This provides detailed discussion of Lean system and techniques to deal with it such as just in time, six sigma, TPM, Business Process Re-engineering etc.
Business economics deals with the application of economic theories and principles to solve business problems and aid management decision making. It involves using economic methodology to analyze issues like demand forecasting, cost analysis, profit analysis, and capital management at the level of individual firms. The study of business economics has both theoretical and practical significance. It helps understand economic behavior, assess economic performance, aid in economic planning and policymaking, and solve problems faced by various groups like businessmen, bankers, and policymakers. Overall, business economics integrates economic theory with business practice to facilitate optimal business decision making and planning.
What is Economic Performance?
Different techniques if economic forecasting (Survey, Econometric Models, Economic Indicators, Diffusion and composition indices).
Operational research emerged in 1885 when Frederick Taylor emphasized applying scientific analysis to production methods. Operational research systematically studies the basic structure, relationships, and functions of an organization using an interdisciplinary team approach from fields like statistics, engineering, and management. The goal is to help management make better decisions by developing mathematical models to quantitatively solve problems and find optimal solutions, though perfect answers may not always be possible. Computers are often needed to solve the complex mathematical models.
The document discusses environmental analysis and forecasting for business decision making. It describes the 4 stages of environmental analysis as scanning, monitoring, forecasting, and assessment. Scanning identifies impactful factors, monitoring provides in-depth analysis of key trends, forecasting anticipates future changes, and assessment evaluates implications. Common techniques include verbal/written information, search/scanning, spying, and forecasting. Environmental analysis helps businesses identify threats, opportunities, and industry transformations to inform strategic planning.
The document discusses the economic environment and its impact on business. It defines the economic environment as factors such as economic conditions, economic system, policies, and international economic factors that influence business operations. It describes the primary, secondary, tertiary and quaternary stages of economic activity and how environmental factors like economic, social, political, technological, and demographic conditions affect businesses.
The document discusses business environment, its meaning and importance. It explains that business environment includes internal factors within a firm's control as well as external factors outside its control, like political, economic, social, technological, environmental and legal conditions. It also discusses Porter's five forces model for analyzing industry competition and outlines various components that influence a firm's external environment, including its economic system.
The document discusses the political environment's important role in shaping business worldwide. It explains that the political leadership in each country controls how international business occurs within that country. Managers need to understand how to interact between business and government and react to conflicts of interest. The political environment includes all laws, government agencies, and lobbying groups that influence organizations. It also outlines the key responsibilities and relationships between business and government. Finally, it provides steps for managers to establish appropriate political strategies to be successful when dealing with varying degrees of government intervention across different countries.
A power point presentation describing some basic definitions, father of cost accounting, Indian aspect of cost accounting and Various Methods and Techniques of costing.
Presented by: Aquib Ali, Ajay Gupta and Ashwin Showi. (M.Com students)
at the Bhopal School of Social Sciences(BSSS) on 6 September, 2017
Business economics deals with the application of economic theories and principles to solve business problems and aid management decision making. It involves using economic methodology to analyze issues like demand forecasting, cost analysis, profit analysis, and capital management at the level of individual firms. The study of business economics has both theoretical and practical significance. It helps understand economic behavior, assess economic performance, aid in economic planning and policymaking, and solve problems faced by various groups like businessmen, bankers, and policymakers. Overall, business economics integrates economic theory with business practice to facilitate optimal business decision making and planning.
What is Economic Performance?
Different techniques if economic forecasting (Survey, Econometric Models, Economic Indicators, Diffusion and composition indices).
Operational research emerged in 1885 when Frederick Taylor emphasized applying scientific analysis to production methods. Operational research systematically studies the basic structure, relationships, and functions of an organization using an interdisciplinary team approach from fields like statistics, engineering, and management. The goal is to help management make better decisions by developing mathematical models to quantitatively solve problems and find optimal solutions, though perfect answers may not always be possible. Computers are often needed to solve the complex mathematical models.
The document discusses environmental analysis and forecasting for business decision making. It describes the 4 stages of environmental analysis as scanning, monitoring, forecasting, and assessment. Scanning identifies impactful factors, monitoring provides in-depth analysis of key trends, forecasting anticipates future changes, and assessment evaluates implications. Common techniques include verbal/written information, search/scanning, spying, and forecasting. Environmental analysis helps businesses identify threats, opportunities, and industry transformations to inform strategic planning.
The document discusses the economic environment and its impact on business. It defines the economic environment as factors such as economic conditions, economic system, policies, and international economic factors that influence business operations. It describes the primary, secondary, tertiary and quaternary stages of economic activity and how environmental factors like economic, social, political, technological, and demographic conditions affect businesses.
The document discusses business environment, its meaning and importance. It explains that business environment includes internal factors within a firm's control as well as external factors outside its control, like political, economic, social, technological, environmental and legal conditions. It also discusses Porter's five forces model for analyzing industry competition and outlines various components that influence a firm's external environment, including its economic system.
The document discusses the political environment's important role in shaping business worldwide. It explains that the political leadership in each country controls how international business occurs within that country. Managers need to understand how to interact between business and government and react to conflicts of interest. The political environment includes all laws, government agencies, and lobbying groups that influence organizations. It also outlines the key responsibilities and relationships between business and government. Finally, it provides steps for managers to establish appropriate political strategies to be successful when dealing with varying degrees of government intervention across different countries.
A power point presentation describing some basic definitions, father of cost accounting, Indian aspect of cost accounting and Various Methods and Techniques of costing.
Presented by: Aquib Ali, Ajay Gupta and Ashwin Showi. (M.Com students)
at the Bhopal School of Social Sciences(BSSS) on 6 September, 2017
Types Of Consumer Redressal Machinaries And ForumsRishebh Clement
The document summarizes the three-tier consumer grievance redressal machinery and forums in India. It discusses the District Forum, State Commission, and National Commission that form the three levels for consumers to file complaints. It provides details on the pecuniary jurisdiction, composition, and terms for each level. The document also outlines the process for filing complaints and appeals at each level, including the information required, limitation periods, fees, and time schedules for disposal.
Walton founded Walmart and Sam's Club, pioneering the discount retail model. In 1962, he opened the first Walmart store in Rogers, Arkansas. By 1980, he had expanded to include Sam's Club, catering to small businesses and individuals. His strategic focus on low prices transformed retail and established Walmart as the largest company in the world by revenue. Walton's business policies centered on low costs, high volume, and passing savings to customers, fueling the company's massive growth in the following decades.
This document discusses various methods for classifying and forecasting demand. It categorizes demand based on whether goods are for consumers or producers, whether they are perishable or durable, and whether demand is derived, autonomous, for a firm or industry, or for total markets versus market segments. It then discusses demand forecasting and different quantitative and qualitative techniques for forecasting, including expert opinion methods, complete/sample consumer enumeration surveys, sales force opinion surveys, and consumer end use surveys. Each technique is described along with its advantages and disadvantages.
This document discusses various techniques used for effective material control, including:
1) Setting reorder levels, minimum levels, and maximum levels to ensure adequate stock levels.
2) Determining economic order quantities to minimize ordering and carrying costs.
3) Just-in-time inventory systems which aim to deliver materials as needed to reduce stock levels.
4) ABC analysis which categorizes materials based on value to prioritize control of high-value items.
Target and Life Cycle Costing discusses target costing, kaizen costing, and life cycle costing. Target costing determines the cost needed for a product to be profitable at its selling price. Kaizen costing uses continuous improvement to maintain costs. Life cycle costing considers all costs over a product's lifetime from development to disposal. It helps companies strategically price products over their sales lifecycles and understand costs from the customer perspective through total cost of ownership analysis.
This document discusses profit maximization, which refers to determining the price and output level that generates the highest profit for a business. It defines profit as total revenue minus total costs. The document outlines two main methods for profit maximization: the marginal cost-marginal revenue method and the total cost-total revenue method. It explains that to maximize economic profits, a firm should produce the quantity where marginal revenue equals marginal costs. The document also notes that while profit maximization is good for businesses, it can be bad for consumers if companies cut costs or raise prices excessively.
Corporate social responsibility (CSR) refers to a company's responsibility to consider the interests of society through its activities and business relationships. CSR includes improving the quality of life of employees and their families as well as the local community and society. While primarily associated with businesses, activist groups and communities can also demonstrate social responsibility. Social auditing is a tool used to evaluate how well a company has fulfilled its social responsibilities and identify areas for improvement.
Indian Ethos and Values (Business Ethics) - BAFJay Mehta
The document discusses Indian ethics and values, as well as total quality management from an Indian perspective. It defines ethics and different views on ethics. It also discusses Indian models of management in socio-political environments. It then covers Indian heritage perspectives on production, consumption, and other economic activities. Finally, it outlines the principles and guiding factors of total quality management from an Indian insight.
Kaizen costing is a method for continuously improving productivity and reducing costs through small, incremental changes. It focuses on minimizing waste and involves employees in an ongoing process of finding problems, developing solutions, implementing changes, and standardizing successful improvements. There are two approaches to kaizen costing - organization-specific and product-specific. Key advantages include improved customer satisfaction, continuous improvement, and a better work environment through collaborative problem-solving.
This document discusses ethics in various functional areas of business such as human resource management, operations, finance, and marketing.
For human resource management, it discusses the meaning of HRM and ethics in HRM. Ethics in HRM indicates treating employees with decency and justice. It also discusses areas of HRM ethics like basic rights, safety, privacy, and fair treatment.
For operations management, it defines operations management and ethics in operations. Ethics refers to social and environmental responsibilities. It discusses issues like cost efficiency, technology use, environmental concerns, and supplier ethics.
For finance, it discusses financial sectors, regulators, and players in India. It covers ethics issues like insider trading, hostile takeovers, deception
Discuss the concept of risk in investment decisions.
Understand some commonly used techniques, i.e., payback, certainty equivalent and risk-adjusted discount rate, of risk analysis in capital budgeting.
Focus on the need and mechanics of sensitivity analysis and scenario analysis.
Highlight the utility and methodology simulation analysis.
Explain the decision tree approach in sequential investment decisions.
Focus on the relationship between utility theory and capital budgeting decisions.
Relationship of Managerial Economics with other disciplines,Difference betwee...Pooja Kadiyan
This document provides an overview of key concepts in managerial economics. It discusses the relationship between managerial economics and other disciplines like economics, operational research, accountancy, mathematics, statistics, psychology, and management theory. Microeconomics studies individual actors in markets while macroeconomics looks at whole economies. The document outlines differences between micro and macroeconomics. Finally, it explores important economic concepts used in managerial decision making, including incremental concepts, time perspective, discounting, opportunity costs, equimarginal principle, contribution concept, and negotiation principle.
A simple and comprehensive presentation on Profit maximization v/s Wealth Maximization.
By Arvinder Pal Kaur
Faculty of Management
Northwest Group of Institutions
Dhudhike, MOGA
This document provides an overview of just-in-time (JIT) manufacturing. It discusses the history and objectives of JIT, the eight types of waste in manufacturing, and the three parts of JIT - purchasing, manufacturing, and quality management. Key aspects of JIT covered include production management, supplier management, inventory management, and human resource management. The document also compares traditional manufacturing systems to JIT systems and discusses how management accounting must adapt to support JIT goals.
The document discusses lean manufacturing and one-piece flow manufacturing. It defines key lean terms like takt time, kanban, jidoka, and heijunka. It then summarizes how United Electric Controls implemented one-piece flow manufacturing through techniques like reducing lot sizes to one piece, pulling production based on customer demand, and using a kanban card system to signal production. This enabled United Electric Controls to reduce lead times from 4-5 weeks to an average of 2 weeks while improving quality and flexibility.
Types Of Consumer Redressal Machinaries And ForumsRishebh Clement
The document summarizes the three-tier consumer grievance redressal machinery and forums in India. It discusses the District Forum, State Commission, and National Commission that form the three levels for consumers to file complaints. It provides details on the pecuniary jurisdiction, composition, and terms for each level. The document also outlines the process for filing complaints and appeals at each level, including the information required, limitation periods, fees, and time schedules for disposal.
Walton founded Walmart and Sam's Club, pioneering the discount retail model. In 1962, he opened the first Walmart store in Rogers, Arkansas. By 1980, he had expanded to include Sam's Club, catering to small businesses and individuals. His strategic focus on low prices transformed retail and established Walmart as the largest company in the world by revenue. Walton's business policies centered on low costs, high volume, and passing savings to customers, fueling the company's massive growth in the following decades.
This document discusses various methods for classifying and forecasting demand. It categorizes demand based on whether goods are for consumers or producers, whether they are perishable or durable, and whether demand is derived, autonomous, for a firm or industry, or for total markets versus market segments. It then discusses demand forecasting and different quantitative and qualitative techniques for forecasting, including expert opinion methods, complete/sample consumer enumeration surveys, sales force opinion surveys, and consumer end use surveys. Each technique is described along with its advantages and disadvantages.
This document discusses various techniques used for effective material control, including:
1) Setting reorder levels, minimum levels, and maximum levels to ensure adequate stock levels.
2) Determining economic order quantities to minimize ordering and carrying costs.
3) Just-in-time inventory systems which aim to deliver materials as needed to reduce stock levels.
4) ABC analysis which categorizes materials based on value to prioritize control of high-value items.
Target and Life Cycle Costing discusses target costing, kaizen costing, and life cycle costing. Target costing determines the cost needed for a product to be profitable at its selling price. Kaizen costing uses continuous improvement to maintain costs. Life cycle costing considers all costs over a product's lifetime from development to disposal. It helps companies strategically price products over their sales lifecycles and understand costs from the customer perspective through total cost of ownership analysis.
This document discusses profit maximization, which refers to determining the price and output level that generates the highest profit for a business. It defines profit as total revenue minus total costs. The document outlines two main methods for profit maximization: the marginal cost-marginal revenue method and the total cost-total revenue method. It explains that to maximize economic profits, a firm should produce the quantity where marginal revenue equals marginal costs. The document also notes that while profit maximization is good for businesses, it can be bad for consumers if companies cut costs or raise prices excessively.
Corporate social responsibility (CSR) refers to a company's responsibility to consider the interests of society through its activities and business relationships. CSR includes improving the quality of life of employees and their families as well as the local community and society. While primarily associated with businesses, activist groups and communities can also demonstrate social responsibility. Social auditing is a tool used to evaluate how well a company has fulfilled its social responsibilities and identify areas for improvement.
Indian Ethos and Values (Business Ethics) - BAFJay Mehta
The document discusses Indian ethics and values, as well as total quality management from an Indian perspective. It defines ethics and different views on ethics. It also discusses Indian models of management in socio-political environments. It then covers Indian heritage perspectives on production, consumption, and other economic activities. Finally, it outlines the principles and guiding factors of total quality management from an Indian insight.
Kaizen costing is a method for continuously improving productivity and reducing costs through small, incremental changes. It focuses on minimizing waste and involves employees in an ongoing process of finding problems, developing solutions, implementing changes, and standardizing successful improvements. There are two approaches to kaizen costing - organization-specific and product-specific. Key advantages include improved customer satisfaction, continuous improvement, and a better work environment through collaborative problem-solving.
This document discusses ethics in various functional areas of business such as human resource management, operations, finance, and marketing.
For human resource management, it discusses the meaning of HRM and ethics in HRM. Ethics in HRM indicates treating employees with decency and justice. It also discusses areas of HRM ethics like basic rights, safety, privacy, and fair treatment.
For operations management, it defines operations management and ethics in operations. Ethics refers to social and environmental responsibilities. It discusses issues like cost efficiency, technology use, environmental concerns, and supplier ethics.
For finance, it discusses financial sectors, regulators, and players in India. It covers ethics issues like insider trading, hostile takeovers, deception
Discuss the concept of risk in investment decisions.
Understand some commonly used techniques, i.e., payback, certainty equivalent and risk-adjusted discount rate, of risk analysis in capital budgeting.
Focus on the need and mechanics of sensitivity analysis and scenario analysis.
Highlight the utility and methodology simulation analysis.
Explain the decision tree approach in sequential investment decisions.
Focus on the relationship between utility theory and capital budgeting decisions.
Relationship of Managerial Economics with other disciplines,Difference betwee...Pooja Kadiyan
This document provides an overview of key concepts in managerial economics. It discusses the relationship between managerial economics and other disciplines like economics, operational research, accountancy, mathematics, statistics, psychology, and management theory. Microeconomics studies individual actors in markets while macroeconomics looks at whole economies. The document outlines differences between micro and macroeconomics. Finally, it explores important economic concepts used in managerial decision making, including incremental concepts, time perspective, discounting, opportunity costs, equimarginal principle, contribution concept, and negotiation principle.
A simple and comprehensive presentation on Profit maximization v/s Wealth Maximization.
By Arvinder Pal Kaur
Faculty of Management
Northwest Group of Institutions
Dhudhike, MOGA
This document provides an overview of just-in-time (JIT) manufacturing. It discusses the history and objectives of JIT, the eight types of waste in manufacturing, and the three parts of JIT - purchasing, manufacturing, and quality management. Key aspects of JIT covered include production management, supplier management, inventory management, and human resource management. The document also compares traditional manufacturing systems to JIT systems and discusses how management accounting must adapt to support JIT goals.
The document discusses lean manufacturing and one-piece flow manufacturing. It defines key lean terms like takt time, kanban, jidoka, and heijunka. It then summarizes how United Electric Controls implemented one-piece flow manufacturing through techniques like reducing lot sizes to one piece, pulling production based on customer demand, and using a kanban card system to signal production. This enabled United Electric Controls to reduce lead times from 4-5 weeks to an average of 2 weeks while improving quality and flexibility.
The document discusses lean manufacturing and one-piece flow manufacturing. It defines key lean concepts like takt time, kanban, jidoka, and heijunka. It then summarizes how United Electric Controls implemented one-piece flow manufacturing through techniques like reducing lot sizes to one piece and pulling production through the process at the customer demand rate. This enabled them to reduce lead times from 4-5 weeks to an average of 2 weeks while improving quality and flexibility.
The document discusses lean manufacturing and one-piece flow manufacturing. Some key points:
1) Lean manufacturing aims to eliminate waste and optimize flow through continuous improvement. This includes reducing batch sizes, setup times, and lead times.
2) One-piece flow manufacturing produces low volumes of varied products through techniques like takt time, pull systems, and single-piece lot sizes to reduce lead times.
3) A company implemented one-piece flow and reduced lead time from 4-5 weeks to an average of 2 weeks, with same-day response for some orders. This was done through techniques like kanban cards, heijunka boxes, and autonomation.
The document discusses lean manufacturing and one-piece flow manufacturing. Some key points:
1) Lean manufacturing aims to eliminate waste and optimize flow through continuous improvement. This includes reducing batch sizes, setup times, and implementing pull systems.
2) One-piece flow manufacturing is well-suited for low-volume, high-variety production. It involves producing only what is needed when it is needed through techniques like takt time, kanban cards, and one-piece workflows.
3) A company implemented these methods and was able to reduce lead times from 4-5 weeks to an average of 2 weeks while improving flexibility.
This document provides information about lean production and just-in-time (JIT) manufacturing. It includes an acknowledgement, index, and sections on what lean production is, JIT, the history and development of JIT, concepts of JIT, and characteristics of JIT. The document was produced by a group of students for their production management and material management class project on lean production and JIT, with a focus on its application to Bisleri company.
1. Lean manufacturing focuses on eliminating waste throughout the production process through techniques like just-in-time production and pull systems.
2. A pull system controls production using signals like kanban cards to produce only what is needed and eliminates waste from long lead times and excess inventory.
3. The Toyota Production System pioneered lean techniques and its goals of continuously eliminating waste and improving processes while respecting people.
The document discusses Just-in-Time (JIT) production. It defines JIT as a system that produces or acquires materials only as needed to minimize waste and costs. JIT was developed by Toyota and aims to eliminate overproduction and waste. The document outlines the purposes, objectives, advantages, disadvantages and characteristics of JIT manufacturing and services.
The document discusses various lean manufacturing concepts including Just-in-Time (JIT), Toyota Production System (TPS), work-in-progress (WIP), Six Sigma, total quality management (TQM), 5S, lean operations, and waste reduction. It explains how these concepts are used to eliminate waste and non-value added activities, achieve continuous process improvement, and maximize efficiency in manufacturing. The overall goal is to meet customer demands with high quality, low costs, and minimal defects.
This document describes a simulation study of a kanban system using Flexsim software. The study aims to analyze the effectiveness of kanban approaches in a rapid response engineering environment.
The simulation model builds a 5-stage kanban production line with sources, queues, processors and a sink. It runs the simulation and records various metrics like time in system, inventory levels, throughput, stockouts and resource utilization.
The results show that the kanban system is able to maintain a constant work-in-process inventory throughout the production line at any time during the simulation runs. Charts of processing times and idle times are also produced from the simulation outputs.
In conclusion, the simulation finds that kanban control approaches can
The document discusses key aspects of Lean Manufacturing and the Toyota Production System. It defines Lean as eliminating waste to continuously improve productivity. The Toyota Production System aims to reduce lead times through just-in-time production and autonomation (Jidoka). It emphasizes a pull-based system, continuous flow, and eliminating overproduction and waiting through techniques like kanban cards, poka-yoke, and standardized processes. The system respects people and helps suppliers continuously improve as well.
This document provides an overview of Just-In-Time (JIT) manufacturing. It defines JIT as a method that organizes production so that parts are available when needed. The key aspects of JIT discussed include: eliminating waste through continuous improvement, leveling production using a pull system like Kanban, setting up cells/modules, reducing setup times, and ensuring quality from suppliers. JIT aims to provide customers what they want, when they want it, with no excess inventory or waste.
Six Sigma is a data-driven methodology for process improvement that aims to reduce defects. It was developed by Motorola in 1986 and uses statistical methods to identify and remove defects in manufacturing and business processes. The five phases of the Six Sigma methodology are Define, Measure, Analyze, Improve, and Control. Lean operations focus on eliminating waste to provide greater customer value with fewer resources. Key aspects of lean include just-in-time production and Kanban systems to minimize inventory levels and only produce what is needed.
Lean - PPT (Lean manufacturing and six sigma)Blankdevil
Lean manufacturing is a methodology that focuses on minimizing waste within manufacturing systems while simultaneously maximizing productivity. Waste is seen as anything that customers do not believe adds value and are not willing to pay for. Some of the benefits of lean manufacturing can include reduced lead times, reduced operating costs and improved product quality.
Lean manufacturing, also known as lean production, or lean, is a practice that organizations from numerous fields can enable. Some well-known companies that use lean include Toyota, Intel, John Deere and Nike. The approach is based on the Toyota Production System and is still used by that company, as well as myriad others. Companies that use enterprise resource planning (ERP) can also benefit from using a lean production system.
Lean manufacturing is based on a number of specific principles, such as Kaizen, or continuous improvement.
Lean manufacturing was introduced to the Western world via the 1990 publication of The Machine That Changed the World, which was based on an MIT study into the future of the automobile detailed by Toyota's lean production system. Since that time, lean principles have profoundly influenced manufacturing concepts throughout the world, as well as industries outside of manufacturing, including healthcare, software development and service industries.
5 principles of lean manufacturing
A widely referenced book, Lean Thinking: Banish Waste and Create Wealth in Your Corporation, which was published in 1996, laid out five principles of lean, which many in the field reference as core principles. Value is created by the producer, but it is defined by the customer. Companies need to understand the value the customer places on their products and services, which, in turn, can help them determine how much money the customer is willing to pay.
The company must strive to eliminate waste and cost from its business processes so that the customer's optimal price can be achieved -- at the highest profit to the company.
2. Map the value stream. This principle involves recording and analyzing the flow of information or materials required to produce a specific product or service with the intent of identifying waste and methods of improvement. Value stream mapping encompasses the product's entire lifecycle, from raw materials through to disposal.
Companies must examine each stage of the cycle for waste. Anything that does not add value must be eliminated. Lean thinking recommends supply chain alignment as part of this effort.
3. Create flow. Eliminate functional barriers and identify ways to improve lead time. This aids in ensuring the processes are smooth from the time an order is received through to delivery. Flow is critical to the elimination of waste. Lean manufacturing relies on preventing interruptions in the production process and enabling a harmonized and integrated set of processes in which activities move in a constant stream.ean manufacturing requires a rel
Just-in-Time (JIT) is a philosophy and technique for manufacturing companies to organize operations more efficiently and reduce waste. It aims to produce goods just when they are needed to meet customer demand. JIT originated in Japan in the 1970s and focuses on minimizing inventory costs and delays. Key aspects of JIT include supplier partnerships, small lot sizes, continuous process flow, and reducing set-up times and waste. Implementing JIT requires changes to production scheduling, inventory management, and company culture. Benefits include lower costs, higher quality, and improved customer satisfaction.
Overview on Kanban Methodology and its ImplementationLaukik Raut
Kanban methodology is very significant
philosophy which plays an important role in many
production units. In this paper Kanban methodology has
been reviewed and has been implemented on „Swing Lever
Assembly‟ of the Bajaj Steels Pvt. Ltd Nagpur. The Kanban
system involves the selection of two important parameters
i.e. the lot size and the numbers of Kanban used in the
process. The main objective of Kanban system is to
maximize the productivity of a unit and this is done by
reducing the idle time of the process. Kanban system is a
very cost efficient process if applied in proper manner.
This document provides an overview of lean manufacturing. It discusses the Toyota Production System and lean techniques like 5S, single minute exchange of dies (SMED), kanban, and cellular manufacturing. Implementing lean aims to eliminate waste and improve efficiency. Key benefits include increased productivity, reduced space/lead times, and improved quality and flexibility. The document also outlines how lean has evolved over time to incorporate strategies like six sigma, lean maintenance, and its application in various industries.
The document discusses various aspects of manufacturing processes. It begins by defining manufacturing as the production of products using labor, machines, and tools to transform raw materials. It then discusses different viewpoints of manufacturing from a technology and economy perspective. Specific manufacturing processes described include tire manufacturing and the history of manufacturing management. Production systems like push, pull, and Just-in-Time (JIT) are explained. Additional concepts covered include lean manufacturing, value stream mapping, total productive maintenance (TPM), 5S workplace organization, and continuous improvement.
Just-In-Time (JIT) is a Japanese manufacturing philosophy developed in the 1970s that was first adopted by Toyota. The main goal of JIT is to meet consumer demands by eliminating waste in the production system. It aims to reduce inventory and lead times by producing only what is needed for smooth, efficient production. JIT requires extensive commitment and changes such as standardization, multi-skilled workers, pull-based production, and close supplier relationships to be successful.
Lean manufacturing aims to eliminate waste in processes to improve value for customers. It involves analyzing information and material flows to continuously improve processes. Key aspects of lean include just-in-time production, standardized work, visual controls, quality at the source, and reducing set-up times and batch sizes. The Toyota Production System developed these lean principles to allow for producing many models in low volumes. Lean identifies seven types of waste including transportation, inventory, motion, waiting, overproduction, overprocessing, and defects. Implementing cells, kanban systems, and focusing on continuous improvement can help eliminate waste.
Similar to Lean system and innovation in strategic Cost Management (20)
This document discusses various pricing methods and strategies. It begins by introducing pricing as a crucial business decision that affects profitability and survival. It then covers pricing under different market structures like perfect competition, monopoly, monopolistic competition, and oligopoly. Common pricing strategies of skimming and penetrating pricing are explained. The document also examines various pricing methods including cost-based pricing, competition-based pricing, and value-based pricing. It provides examples and considerations for each method. In summary, the document provides an overview of important pricing concepts, strategies, and calculation techniques for businesses.
This document will deal with several cost reduction techniques such as target costing, life cycle costing, Pareto analysis etc.
Further, it consist a quick view of environmental cost management and accounting.
Modern business Techniques in Strategic Cost Management Yash Maheshwari
This will provide you a detailed discussion on modern business techniques available in current business world.
Also, this may serve purpose for your study content.
The document provides an overview of key concepts in Indian income tax law.
1) It outlines the basic components of India's income tax law, including the Income Tax Act 1961 which is amended annually by the Finance Act, as well as Income Tax Rules, Circulars, Notifications, and legal decisions from courts.
2) Important definitions from the Income Tax Act are summarized, such as the definitions of "assessee", "assessment", "previous year", and types of persons like an individual, HUF, company, firm, AOP, and BOI.
3) Rules of interpretation for income tax provisions are covered, including how charging provisions, machinery provisions, and provisions giving exemptions/rel
This document discusses the concept and process of securitization. It defines securitization as the process of repackaging illiquid assets like loans into marketable securities. The key steps involve pooling assets, transferring them to a special purpose vehicle (SPV), issuing securities to investors based on the assets, and using proceeds to repay the originator. Primary participants are the originator, SPV, and investors. Secondary participants include obligors, rating agencies, servicers, trustees, and structurers. Benefits include off-balance sheet financing for originators and risk diversification for investors. Challenges to securitization in India include high stamp duties and lack of clear tax treatment.
The document provides an introduction to strategic cost management (SCM). It discusses the limitations of traditional cost management including its short-term outlook, excessive focus on cost reduction, and reliance on internal factors. SCM is presented as having a long-term dynamic approach focused on achieving sustainable competitive advantages through product differentiation or cost leadership. The value chain concept is introduced as a way to identify value-adding and non-value adding activities within a company's processes. Porter's value chain model is described including primary and support activities.
Strategic financial management combines accounting and financial management to help achieve organizational objectives through strategic decisions around financing, investments, dividends and portfolios. It is important for long-term survival and market leadership. Financial policy and strategic management are closely linked, as strategic decisions require financial considerations and financial policies shape organizational strategy and growth. Sustainable growth requires balancing financial goals with distributing resources in a way that benefits future stakeholders.
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...Dr. Vinod Kumar Kanvaria
Exploiting Artificial Intelligence for Empowering Researchers and Faculty,
International FDP on Fundamentals of Research in Social Sciences
at Integral University, Lucknow, 06.06.2024
By Dr. Vinod Kumar Kanvaria
This presentation includes basic of PCOS their pathology and treatment and also Ayurveda correlation of PCOS and Ayurvedic line of treatment mentioned in classics.
How to Setup Warehouse & Location in Odoo 17 InventoryCeline George
In this slide, we'll explore how to set up warehouses and locations in Odoo 17 Inventory. This will help us manage our stock effectively, track inventory levels, and streamline warehouse operations.
Walmart Business+ and Spark Good for Nonprofits.pdfTechSoup
"Learn about all the ways Walmart supports nonprofit organizations.
You will hear from Liz Willett, the Head of Nonprofits, and hear about what Walmart is doing to help nonprofits, including Walmart Business and Spark Good. Walmart Business+ is a new offer for nonprofits that offers discounts and also streamlines nonprofits order and expense tracking, saving time and money.
The webinar may also give some examples on how nonprofits can best leverage Walmart Business+.
The event will cover the following::
Walmart Business + (https://business.walmart.com/plus) is a new shopping experience for nonprofits, schools, and local business customers that connects an exclusive online shopping experience to stores. Benefits include free delivery and shipping, a 'Spend Analytics” feature, special discounts, deals and tax-exempt shopping.
Special TechSoup offer for a free 180 days membership, and up to $150 in discounts on eligible orders.
Spark Good (walmart.com/sparkgood) is a charitable platform that enables nonprofits to receive donations directly from customers and associates.
Answers about how you can do more with Walmart!"
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
How to Make a Field Mandatory in Odoo 17Celine George
In Odoo, making a field required can be done through both Python code and XML views. When you set the required attribute to True in Python code, it makes the field required across all views where it's used. Conversely, when you set the required attribute in XML views, it makes the field required only in the context of that particular view.
How to Manage Your Lost Opportunities in Odoo 17 CRMCeline George
Odoo 17 CRM allows us to track why we lose sales opportunities with "Lost Reasons." This helps analyze our sales process and identify areas for improvement. Here's how to configure lost reasons in Odoo 17 CRM
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
-------------------------------------------------------------------------------
Find out more about ISO training and certification services
Training: ISO/IEC 27001 Information Security Management System - EN | PECB
ISO/IEC 42001 Artificial Intelligence Management System - EN | PECB
General Data Protection Regulation (GDPR) - Training Courses - EN | PECB
Webinars: https://pecb.com/webinars
Article: https://pecb.com/article
-------------------------------------------------------------------------------
For more information about PECB:
Website: https://pecb.com/
LinkedIn: https://www.linkedin.com/company/pecb/
Facebook: https://www.facebook.com/PECBInternational/
Slideshare: http://www.slideshare.net/PECBCERTIFICATION
हिंदी वर्णमाला पीपीटी, hindi alphabet PPT presentation, hindi varnamala PPT, Hindi Varnamala pdf, हिंदी स्वर, हिंदी व्यंजन, sikhiye hindi varnmala, dr. mulla adam ali, hindi language and literature, hindi alphabet with drawing, hindi alphabet pdf, hindi varnamala for childrens, hindi language, hindi varnamala practice for kids, https://www.drmullaadamali.com
Lean system and innovation in strategic Cost Management
1. Lean System and Innovation Page 1
Lean System and Innovation
Topic 1: Lean System 2
Topic 2: Just In Time [The Pull System] 4
Topic 3: Kaizen Costing 12
Topic 4: 5S Of JIT 14
Topic 5: Total Productive Maintenance (TPM) 17
Topic 6: Cellular Manufacturing 20
Topic 7: Six Sigma 22
Topic 8: Process Innovation 25
Topic 9: Business Process Re-Engineering 26
Topic 10: Heijunka And Takt Time 30
2. Lean System and Innovation Page 2
Topic 1: Lean System
Lean System is an organized method for waste minimization without sacrificing
productivity within a manufacturing system.
Lean implementation emphasizes the importance of
Optimizing work flow through strategic operational procedures
while minimizing waste and being adaptable.
Hindi mein jane: Mahool ke hisab se badalna hoga and aise ki apka waste bhi kam ho. Jaise Ford Motors ek hi
Model 19 saal se chlta chla – jabki general motors ne naye naye design diye car ke – jab tak ford ne khud ko
change kiya mahool ke hisab se bahut derr kr di + usne bahut high cost mein woh kaam kiya + 4 saal uska
production pura ruk gaya – mtlb change to kia system par productivity affect kr ke puri.
Definition of Waste is any step or action in a process that is not required to complete a process
successfully (called Non-Value Adding Activity). i.e. koi bhi aisa kaam jis se customer ko koi value ni milta
When Waste is removed, only the steps that are required (i.e. Value-Adding activities) to deliver a
satisfactory product or service to the customer remain in the process.
7 Types of Wastes [OIW-M-TRO]
Overproduction: Producing ahead of demand i.e. buffer finished goods not required – iss ko control
krne ke liye hum use krte hai ek technique KANBAN – wohi lighting system
Inventory: Having more inventory than is minimally required at any point in the process,
including end-product i.e. Buffer inventory of raw material and WIP required – iss ko control krne ke liye
hum use krte hai ek technique JIT
Waiting: Waiting includes products waiting on the next production step i.e. product waiting time
due to non synchronous manufacturing – iske liye kanban use karo and constraint remove karo.
Motion: People or equipment moving or walking more than is required to perform the
process i.e. less movement of people (excess labour work) or equipment while working – use assembly line
system.
Transportation: Moving products that are not actually required to perform the process i.e.
focuses on optimum layout of products, people and process within the factory. Like process 1 and process 2 ka
daily connection hai toh unme jyda gap ni hona chahiye ki factory mein hi ghum raha product – iss ko control
krne ke liye hum use krte hai ek technique Cellular Manufacturing
Rework from defects: Non-right first time i.e. ek bar mein hi sahi banao product - iss ko control krne ke liye
hum use krte hai ek technique Six Sigma
Over Processing: Unnecessary work elements (non-value added activities) like inspection ek bar
kar lia – yeh ni lage hue hai ek hi kam m.
Lean manufacturing involves a shift in traditional thinking, from batch and queue to product-aligned
pull production i.e. focuses on pull system (sales to production) of manufacturing rather than push
system (Production to sales).
Instead of producing a lot of parts, the focus is on different types of operations conducted adjacent
to each other in a continuous flow i.e. ki ek jagah saara raw material daal dia toh finished product aa jaye sidha nikl
ke – tukdo mein kam na ho. Assembly line production use hona chahiye for this flow.
3. Lean System and Innovation Page 3
5 characteristics of lean manufacturing [measures of 7 wastes]
Zero waiting time
Zero inventory
Pull processing
Continuous flow of production
Continuous finding ways of reducing process time.
6 techniques of incorporating lean system
Just-in-Time (JIT)
Kaizen Costing
5S
Total Productive Maintenance (TPM)
Cellular Manufacturing/ One-Piece Flow Production Systems
Six Sigma (SS)
Most of these applications are based on following 4 principles
Perfect first-time quality
Waste minimization
Continuous improvement
Flexibility i.e. adaptability
4. Lean System and Innovation Page 4
Topic 2: Just in Time [The Pull System]
A just in time approach is a collection of ideas that streamline a company’s production
process activities to such an extent that wastage of all kinds viz., of time, material, and labour is
systematically driven out of the process. Thus, JIT has a decisive, positive impact on product costs.
Meaning
Just-in-time (JIT): System whose objective is to produce or to procure products or components
as they are required by a customer or for use, rather than for stock.
Mtlb saaf hai – ki stock mat bharo – rather jab zaruraat ho – tab mangwa lo – isse storage and handling cost save hoga –
par issue hai isme yeh ki agar jab zarurat hui and ni aaya toh production cycle halt ho skti hai.
A complete JIT system
Begins with production,
includes deliveries to a company’s production facilities,
continues through the manufacturing plant, and
even includes the types of transactions processed by the accounting system.
i.e. raw material ka delivery lia and sidha usse production ke liye bhej dia – instead of store room – and iska accounting
treatment normal accounting se hatt ke hai thoda.
4 Process of JIT
Suppliers Management – Process that vastly reduces the amount of raw materials inventory and
improves the quality of received parts
Spare Parts/ Materials from
suppliers shall be receives on
the exact date and at the
exact time when they are
needed.
•Purchasing staff must
investigate and evaluate
every supplier and shall
eliminate those which could
not keep up with the
delivery dates
Straight delivery shall
be made to the
production floor for
immediate use in
manufactured products
•so that there is no time
to inspect incoming
parts for defects
Engineering staff should
visit at supplier sites to
examine supplier's
processes
•and to to provide them
with engineering
assistance to bring
them up to a higher
standard of product.
Installation of EDI system by
concern that tells certified
suppliers exactly how much of
which parts are to be sent
Dropping off products
at the specific machines
that will use them first
Just-in-time production: Production system
which is driven by demand for finished
products, whereby each component on a
production line is produced only when needed
for the next stage i.e. utna produce karo, jitna sale
karna ho – so no finished goods
Just-in-time purchasing: Purchasing system
in which material purchases are contracted
so that the receipt and usage of material, to
the maximum extent possible, coincide i.e.
utna hi purchase karogy jitna consumption hoga – so
unnecessary inventory ni hoga and next process
requires first process completion
5. Lean System and Innovation Page 5
Process Management – Process in which a company reduces the amount of work-in-process, while
also shrinking the number of products that can be produced before defects are identified and fixed,
thereby reducing scrap costs.
Shorten the setup times
Eliminating the need for
long production runs
Smooth and streamline
flow of parts from
machine to machine
Traditional Approach
When setups take a long time, company management authorizes long production
runs, which spreads the cost of the setup over far more units, thereby reducing the
setup cost on a per-unit basis.
However, with this approach too many products are frequently made at one time,
resulting in product obsolescence, inventory carrying costs, and many defective
products. Therefore, concern must shorten the machinery set up time.
JIT Approach
Under JIT system a different approach to the setup issue is followed which focuses on
making a video tape (SIMO Study) of a typical set up and thereby eliminating the need for
long production runs to reduce per unit costs.
A team of industrial engineers and machine users examines this tape, spotting and
gradually eliminating steps that contribute to a lengthy setup.
2 Problems even after reduction of machine set up times
Pile up of WIP i.e. large difference between the operating speeds of different machines that
create an excessive quantity of WIP inventory
Delayed Identification of defectives i.e. defective parts produced by an upstream machine may
not be discovered until the next downstream machine operator works his way through a pile of
WIP and finds them
2 Solutions to resolve these problems (reduce excessive work-in-process inventory and defective parts in JIT System)
a) Kanban Card
It is a notification card that a downstream machine sends to each machine that
feeds it parts, authorizing the production of just enough components to fulfill the
production requirements being authorized in turn by the next machine further
downstream.
This is also known as Pull System
With this approach, there is no way for work-in-process inventory to build up in the production
system, since it can be created only with a kanban authorization.
Hindi mein jaan le:
Jab tak process 2 ka kam khtm ni hoga tab tak process 1 kam shuru ni kregi, so that WIP na bane. Issme ek traffic signal
system use hota h jo hum bottleneck m discuss kiye the. Abb jo log khali baithe h unko prb ho skti h toh uske liye unki
wages fix kr do taki woh secure and motivated rahe.
6. Lean System and Innovation Page 6
Note: Both kanbans and machine cells should be used together—they are not mutually exclusive.
Thus, by doing so a company could achieve extremely low product defect rates as well as vanishingly
small investments in work-in-process inventory.
Workforce Management i.e. Training to employees how to operate a multitude of different
machines and perform limited maintenance
Before taking into consideration process management it becomes apparent that a major change
must also be made in the work force.
Under traditional approach, there was one employee maintaining one machine, which is so
monotonous that workers quickly lapse into apathy and develop a complete disregard for the
quality of their work.
Therefore, the workforce must be completely retrained and focused on a wide range of
activities.
To enhance this situation, the human resource development department of organisation must
prepare and organise training classes to teach to employees
how to operate a multitude of different machines,
perform limited maintenance on the machines without having to call in the maintenance
staff,
spot product errors,
understand how the entire system flows, and
when to halt the production process to fix problems.
This result in a reconfiguration of the compensation system as the focus of attention shifts away
from performance based to high production volumes and in the direction of performance based
to high product quality.
Since, the production staff resolved the underlying issues within a few minutes of their
occurrence, the variance report becomes a complete waste of time i.e. quick response
b) Work Cells
Grouping machines into working cells is another way to reduce excessive work-in-process
inventory and defective parts.
A working cell is a small cluster of machines which can be run by a single machine operator.
This individual machine operator takes each output part from machine to machine within the cell;
and thus there is no way for work-in-process to build up between machines.
Also, this operator can immediately identify defective output which otherwise is difficult for each
machine of the cell
4 Benefit of work cells
lower maintenance costs
no way for WIP
immediately identify defective output
easier to reconfigure the production facility when a new product is to be produce
Hindi mein Jaan le:
Yaha, ek hi worker hota h jo saari machines operate krta h – machines iss tarah se setup hoti h – ki ek jagah par baithe baithe
saare kam kr le woh banda – though yeh sirf kisi plant ko new set up kia h tabhi jyda possible h – humare home kitchen ek
example h working cell ka jaha mummy ek jagah se hi saare kam kr lete h.
7. Lean System and Innovation Page 7
capabilities of a JIT system allows the management accountant to omit a large amount of the
variance reporting that was previously an important central job function.
Accounting System (Back flush System)
Massive changes caused by a JIT system also require several alterations in the supporting
accounting systems.
2 associated Problems
o Accounting staff faces the prospect of going through a large pile of accounts payable
paperwork
o Since, suppliers deliver parts directly to the production operation, so there is no way to
determine if deliveries have been made
2 Solutions
o Accountants can switch to making a single consolidated monthly payment to each supplier
to resolve first problem
o To resolve second problem, accountant can incorporate accounting system that can
determine the amount of finished products created during the period and then multiply
these quantities by the parts listed on the bill of materials for each product, obtaining a
total quantity for each part used.
The accountants then pay suppliers based on this theoretical production quantity, which is
also adjusted for scrap during the production process.
Thus, there is no need for suppliers to send invoices, since the company relies solely on its
internal production records to complete payments.
Back flushing Accounting
Back-flushing requires no data entry of any kind until a finished product is completed. At that time
the total amount finished is entered into the computer system, which multiplies it by all the
components listed in the bill of materials for each item produced.
Here, Closing Inventory is calculated as Opening Inventory Balance (–) list of components that should
have been used in the production process.
Hindi mein jaan lo:
Kisi bhi business mein jab aap – process chnge krte ho – toh phle workers se discuss krna chahiye – taki
woh motivate ho plus unko pta ho ki aagy kaise kaam karna hai and production ka flow kya hai – phle yeh
toh tha ki machine ek worker ko de di – abb woh ussi ko kar raha – saalo saal – bahut boring ho jata hai
yeh (jaise humne ford motor ke case mein dekha tha) – iska solution yeh nikla ki – har worker ko sab
machines ki knowledge do – taki job switch kar sake woh easily – further unko motivate karo – ki agar
machine mein choti moti problem aa rahi hai – toh usse khud se sahi kare – bina service wale ko bulaye –
further agar kissi worker ko lag raha ki kuch prb hai – toh usse right do ki woh production band kar ske –
jaise Hyundai mein hota hai.
Aao smjte hai:
JIT mein material kabhi bhi store mein ni aata – sidha production par jata and usme bhi turant hi use mein lag jata –
isliye problem aati hai accounts deptt ko ki trace kasie kare ki kya material h – kitna h – kitne paise dene hai plus kabhi
kabhi toh yahi pta ni lagta ki material aaya bhi hai ya ni. Isska solution nikla gaya – Back flushing Accounting – iss mein
yeh dono prb solve ki jati hai – ek to accounts monthly payment kar deta hai – ek consolidated basis par and maal
kitna aaya tha – yeh woh pta kar leta hai ki kitna finish good bana + kitna material scrap ho gaya hai – yani back
calculation se pta kr leta hai ki kitna material aaya.
8. Lean System and Innovation Page 8
4 Problems with Back Flushing that must be corrected before it will work properly
Production Reporting i.e. it requires an accurate production count as an incorrect count will
relieve an incorrect amount of components and raw material in stock.
This problem occurs due to high turnover or low level of training to production staff. To resolve
this, production should be done in small lot and proper training must be provided to staff.
Scrap Reporting [worst problem]
i.e. all abnormal scrap must be tracked and recorded such that they
can be charged to inventory.
This problem occurs due to high turnover or low level of training to employees. To resolve this,
production should be done in small lot and proper training must be provided to employees.
Lot Tracing i.e. under this system, manufacturer cannot keep records of which production lots
were used to create a product. Therefore, all items need to be recalled, if any defect is found.
This problem can be resolved by using right and highly equipped software and system.
Inventory Accuracy i.e. since this system does not remove item from inventory until after a
product has been completed, so the inventory records will remain incomplete. Therefore, a fast
production cycle time will be required to resolve this.
Consequently, the success of a back-flushing system is directly related to a company’s willingness to
invest in a well-paid, experienced well-educated production staff that undergoes little turnover.
3 Aims of JIT Production
Meeting customer demand in a timely manner
Providing high quality products and
Providing products at the lowest possible total cost
5 Features of JIT Production System
Material handling costs are reduced by organizing production in working cell and using the
concept of assembly line whereby Materials move from one machine to another where
various operations are performed in sequence
Labour idle time gets reduced i.e. Hire and retain multi-skilled workers so that they are
capable of performing a variety of operations, including repairs and maintenance tasks.
JIT creates urgency for eliminating defects as quickly as possible. Apply TQM to eliminate
defects. As, there are tight link stages in the production line, and minimum inventories at
each stage, defect arising in one stage can hamper the other stages.
Place emphasis on reducing set-up time which makes production in smaller batches
economical and reducing inventory levels. Thus, company can respond to customer demand
faster.
Carefully selected suppliers capable of delivering high quality materials in a timely manner
directly at the shop – floor, reducing the material receipt time
7 Essential Pre-requisites of a JIT system
Low variety of goods
Vendor reliability
Good communication
9. Lean System and Innovation Page 9
Demand stability
TQM i.e. Total Involvement of Management and Employees
Defect free materials
Preventive maintenance like Quality Circles, Routine Checkups etc.
Impact of JIT System on
Waste Cost
When fully installed, a JIT system vastly reduces all types of waste such as waste of assets,
waste of inventory, defective products, rework cost etc. When this happens, there is a sharp
drop in several aspects of a product’s costs.
Overhead Cost
The costs of material handling, facilities, and quality inspection decline when a JIT system is
installed. This also reduces the cost associated with warehouse like costs of staff,
equipment, fixed assets, facilities, and rent.
Product Price
When a company achieves a higher level of product quality, along with ability to deliver
products on the dates required, customers may be willing to pay a premium. However, if
these factors are not of great importance, or if customers place a higher degree of
importance on other factors, then there will be no opportunity for a price increase.
BenefitsofJIT
Question: How does the JIT approach help in improving an organisation’s profitability?
Answer: JIT approach helps in the reduction of costs/increase in prices as follows:
i. Immediate detection of defective goods being manufactured so that early correction is
ensured with least scrapping.
ii. Eliminates / reduces WIP between machines within working cell.
iii. Overhead costs in the form of rentals for inventory, insurance, maintenance costs etc. are
reduced.
iv. Higher product quality ensured by the JIT approach leads to higher premium in the selling
price.
v. Detection of problem areas due to better production / scrap reporting / labour tracing
and inventory accuracy lead to reduction in costs by improvement.
Question: Explain how the implementation of JIT approach to manufacturing can be a major
source of competitive advantage.
Answer: JIT provides competitive advantage in the following ways:
i. Stocks of raw materials and finished goods are eliminated, stock holding costs are
avoided.
ii. JIT aims at elimination of non-value added activities and elimination of cost in this
direction will improve competitive advantage.
iii. It affords flexibility to customer requirements where the company can manufacture
customized products and the competitive advantage is thereby improved.
iv. It focuses the direction of performance based production of high quality product.
v. It minimizes waiting times and transportation costs.
10. Lean System and Innovation Page 10
10 Performance Measurement of JIT
Small machines, small investment, lesser need to justify
i.e. machine utilization measurement shall be discarded under JIT environment as it may result
in high level of inventory. Therefore, Machine cells system to be used which tend to be small and
less costly.
Rewarding Employees on quality of improvements
i.e. any piece rate system must be eliminated and replaced with measures that focus instead on
the quality of output or the number of employee suggestions for improving the system, which
are much more important outcomes in a JIT system. (piece rate mein EEs jyda banana ki kosis kregy fir inventory
pile up hogi)
Eliminating labour efficiency variance although
i.e. JIT consider all labour tracking traditional measures as non value adding activity and there by
eliminate it. JIT focuses only on quality of the product manufactured.
Installing a JIT system does not mean that there should be complete elimination of operational
measures. Few measures are still important, such as:
High inventory turnover ratio
i.e. JIT systems emphasize on inventory turnover so that one can determine the turnover levels
for raw materials, work in process, and finished goods. Higher the ratio, better it is.
Set up Time
i.e. to calculate and measure average set up time per machine for short production runs
periodically. Shorter the set up time, better it is.
Concern for customer complaints
i.e. the accumulation of customer complaints and their dissemination to management should be
considered a major JIT measure. Thereby any complaint should be greeted with the gravest
concern and investigated immediately. Lower the response time, better it is.
Reduction of scrap
i.e. to calculate cost of scrap. Implementation of JIT should drive cost of scrap to exceedingly low
levels and helps to identify problem areas requiring further management attention. Lesser the
scrap, better it is.
Keeping track on quality
i.e. to calculate cost of quality. Since JIT focus on creating high quality products, it keep track on
cost of quality such that that management could know where the largest quality costs still reside
in the company and can then work to reduce them.
Customer service
i.e. reporting w.r.t delivering products on the dates required by customers, shipping full orders
to customers, and not having products returned because of poor quality since JIT focus on
highest possible degree of customer service.
Ideas generated by employees
i.e. to measure the number of ideas per worker, the number of ideas suggested in total, the
number of ideas implemented, or the proportion of ideas suggested that are implemented.
11. Lean System and Innovation Page 11
All the above JIT measures are not financial in nature (with the exception of the cost of quality)—
they are operational measures that focus attention on the nuts-and-bolts details of creating and
running a JIT system.
Note: JIT does not requires standard costing system because the production staff resolved the
underlying issues within a few minutes of their occurrence and thus the variance report becomes a
complete waste of time.
Process Cycle Efficiency
How to evaluate whether implementing JIT system is beneficial or not for an organization in a
particular scenario?
To evaluate the success of JIT system, an organization needs to assess the efficiency of their
manufacturing processes. To measure efficiency of process, managers keep track of the relation
between ‘time taken by value adding activities’ in comparison ‘total cycle time’. This is known as
“process cycle efficiency”.
To calculate process cycle efficiency, cycle time of production is breakdown into combination of
value adding activity
non value adding activity
non value adding activity but strategic activities i.e. activities that does not add value, but is
a necessary step in the final value-added product.
Therefore,
Process Cycle Efficiency =
The key to improving Process Cycle Efficiency is to reduce the Lead Time and balancing the process
takt times.
12. Lean System and Innovation Page 12
Topic 3: Kaizen Costing
[Continuous Improvement]
Kiazen is the continual examination and minor improvements of existing processes. This philosophy
implies that small and incremental changes routinely applied and sustained over a long
period result in significant improvements.
It involves repeat of many of the value engineering steps for as long as a product is
produced, constantly refining the process and thereby stripping out extra costs.
It takes into consideration various costs such as costs of supply chain, manufacturing costs,
marketing, sales, distribution costs etc.
2 Main Activities of Kaizen
elimination of waste in the production, assembly, and distribution processes
elimination of work steps in any of these areas
6 Kaizen Costing Principles
The system seeks gradual improvements in the existing situation, at an acceptable cost.
It encourages collective decision making and application of knowledge.
There are no limits to the level of improvements that can be implemented.
Kaizen involves setting standards and then continually improving these standards to achieve
long-term sustainable improvements.
The focus is on eliminating waste, improving systems, and improving productivity.
Involves all employees and all areas of the business
5 Kaizen Costing Benefits
Kaizen reduces waste in areas such as employees waiting time, transportation, excess inventory
etc., which leads to improved efficiency in overall business processes and systems.
A company applying Kaizen philosophy can achieve cost reduction through small incremental
improvements and cost savings.
Kaizen looks at functions and processes at all levels of organisation and requires participation of
all employees and massive as well as open communication system. This participative approach
improves teamwork across the organisation.
Product improvement using Kaizen is likely to result in less number of defective products leading
to customer satisfaction and reduction in warranty related costs.
The reduction in wastage, improved efficiency and cost reduction improves the overall
profitability of the company.
Kaizen Costing v/s BPR
Kaizen Costing Business Process Reengineering (BPR)
Resultant Cost reduction are smaller in value Resultant Cost reduction are higher in value
Force down the price of a product over time Force down the price of a product in one go
continual examination and improvement of
existing processes
radical one-off changes to improve an
organization's operations and processes
13. Lean System and Innovation Page 13
Kaizen Costing v/s Standard Costing
Kaizen Costing Standard Costing
Focus on cost reduction Focus on cost control
Sets small standards and reduce continuously Sets long term stable standards
Employee Participation in setting standards No Employee Participation in setting standards
3 Major changes required for implementation of Kiazen Costing Concepts
a) Adoption of Cost Reduction System
Kaizen Costing believes in continuous improvements in manufacturing processes and hence, the
goal is to achieve cost reduction target. Therefore, cost reduction system shall be adopted for
setting standards.
b) Periodicity for variance analysis
Under Kaizen Costing system cost reduction targets should be set for small periods say for a
week or a month and accordingly variance reports shall also be generated for small periods.
c) Involvement of workers
Under the Kaizen Costing system participation of workers or executives who are actually
involved in the manufacturing process are highly appreciated while setting standards. Therefore,
traditional system of setting standards by top management shall not be continued under this
system.
Example for Practice
Whether Statement is Valid Yes/No Remarks
VP (Finance) is of the view that
company has to make a huge initial
investment to bring a large scale
modification in production process
No
Kaizen Costing is the system of cost reduction
procedures which involves making small and
continuous improvements to the production
processes rather than innovations or large-scale
investment
Head (Personnel) has made a point that
introduction of Kaizen Costing does not
eliminate the training requirement of
employees.
Yes
The training of employees is very much a long-
term and ongoing process in the Kaizen costing
approach. Training enhances the abilities of
employees
General Manager (Manufacturing)
firmly believes that only shop floor
employees and workers’ involvement is
prerequisite of Kaizen Costing approach
No
Kaizen costing approach involves everyone from
top management level to the shop floor
employees. Every employee’s active
participation is a must requirement
Manager (Operations) has concerns
about creation of confusion among
employees and workers regarding their
roles and degradation in quality of
production
No
Though the aim of Kaizen Costing is to reduce
the cost but at the same time it also aims to
maintain the quality. Kaizen costing also aims to
bring the clarity in roles and responsibilities for
all employees
14. Lean System and Innovation
5S explains how a work space should be organized for efficiency and effectiveness by identifying and
storing the items used, maintaining the area and items, and sustaining the new
•Make work easier by
regard to cost or other
•Reduce chances of being
•Prevent accumulation of
Sort (Seiri) i.e. separate
remove latter
•Arrange all necessary items
so that they can be easily
•Ensure first-in-first-out
items
•Place components according
being neared to the work
Set In Order (Seiton) i
that they are easy in find
•Clean your workplace on
•Keep workplace safe, easy
•In an unfamiliar environment,
50 feet.
Shine (Seiso) i.e. conduct
•Standardize the best practices
•Maintain high standards,
standard.
•Every process has a standard
Standardize (Seiketsu)
to ensure that all steps are
•Not harmful to anyone,
•Also translates as “do without
•Training is goal-oriented
Sustain (Shitsuke) i.e.
through training a nd communication
Aao smjte hai
Yeh concept JIT ka hi part hai – yeh btata hai ki kaise apne work space ko ya work cell ko organize manner
mein rakhe – matlb aise smj lo – apni wadrobe ko kaise rakhe ki sab easily mil jaye
– waise hi kaise apne work cell ko rakhe ki saare item mil jaye and unko search krne mein time waste na ho.
Abb Japanese ne iss ke 5 phase bataye hai
nikllo system se – set in order i.e. abb bekar haata dia
laga ko based on frequency etc –
abb jo order bana lia na usko standard bana lo and humesha waise hi karo, taki jab aap chale bhi j
koi naya aaya toh use smj aa jaye khud
bhi. Ek 6
th
S aur hota hai safety in order to ensure safety while performing 5S.
Topic 4: 5S of JIT
explains how a work space should be organized for efficiency and effectiveness by identifying and
storing the items used, maintaining the area and items, and sustaining the new order.
by eliminating obstacles and evaluate necessary
factors.
being disturbed with unnecessary items
of unnecessary items.
separate needed and unneeded materials and
items into their most efficient and accessible arrangements
easily selected for use and make workflow smooth and
out FIFO basis, so that it is easy to find and pick up
according to their uses, with the frequently used
work.
i.e. arrange material and equipment so
find and use
on daily basis completely or set cleaning frequency
easy to work, clean and pleasing to work in
environment, people must be able to detect any problems
conduct of clean up campaign
practices in the work area.
standards, orderliness, everything in order and according
standard
i.e. formalize procedures and practices
are performed correctly
anyone, training and discipline, to maintain proper order
without being told"
oriented process. Its resulting feedback is necessary monthly
form habit of always following first 4S
communication
yeh btata hai ki kaise apne work space ko ya work cell ko organize manner
apni wadrobe ko kaise rakhe ki sab easily mil jaye – socks, hanky, pant etc.
e apne work cell ko rakhe ki saare item mil jaye and unko search krne mein time waste na ho.
Abb Japanese ne iss ke 5 phase bataye hai – sort i.e. bekar ko haatao, jo jo unnecessary chize hai who sab
i.e. abb bekar haata dia, toh sab item kaam ka bacha na, abb use order mein
– shine i.e. abb apne workspace ko daily saaf krte raho
abb jo order bana lia na usko standard bana lo and humesha waise hi karo, taki jab aap chale bhi j
koi naya aaya toh use smj aa jaye khud– sustain i.e. and inn 4 steps ko krte raho humesha, bina kisi ke bole
in order to ensure safety while performing 5S.
Page 14
explains how a work space should be organized for efficiency and effectiveness by identifying and
order.
necessary items with
arrangements
and easy.
up necessary
components
frequency
problems within
according to its
order
monthly
yeh btata hai ki kaise apne work space ko ya work cell ko organize manner
socks, hanky, pant etc.
e apne work cell ko rakhe ki saare item mil jaye and unko search krne mein time waste na ho.
i.e. bekar ko haatao, jo jo unnecessary chize hai who sab
, toh sab item kaam ka bacha na, abb use order mein
i.e. abb apne workspace ko daily saaf krte raho – standardize i.e.
abb jo order bana lia na usko standard bana lo and humesha waise hi karo, taki jab aap chale bhi jao, aur
i.e. and inn 4 steps ko krte raho humesha, bina kisi ke bole
15. Lean System and Innovation Page 15
Benefits of implementation of 5S
Sorting
Help to identify
Obsolete material and parts not required
Defective material and parts
Scrap Material
Material which are not in place
Unnecessary or extra material
Help in saving cost by reducing vacant material – as it free up space and reduce
chances of loss of material.
Set in order
Faster retrieval of things results in elimination of search time
Eliminate motion waste and provide search free and count free arrangement
Space saving by systematic arrangement
Efficiency of work improves as things are available when they are actually
needed
Resolve problem of non accessibility of tools
Shine Help in lowering down maintenance and repair and replacement cost
Standardization
Help in identification of Critical success factor (CSFs) and benchmark KPIs
against each CSFs
Sustain Help in following the system in long run
How to implement these 5S?
Sorting
Sort by dividing items into categories such as
Not needed at all
Needed but not now
Needed but not here
Needed but not so much quantity
Such sorting can be done by considering following questions
What is required?
How much required?
When it is required?
Where it is required?
Set in order
In order to implement systematic arrangement
Analyze status
Decide which things will belong where
Decide how they should be put away
Get everybody to follow rules through indexing, labelling etc.
Shine
Cleaning should be with meaning
Inspection shall be done from all aspects
Standardization
Fix responsibilities for implementing and evaluating system
Integrate these responsibilities into routine work
Check how well the system is working and sustaining itself
Sustain
Required to do
Daily Monitoring
Improving ownership by allocating areas
Usevisualaid
techniquei.e.colour
tags(RYGB)
Usevisual
management
16. Lean System and Innovation Page 16
Structured Communication
Continuous training of all employees
Periodic audits at all levels
Motivating staff through recognition
5S is considered as important component of lean manufacturing and foundation of 8 pillars of TPM.
5S methodology is being applied to a wide variety of industries including Manufacturing, Health care,
Education & Government.
ICAI Question1
1
Also refer material page no. 3.20 for case study
17. Lean System and Innovation Page 17
Topic 5: Total Productive Maintenance (TPM)
Total Productive Maintenance (TPM) is a system of maintaining and improving the integrity of
production and quality systems through keeping all equipment in top working condition so as to
avoid breakdowns and delays in manufacturing processes.
It involves identifying machines in every division (including planning, manufacturing, maintenance)
and then planning and executing a maintenance programme covering their entire useful life.
This is done through the machines, equipment, processes, and employees that add to the value in
Business Organisation.
TPM includes attaining
Zero break downs
Zero downtimes
Zero defects
No loss of efficiency or production capacity
4 Types of losses arise due to breakdowns
Unexpected Loss of production time
Production of inferior quality of goods that causes financial loss
Losses incurred on set up of machines etc. after every breakdown
Delayed customer services leading customers unsatisfied
4 Phases for Introduction of TPM
Preparation Stage: Establish a suitable environment and conducting programme awareness.
Introduction Stage: Initialization of TPM, information to suppliers, customers, and other
stakeholders.
Implementation Stage: This is done with the help of eight activities referred as eight pillars of
TPM.
Institutionalizing stage: This is the stage of getting TPM awards
8 Pillars of TPM with 5S strategy
Foundation & Pillars About Techniques
Foundation: 5S
TPM starts with 5S. It deals with organizing a
workplace which helps to recognize the
uncover problems
Seiri (sort), Seiton (set in
order) Seiso, (shine),
Seiketsu (standardize),
Shitsuke, (sustain).
P-1: Autonomous
Maintenance
Operation of equipment without breakdown
and eliminating the defects at source
through active employee participation
Cleaning, Lubricating, Visual
Inspection, Tightening of
Loosened Bolts etc (khud se karlo)
Jab machines, equipments etc. downgrade ho jati hai – toh hume use sahi krna pdhta – isse humra time
and money dono waste hote – efficiency and effectiveness dono low rehti – isliye ek concept aaya TPM –
jo ki inn system breaks par dhyn deta hai and inke failure se bachta hai.
Iss concept ko implement krne ke 4 steps hai – phle ek mahool banaao – organization mein – taki sab log
zero defects, zero breakdown and zero accidents – inn par focus kre. Apne sabi stakeholders ko batao ki
hum yeh follow krte hai and apko bhi yahi krna hai – fir TQM implement karo – mtlb kuch 8 activities hai –
unko shuru karo – and implement krne ke thode time baad se hi result paao must.
18. Lean System and Innovation Page 18
P-2: Focussed
Improvement (Kaizen)
This pillar is about the minor improvements
made on continuous basis. This pillar aims to
reduce losses in the workplace that affect
efficiencies
Kaizen Register, Kaizen
Summary Sheet, Why-Why
Analysis, Summary of
Losses.
P-3: Planned
Maintenance
This is proper maintenance system adopted
for improvement in reliability and
maintainability of equipment. It aims to have
zero breakdown and optimum maintenance
cost.
Preventive Maintenance,
Breakdown Maintenance,
Corrective Maintenance,
and Maintenance
Prevention.
P-4: Early
Management (parivartan jldi laao)
This focuses on shortening the time required
for product and equipment development.
Engineering and Re-
engineering Processes.
P-5: Quality
Maintenance
This is towards achieving customer
satisfaction through delivery of highest
quality product.
Root Cause Analysis,
Customer Data Analysis
P-6: Education &
Training
It aims to improve knowledge/ skills and
enhance morale of employees.
Training Calendar, Policies
for Education and Training,
On-site Training etc.
P-7: Office TPM
This refers to application of TPM techniques
in administration to improve productivity
and efficiency in the functions with
elimination of losses.
Analyzing processes and
procedure towards
increased Office
Automation
P-8: Safety, Health,
and Environment
Above all the safety of worker is utmost
importance. It aims to have zero accidents
and zero health damages
Drama, Safety Slogans,
Quizzes, Posters Making to
create awareness related to
safety.
Measurement of TPM
The most important approach to the measurement of TPM performance is known as Overall
Equipment Effectiveness (OEE) measure. The calculation of OEE measure requires the identification
of 6 big losses:
Time Loss
Calculated by Availability Ratio
Equipment Failure/ Breakdown
Should be more than 90%
Set-up/ Adjustments
Speed Loss
Calculated by Performance Ratio
Idling and Minor Stoppages
Should be more than 95%
Reduced Speed
Quality Loss
Calculated by Quality Ratio
Reduced Yield and
Should be more than 99%
Quality Defects and Rework
TPM mein jo activities hai – woh bahut saare concepts ko mila kar bani hai – sabse phla toh hai – ki TPM
implement krene se phle – organization ki problem ko jaano – yani ek toh 5S kia and ek internal and external
cost ko janna hai company ki – accordingly hum cost of quality concept lagate hai i.e. appraisal and prevention
cost kharch karte h – second hum jo chote chote improvements hai – uske liye Kiazen ko use kr skte hai – agar
koi process puri hi badalni hai – toh BPR – and yeh sab krne mein organization ke har bande ka saath chaiye
and focus quality hi hota hai – toh TQM apply krte hai.
19. Lean System and Innovation Page 19
Therefore, OEE = Performance * Availability * Quality
Accordingly, OEE at World Class Performance would be approximately 85%. Kotze (1993)
contradicted, that an OEE figure greater than 50% is more realistic and therefore more useful as an
acceptable target.
Difference between TQM and TPM
TQM and TPM are often used interchangeably. However, TQM and TPM are considered as two
different approaches.
TQM focuses on the quality of the product, while TPM focuses on the equipment used to
produce the products.
TQM attempts to increase the quality of goods, services and concomitant customer satisfaction
by raising awareness of quality concerns across the organisation.
However, by preventing equipment break-down, improving the quality of the equipment and by
standardising the equipment, the quality of the products increases.
TQM and TPM can both result in an increase of quality. However, the approach of each is
different. TPM can be seen as a way to help achieving the goal of TQM.
Connection between TQM and TPM
TQM and TPM make company more competitive by reducing costs, improving customer
satisfactions and slashing lead times.
Involvement of the workers into all phases of TQM and TPM is necessary.
Both processes need fundamental training and education of participants.
TPM and TQM take long time to notice sustained tangible benefits.
Commitment from top managements are necessary for success of the implementation
5 Types of Maintenance under TPM
Breakdown Maintenance
This type of maintenance is used when the equipment failure does
not impact the operations and production significantly and the only
cost incurred is the cost of repair.
Preventive Maintenance
It is a daily maintenance (cleaning, inspection, oiling and re-tightening),
designed to retain the healthy condition of equipment and prevent
failure through the prevention of deterioration, periodic inspection
or equipment condition diagnosis.
Corrective Maintenance
It focuses on making machines easier to clean and maintain. It is
reconfiguration of certain parts of the machines to ensure that the
maintenance staff can carry out maintenance effectively and easily
Maintenance Prevention
It helps the maintenance technicians to work with the designers of
machines to create machines that are more reliable.
Maintenance and repairs that are required can be made as simple
and as easy as possible to reduce time, save money and improve
safety.
Autonomous Maintenance
Here, minor and day to day repairs are carried out by the operators
of plant themselves instead of waiting for technicians.
Activities like lubricating, bolt tightening etc. are done along with
minor repairs by the floor workers or operators.
20. Lean System and Innovation
Concept of Cellular Manufacturing
In the assembly line multiple working
machines which accomplish a certain task. The product moves from one cell to the next, each station
completing part of the manufacturing process.
U-shaped design is given to these cells because this allows for the supervisor
the ability to more readily watch over the entire process
3 Goals of Cellular Manufacturing
To move as quickly as possible,
Make a wide variety of similar products
Making as little waste as possible
4 Steps of Implementation Process
7 Advantages of Cellular Manufacturing
Flexibility in operations,
changes easy to make,
variety of product scaling,
minor changes can be easily and quickly implemented,
conducted by logic so reduces flow time, flow distance, floor space, inventory, h
scheduling transactions, scrap and rework
facilitate production and quality controls,
improves group cohesiveness among employees
•Grouped the parts into
requirements
Step 1
•Perform Systematic Analysis
•Like: production flow analysis
design/product data for
•This analysis can be time
Step 2
•Plan a Cellular Manufacturing
•such as multiple plant
and various part mix.
Step 3
•Perform Optimization to
•such as total cost of holding,
fixed cost for producing
Step 4
Topic 6: Cellular Manufacturing
[ONE PIECE FLOW PRODUCTION SYSTEM]
Concept of Cellular Manufacturing
working cells are used. Each work cell comprises of one or more
machines which accomplish a certain task. The product moves from one cell to the next, each station
completing part of the manufacturing process.
shaped design is given to these cells because this allows for the supervisor to move less and have
the ability to more readily watch over the entire process.
3 Goals of Cellular Manufacturing
To move as quickly as possible,
Make a wide variety of similar products
Making as little waste as possible
4 Steps of Implementation Process
Advantages of Cellular Manufacturing
Flexibility in operations,
variety of product scaling,
minor changes can be easily and quickly implemented,
conducted by logic so reduces flow time, flow distance, floor space, inventory, h
scheduling transactions, scrap and rework
production and quality controls,
improves group cohesiveness among employees
into families by similarity in design or manufacturing
Analysis of each family to create a cell.
analysis (PFA) for manufacturing families, or examination
for design families.
time consuming and costly.
Manufacturing Centre by taking into account various variables
locations, multi-market allocations with production
to minimize factors
holding, inter-cell material handling, external transportation,
producing each part in each plant, machine and labour salaries
Page 20
cell comprises of one or more
machines which accomplish a certain task. The product moves from one cell to the next, each station
to move less and have
conducted by logic so reduces flow time, flow distance, floor space, inventory, handling,
manufacturing
examination of
variables
production planning
transportation,
salaries
21. Lean System and Innovation Page 21
3 Limitations of Cellular Manufacturing
Decrease in production flexibility,
difficulty in realignment of cells in case of decrease in demand,
changes in flow may be very costly
6 Criteria for implementing Cellular Manufacturing
Develop Efficient Changeover capacities among the processes
Required multi skilled workers
Must have a U Shaped system that allow supervisor to move less and have the ability to
more readily watch over the entire process
Must maintain buffer stock for common processes and material required
Adopt the concept of Heijunka
Ensure that product is prepared within the cycle time i.e. Taqt Time
10 Difficulties in creating efficient flow in Cellular Manufacturing
Exceptional Elements
Machine Distances
Bottleneck Machines and Parts
Machine Location and Relocation
Part Routing
Cell Load Variation
Inter and Intracellular Material Transferring
Cell Reconfiguring
Dynamic Part Demands
Operation and Completion Times
Aao smjte hai
Phle kya hota tha – ki suppose garment manufacturing wali company hai – abb usse 4 designs ki shirts
banana hai – prb is ki minimum shirts ek bar mein 1000 hi banegi tabhi cost effective hga – toh abb ek
design ki 1000 shirts banegi phle fir 2
nd
design ki 1000. Isme 2 prb toh saaf saaf hai – phli abbhi 1000 shirt
ek saath ni bikegi – toh buffer stock ho jayega saari design ka – second prb – ki customer waiting time bhad
jayega like usse 4
th
design wali 100 shirts chahiye toh usse bahut baad mein milegi.
Iss type ki problem ko solve krne ke liye ek concept aaya cellular manufacturing. Iss smjne ke liye ek
example lete hai
Ek Dosa shop le lo – jaha 50 types ke dose banate hai – abb agar upar wali baat ke hisab se chle toh koi
customer aaya Rava Dosa mangne – toh kya bology ki phle masala dosa banega tab rava dosa ka lot aayega
– aise toh koi customer nni aane wala – toh hum kya karte iss case mein – ki dosa banana mein kuch chize
common hoti hai – jaise nariayr wali chatni, sambar, dose ka ghoul – toh isse bana kar rakh lo – ek sath –
buffer mein – and abb baat aati hai dosa banana ki – toh ek taawe par - abb do teen alag alag variety ke
dose bana skte ho – bus jo material unn 3 doso ko alag krega who banate time daal degy – yahi concept h
cellular manufacturing ka.
Jab abb koi process kar rahe ho – toh aise karo – ki 2-3 chize ban jaye according to demand – taki customer
waiting time kam ho jaye and buffer stock sirf common chizo ka hoga – iss ke liye work cell wale concept
ko llaaaya gaya – jisme ek U shape mein production system design hota hai – jaha saari process ek sath
hoti hai – such that motion time kam lgta hai –workers aapas mein ek dusre ko jaan pate hai - workers ko
multi task krne ko mil jaata hai – nd flexible ho jte h hum thode production – full caoacity bhi use hoti hai –
saath ki saath cost effective bhi hota.
22. Lean System and Innovation Page 22
Topic 7: Six Sigma
Six Sigma is the statistical measure used to ensure quality of products and services. The premise of
Six Sigma is that by measuring defects in a process, a company can develop ways to eliminate them
and practically achieve zero defects. It is quality improvement technique whose objective to
eliminate defects in any aspect that affects customer satisfaction.
'Sigma' is a statistical term that measures how far a process deviates from perfection. The higher the
sigma number, the closer the process is to perfection.
In quality practice, six-sigma means 3.4 parts per million or getting things right 99.99966%. It is
possible to develop ways of reducing defects by measuring the level of defects in a process and
discovering the causes.
The primary focus of Six Sigma is on:
Customer satisfaction.
Decisions based on data-driven facts.
Management, improvements, and processes.
Proactive management team.
Collaboration with in the business
Goal for perfection.
It may not be possible to achieve 'perfect Six Sigma' but relevant benefits can be achieved from a
rise from one Sigma Level to another.
2 Methods of implementing Six Sigma
DMAIC
This method is very robust. It is used to improve existing business process. To produce dramatic
improvement in business process, many entities have used it successfully. It has five phases:
DMAIC is used under the following
circumstances:
A product or process exists.
The project is part of ongoing
continuous improvement
process.
Only a single process needs to
be altered.
Competitor’s actions are stable.
Customer’s behaviour is
unchanging.
Technology is stable
23. Lean System and Innovation Page 23
DMADV
The application of these methods is aimed at creating a high-quality product keeping in mind
customer requirements at every stage of the product. It is an improvement system which is used to
develop new processes or products at Six Sigma quality levels. It has five phases:
Difference between DMAIC and DMADV
Similarities between DMADV and DMAIC
Both of these six sigma methodologies are based on defects per million opportunities
(DPMO)
Both DMADV and DMAIC use the same kind of six sigma quality management tools.
Customer’s needs are the basic parameter for both six sigma methodologies.
Both DMADV and DMAIC are fundamental six sigma methodologies for improving quality of
product/process. Broadly, DMAIC deals with improving some existing process to make it align with
customer’s needs while DMADV deals with new design or redesign.
DMDAV is used under the following
circumstances:
A product or process is not in
existence
Existing process has been optimised
using either DMAIC or some other
process.
Project has strategic importance.
Multiple processes need to be
altered.
Competitor’s performance is
changing.
Customer’s behaviour is changing.
Technology is growing.
24. Lean System and Innovation Page 24
7 Limitation of Six Sigma
Six Sigma focuses on quality only.
Six Sigma does not work well with intangible results.
Substantial infrastructure investment is required.
Six Sigma is complicated for some tasks.
Not all products need to meet Six Sigma standards.
Six Sigma focuses on specific type of process only.
There are lot to real time barriers which needs to be resolved while translating the theoretical
concepts into practical applications
Lean Six Sigma
It is the combination of Lean and Six Sigma which help to achieve greater results that had not been
achieved if Lean or Six Sigma would have been used individually. It increases the speed and
effectiveness of any process within any organization.
By using lean Six Sigma, organisations will be able to Maximize Profits, Build Better Teams, Minimize
Costs, and Satisfy Customers.
25. Lean System and Innovation Page 25
Topic 8: Process Innovation
Process Innovation means the implementation of a new or significantly improved production or
delivery method (including significant changes in techniques, equipment and/ or software).
The process of innovating new solutions could fall into one of these 3 areas:
Production: This is related to processes, equipment and technology to enhance manufacturing
or production processes. This includes computer software.
Delivery: Delivery process innovations involve tools, techniques and software solutions to help in
supply chain and delivery systems. This includes barcodes, tracking systems or shipping
software.
Support Services: Innovations in processes aren’t limited to simply production or delivery, but
also areas including purchasing, maintenance and accounting
Following are not considered innovations:
Changes, improvements, increase on product or service capability done by addition in
manufacturing or logical system,
Ceasing to use a process,
Simple capital replacement or extension,
Changes resulting purely from changes in factor prices, customization, regular seasonal and
other cyclical changes,
Trading of new or significantly improved products
26. Lean System and Innovation Page 26
Topic 9: Business Process Re-engineering
Business Process Reengineering (BPR) is the fundamental rethinking and radical redesign of
business processes to achieve dramatic improvements in critical contemporary measures of
performance, such as cost, quality, service, and speed.
4 Key Components of BPR
Fundamental rethinking of business processes,
Radical redesign if we had to start the business afresh,
Achieving dramatic improvements in performance measurements,
Reengineering focuses on end-to-end business processes rather than on the individual activities
that comprise the processes.
Ford Motors ki kahani
Ford ki accounts payable record krne ki process – Phle purchase department vendor par order place krta
tha – fir purchase order ki copy – accounts payable wale ko bhejta tha – fir supplier se maal receive krta tha
– receiving department – receiving department ek delivery note bhejta tha accounts walo ko – fir vendor
invoice bhejta tha accounts walo ko – accounts walaa teeno ko match krta manually and match hone par
payment krta.
Abb problem yeh aati thi – ki PO agar 3 item ka hai – delivery note 2 item ka aaya hai – invoice 3 ka aaya
hai – toh accounts wale ko teeno se puchna padhta tha – fir pta chlta ki aare – delivery note bhejna bhul
gaye 1 item ka jo baad mein aaya tha – aise yeh process bahut time le leta tha – bcoz ek vendor toh hai ni –
1000 vendors hogy – plus documentation kitni ho gayi – manual kaam saara – koi delivery note kho gaya
toh aafat- dikkate bahut thi.
Ford mein accounts payable ko record krne and puri process ke liye – 500 log the – jabki ek company thi –
jisse ford acquire kr rahi thi - uske yaaha sirf 5 log the – accounts payable ko manage krne ke liye – ford ne
hisab laagaya – toh paya – ki size ko consider krte hue hum sirf 100 log chahiye – iss kaam mein – fir hum
500 log kyu use krte hai – and usme bhi kaam sahi se hota ni hai – abb ford ne expert bulaya and uss expert
ne 2 options bataye ford ko.
Option 1: Computer system use karo – taki record ho jaye transaction system mein – toh documentation
smblne ka prb ni – system se direct check kr lo – ki teeno match hai ya ni – par isse bus 20% ka farak pdhta
mtlb abhi bhi 400 log lagte. Toh ford ko pasand ni aaya yeh method.
Option 2: Computer use karo – plus ek data server banao – jisme purchase wala PO daal dega – koi copy ni
bheja accounts walo ko – fir uss PO ko receiving waala update kr dega – receiving wala koi delivery note
generate ni krega – discrepancies hogi koi toh note krega – system mein – system abb check kr ke khud sab
– and accounts wala wo check report vendor ko bhej dega – and vendir ki confirmation par payment ho
jayega usse. Iss puri process mein sirf 125 bande lagegy and inventory management aacha hua as physical
record and financial record same ho gaye– yahi BPR tha.
27. Lean System and Innovation Page 27
Fundamental Rethinking
Why do we do what we do?
Why do we do it the way we do it?
Jaise hum kyu delivery note banate hai – and chlo banate bhi hai – toh usko aise kyu krna ki kuch bhul ya discrepancies
aaye.
Radical Redesign
If we were a brand - new business, how would we operate our company?
Goal is to reinvent what is done and how it is done rather than to make improvements in
existing system
Jaise agar ford option 1 choose krta toh woh bus apne manual kam ko computerise kar leta – yeh koi BPR ni hota bus – ek
improvement hota.
Dramatic Improvements
The fundamental rethinking and radical redesign of business processes are aimed toward
making quantum leaps in performance (bahut bada badlav)
Jaise 75% change in ford motor process – in no of persons employed for recording of accounts payable. Yeh ek bahut major
change hai + plus better inventory management woh alag se
End to End Business Processes
Reengineering would apply that view to all business processes rather than on the individual
activities that comprise the processes.
Jaise ki accounts payable ki puri process ko consider krte hue hum BPR sochgy – aisa ni ki accounts payable ki process mein
3 activities thi – toh usme se kisi ek activity ko dekh lia bus
How to implement BPR in improving processes (4 stages of BPR)
Divide each business process of into a series of processes.
Document and analyse each business process to find out
o whether it is essential,
o whether it provides support to other valuable processes and
o whether it is adding value.
Remove processes which do not add value or do not provide essential support to the value
adding activities.
Remaining Processes needs to be re-engineered/re-structured so that can be as efficient as
possible.
Process Identification
Each task performed
being re -engineered is
broken down into a
series of processes.
Process Rationalisation
Processes which are
non value adding, to be
discarded.
Process Redesign
Remaining processes
are redesigned.
Process Reassembly Re
-engineered processes
are implemented in the
most efficient manner.
Porter’s Value Chain is
commonly used in Business
Process Re-engineering as a
technique to identify and
analyse processes that are
of strategic significance to
the organisation.
28. Lean System and Innovation Page 28
7 Principles of successful BPR
Organize around outcomes and not tasks i.e. instead of segregation of duties, all steps of a
process should be performed by one person such that he/she can be held accountable.
Have those who need the results of a process perform the process i.e. guide customers to
provide own services and to carry routine repairs to themselves.
Integrate the processing of information into the work process that produces the information i.e.
each department not only produces the information but shall process the same
Jaise after BPR – ford mein purchase department and receiving department sirf information produce ni kar rahe – ki
PO de diya – delivery aa gayi – balki process bhi kr rahe - ki agar order mein discrepancies hai – toh receiving wala
wahi se maal wapis bhej dega.
Treat geographically dispersed resources as though they were centralized i.e. Create a
combination of centralise and decentralise system.
Jaise ford jab mein – vendors selection hai – usme centralize system follow kr skta – taki input sab jagah same quality
ka ho – par konsi unit ko kitna order dena hai – woh independent kr skte hai har unit ke liye i.e. decentralize system.
Create Line parallel activities instead of integrating their results i.e. create communication
network and shared database to coordinate activities of a process. This help in decision making
process based on the information transmit by one department to other.
Jaise ford mein ek data base server bana dia – abb jaise hi koi kuch update krega – sabko pta chl jayegi.
Put the decision point where the work is performed and build controls into the process i.e.
reduce non value-added management and flatten the organization structure.
This can be done by using information technology to capture and store data, and expert systems
to supply knowledge to enable people to make their own decisions.
This changes the role of manager from controller and supervisor to supporter and facilitator and
eliminates middle managers.
Capture information once and at the source i.e. collect and store data in online data-bases for all
who need them.
This can be is facilitated by information technology, such as telecommunications, networking,
client/server architecture, EDI, image processing, relational database system, bare coding,
intelligent workflow software.
4 Advantages of BPR
Provide customers with more timely service
Reduce overhead needed to coordinate the activities of these units by having customers provide
their own service.
Set the accountability of person for a process
Help to build better communication network
6 Factors important for success for BPR [Reading Only]
BPR Team Composition
Business needs analysis
Adequate IT infrastructure
Effective management change
Involvement of top management to lower management
Ongoing continuous improvement
29. Lean System and Innovation Page 29
Conclusion
BPR may increase costs in short-term due to heavy investment in technology. However, this would
also reduce substantial levels of manual activities and processes thereby providing speedy services
to customers.
In long term, this would result in high levels of efficiency, profitability and better levels of customer
satisfaction and retention.
2 Difference between Process Innovation and BPR
BPR focuses on amending existing processes, while PI attempts to implement new processes
into an organisation.
PI is more radical than BPR, because it is changing the overall structure of an organisation,
whereas BPR is streamlining processes that are already in place.
Example:
30. Lean System and Innovation Page 30
Topic 10: Heijunka and Takt Time
Concept of Heijunka
Heijunka is a Lean method for reducing the unevenness in a production process and minimizing the
chance of overburden.
By implementing Heijunka, organization can stop producing work in batches and start processing
orders according to customer demand.
Benefit of Heijunka
Flexibility to make what the customer wants when they want it.
Reduced risk of unsold goods.
Balanced use of labor and machines.
Smoothed demand on the upstream processes and suppliers
Therefore, the correct implementation of the system provides predictability by levelling demand,
flexibility by decreasing changeover time and stability by averaging production volume and type
over the long term.
Aao smje zaara:
Suppose ek Company 4 products banati hai – traditional method mein kya hota tha – ki company phle
1000 product 1 ke bnti fir 2 ke fir 3 ke nd fir 4 ke. Isme hota yeh ki 4
th
product ka waiting time bahut high
ho gaya, and if demand aaya toh kya kregy – ki abhi ruko ji, phle yeh 3 product banaegy fir apka no.
aayega aise toh customer ni rukega.
Isliye Heijunka concept laaya gaya – jo bolta hai – production levelling karo – and demand ke hisab se
production karo. Yaha 2 methods diye ki – yaha toh batch size 1000 ki jagah 100 100 ka kardo sabka – ya
fir jo product ki demand sabse jyda rehti hai – phle usse banao. 1
st
method ko bolte hai - Leveling by
volume and 2
nd
ko bolte hai Leveling by type.
Focus heijunka ka yahi hai – ki workflow continous chle saare product ka – and inventory bhi na ho. Par
aisa na ho ki products ka waiting time high ho.
Yeh Heijunka sirf – concept btata hai ki aise karo – isse calculate krne ke liye time ke terms mein ek
concept hai Takt Time.
Takt time humko btata hai – ki har product ka production rate kya hona chahiye, based on current market
demand. Example ke liye humko 10 product banana hai and 480 min hai, jisme se 30 min toh machine on
and yeh sab krne mein lag jayega – iss case mein per product takt time 45 min hua (i.e. (480-30)/10). Mtlb
yeh maximum time hai jisme mere ko customer ki demand puri krni hi hogi – mtlb agar unit ke beech
mein 45 min se jyda ka time hua toh production ni kr skte puri 10 units ka.
Abb jab time pata chl jta hai – toh hum apne products ko optimize way mein production ke liye lagate hai
– jisme ek tool hota hai heijunka box jo help krta hai.
A Heijunka box is a scheduling tool used to visualize the work items that need to be completed to meet
your average customer demand. Basically, it is a system that visualizes the orders of each product and
according to the average demand, it levels a production sequence for achieving an optimal flow.
31. Lean System and Innovation Page 31
One way to achieve levelled production is by implementing Takt time, which means basing the
production rate on an estimate of how many units per units of time must be processed at each work
centre in order to meet market demand. By using takt time, production can be leveled to either a set
level or to between a minimum and maximum level.
Concept of Takt Time
Takt time is the maximum available time to meet the demands of the customer. It is the rate at
which organization needs to complete a product in order to meet customer demand.
For example: if we receive a new product order every 4 hours, to meet demand, we needs to finish
a product in 4 hours or less.
Takt Time =
Takt time is the average time between the start of production of one unit and the start of production
of next unit, when these production starts are set to match the rate of customer demand.
Example: ek burger ki kahani
Jab mein MCD mein ek order place krta hu – ek burger ka – toh pure process ko yani mere order place krne se
lekar burger mere hath mein aane tak – jo time lagta hai that is Lead time (say 13 min).
Abb suppose iss 14 min mein se 12 min MCD ko, burger banane mein lag jate hai – this is the cycle time.
Par, current consumer ki jo demand hai – uske accordingly, MCD ko 11 min mein ek burger unko de dena hai.
This is Takt time i.e. rate to work at to meet customer demand.
It implies, ki agar MCD cycle time > takt time – then this is not good situation for MCD and it needs to work to
remove non value adding activities to shorten the cycle time. Par yeh jyda short bhi ni hona chahiye , bcoz fir
inventory aana start ho jayega. Ideal will be cycle time = takt time.
Difference between Takt Time vs Cycle Time vs Lead Time
Lead time equals the total time
it takes from receiving an order
to delivering an item.
It is calculated as:
Time from order to dispatch
Cycle time equals the average
time it takes to finish one unit
It is calculated as:
Net Production/No. of units
produced
Takt time equals the time
between starting to work on
one unit and starting the next.
It is calculated as:
Net Production/Consumer
demand
32. Lean System and Innovation Page 32
Importance of Takt Time
It helps in optimizing organization capacity.
It helps in reducing the waste of your process.
It helps in maintaining a continuous flow of work and reduce unevenness in workflow.
It is valuable for optimizing storage costs as it will help you avoid overproduction.
Benefit of Takt Time
Estimate service delivery processes
Maintain a constant production flow
Standardize work processes
Increase efficiency and decrease training times
Set realistic time targets
Minimize overtime
Reduce errors and increase quality
As demand tends to fluctuate, organization needs to define a takt time for keeping up with the flow
of orders and yet avoid overproduction. To help stick with it, Lean has a method called Heijunka that
allows to optimize production capacity in the most appropriate way to meet demand.
Therefore, Heijunka can be applied in order to reduce variation between “Takt Times” over the
production.