Dr. Abu Bakr Siddique's lecture outline covers visual management, quality, cost, delivery (QCD), and the just-in-time (JIT) system. The document discusses how visual management is used to detect abnormalities and make problems visible. It also explains how QCD factors are interrelated and how improving quality can reduce costs over time. Additionally, it describes how the JIT system addresses costs and delivery by producing only what is needed, and provides an example of how Aisin Seiki's plant implements JIT production.

1. Engineering Management
Dr. Abu Bakr Siddique

2. Lecture Outline
• Visual Management
• QCD
• Just-in-Time System

3. Visual Management

4. Abnormalities
• At the gemba, abnormalities of all sorts arise on a
daily basis.
• The key is to detect abnormalities that are causing
processes to go out of control. Abnormalities can be
detected through Visual Management.
• The practice of visual management involves the
clear display (using visual tools) of actual products
and records of performance.

5. Making Problems Visible
• Most information originating from the gemba goes
through many managerial layers before reaching top
management, and the information becomes
increasingly abstract and remote from reality as it
moves upward.
• The first principle of visual management is to make
problems in the gemba visible to all employees—
managers, supervisors, and workers—so that
corrective action can begin at once.

6. Visual Management – a tool for
Management
• Where visual management is practiced a manager can
see problems at a glance the moment he or she walks
into the gemba, and thus can give instructions on the
spot in real time.
• Visual management helps management to manage the
five Ms (5M) in the Gemba:
manpower machines
measurements materials
methods

7. Visual Management in the Five Ms
• Manpower (Operators)
• A display board in the Gemba can show who is trained
to do what tasks and who needs additional training. This
way everyone is aware of the skill level of individual
operators.
• The number of suggestions, the extent of participation
in quality circles and figures on absenteeism are a
measure of an employee’s morale. These items should
be made visible at the gemba so as to know moral of
workers.

8. Visual Management in the Five Ms
• Machines
• Visual management can be used to check the status
of machines and see if they are producing good
quality products or if it requires repairs and/or
scheduled maintenance.
• Displaying such machine related issues and
subsequently assigning the issue to an employee,
ensures that something is being done to address the
issue(s).
• Measurements
• Trend charts should be displayed in the Gemba to
show targets, production schedules, results, etc.

9. Visual Management in the Five Ms
• Materials
• Using signal lamps, audio signs and displays it is
possible to highlight abnormalities pertaining to
materials (such as supply shortages, maximum
allowable inventory level, material oversupply, etc).
• Methods
• Standard worksheets should be posted at each
workstation that would show the sequence of work,
cycle time, safety items, quality checkpoints, and
what to do when variability occurs.

10. Quality, Cost and Delivery

11. Quality Cost and Delivery
• Quality, cost, and delivery are not distinctly
separate subjects but rather are closely
interrelated.
• It is pointless to buy products or services
lacking in quality, no matter how attractive
their price.
• Conversely, it is meaningless to offer products
or services of good quality and attractive price
if those products cannot be delivered in time to
meet the customer’s need and in the quantity
that the customer wants.

12. Quality: Not Just a Result
• Quality often means the quality of products
(services) – that is to say the quality of the
result (final products /services).
• In practice, however, it does not only refer to
the quality of the final products (or services)
but also to the processes of designing,
developing, producing, selling, and servicing
the products (services).

13. Quality: Not Just a Result
• The manufacturing production process can be
pictured like a river.
• Upstream refers to the material inputs needed
for production, while downstream is the
opposite end, where products get produced and
distributed.
• What Upstream Management means is that
through continuous improvements defects are
eliminated farther and farther upstream in the
production process.

14. Quality: Not Just a Result
• This practice reduces the number of defects
(flaws) that are passed to the next process and
ensures overall product Quality.
• Improving quality does not require laying
emphasis on only upstream management but
also on downstream management.
• For example, before a product is mass
produced it has to be designed, which will
require an understanding of the customer side
(downstream management).

15. Cost
• Cost management oversees the processes of
developing, producing, and selling products or
services of good quality while striving to lower costs
or hold them to target levels.
• To reduce costs, the following six activities should
be carried out simultaneously:
• 1. Improve quality. 2. Improve productivity.
• 3. Reduce inventory. 4. Reduce lead time.
• 5. Shorten the Production Line
• 6. Reduce machine downtime

16. Improve Quality
• Quality improvement actually initiates cost reduction
and can be experienced over a period of time.
• The first time a product quality is substantially
improved (say for example through the addition of a
new feature), the overall cost of the product will
increase.
• However, over time the company will learn to adapt to
these changes and be able to bring the additional costs
down (i.e. incorporate the additional feature with little
or no additional costs).

17. Improve Quality
• Another way of looking at this is through the
PDCA/SDCA cycles. The PDCA cycle initiates
improvements while the SDCA cycle stabilizes
processes.
• During SDCA the company will not only check for
abnormalities but also for ways to achieving the
same product quality through other means that
would help reduce costs.
• This is the reason why technology also improves
upon its predecessor and does not remain a constant.

18. Improve Productivity
• Productivity improves when less input
produces the same output or when output
increases with the same input.
• Input here refers to such items as human
resources, utilities, and material.
• Output means such items as products, services,
yield, and added value.

19. Reduce Inventory
• Inventory occupies space, prolongs production
lead time, creates transport and storage needs,
and eats up financial assets.
• In the context of a manufacturing production
system, inventory refers to all work that has
occurred (raw materials, partially finished
products and finished products prior to sale).
• In the context of services, inventory refers to
all work done prior to sale, including partially
processed information.

20. Reduce Lead Time (Throughput Time)
• Lead time begins when a company pays for
raw materials and supplies, and ends only
when the company receives payment from its
customer for products sold.
• Thus lead time represents the turnover of
money. A shorter lead time means better use of
resources and a lower cost of operations.
• Ways to cut lead time include improving and
speeding feedback of customer orders and
communicating better with suppliers.

21. Shorten the Production Line
• In manufacturing, a longer production line
requires more people, more work-in-process,
and a longer lead time.
• More people on the line also means more
mistakes, which lead to quality problems.

22. Reduce Machine Down Time
• A machine that goes down interrupts
production. Unreliable machinery necessitates
extra work-in-process, extra inventory, and
extra repair efforts.
• Such problems are similar in the service sector.
Downtime in the computer or communications
system causes undue delay, greatly increasing
the cost of machine operations.

23. Delivery
• Delivery refers to the timely delivery of the
volume of products or services.
• One of management’s tasks is to deliver the
required volume of products or services in
time to meet customer needs.
• The challenge for management is to live up to
delivery commitments while meeting quality
and cost targets. In line with the axiom,
“Quality first,” quality is the foundation on
which cost and delivery are built.

24. JIT System

25. QCD & the JIT System
• In order to achieve successful quality, cost, and
delivery (QCD) and satisfy the customer as well as
itself, a manufacturing company must have all three
major systems in place:
• (1) total quality control (TQC) or total quality
management (TQM)
• (2) total productive maintenance (TPM)
• (3) just -in- time (JIT) production.

26. QCD & the JIT System
• Each of the three major systems necessary for
achieving QCD has different targets:
• TQC has overall quality as its major target
• TPM addresses the reliability and quality of
equipment.
• While JIT deals with the other top priorities of
management—namely, cost and delivery.

27. JIT System – an Inventory Strategy
• A just-in-time (JIT) system addresses both cost and
delivery issues.
• In JIT, every effort is made to produce and deliver
the product just in time—that is, to produce only as
many as are needed and only when needed, thereby
eliminating the cost of excessive inventory.
• The JIT is an inventory strategy that aligns raw-
material orders from suppliers directly with
production schedules.

28. JIT System – an Inventory Strategy
• Companies employ this inventory strategy to
increase efficiency and decrease waste by receiving
goods only as they need them for the production
process.
• This method reduces inventory costs but requires
producers to forecast demand accurately.
• The JIT inventory system contrasts with just-in-
case strategies, wherein producers hold sufficient
inventories to have enough product to absorb
maximum market demand.

29. Japan & the JIT System
• During Japan's post-World War II rebuilding of industry,
Japan lacked cash, space and natural resources. Thus the
Japanese "leaned out" their processes.
• They built smaller factories ... in which the only
materials housed in the factory were those on which
work was currently being done.
• In this way, inventory levels were kept low, investment
in in-process inventories was at a minimum, and the
investment in purchased natural resources was quickly
turned around so that additional materials were
purchased.

30. The Case of Aisin Seiki’s Anjo Plant
• A visit to Aisin Seiki’s Anjo plant in Japan will help
the reader understand JIT.
• This plant produces such products as bed mattresses,
industrial sewing machines, gas heating pumps, and
air conditioners.
• The mattress production plant uses 7 dedicated lines
to produce mattresses of 750 different colors, styles,
and sizes every day.

31. The Case of Aisin Seiki’s Anjo Plant
• For the most popular models, a small storeroom at
the end of the line holds a standard inventory of
between 3 and 40 mattresses.
• Each of these high demand mattresses is placed in a
given location and with a kanban tag (production
order slip) attached.
• Every time an order comes in and a mattress is
shipped, the kanban that had been attached to that
mattress is sent back to the starting point of the line
and serves as an order to start production.

32. The Case of Aisin Seiki’s Anjo Plant
• This system ensures that the minimum required
number of the popular models is always in stock.
• For nonstandard types of mattresses, no storeroom
exists because the mattresses are shipped directly
from the production line to the furniture store that
placed the order.
• Sometimes the company receives large orders from
hotels and vacation resorts; when this happens, the
company spreads the production, manufacturing a
given number of mattresses each day.

33. The Case of Aisin Seiki’s Anjo Plant
• It fits this production evenly in between the
production of other models so that the normal
production schedule is not disturbed. This is called
heijunka or leveling.
• Large orders of this kind require the company to
secure outside storage space until the shipping date.
• Although JIT is sometimes referred to as a non-
stock production system, it is not always either
possible or practical to keep a zero inventory.

34. JIT System - Advantages
• Such a production system yields many insights.
• First, one can sense an invisible line connecting the
customer and the production process. That is, the
company has an overview of the complete supply
chain. As you shall see later when we talk about
Total Flow Management Model, having a full scale
view of the supply chain is very helpful.
• Secondly, this system allows great flexibility to meet
customer needs, both in terms of product and
quantity variation.

35. JIT System - Advantages
• A JIT production system is typically capable of
producing an average number of products per day,
but is able to account for a certain degree of demand
variation.
• Also a JIT production system is typically a one-
piece-flow system (discussed later), where the
manufacturing line is routinely changed when the
product type has to be changed. This makes a JIT
production line more apt to changes and therefore
capable of manufacturing niche products.

36. JIT System - Advantages
• Third, this kind of production system can respond
quickly to abnormalities on the line. If a reject is
produced, the whole line must be stopped because
there will be no replacement.
• In other words, management has to make a
concerted effort to address problems on the line so
that the line never stops.
• Fourth, this kind of production system helps
companies to forecast the market more accurately
for its most popular models.

37. JIT System - Advantages
• It is easier for companies with a JIT inventory
system to learn from experience the daily demand
for its most popular models, as opposed to
companies that would keep an inventory for all
kinds of models.
• This improves the ability of JIT systems to improve
its market forecasts – since all the less popular items
require no forecasting as the company would be
making them after receiving orders and in the
sequence they are ordered.

38. Key features of a JIT System
• Apart from these four advantages of JIT systems,
there are three additional features that may not be as
visible but are still present:
– 1. Takt time versus cycle time.
– 2. Pull production versus push production.
– 3. Establishing production flow.
• These three features of a JIT system will be
discussed in the next lecture.