World-Class Manufacturing Issues - Essay Example

Management Accounting A. While there is no exact definition of World Manufacturing (WCM), companies that aspire to that would be expected to have most of the following features: total quality management (TQM); a flexible and highly motivated workforce; Just-in-Time (JIT) system; and aim to satisfy customers at a global level. More intense rivalry among competitors, technological innovation, and the rapid integration of markets to become a single global village primarily spurred developments in the operations of business organizations. These factors created multi-faceted changes in the different functional areas of companies especially in the way they manufacture the products and commodities they offer to customers. Current trends emphasize world class manufacturing (WCM) which highlights maximum manufacturing efficiency in businesses, and customer and workforce satisfaction. WCM is regarded as "manufacturing systems which demonstrates best industry practice( World Class Manufacturing)." Accordingly, a world class manufacturer is a firm which displays excellence in key competitive points like quality, price, delivery speed, delivery reliability, flexibility and innovation. Its main features is the utilization of a total quality management (TQM) approach, highly flexible and motivated workforce, Just-in-Time (JIT) manufacturing philosophy, and the pursuit of satisfying customers at a global level. This section will discuss the main features of WCM. It should be noted that these features overlaps at some point as they essentially denotes one set of business concept. Consistent with the goal of a world class manufacturer, TQM denotes a set of management practices within the organization which are implemented to ensure the quality of products and services offered. The primary goal of TQM is the production of commodities which consistently meets or even exceeds customer requirements. This feature of world class manufacturing emphasizes process measurement and controls to pursue continuous improvement (John Stark Associates 2000). However, TQM does not just involve the production system or processes of the company but embraces the whole operation of a manufacturing business. Implementing TQM involves modifying the whole organization as it has strong bearing on the culture, attitude, and organization of the company. TQM culture requires the unmatched quality in all aspects of the company's operations "with things being done right first time, and defects and waste eradicated from operations (John Stark Associates 2000)." Important aspects of TQM include customer-driven quality, top management leadership and commitment, continuous improvement, fast response, actions based on facts, employee participation, and a TQM culture (John Stark Associates 2000). A flexible and highly motivated workforce is another essential feature of WCM. As discussed above, WCM as opposed to the traditional manufacturing implements a totally innovative approach in operations which has a huge impact on employees. WCM needs a flexible workforce as these employees will not handle production in the traditional assembly line. WCM often requires teams which work together to finish an output. Specialization of jobs is often displaced in WCM replaced by "job enrichment." This new approach is intended to eliminate boredom and lessen employee dissatisfaction. Job enrichment is geared to "expand the scope of the job with a greater variety of tasks, vertical in nature, that require self-sufficiency (Mione 2005)." Thus, in WCM it is imperative that employees are flexible to take on a more responsibilities. Motivation is also increased as jobs are "enriched" and employees become are empowered. Motivation, in turn is a great factor in the success of WCM. In this new manufacturing approach, employees need to be motivated to excel in their job to produce the best job results. A highly flexible and motivated workforce results into a high quality product which is the main goal of WCM. JIT is a manufacturing philosophy which aims to "produce the necessary units, in the necessary quantities at the necessary time with the required quality (Lean Manufacturing 2005)." This main features and benefits of this manufactruing philosophy will be further explained below. Consistent with WCM, JIT aims the eradication of wastes or non-value adding activities in the supply chain of business organizations. The Just-in-Time manufacturing philosophy originated from Japan. In fact, JIT is originally referred to the "Toyota Production System" acknowledging the first company which utilized this manufacturing concept-Toyota Motor Company. JIT is a manufacturing philosophy which essential leads to "producing the necessary units, in the necessary quantities at the necessary time with the required quality (Lean Manufacturing 2005)." With that definition, JIT became an innovative approach for companies aiming to achieve excellence in the reduction or the total elimination of "wastes" which includes overproduction, unneeded inventory, defective products, and transport and waiting time. Thus, the JIT philosophy is an elimination of non-value adding activities in the company's supply chain to boost manufacturing efficiency, driving down cost, and ensuring maximum customer satisfaction by driving down prices of commodities. The elimination of the "wastes" necessitated the installation of the following essential elements and features to the manufacturing system: regular meetings of the workforce to discuss the company's practices, confront and solve problems; emphasis on consultation and cooperation (i.e. involving the workforce) rather than confrontation; modification of machinery to reduce setup time; reduction of buffer stock, exposition of problems, reveal bad practices; and elimination of the security blanket of stock (Beasley 2005). Customer satisfaction is in the heart of WCM. After discussing the main features of WCM, it can be noted that it is primarily geared in ensuring quality. This consistency and excellence in quality leads to the overall satisfaction of customers. In marketing, it can be recalled that a company's main goal is the satisfaction of customers by emphasizing on "customer value." Thefore, producing high quality products and offering them to customers help companies in delivering the desired value. However, it should also be noted that satisfaction is not only on a "local" basis but emphasis is placed on satisfying customers at a "global" basis. It is a fact that satisfaction of customers differs from one continent and geographical area to another. WCM realizes this and implements a system where customer preferences are prioritized. WCM, like the one employed by Dell Computers enables customization of products according to customer specifications. Customer satisfaction is also attained through after sales services. B. Describe the main features of JIT manufacturing philosophy. The success of Just in Time manufacturing philosophy hinges on several elements.the JIT manufacturing system essentially focuses on four aspects namely quality, employee involvement, production flow, and integration. Quality is ensured in this manufacturing philosophy as the whole process aspires of producing high quality commodities, which are checked utilizing inherent manufacturing standards. It should be noted that an organization utilizing JIT in its operation has to perform quality checks in its processes oftenly. This is to eliminate one identified waste which is defects. Employee involvement is a factor in successful JIT implementation. Empowerment and motivation of employees is essential as JIT highlights giving each individual workforce to solve problems on their own. JIT also involves total employee improvement, which includes "quality circles, work teams, and kaizen teams (Lean Manufacturing 2005)." Empowerment highly involves employees in the manufacturing system which produces higher quality products and low employee turnover. JIT's production flow is also remarkable. In this manufacturing system, we can see an interelation of uniform factory load, setup time reduction, machine cells, pull system and JIT purchasing to create a highly efficient manufacturing system. Another feature of the philosophy is the integration of the whole firm's functional areas such as the accounting side, engineering side, supplier side, and customer side. The philosophy utilizes the help of the accounting and engineering technologies, fosters a closer integration with suppliers, and ensures customer satisfaction. In the JIT manufacturing philosophy, a classic diagram is presented to grasp the idea of JIT . In the manufacturing process without the utilization of the JIT, the company floats in the sea of inventory which becomes a hindrance for it to get a good grasp of its problems. With JIT, the diagram is modified primarily because of the reduction of inventory. With the decrease in stocks, the company's problems are exposed and taken care of by the company. JIT offers a lot of benefits to manufacturing companies. As this philosophy requires a minimum amount of work-in-progress and stock levels, costs are reduced through the decline in holding costs. The more efficient production flow, has streamlined the production process and has significantly resulted into increased productivity. As stated earlier, quality is checked through the system ensuring the elimination of defects and less rework. The integration of the different functional areas and the use of technology reduced processes within the business organization resulting in less administrative task. JIT also requires close collaboration with suppliers which lead to a smoother flow of inputs in the supply chain. One of the most sucessful companies utilizing the Just in Time manufacturing philosophy is Dell Computers. The company's supply chain has been modified in order to increase efficiency which resulted to cost savinbgs, high quality products, and excellent customer service. Furthermore, this has helped Dell to become the largest computer manufacturer in the world. C. Outline the principles of the Materials Requirements Planning (MRP) approach to stock control. One of the simplest definitions of the Materials Requirements Planning is that it is a "software based production planning and inventory control system used to manage manufacturing process (Material Resource Planning 2006)." Accordingly, MRP is created to essentially meet three important objectives which include maintenance of lowest possible inventory, planning the manufacturing processes, delivery schedules and purchasing activities as well as ensure input needed for the production process and the output for the delivery to customers. The main reason in the utilization of the MRP is to control the level of stock the company holds. As we all know, companies are currently exerting effort in minimizing its inventory costs, which comprises stock out and holding costs. MRP is an important managerial tool which aims to control inventory by minimizing holding costs through keeping low input levels to aid in production and at the same time hold adequate quantities to accommodate possible demand from customers. MRP aids companies in stabilizing inventory levels by providing answers to the specific items required, quantities required and the timing of their requirements. The system accomplishes the aforementioned tasks by making use of necessary inputs and producing the right outputs to be applied to a specific company. In common MRP software, it first produces a report of what will be produced in the next production period, which is generated from a master production schedule. Then, the system calculates the span of time required to manufacture the products utilizing the records of the company on their assembly time. After that, the MRP "explodes the product into lists of parts required" using the bill of materials developed by the engineering team. Parts are ordered as they are needed and relevant paperwork is generated. From the above discussion, it is important to note that an MRP software produces two output-the recommended production schedule and recommended purchasing schedule. While the recommended production schedule details the required minimum start and completion dates together with the quantities for each step in the production process, the recommended purchasing schedule tells the company the dates that the inputs needed should be received and the date of purchase orders to match production schedule. D. Discuss in detail the essential features of an Manufacturing Resource Planning (MRP2). The Association for Operations Management define MRP2 as "as a method for the effective planning of all resources of a manufacturing company." Accordingly, MRP2 is used in operational planning to asses the volume to be produced and the amount to required to finance the production. Another feature of the MRP2 is its capability to generate answers to "what-if" questions (MRP2 2006). MRP2 was designed to address the shortcomings of MRP. Like the MRP, it includes essential elements like its being based around the Bill of Materials, usage of a Master Production Schedule as a starting point, and utilization of the three steps of explosion, netting, and offsetting to create schedule (Institute for Manufacturing 2006). However, MRP2 goes beyond that by the incorporation of four more elements such as feedback, resource scheduling, batching rules, and software extension programmes. Utilization of MRP2 enables business organizations to generate feedbacks from the shop floor on how the production was carried out. This feature also enables the company to update the next production runs on a regular basis. Resource scheduling also has positive impact on manufacturing firms. This feature gives the company much tighter control on its production processes as detailed plans can now be put on shop floors and are reported on by operation. However, it should also be noted that as the capacity is only considered after the MRP schedule has been prepared, there is a possibility that insufficient time was allowed within the MRP schedule for the individual operations to be completed (Institute for Manufacturing 2006). Another advantage of using MRP2 is that companies can integrate other software in the MRP2 which are designed to help in generating an efficient scheduling procedure. According to the Institute for Manufacturing (2006), the most important of this is the Rough Cut Capacity Planning (RCCP), an initial attempt to match the order load to the capacity available, by calculating (using a number of simplifying assumptions) the load per resource. Through this, overloads are identified and orders can be moved to achieve a balance. This paper should also mention that the effectiveness of using MRP2 is highly dependent on the type of data put in. MRP2 requires data accuracy as errors in figures will result in huge problems for all users. Users of MRP2 are encouraged to input data which are 95-98% accurate. . References Beasley, J.E., 2005. Just-in-Time. Retrieved 02 April 2006, from http://people.brunel.ac.uk/mastjjb/jeb/or/jit.html Institute for Manufacturing, 2006. Manufacturing Resource Planning. Retrieved 02 April 2006, from http://www.ifm.eng.cam.ac.uk/dstools/process/mrp2.html John Stark Associates, 2000. A Few Words About TQM. Retrieved 02 April 2006, from http://www.johnstark.com/fwtqm.html Lean Manufacturing, 2005. Retrieved 02 April 2006, from http://members.aol.com/williamfla/jit.htm Material Requirements Planning, 2006. Retrieved 02 April 2006, from http://en.wikipedia.org/wiki/Material_resource_planning Mione, P. 2005, Job Enrichment. Retrieved 02 April 2006, from http://edweb.sdsu.edu/people/ARossett/pie/Interventions/jobdesign_1.htm World Class Manufacturing, 2000. Retrieved 02 April 2006, from http://www.smthacker.co.uk/world_class_manufacturing.htm Read More