Elements of lean management
Lean management is an efficient method of eradicating waste in the production process. The muscular approach system is derived from the Toyota production system (TPS). TPS is mainly built on two pillars, namely Jidoka and Just-in-time (JIT). Lean management is focused on creating high-quality products. Additionally, TPS is aimed at utilizing the lowest possible cost in making products. Furthermore, TPS is channeled to use the shortest possible lead-time in production.
The four elements of lean management include MUDA, KAIZEN-CIP, standards, and visual management. However, the three main elements include standards, continuous improvement, and visual management. Essentially, lean management tries to minimize overproduction, among others. KAIZEN means change for the better. KAIZEN helps to eliminate wastes in lean management.
KAIZEN is equivalent to CIP, which means continuous improvement. When lean management minimizes wastes, the wheel of improvement is turned in the right direction. Effectively, CIP improves the standard of management. It is important to note that there can be no improvement without standards.
Standards are, therefore, essential in every work environment. Additionally, visual management is essential in lean management. Visual management provides information on abnormal processes, which help to improve production. Lean management fortifies three main elements, namely waste elimination, standardization, and discipline.
The traditional approach emphasizes on equipment and value addition. In essence, the traditional approach works to improve cycle tests, automation, and uptime. However, this approach does not improve the whole value stream.
The traditional approach does not recognize non-value added steps. The lean management approach improves the whole value stream as opposed to the traditional approach system. Firms in Kuwait require the entire value stream to be improved. In this regard, the lean management approach would be the best for firms in Kuwait.
Costs of quality
Most businesses spend time improving the quality of products. Customers tend to ignore goods that do not satisfy their needs. In this regard, businesses spend resources on training, time, and effort, among other activities, to ensure that products satisfy customer’s needs. However, these activities come at a cost to the business. There exist four main costs of quality, namely, prevention, appraisal, the internal and external cost of defects. It is estimated that the cost of quality alone can amount to about 30 percent of the gross sales.
This shows how much businesses spend on improving quality. Prevention costs are usually incurred when the business works to avert defects in products before they materialize. This area includes training, educating suppliers, planning for an effective quality control process, designing the quality of the product, maintenance, and designing of the system of quality.
Appraisal costs usually happen when the business is examining the existing quality of its operations. Additionally, internal failure happens when business gets defects during production. These defects may fall into the category of scrap or rework. The latter involves rechannelling of the product to rectify defects while the former involves rendering the product unfit for continued processing. External costs are usually discovered by customers. This is very serious since it can give a bad picture of the organization.
This involves warranties, recalls, quick responses, and adjustments, among others. A consultant would advise businesses to minimize external failures since such failures can damage the company profile. The focus should be given to prevention costs and appraisal costs, as these would minimize both internal and external costs. Additionally, this would save on the cost of production by minimizing scrap and rework as well as external failure.
Variation in statistical process control
Statistical process control, which is sometimes initialized as SPC, can be defined as the use of visual display and statistical methods to comprehend the variation in a process. Understanding the variation of processes helps in knowing the types of variations. This knowledge helps to improve the process to give better results. Moreover, statistical process control can help in determining the validity of prediction by comparing results with predictions made.
Measurements can be done periodically, namely, daily, weekly, or even monthly. However, it should be noted that the shorter the period of monitoring, the better the chances of improvement. Data is usually aggregated over a period before plotting is done to establish a trend. A trend that results is usually informative, and this gives rise to variation. Companies benefit greatly in conducting statistical process control since it enables them to point areas of weaknesses with the aim of strengthening them.
For instance, the company can appreciate the intended variation. Similarly, the company can rectify unintended variations in its process. Unintended variations can result from changes or by chance. This should be identified by the company to allow for improvements. Variation helps companies to determine whether their processes are stable, predictable, and capable that makes it acceptable.
Sigma approach emphasizes on improvement of quality of processes. Additionally, it emphasizes on variability reduction. Sigma utilizes statistical process control to achieve a stable process.
Additionally, Deming’s theory of variation proposes the understanding of variation with the aim of improving systems as well as processes. Essentially, both approaches help companies to achieve a stable and acceptable process through statistical process control. Statistical process control is, therefore, essential for monitoring intended and unintended variations in systems and processes.
Competitive priorities
In general, it is impossible for companies to excel in all their competitive priorities. In fact, companies should not bother seeking excellence in all their priorities. However, they should consider core priorities to excel. If a company works towards achieving all the priorities, the result is always damning. Order qualifiers are essential in determining which priorities should be pursued. Moreover, order qualifiers should pertain to the specific services or products offered or produced by the business.
In essence, management in businesses or companies should ascertain the order of qualifiers before choosing their minimum level of competing priorities. Additionally, the company’s overall strategy is essential in determining its order of qualifiers. Business strategy is usually driven by the company’s mission statement.
Moreover, company strategies are also driven by their core competencies aimed at achieving a competitive advantage. Core competencies are essential in providing the company with core processes. These processes determine competitive priorities based on the company’s strategy.
Therefore, if a company tries to excel in all the competitive priorities, it can end up losing touch with its mission statement. Additionally, the company risks pursuing irrelevant strategies. Seeking irrelevant or unnecessary strategies can exhaust the company’s resources, thereby reducing its viability in the market. Moreover, seeking all competitive priorities scan distract the company from its main objectives, thereby resulting in low quality produce.
This can also result in a weakened competitive advantage, which is the main aim of all companies. In essence, the company’s mission statement should drive its strategies. These strategies should define the company’s core competencies, which, in turn, delineate its core processes. As a result, the company can choose its core competitive priorities for competitive advantage.
Make-to-order, Assemble-to-order, and make-to-stock
Operation strategies are important in corporative strategy. Firstly, operation strategies give support to the company’s overall strategy. In addition, operation strategy acts as the company’s unique competence. A number of factors are considered in choosing an operation strategy. These include capacity, technology, human resources, products, and sourcing, among others. However, products and services are the core elements that define the operation strategy.
These can be classified as made to order products, make to stock products, and assemble to order products. Make to order products are usually designed, made, and then delivered to customers as ordered by the latter. Examples include chartered airline that works with orders from customers. On the other hand, make to order products or services are designed, made, and stored in anticipation of customer demand. In most cases, customers are specified as standard customers. Examples include airline flights meant, among others.
Assemble to order service/product strategy is one in which goods or services are designed and made in standard modules so that options can be added with regards to customer needs. Examples include industrial equipment, among others. Producers face a race against time in producing made to order and assemble to order products.
On the other hand, producers face inventory issues with assembling to order products as opposed to making to order products — nonetheless, producers race to satisfy each customer’s demand to make to order strategy. Furthermore, make to order strategy give producers difficulties in forecasting future needs and customer service goals. Most customers go for what they need whenever they need it. However, make to order and assemble to order strategies tend to take long while make to stock may not meet customers’ exact needs.
Improving process
Operation management involves planning and control of business processes. This is usually done to ensure that the processes move smoothly and in an acceptable manner. Nonetheless, continuous improvement of business processes is also necessary as a lean management approach requires that follows the basic elements of lean management. Firstly, an external consultant would generate a process master, which includes the list of organizational processes.
Additionally, an external consultants would list suppliers, inputs, process activities, and customers, among other important metrics. This step would be followed by prioritizing of processes by weighing factors in accordance with the organization’s strategy. Thirdly, the consultant would assemble a team and generate a process model. After this, root cause analysis can be performed by the use of charting techniques. Moreover, brainstorming tools, as well as affinity diagrams, can also be utilized to aid the major data analysis tools.
Moreover, the consultant can use the six-sigma improvement model, which begins with the identification of process, measurement of quality of the process, analysis of the process. As mentioned above, the consultant is experienced in this section. Therefore, he/she can start by charting, then using analysis tools to produce desired outcomes. These may involve Pareto charts, cause-and-effect, and scatter diagrams.
Thereafter, the consultant can determine whether a major or minor redesign is required. Moreover, he/she can come up with the necessary procedures for creating the desired result routine. Once the analysis has been conducted, modification and redesign techniques can be implemented to improve the process and hence, achieve the desired performance objectives. The last stage is the control section. In this stage, data analysis tools can be utilized to maintain high-performance levels through monitoring of the processes involved.
How a company develops a process strategy
Process strategy gives a pattern of decisions prepared in managing processes. The objective of the process strategy is to realize competitive priorities. Process strategy is influential in guiding process decisions. Moreover, it can be used to guide the operations strategy and the company’s ability to acquire resources. In developing a process strategy, the company should first know why it is in business. That is, the company should define its mission statement. The company should know where it wants to go.
Additionally, the company should know how it wants to go about its values. The company’s values are the striking factors that hold it together. Developing a process strategy requires knowledge of the company’s values. The TWOs matrix provides an important option for developing processes strategy. The company must analyze its external environment, which includes opportunities and threats to the business. Additionally, the company must analyze its internal environment, which includes the strengths and weaknesses of the business.
The company can utilize TWOs analysis to have a better grasp of process strategy choices available. In essence, the company has to take advantage of its strengths while it works to circumvent its weaknesses. Additionally, the company has to benefit from its opportunities as it tries to handle its threats. The company should then analyze these results to maximize opportunities by using its strengths and steer clear threats by minimizing its weaknesses.
For instance, a company can analyze how to make its product or services by TWOs matrix to come up with the best choice. For example, a company like IBM can perform TWOS analysis on its software and hardware packages. If the software provides more opportunities and strengths than hardware, then the company can chart its process strategy to focus on software packages.
Major features of a supply chain
SCM has five main components. These are a plan, source, make, deliver, and return. Planning is strategic because it involves the layout of metrics aimed at monitoring the supply chain. Additionally, it ensures that the supply chain provides quality products as well as increases the value of products to customers. The sourcing component ensures that managers, along with their strategic staff, set pricing, payment, and delivery channels. Companies are tasked with the responsibility of choosing suppliers that bring raw materials.
The source component also helps managers to manage the inventory of raw materials acquired from suppliers. The next component of SCM is made, which involves production or manufacturing. At this stage, raw materials are converted into finished products with consideration for customer needs. The processes include manufacturing and testing of the products. Additionally, it includes packing, among others. The next component is known as delivering or logistics.
It involves the process of arranging and delivering orders made by customers. It also involves the integration of networked warehouses as well as carriers, which transport the products to customers. Additionally, this component enables companies to establish modalities of receiving payments such as invoices, among others. The return component deals with defective as well as excess goods or services. It is necessary that companies establish flexible and responsive networks for receiving faulty products from customers.
The responsive supply chain is one in which SCM responds in a timely and purposeful manner to customer requests while an efficient supply chain is one, which SCM focuses on minimizing costs. While a responsive supply chain can utilize resources on non-value added activities, an efficient supply chain does not. For example, Fashion predictors like Gap and Fashion followers like Zara are efficient and responsive supply chains, respectively.
Outsourcing process with respect to managing supply chain
Many businesses tend to meet difficulties when it comes to focus on business strategy, especially when they face the challenge of achieving both an efficient and responsive supply chain. In most cases, such businesses are overwhelmed by operations as well as administration. More often, such companies opt to outsource some operations such as supply chain management, among others.
Issues such as inventory management, warranty management, shortages of parts, and customer service can easily eat away time needed for internal operations, thereby affecting profit margin and hence efficiency. Moreover, overseeing SCM can also be tasked to the company. However, it should be noted that outsourcing SCM is not for every business. Outsourcing SCM can have its benefits and pitfalls. Outsourcing can help the business to prosper.
For instance, outsourcing can help the business to focus on new business aspects, which have the potential to build the business. Additionally, outsourcing can help the business to minimize its overall running costs using expertise and knowledge from the external organization. Outsourcing can help the organization to meet its customer demand. This can act as a catalyst for growth. Moreover, the business can develop a more extensive infrastructure through outsourcing.
Potential pitfalls in outsourcing include anticipated costs, which may be high if there are hidden fees. Additionally, the company can face difficulties if the third party organization provides idealistic timelines all over the distribution.
Moreover, if the third party organization lacks adequate experience in the product line, quality suffers. Integration can also be difficult. Outsourcing requires perfect communications to avoid mishaps. Vertical integration is essential in the company’s corporate strategy; outsourcing can trim down the firm’s ability to own both upstream suppliers and downstream buyers.
Bottlenecks
When driving home from a busy day at work, a number of bottlenecks show up, especially on the road. Firstly, speed limits on the highway make it impossible to reach home faster and retire from the heavy-duty at work. Secondly, traffic jam on the way also makes it difficult to move home quickly.
Additionally, mind-boggling thoughts of the next assignment compounded by the remaining tasks in uncompleted assignments resurface on the way home. In essence, intense pressure develops on the way such that focus on the road is slightly diverted by unseen obstacles. Calls made on the way, which are risky to take while driving, also boggle the mind. A series of events interrupt an already worked up mind that needs to rest. Such are bottlenecks that slow down processes in a business set up.
The theory of constraints (TOC) helps to spot the essential limiting factor or the most crucial constraint. For instance, among the constraints mentioned above in a highway, traffic jam is the most vital constraint that limits time and one’s ability to reach home early. Traffic Jam extends the time over which one can reach home.
TOC postulates that every process has a single constraint that limits the whole process such that if the constraint can be improved, then the process throughput can be improved too. Once the limiting constraint has been identified, it can be improved to give an overall improvement. The constraint can be improved by utilizing available resources until it is broken. For instance, identifying and turning towards routes that lead home with little traffic jam would break the limiting constraint hence improve the throughput process.