Systems and Benefits of Managerial Organizations - Report Example

Managerial Organizations; Systems and Benefits By + Introduction Quality movements can be traced back to the 13th century when craftsmen organized themselves in guilds. This was the model used in manufacturing until early 19th century. Emphasis on product inspection was part of the factory system that began in Britain in mid-18th century. This factory system developed into the industrial revolution in early 18th century. Manufacturers began using quality practices in early 20th century. Quality became a critical part of war effort after United States joined the World War II. For instance, bullets manufactured in a given state had to work without problems in rifles manufactured in other states (Ostwald, 2007). Publication of military standards aided the inspection of military products. During the 1970s the U.S received an awakening on the significance of quality. Increased competition from foreign firms especially from Japan resulted in the reduction in market share of many firms. For instance the market share of Detroit in the auto market reduced from 71.3% in 1980 to 62.5% in 1991. U.S made computers sold within U.S reduced from 94% to 66% during this period. Quality became a global revolution affecting every business. Baldrige National quality award was legislated resulting in a remarkable interest in quality among businessmen in America. It became clear that the ability of any firm to achieve market edge over its competitors was to dwell on a strategy that was quality driven (Liker, 2011). Worker responsibility in qualitative manufacturing was emphasized by W. Taylor’s concept of scientific management. Focusing on jobs decomposition to small tasks and efficient production meant that inspection was an n independent quality control department in Organizations This essay covers the concept of quality while evaluating the perspectives of the concept in the manufacturing process and its effect, benefits and challenges to Organizations from an economic point of view. Manufacturing Organizations (Quality) Quality Control Quality control can be defined as the totality of feature of a product that bears on its ability to satisfy consumer needs. Many people view quality as having some level of superiority or having no defects. This definition means that Organizations must be able to identify the different features of products that determine consumer satisfaction in order to formulate a measurement proxy for quality. A good example is how Toyota engineers developed the Lexus model. The engineers put different companies’ cars including Jaguar, BMW and Mercedes in test runs. The principal engineer decided that matching Mercedes on performance and luxury was a gruelling task. He developed performance tasks which yielded a design that had a drag coefficient smaller than any other luxury automobile, lower noise level, lighter weight and fuel-efficient engine. The design cluster was called ‘‘a work of art’’ by then Ford director of interior design in North America (Krieg, 2005). Quality Assurance Quality assurance entails the entire structure of procedures and policy guidelines established by an Organization in order to maintain production on the quality track. Quality assurance consists of three functions namely; engineering, control and management. Quality engineering involves incorporating quality into manufacturing designs and to predict any defects before the product is delivered. Quality control is a measurement tool that determines if set quality standards have been met. Quality management involves planning and organizing all quality assurance activities (Kamrani, 2005). Quality Systems Quality is an important component of all processes in manufacturing. Quality systems ensure that marketing research is effective, product design is up to date and production planning and scheduling is of high grade quality. Quality Management Managers concentrate on quality because it has become the business priority of many organizations. Quality management involves dealing with poor designs and field failures that impact negatively to the organization’s pursuit of its goals. Quality impacts directly on the performance of organizations as it affects the prices of products and volumes of sales. Quality management is therefore crucial for any organization to ensure all manufacturing processes are in line with set standards (Irani, 2009). Six-Sigma The word ‘sigma’ is a symbol of unit of measurement in product quality variations and has been used by engineers and other experts since the 1920’s. In 1980’s Motorola engineers used ‘Six Sigma’ as an informal name for an in-house initiative for reducing defects in production of process. Motorola extended the use of Six Sigma in its operations and it later became a performance improvement methodology rather than just defect reduction tool. In early 2000s Six Sigma was established as an industry on its own involving training and implementation in Organizations worldwide. Six Sigma training involves training on use of measurement tools and in relationship skills necessary to serve the needs of different stakeholders. The Six Sigma DMAICT process elements include; defining an opportunity, measuring performance, analysing opportunity, improving performance, control of performance and transfer of best practice (Swift, 2013). Kaizen Also referred to as rapid improvement process, Kaizen is a building block of lean production processes. It focuses on waste elimination, improvement of productivity and achieving a long term improvement in targeted manufacturing processes. Lean production is founded on this idea of continual improvement. Under this strategy, workers are involved in multiple functions of the organization to improve processes. Analytical techniques are used to identify ways in eliminating waste quickly in a production area (Russ, 2009). Total Quality Management Total quality management is a management approach to a sustained success in customer satisfaction. In this approach, all members of the organization participate in improving the manufacturing processes and the organizational culture. The main features of this approach are that it is customer oriented whereby all activities are done with aim of meeting customer needs. This approach is also all inclusive in that all employees are engaged. The approach is also process centred. It aims at improving a series of steps in the production process. This approach is also systematic and decisions are made based on facts (Krieg, 2005) ISO 9000 ISO 9000 is a quality management standard that provides a guiding structure on increasing customer satisfaction and business efficiency. The objective of ISO 9000 is to increase productivity, reduce costs and ensure quality manufacturing processes. ISO 9000 is flexible which means organizations have a wide range of options on how to implement quality management systems. It is a process oriented approach that requires the organization to look at the bigger picture. Some of the principles of ISO 9000 include; good leadership, stakeholder engagement, process approach, customer focused, factual decision making and continual improvement (Ludema, 2007). Statistical Process Control Statistical process control is an organization standard methodology for controlling and measuring quality during the production process. Data in form of process measurements are obtained in real time during production. The data is then plotted on graph with already determined limits. Specification limits are determined by client needs whereas control needs are determined by capability of the processes. Data that falls outside control limits means that the system is operating as planned. Data outside the control limits means there is some problem that should be fixed in the process before defects occur. This model helps increase the performance of the organization by reducing variability, reducing costs, improving productivity scientifically and making real-time decisions (Swift, 2013). Manufacturing Organization A manufacturing organization is an establishment that engages in the process of raw materials into end products for sale by use of industrial machines. Manufacturing Systems Manufacturing systems are made up of the products, people, and information, equipment, support and control functions for competitive development of products to satisfy market needs. The equipment includes manufacturing machines and tools as well as computer systems. The examples of manufacturing systems include single-station cells, machine cells, automated machine clusters and assembly lines. The components of a manufacturing system are production machines, human resource, material handling systems and computer systems. Manufacturing systems are classified based on the following factors; system layout, types of operations performed, number of work stations and automation and manning level. Cellular Manufacturing In this method of manufacturing, work stations are organized in an order that enables smooth flow of materials in the manufacturing process with minimal delay. Products are moved one at a time in the production system at a frequency determined by consumer needs. Product types can also be varied to suit consumer specific needs. This method includes analytical techniques for assessing operations and designing a cell-based layout that shortens change over times. This technique can either reduce or increase the production capacity by changing the production cells (Krieg, 2005). The steps involved in converting to a cellular production system include understanding the prevailing conditions then converting to a process-based layout. Finally the organization should seek to continuously improve the process. Just In Time Just in Time is an inventory strategy used by organizations to improve efficiency and reduce wastes by receiving goods when they are required in the production system thereby reducing costs that would be incurred if the products were stored. Organizations must be able to accurately forecast demand (Krieg, 2005). 5 S’s 5 S was developed in Japan and comprises five Japanese words Seiri, Seiton, Seiko, and Seiketsu & Shitsuke. These words mean tidiness, orderliness, cleanliness, standardization and discipline respectively. Tidiness means disposing all unwanted materials in the workplace. Orderliness entails storage of everything in the correct way and right place for easy retrieval. Cleanliness generally entails keeping the workplace clean as well as employees maintaining high cleanliness levels. Standardization is a way of maintaining cleanliness. Discipline relates to commitment to the 5 S on daily basis (Liker, 2011). Kanban Kanban is one of the lean tools used to reduce idle time in the production process. This system aims at delivering what a process needs at the exact time of need. In Japanese ‘kan’ means visual while ‘ban’ means card. Kanban can therefore be defined as visual cards used as signalling systems that trigger actions. This system was first used in Toyota production in the design of pull systems and the concept of delivering goods just-in time (Ostrowska, 2010) Inventory Management Inventory management is the process of efficiently and effectively overseeing the flow of units in and out of an existing inventory. Organizations are required to keep optimal inventories to avoid inventory costs that would result from unbalanced inventory levels. Lean Manufacturing Lean manufacturing is a business model that focuses on eliminating wastes in production of quality products in an efficient way. In the current world where organizations are focusing on reducing production costs, lean manufacturing is a necessity. Lean manufacturing focuses on achieving rapid improvements in cost, quality and delivery (Fujimoto, 1999). Benefits High levels of internal integration will keep the firm on its toes, that is, it will regularly examine its performance compared to other competitors and will be able to quickly understand customer needs. Uncertainty is reduced due to improved communication between departments. Decision making process is improved by information sharing by cross-functional teams of skilled employees. Sharing of information and technological advances helps the organization to develop high quality products with new features that meet customer expectations From the above discussion it can be noted that internal integration leads to performance related benefits to the organization. These benefits include Product innovation, quality enhancement, delivery time performance and efficient cost management. Supplier integration stimulates the long run commitment and enhances trust. Suppliers can provide information feedback on pricing, materials and qualities. Supplier engagement in early stages of product development can also shorten the manufacturing period. There is a positive relation between supplier integration and the quality of goods, process flexibility, and cost and delivery reliability. Customers are strategic collaborators in any business. Customers provide important information that can help the organization to improve its product performance. This evaluation by customers helps reduce uncertainty as the organization is able to prepare for the future consumer needs. Customer integration is directly associated with performance indexes such as delivery speed, flexibility and receptiveness .System thinking comes automatically for some individuals. However, for many individuals it is a completely different approach to problems. The structured tools and link of questioning used to achieve understanding of problems is not familiar to many (Irani, 2009). Managers will need to understand how to manage these differences in understanding and the difficulties that come with using different organization systems. Challenges The ability to create all-round functioning teams with all the stakeholders is not an easy function. It requires patience, active listening, encouragement and application of expertise skills in the practice of good group dynamics. To add on that, for the whole process to be a success, the management and facilitators must avoid stakeholders’ conflicts of interests while guiding them towards the realization of the organization’s goals and objectives. System integration demands an admittance that the current structures and manufacturing practices are actually contributing to the existing problems in quality of products, use of resources and inventory management. References Fujimoto, T. 1999. The evolution of manufacturing system at Toyota. New York: Oxford University Press Inc, USA. Irani, S. A. 2009. Handbook of cellular manufacturing systems. New York: Wiley. Kamrani, A. K., Parsaei, H. R., & Liles, D. H. 2005. Planning, design, and analysis of cellular manufacturing systems. Amsterdam: Elsevier. Krieg, G. N. 2005. Kanban-controlled manufacturing systems. Berlin: Springer. Liker, J. K., & Convis, G. L. 2011. The Toyota way to lean leadership: achieving and sustaining excellence through leadership development. New York: McGraw-Hill. Ludema, K. C., & Caddell, R. M. 2007. Manufacturing engineering: economics and processes. Englewood Cliffs, N.J.: Prentice-Hall. Ostrowska, B. 2010. Comparative media systems European and global perspectives. Budapest: Central European University Press. Ostwald, P. F., & Muñoz, J. 2007. Manufacturing processes and systems (9th Ed.). New York: John Wiley & Sons. Swift, K. G., & Booker, J. D. 2013. Manufacturing process selection handbook. Oxford: Butterworth-Heinemann. Russ, J. S. 2009. Global motivations: Honda, Toyota, and the drive toward American manufacturing. Lanham, Md.: University Press of America. B1. Machine A Break-even Analysis Machine B Break-even Analysis Break-even Points: Machine A= 75000/ (25-13) = 6250 units. Machine B = 87000/ (25-10.5) = 6000 units. The company will have to produce and sell 6250 units while using machine A and 6000 units using machine B to cover for all its expenses fixed and variable. I would recommend the purchase of machine B since it has a lower break-even point. B2. True cost= direct costs+ overhead costs Material costs = 2500*2= 5000 Labor costs (2500*4/60)15 = 2500 Total overheads = 2500* 350/100 = 8750. True cost = 5000+2500+8750 = 16250 B3. Year Cash flows for machine A Cash flows for machine B 1 -80000 -80000 2 5000 35000 3 8000 25000 4 12000 18000 5 20000 10000 6 25000 7000 7 30000 5000 i) Payback Period Machine A – 7 years Machine B- 5 Years I would choose machine B because it has a shorter payback period compared to machine A. ii) Payback period does not consider the cash flows past the payback period and hence cannot be used to estimate expected returns of entire machine’s life. b) Net Present Value at a 7% discount rate NPV = P.V of cash flows – invested capital Project A 0.9346*5000 + 0.8734*8000 + 0.8163*12000 + 0.7629*20000 + 0.7130*25000 + 0.663*30000 = 74430 74430 - 80,000 = -5570 Project B 0.9346*35000 + 0.8734*25000 + 0.8163*18000 + 0.7629*10000 + 0.7130*7000 +0.663*5000 = 85175 8175 – 80000 = 5175 I) NPV of machine A at 4% discount rate 0.9615*5000 + 0.9246*8000 + 0.8890*12000 + 0.8548*20000 + 0.8219*25000 + 0.7903*30000 = 84225 84225-80000 = 4225. B4. Sample Batches 10 x Diameter (cm) Average (cm) Range (mm) 1 25.0,25.1,24.8,25.1,25.1,24.9,25.0,25.0,24.9,25.1 25 24.5-25.5 2 25.2,24.9,24.9,25.0,25.0,25.1,25.1,24.9,25.1,25.1 25.03 24.53-25.53 3 25.0,25.1,25.2,25.2,25.3,25.1,25.0,25.4,25.0,25.1 25.14 24.64-25.64 4 25.2,25.4,25.4,25.5,25.4,25.5,25.3,25.2,25.2,25.4 25.35 24.85-25.85 5 25.3,25.4,25.3,25.5,25.6,25.2,25.3,25.5,25.5,25.4 25.4 24.9-25.9 6 25.2,25.4,25.3,25.6,25.6,25.5,25.6,25.6,25.4,25.4 25.46 24.96-29.96 7 25.4,25.5,25.6,25.7,25.6,25.6,25.7,25.6,25.7,25.4 25.58 25.08-26.08 8 25.7,25.6,25.7,25.6,25.6,25.6,25.4,25.7,25.6,25.8 25.63 25.13-26.13 Average Chart Range control chart Read More