Description
The presentation includes concepts of JIT, outsourcing, buying committee and value analysis with the help of examples of toyota production system, Ford, GE.
?
JIT can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods). JIT involves
? ?
The elimination of waste in production effort The timing of production resources (i.e., parts arrive at the next workstation “just in time”)
?
JIT can be divided into two terms: “Big JIT” and “Little JIT”
?
Big JIT (also called Lean Management) is a philosophy of operations management that seeks to eliminate waste in all aspects of a firm’s production activities: human relations, vendor relations, technology, and the management of materials and inventory
?
Little JIT focuses more narrowly on scheduling goods inventory and providing service resources where and when needed
?
?
In JIT the ideal inventory is ONE
First sell it, then make it: JIT reverses the conventional approach of first making and then selling. Ideally nothing is produced unless a customer is identified. In some Japanese factories the cars are shipped with the customer’s name already attached. This helps in reducing inventories, warehousing and other holding costs.
Based on two philosophies:
? ?
Elimination of waste Respect for people
LEAN PRODUCTION
?
A production system whose focus is on optimizing processes
through the philosophy of continual improvement
?
The idea is to waste as little time, effort, and resources as possible.
?
Value-added functions are to be maximized, then evaluated
and maximized again.
DELAYS As JIT is applied to the manufacturing process, one must keep strict attention on any possible delays as
? ?
Delays will prove to be ever most costly due to the complete interdependence of the system They will highlight the next step to take in the continuous improvement process
KANBANS Kanban is a visual signaling system used to trigger action
? ?
The visibility makes it easy to know when to “pull” an item to the next station Pros of kanbans include:
? ?
Reducing excessive movement Reducing excessive production
CONTINUOUS IMPROVEMENT Improvement methods at Toyota have a number of unique characteristics
?
Proposed improvements are structured as experiments
?
This allows for statistical date to prove whether a proposal will be beneficial or not
?
Employee involvement in the improvement method
?
Employees can better observe first-hand how individually beneficial process improvements are
?
Unique worker-manager relationship is established where both are actively involved in the process.
1.
2. 3.
4.
5. 6. 7.
Waste from overproduction Waste of waiting time Transportation waste Inventory waste Processing waste Waste of motion Waste from product defects
? ? ?
Level payrolls Cooperative employee unions Reliable Subcontractor networks
?
?
Bottom-round management style (i.e., consensus management)
Quality circles (Small Group Involvement Activities or SGIA’s)
Value Analysis is used to increase the value of products or services to all concerned by considering the function of individual items and the benefit of this function and balancing this against the costs incurred in delivering it. How to use it? Identify and prioritize functions
? ? ? ?
Identify the item to be analyzed and the customers for whom it is produced. List the basic functions (the things for which the customer is paying Identify the secondary functions by asking ‘How is this achieved Determine the relative importance of each
Analyze contributing functions
? ?
Find the components of the item being analyzed that are used to provide the key functions Measure the cost of each component, including all material and production costs.
Seek improvements
? ?
Eliminate or reduce the cost of components that add little value, especially high-cost components. Enhance the value added by components that contribute significantly to functions that are particularly important to customers.
?
Value analysis is not new to Ford Motor Co., but it has become the centerpiece of the automaker's efforts to reduce the cost of parts from suppliers by 20% over the next four years. • Ford pioneered the value analysis in the development of its newage car series through sequential analysis involving 6 phases • Stage 6 represents the market launch and subsequent customer response
? ? ? ? ?
Value engineering began at General Electric Co. during World War II Because of the war, there were shortages of skilled labour, raw materials, and component parts. Lawrence Miles, Jerry Leftow, and Harry Erlicher at G.E. looked for acceptable substitutes They noticed that these substitutions often reduced costs, improved the product, or both What started out as an accident of necessity was turned into a systematic process. They called their technique “value analysis”.
This concept has later led to many further initiatives like six-sigma, statistical analysis, lean-thinking etc
Outsourcing often refers to the process of subcontracting to a third-party.
? ?
? ?
In this sense, two organizations may enter contractual agreement involving an exchange of services and payments Of recent concern is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as off-shoring or offshore outsourcing Almost any conceivable business practice can be outsourced for any number of stated reasons The implications of outsourcing objectively and subjectively vary across time and space
Cost savings ? The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost restructuring Focus on Core Business ? Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specialized IT services companies Cost restructuring ? Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable
Improve quality ? Achieve a step change in quality through contracting out the service with a new service level agreement
Knowledge ? Access to intellectual property and wider experience and knowledge
Contract ? Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services Operational expertise ? Access to operational best practice that would be too difficult or time consuming to develop in-house
Access to talent ? Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering
Capacity management ? An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier Catalyst for change ? An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process Enhance capacity for innovation ? Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation
Reduce time to market • The acceleration of the development or production of a product through the additional capability brought by the supplier Commodification • The trend of standardizing business processes, IT Services, and application services which enable to buy at the right price, allows businesses access to services which were only available to large corporations Risk management • An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation Scalability • The outsourced company will usually be prepared to manage a temporary or permanent increase or decrease in production
?
? ?
?
?
Quality risk Quality of Service Staff turnover Failure to create Business transformation Security
?
?
There are situations when a firm may consider outsourcing some of its R&D work to a contract research organizations. For example Tata Motors outsources many of its Design R & D to InCat designs.
Reasons for Tata might be:
? new product design does not work ? project time and cost overruns
? loss of key staff
? competitive response ? problems of quality/yield.
?
Buying Committee: Is an officially appointed group that is responsible for purchasing goods and services in an organization Buyer
? The organizational member that carries out the purchase procedures
?
of a product ? May or may not make the buying decision ? Will manage the buying process, e.g. place the order and process the paperwork.
(1) INITIATOR: the person who first suggests the idea of buying the particular product or service (2) INFLUENCER: a person whose views influence other members of the buying center in making the final decision (3) DECIDER: the person who ultimately determines any part of or the entire buying decision-whether to buy, what to buy, how to buy, or where to buy (4) BUYER: the person who handles the paper work of the actual purchase (5) USER: the person who consumes or uses the product or service
? ?
?
Power generators have several components Cummins buys most of its components from outside vendors Cummins Power Generator division is thinking of buying a new generator component – a heat exchanger
? Reason: the old heat exchanger component is
outdated
?
How would the buying committee at Cummins go about this decision?
1.
Initiator: The Plant manager identified that heat exchanger component needs to be replaced
? He informs following departments
? Purchase ? Product engineering ? R&D
2.
Influencer: The Product and Design engineers decide what kind of specifications they need in the component
?
They do this in conjunction with R&D team
3.
Decider: Plant manager decides, in conjunction with purchase manager, about whom to buy component from
?
Decision may need approval from higher authority, like VP (purchasing)
4.
5.
Buyer: Purchase manager handles all the paper work related to purchase of component User: Plant manager and his team finally take delivery of component and incorporate it in their product viz. the power generator
doc_896887159.pptx
The presentation includes concepts of JIT, outsourcing, buying committee and value analysis with the help of examples of toyota production system, Ford, GE.
?
JIT can be defined as an integrated set of activities designed to achieve high-volume production using minimal inventories (raw materials, work in process, and finished goods). JIT involves
? ?
The elimination of waste in production effort The timing of production resources (i.e., parts arrive at the next workstation “just in time”)
?
JIT can be divided into two terms: “Big JIT” and “Little JIT”
?
Big JIT (also called Lean Management) is a philosophy of operations management that seeks to eliminate waste in all aspects of a firm’s production activities: human relations, vendor relations, technology, and the management of materials and inventory
?
Little JIT focuses more narrowly on scheduling goods inventory and providing service resources where and when needed
?
?
In JIT the ideal inventory is ONE
First sell it, then make it: JIT reverses the conventional approach of first making and then selling. Ideally nothing is produced unless a customer is identified. In some Japanese factories the cars are shipped with the customer’s name already attached. This helps in reducing inventories, warehousing and other holding costs.
Based on two philosophies:
? ?
Elimination of waste Respect for people
LEAN PRODUCTION
?
A production system whose focus is on optimizing processes
through the philosophy of continual improvement
?
The idea is to waste as little time, effort, and resources as possible.
?
Value-added functions are to be maximized, then evaluated
and maximized again.
DELAYS As JIT is applied to the manufacturing process, one must keep strict attention on any possible delays as
? ?
Delays will prove to be ever most costly due to the complete interdependence of the system They will highlight the next step to take in the continuous improvement process
KANBANS Kanban is a visual signaling system used to trigger action
? ?
The visibility makes it easy to know when to “pull” an item to the next station Pros of kanbans include:
? ?
Reducing excessive movement Reducing excessive production
CONTINUOUS IMPROVEMENT Improvement methods at Toyota have a number of unique characteristics
?
Proposed improvements are structured as experiments
?
This allows for statistical date to prove whether a proposal will be beneficial or not
?
Employee involvement in the improvement method
?
Employees can better observe first-hand how individually beneficial process improvements are
?
Unique worker-manager relationship is established where both are actively involved in the process.
1.
2. 3.
4.
5. 6. 7.
Waste from overproduction Waste of waiting time Transportation waste Inventory waste Processing waste Waste of motion Waste from product defects
? ? ?
Level payrolls Cooperative employee unions Reliable Subcontractor networks
?
?
Bottom-round management style (i.e., consensus management)
Quality circles (Small Group Involvement Activities or SGIA’s)
Value Analysis is used to increase the value of products or services to all concerned by considering the function of individual items and the benefit of this function and balancing this against the costs incurred in delivering it. How to use it? Identify and prioritize functions
? ? ? ?
Identify the item to be analyzed and the customers for whom it is produced. List the basic functions (the things for which the customer is paying Identify the secondary functions by asking ‘How is this achieved Determine the relative importance of each
Analyze contributing functions
? ?
Find the components of the item being analyzed that are used to provide the key functions Measure the cost of each component, including all material and production costs.
Seek improvements
? ?
Eliminate or reduce the cost of components that add little value, especially high-cost components. Enhance the value added by components that contribute significantly to functions that are particularly important to customers.
?
Value analysis is not new to Ford Motor Co., but it has become the centerpiece of the automaker's efforts to reduce the cost of parts from suppliers by 20% over the next four years. • Ford pioneered the value analysis in the development of its newage car series through sequential analysis involving 6 phases • Stage 6 represents the market launch and subsequent customer response
? ? ? ? ?
Value engineering began at General Electric Co. during World War II Because of the war, there were shortages of skilled labour, raw materials, and component parts. Lawrence Miles, Jerry Leftow, and Harry Erlicher at G.E. looked for acceptable substitutes They noticed that these substitutions often reduced costs, improved the product, or both What started out as an accident of necessity was turned into a systematic process. They called their technique “value analysis”.
This concept has later led to many further initiatives like six-sigma, statistical analysis, lean-thinking etc
Outsourcing often refers to the process of subcontracting to a third-party.
? ?
? ?
In this sense, two organizations may enter contractual agreement involving an exchange of services and payments Of recent concern is the ability of businesses to outsource to suppliers outside the nation, sometimes referred to as off-shoring or offshore outsourcing Almost any conceivable business practice can be outsourced for any number of stated reasons The implications of outsourcing objectively and subjectively vary across time and space
Cost savings ? The lowering of the overall cost of the service to the business. This will involve reducing the scope, defining quality levels, re-pricing, re-negotiation, cost restructuring Focus on Core Business ? Resources (for example investment, people, infrastructure) are focused on developing the core business. For example often organizations outsource their IT support to specialized IT services companies Cost restructuring ? Operating leverage is a measure that compares fixed costs to variable costs. Outsourcing changes the balance of this ratio by offering a move from fixed to variable cost and also by making variable costs more predictable
Improve quality ? Achieve a step change in quality through contracting out the service with a new service level agreement
Knowledge ? Access to intellectual property and wider experience and knowledge
Contract ? Services will be provided to a legally binding contract with financial penalties and legal redress. This is not the case with internal services Operational expertise ? Access to operational best practice that would be too difficult or time consuming to develop in-house
Access to talent ? Access to a larger talent pool and a sustainable source of skills, in particular in science and engineering
Capacity management ? An improved method of capacity management of services and technology where the risk in providing the excess capacity is borne by the supplier Catalyst for change ? An organization can use an outsourcing agreement as a catalyst for major step change that can not be achieved alone. The outsourcer becomes a Change agent in the process Enhance capacity for innovation ? Companies increasingly use external knowledge service providers to supplement limited in-house capacity for product innovation
Reduce time to market • The acceleration of the development or production of a product through the additional capability brought by the supplier Commodification • The trend of standardizing business processes, IT Services, and application services which enable to buy at the right price, allows businesses access to services which were only available to large corporations Risk management • An approach to risk management for some types of risks is to partner with an outsourcer who is better able to provide the mitigation Scalability • The outsourced company will usually be prepared to manage a temporary or permanent increase or decrease in production
?
? ?
?
?
Quality risk Quality of Service Staff turnover Failure to create Business transformation Security
?
?
There are situations when a firm may consider outsourcing some of its R&D work to a contract research organizations. For example Tata Motors outsources many of its Design R & D to InCat designs.
Reasons for Tata might be:
? new product design does not work ? project time and cost overruns
? loss of key staff
? competitive response ? problems of quality/yield.
?
Buying Committee: Is an officially appointed group that is responsible for purchasing goods and services in an organization Buyer
? The organizational member that carries out the purchase procedures
?
of a product ? May or may not make the buying decision ? Will manage the buying process, e.g. place the order and process the paperwork.
(1) INITIATOR: the person who first suggests the idea of buying the particular product or service (2) INFLUENCER: a person whose views influence other members of the buying center in making the final decision (3) DECIDER: the person who ultimately determines any part of or the entire buying decision-whether to buy, what to buy, how to buy, or where to buy (4) BUYER: the person who handles the paper work of the actual purchase (5) USER: the person who consumes or uses the product or service
? ?
?
Power generators have several components Cummins buys most of its components from outside vendors Cummins Power Generator division is thinking of buying a new generator component – a heat exchanger
? Reason: the old heat exchanger component is
outdated
?
How would the buying committee at Cummins go about this decision?
1.
Initiator: The Plant manager identified that heat exchanger component needs to be replaced
? He informs following departments
? Purchase ? Product engineering ? R&D
2.
Influencer: The Product and Design engineers decide what kind of specifications they need in the component
?
They do this in conjunction with R&D team
3.
Decider: Plant manager decides, in conjunction with purchase manager, about whom to buy component from
?
Decision may need approval from higher authority, like VP (purchasing)
4.
5.
Buyer: Purchase manager handles all the paper work related to purchase of component User: Plant manager and his team finally take delivery of component and incorporate it in their product viz. the power generator
doc_896887159.pptx