Performance Improvement in Business: Printer Supplies - Essay Example

Company profile Printer Supplies, a company located in Liverpool, is active in printer cartridge recycling and remanufacturing. The company has a small factory, which produces monthly 10 000 recycled cartridges. Over 200 technicians work in the factory of the company. Their main activities consist of cleaning used cartridges, verifying defective parts, replacing defects, filling cartridges with inks or toner. The overall manufacturing process can be described as follows: used cartridges arrive to the warehouse; they are sieved into three categories: usable, repairable and unusable; usable and repairable cartridges enter the factory; the usable cartridges are cleaned and filled with toner or inks; the repairable cartridges are repaired, cleaned and, then, filled with toner or inks; recycled products are tested; final products are packed and stocked in the warehouse; ready-for-use recycled cartridges are shipped to whole sellers in the UK, France and Germany. Report This report will be dedicated to production improvement techniques based on operations management theoretical and practical issues. This report will be written on behalf of an operation manager and will address specific areas describing production improvement techniques practiced from the beginning of the XXth century until the present times. First, the report will give a short insight into production theories adopted and used widely before the World War II. Later, the rise of post-war alternative theories will be in the focus. Finally, modern production theories and practices will be described as well as solid proofs will be given of how these techniques and practices can improve the overall competitive and financial states of a company. Lean manufacturing will be the most important point to emphasize throughout the report. Its components, practices and methods will be given much detail. At the end of this report an analysis of the techniques and a list of key factors perspective for implementation within the company will be presented. This report will be written in the 3rd person present tense. Evolution At the turn of the XIXth and XXth centuries a new monopoly era comes into being. New breakthroughs become part of everybody’s life. These include electricity, combustion engines, telephone. The technical progress and production need standardization and unification for production processes managed in old ways. In these conditions F. Taylor is the first to pay attention to production organization. His views are described in his works “The Principles of Scientific Management” (1911) and “Shop Management” (1911) (Stralser, 2004, p.40). Before Taylor’s theories any organization would need just a good manager, whereas Taylor’s approach creates an organization system, which breaks any job into components or constituent parts. Then, these parts are analyzed and possibilities to reduce expenses are found. Bringing in good wages and profits, Taylor’s approach makes employees be like robots accomplishing assigned tasks. While Taylor concentrates on time and ways of how to reduce it for each part of a job, F. and L. Gilbreth consider the number of motions necessary for performing a job as crucial for business efficiency. For them, the fewer motions to perform a task are needed, the less time is consumed. Henry Ford applies the two approaches into practice. His assembly line principle, maximum specialization of employees, regulated working regimen make his factories be very complex entities. It is the beginning of the so-called mass production period or production of standardized products in big quantities. Mass production increases greatly production rates per worker and provides inexpensive products. At the same time, the machinery used is extremely costly. So, to return the investment products must sell very well, which supposes customers have homogeneous needs and demands. In terms of contemporary economics and management, this type of manufacturing is called “push”. In the post-war period, a new type of manufacturing – “pull” - comes into being. The novelty comes from Japan in the 50-ies of the twentieth century. Due to Deming’s research and publications rejected in the USA and accepted in Japan, a new approach to production management is implemented in Japan and contributes a lot to the country’s economic development in the post-war period. Deming is the founder of the so-called statistical quality management, which becomes very popular in Japan. The core idea of this approach is that there is no assessment of tasks and results for employees as these are considered fear factors, which make employees concentrate on short-term goals and ignore long-term perspectives and team work. This approach emphasizes the importance of staff involvement, which brings about quality improvement and customer-driven orientation. As truly mentioned by Stralser (2004), Deming’s methods include statistical process control and problem solving techniques that are very necessary helping companies to switch from mass production practices to mass customization, or customer-focused methods (Stralser, 2004, p.266). Thus, quality systems are getting more complex as statistics enters the realm of quality control management. Taiichi Ohno at Toyota is the founder of the Toyota Quality System, which embodies the progressive views of Deming and his followers. At the same time, the Toyota Quality System is also based on Just-In-Time (JIT) and jidoka concepts developed in Japan. JIT is a process focused on increasing value-added activities and eliminating waste (Liker, 2004, p. 21). In other words, JIT is a production schedule and control practice, which calls for a new item needed in production just in time when it is needed. The jidoka principle imposes responsibility on each worker for them to perform tasks similarly and check every single product for defects. Thus, these components enable improvements in quality and involve people to contribute productively and creatively to the production performance. To look back at the main theories and practices existent in the twentieth century, it is possible to draw the following conclusion: the process approach born from mass production practices of the beginning of the century gave birth, in its turn, to systematic methods applied in production management. This ideology becomes predominant in the 60-70-ies of the XXth c. and regards processes as constituent parts of larger structures or systems. The systems are built on hierarchy principles and can be easily analyzed (Eckes, 2003, p.143). Added value and elimination of waste become the milestones for the development of new operations management practices. Cost reduction and increasing efficiency of the 70-ies along with rigorous quality control advance production management to the next level: lean manufacturing. Lean manufacturing Lean manufacturing is based on reduction and elimination of waste in business activity. In general, lean business philosophy opts for elimination of any activity, which does not produce added value. Such an activity is regarded as waste and should be eliminated. In terms of operations “lean” means improvement of equipment reliability, higher quality, continuous flow production, and continuous improvement within the “pull” type of business. In production “lean” stands for less effort, less space, less investment, less time and fewer materials used to achieve a better result and higher quality. Lean manufacturing is absolutely customer-driven. The unwritten law is that a product is produced only when a customer demands for it. All value-adding activities tend to build a product fitting the customer’s needs. All activities not contributing to this goal are wastes and should be eliminated (Liker, 2004, p. 24). The main wastes determined by Toyota are: Overproduction or producing more than necessary; Transportation or moving products farther than necessary; Waiting or people/products waiting for the next stage; Inventory or more inventory than necessary; Motion or people moving more than necessary; Processing or doing more work than necessary; Defects or repairing and inspecting. (Liker, 2004, p. 26) In Lean Manufacturing operations are changed so as employees’ work is more productive, less tiring, more effective and less insecure. All staff members are involved in elaboration of new procedures meant for improving their work. Employees are empowered to organize their working space and practices in the best productive way. The work of equipment is also regarded as one of the most important issues in lean manufacturing. To make equipment more reliable and decrease the number of defective products, a system of error and defect indicators is usually set up. The layout of the equipment in place is conceived in such a way that workers have easier access to machines and the number of unnecessary motions is limited. At the same time, the number of humans engaged in operating the machines is also limited to the strictly necessary amount. Another particularity of lean manufacturing consists in constant flow or single piece flow. Flow without interruption or waiting improves response time to customer order, reduces lead time and necessary operation space. With all these in mind, lean manufacturing opposes “push” businesses existent in the first half of the XXth c. and practices a new type of production philosophy, where customer drives manufacturing process. Lean manufacturing uses a number of tools helping reduce waste and adding value. Value stream mapping allows establishing a graphic picture of material and information flows in an organization. It also spots all value adding and value losing parts of a process. Poka-Yoke, or zero error system, is another powerful tool used in lean manufacturing. Anti-error devices are set up in order to maintain the same high quality despite possible tiredness or loss of attention in workers. In automatically performed tasks Poka-Yoke prevents from errors by special systems: “all or nothing” encourages only one correct working position; “counter” minimizes the risk that an item was not proceeded; “stage watcher” ensures all working stages are passed (George&Weimerskirch, 1998). 5 Sigma technique puts “no-waste” policy in place. It includes: Sorting out: elimination of any unnecessary activity; Systematic arrangement: systematic cleaning of workplace; Scrub: clean workplace; Standardization: presence of well established standards; Self-discipline. (Thomsett, 2005, p. 20). Total productive maintenance is another powerful tool used in Lean Manufacturing. It puts in place the systematic execution of maintenance by all employees (Liker, 2004, p. 48). The main goal of total productive maintenance is to achieve zero breakdowns and zero defects. Thus, equipment efficiency is improved and costs are reduced. Inventory costs connected with spare parts are also reduced. SMED or single minute exchange of die reduces the time between the production of an item and the next item. Single minute wants to say the exchange time should be less than 10 minutes. SMED is accomplished through elimination of wasteful operations; simplified procedure and rare resettings (Slater, 2000, p. 164). In Lean Manufacturing batch production is viewed as wasteful and is limited to minimum. The main reason is to reduce downtime periods between batches. Reducing time periods necessary for movements is reflected in cellular manufacturing. The aim is to minimize movements of materials and people as well as time periods needed to move between the machines (Haines et.al, 2005). Lean Manufacturing is merely based on Kaizen philosophy of continuous improvement. In Japanese Kaizen means improvement without employing great efforts. Such a state can be reached by constant small efforts performed by top managers and workers on daily basis. Just-In-Time Just In Time (JIT) is one of the principles of Kaizen. JIT is a set of tools and techniques that allow a company to produce and deliver products in small quantities, with short lead times, to meet specific customer needs. Simply put, JIT delivers the right items at the right time in the right amounts (Liker, 2004, p. 39). JIT stands for production of what is needed in needed quantities at a needed time. JIT changes all traditional approaches in manufacturing. In traditional manufacturing an item passes to another stage as soon as it is ready. In JIT each stage in manufacturing turns back to the previous stage to get the necessary material for its performance. JIT allows reducing manufacturing costs, increasing production volumes, increasing quality and distribution volumes, increasing product lead time periods. The basic components of JIT as mentioned by Stralser (2004) are: Production line optimization; Small volume production; In-time supply; Establishment of Kanban communication system (Stralser, 2004, p. 271). Kanban In Japanese Kanban is a small label glued to a box, which goes into the assembly department. A worker receives the box and sends the label back. It means the materials from the box have been well received. The returned kanban tells there is a need for a new party of materials to be sent. Thus, Kanban coordinates the flow of materials by reducing the overall time necessary for the process. So, Kanban is a signaling communication system helping accomplish the JIT principle. MRP Manufacturing companies need to deal with customers’ demands for products, which should be available sooner than the products can be manufactured. To combat such situations companies need to do solid planning. MRP or material requirements planning is the system that is advised in such cases. Usually, a MRP system is a computer-assisted software system, which helps control the type and quantities of purchased raw materials. It also assists in planning quantities to be produced and whether these quantities meet customers’ demands. MRPII Manufacturing resource planning (MRPII) is also a computer-assisted system, which allows performing manufacturing control and establishing an inventory reduction plan. As compared to MRP, MRPII involves all the activities of a company. In his article Fisher (1997) states that “manufacturing resource planning software orchestrates the ordering, production and delivery of supplies, thereby enabling the entire supply chain to minimize inventory and maximize production efficiency” (Fisher, 1997, p.107). Moreover, MRPII regulates the flow of information between the players within a supply chain and coordinates their activities to meet predictable demand at the lowest price possible. JIT versus MRP In the world of experts in operations management and logistics there is a divergence of opinions regarding the two above systems. One group of experts stick to the opinion the two systems can co-exist, the other group denies any possibility for any co-existence. Before considering their views, it is worth seeing the strengths and weaknesses of the two systems. JIT: strengths weaknesses Reduction of stocked and unfinished products; Reduced production periods; Higher efficiency; Low downtime periods; Responsible employees; Better relationships with suppliers; Constructive problem solutions. High initial investment (high costs for high-performance equipment); Inability to deal with emergencies (strikes, etc.); Necessity to work in a stable economic environment; Low flexibility in demand fluctuations; Inability of certain suppliers to apply JIT; Inability of staff to take responsibility in emergencies. MRP: strengths weaknesses Operation with future demands; Zero stock, space, staff; High turnover of goods; Low downtime periods; Low number of urgent orders. High volume of detailed and precise data; Low flexibility to external changes; Complex and sophisticated administration; Inability to analyze capacity or other production parameters; Expensive. The opponents of their co-existence put forth the idea the two systems responds to diametrically opposite needs. Whereas MRP responds well to a setting with variable demand, JIT works with low demands. JIT practices continuous improvement, but MRP has fixed lead times. Besides it, JIT is self-organized, but MRP is strongly hierarchical. MRP is technology driven, whereas JIT is just about cards and people (“Supply chain..”, 2006). Other specialists say JIT and MRP can co-exist quite successfully. In their opinion JIT and MRP may respond to various needs, but they complement each other and even reinforce the degree of internal control within an enterprise1 (Packendorff, 2005). JIT and MRP systems function based on years of experience. Unfortunately, they can be fully applied only in gross volume manufacturing. The fortunate moment is that some of their elements can be put in practice in medium-size companies, too. JIT communication principles can fit even small manufacturing department, whereas MRP-like software can be installed to regulate the supply chain management and optimize the flows of a company. Conclusion In relation to our company, which wants to boost its competitiveness in the market, the following could be considered and, eventually, applied: Application of lean techniques in operations department: Reduction of batch production; Change of equipment layout; Empowerment of the staff; Use of JIT principles and techniques (e.g. kanban); Optimization of the supply chain management through: Optimization of MRP software and its extension to MRPII. References: Cohen, S., &Roussel, J. (2005). Strategic supply chain management. New York: McGraw-Hill Eckes, G. (2003). Six sigma for every one. New Jersey: John Wiley & Sons Inc. Fisher, L. M. (1997, March-April). What is the right supply chain for your product?. HBR, 105-116. George, S., &Weimerskirch, A. (1998). Total quality management. New York: John Wiley & Sons, Inc. Haines, S.G., Aller-Stead, G, &McKinlay, J. (2005). Enterprise-wide change. San Francisco: Pfeiffer. Kaplan, R. S., & Norton, D.P. (2001). The strategy-focused organization. Boston: Harvard Business School Press Liker, J.K. (2004). The Toyota Way: 14 management principles from the world’s greatest manufacturer. New York: McGraw-Hill Packendorff, J. (2005). MRP, ERP och JIT. Retrieved Nov. 24, 2006 from http://www.indek.kth.se Project management manual. (1997). Harvard Business School. Slater, R. (2000). The GE way fieldbook. New York: McGraw-Hill Stralser, S. (2004). MBA in one day. New Jersey: John Wiley & Sons Inc. Supply chain planning & scheduling classics. Retrieved Nov. 24, 2006 from http://www.math.unimaas.nl/PERSONAL/jorisk/bis2005/planning&scheduling.ppt Thomsett, M. C. (2005). Getting started in six sigma. New Jersey: John Wiley & Sons Inc. Appendix I: JIT and MRP co-existence Source: Packendorff, J. (2005). http://www.indek.kth.se Read More