
    - Takes away from the workers responsibility for quality. Workers won’t see quality as their responsibility and will not feel that it is their task to ensure it’s maintained. Is demotivating and will result in lower-quality.
  25. 25Quality Assurancebased on setting agreed quality standards at all stages in production in order to ensure customers’ satisfaction is achieved. Often involved self-checking by workers o their own output against these agreed quality standards.
  26. 26The key differenceces between quality control and quality assurance is that quality assurance: 4- Put more emphasis on prevention of poor quality by designing products for easy fault-free manufacture, rather than inspecting for poor-quality products – getting it right the first time
    - Stresses the need for workers to get it right the first time and reduces chances of faulty products occurring or expensive reworking of faulty goods
    - Establishes quality standards and targets for each stage of the production process
    - Checks components, materials and services bought into the business at the point of arrival or delivery not at end by which stage much time and many resources may have been wasted
  27. 27Agreed standards must be established at all stages which are: 5- Product design: will product meet consumer expectations?
    - Quality of inputs: quality must not be let down by bought in components. Suppliers will have to keep strict quality standards
    - Production quality: can be assured by total quality management (TQM) and emphasizing with workers that quality levels must not drop below pre-set standards
    - Delivery systems: customers need goods and services delivered at times that are convenient to them. The punctuality and reliability must be monitored
    - Customer service including after-sale service: continued customer satisfaction will depend on the quality of contact with consumers after purchase
  28. 28Quality assurance has the following advantages over quality-control systems based on final inspection: 4- Makes everyone responsible of quality – can be form of job enrichment
    - Self-checking and making efforts to improve quality increase motivation
    - System can be used to trace back quality problems to the stage of the production process where a problem may have been occurring
    - Reduces need for expensive final inspection and correction or reworking of faulty production
  29. 29Reasons for the importance for businesses to establish quality-assurance systems: 5- Involve all staff and this can promote teamwork and a sense of belonging – aids motivation
    - To set quality standards for all stages of production so that all materials and all production phases are checked before it’s too late and the whole product has been completed
    - To reduce costs of final inspection as this should become less necessary as all stages and subsections of the process have been judged against quality standards
    - To reduce total quality costs – by instilling in the whole organization a culture of quality, it’s possible for quality assurance to lead to reduced costs of wastage and faulty products
    - To gain accreditation for quality awards – can give business status or kudos.
  30. 30ISO 9000 What does a firm have to demonstrate? 5 one drawbackThis is an internationally recognized certificate that acknowledges the existence of a quality procedure that meets certain conditions.
    This award is given to firms that can demonstrate that they have a quality-assurance system in place that allows for quality to be regularly measured and for corrective action to be taken if quality falls below these levels. Doesn’t prove that every good produced or service is of good quality. To obtain the ISO 9000 certificate the firm has to demonstrate that it has:
    - Staff training an appraisal methods
    - Methods for checking on suppliers
    - Quality standards in all areas of the business
    - Procedures for dealing with defective products and quality failures
    - After-sales services
    Drawbacks such as the costs of preparing for inspection and the bureaucratic form-filling required for the certificate.
  31. 31Total Quality Management (TQM)An approach to quality that aims to involve all employees in quality-improvement.
  32. 32TQMRequires the involvement of all employees in an organization. Based on the principle that everyone within a business has a contribution to make to the overall quality of the finished product or services. Often involves a significant change in the culture of an organization. Employees can’t think quality is someone else’s responsibility – search for quality must affect the attitudes and actions of every employee. Every worker should think about the quality of the work they are performing because another employee is, in effect, their internal customer. Every department is obliged to meet the standards expected by its customer(s). These departmental relationships are sometimes known as quality chains. All businesses can therefore be described as a series of supplier and customer relationships. To be effective the concept must be fully explained and training given to staff. Not a technique – it’s a philosophy of quality being everyone’s responsibility.
  33. 33TQM aim - want want to achive - motivation which one?Aim to make all workers at all levels accept that the quality of the work they perform is important. They should also be empowered with the responsibility of checking the quality level before passing their work on the next production stage. Fits in well with Herzberg principles of job enrichment. Should almost eliminate the need for a separate quality-control department with inspectors divorced from the production line itself. Aims to cut the costs of faulty or defective production by encouraging all staff to get it right first time and to achieve zero defects. This is in contract to traditional inspected quality methods that considered quality control as being a cost center of the business. TQM will not work in a rigid and authoritarian structure.
  34. 34Internal CustomersPeople within the organization who depend upon the quality of work being done by others.
  35. 35Zero Defects– Achieving perfect products every time.
  36. 36What are the potential benefits of quality systems? 6Good publicity eg from consumer pressure groups and consumer-oriented articles in the media
    Consumer satisfaction and repeat custom as encouraged to buy more due to quality – and tell their friends about it
    Reputation for quality encourages retailers to stock the firm’s products – will increase the distribution outlets for a product
    Easier to establish new products in the market as consumers will associate the business’s good reputation with the new product
    Allows the brand to be built around a quality image, braining is an important form of non-price differentiation
    May allow a price premium to be charged over other similar products in that market segment – quality can be used as a USP and would be a clear demonstration that quality pays as the extra revenue gained should cover quality costs
  37. 37What are the potentila costs of quality systems> 7Market research to establish expected customer requirements
    Staff training costs to ensure that standards are understood and the operations needed to check them can be undertaken – especially important with TQM
    Material costs – rejecting below-standard materials and components before they are used in the production process will almost certainly lead to higher expectations from suppliers
    Equipment costs for checking standards at each stage
    Inspection and checking costs
    Reworking of faulty products or rejection wastage costs – aim of quality assurance is to reduce these to an absolute minimum – right first time
    Stopping production to trace and correct quality problems will disrupt output
  38. 38How the competitiveness of a business can be improved by managing quality: 3- Globalization has increased competition and so has consumer access to the internet. Lowering prices is not the only method of increasing competitiveness and it may not be the wisest way if a business is unable to reduce its costs tot eh same extent. Achieving consistent quality is often more effective of competition in both domestic and international markets
    - Consistent high quality can lead to a well-known brand image that higher prices can be justified for this USP
    - As consumer incomes rise with world economic growth, the average consumer buying decisions will become more influenced by quality and fitness for purpose. Vital for businesses to differentiate themselves with a quality brand image – regularly and consistently meeting consumers’ (rising) expectations. Cost factors involved in improving quality must always be weighed against the expected gains in competitiveness
  39. 39BenchmarkingInvolves management identifying the best firms in the industry and then comparing the performance standards – including quality – of these businesses with those of their own business.
  40. 40Full title = best practice benchmarking. This comparison will identify areas of the business that need to be improved to meet the standards of quality and productivity of the best firms. Stages in the benchmarking process: 71. Identify the aspects of the business to be benchmarked: could be decided by interviewing customers and finding out what they consider to be most important. Areas that the firm would first benchmark
    2. Measure performance in these areas: ie reliability records, deliver and number of customer complaints
    3. Identify the firms in the industry that are considered to be the best: process may be assessed by management consultants or by benchmarking schemes operated by government or industry organizations
    4. Use comparative data from the best firms to establish the main weaknesses in the business: may be obtained from firms by mutual agreement, from published accounts, specialist industry publications and contact with customers/suppliers
    5. Set standards for improvement: may be the standards set by the best firms or they could be set even higher to create a competitive advantage
  41. 41last 6 and 76. Change processes to achieve the standards set: may require nothing more than a different way of performing one task, but more substantial changes may be necessary
    7. Re-measurement: changes need to be checked to see if the new, higher standards are being reached. Benchmarking is not a one-off exercise and to be effective it should become a continuous process to achieve long-term improvements in productivity and quality
  42. 42What are hte benefits of benchmarking? 5- Is a faster and cheaper way of solving problems than firms attempting to solve production or quality problems without external comparison
    - The areas of greatest significance for customers are identified and action can be directed to improving these
    - It’s a process that can assist the firm to increase international competitiveness
    - Comparisons between firms in different industries, can encourage a useful crossover of ideas
    - If the workforce is involved in the comparison exercise, then their participation can lead to better ideas for improvement and increased motivation
  43. 43What are the limitations of benchmarking? 3- Process depends on obtaining relevant and up-to-date information from other firms in the industry. If difficult to obtain then the benchmarking exercise will be limited
    - Merely copying the ideas and practices of other firms may discourage initiative and original ideas
    - The costs of the comparison exercise may not be recovered by the improvement obtained from benchmarking
  44. 44Quality Circlesa Japanese-originated approach to quality. Based on staff involvement in improving quality, using small groups of employees to discuss quality issues. Using team-working and participation can lead to quality improvement and an increase in worker participation. The overall aim of the groups is to investigate quality problems and present solutions to management or if a group is fully empowered to put the improvements into effect.
  45. 45What are hte main benefits of quality circles? 3Improves quality though joint discussion of ideas and solutions
    Improves motivation through participation
    Makes full use of the knowledge and experience of the staff
  46. 46What are the main conditison for determining the cucess fo quality circles? 4Circle members must be committed to improve quality
    Training given in holding meetings and problem-solving
    Full support from management
    Team should be empowered to implement the recommendations
  47. 47quality noteQuality is not an option. It is a fundamental aspect of all successful businesses. An issue for all firms. Improving quality has cost advantages if the rate of defective products is reduced. The marketing and people benefits should not be overlooked either. Satisfying customers will give advantages when seeking further sales. Involving staff in quality improvement can lead to a more motivated workforce. Needs to be driving force through an organization.

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A level AL Business (Unit 4: Operations and Project Management) Flashcards on Chapter 26: Lean prodction and Quality Management, created by HRYN red on 17/04/2022.
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