MBA 206

Production & Operations Management( New Syllabus)

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Unit VII: JIT and Quality: Definition of Just-In-Time (JIT), process of JIT, quality: costs of
quality, characteristics of quality, quality of the process, seven tools of statistics, quality
planning and improvement tools, specification and control limits, Total Quality Management,
principles of TQM, Deming’s 14 points.

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Just-In-Time (JIT)

JIT stands for Just-In-Time, which is a manufacturing strategy that seeks to

streamline production and inventory management by producing and delivering goods
precisely when they are needed. This means that goods are not produced until an
order has been received, and they are delivered to the customer immediately after
production.

The JIT strategy is based on the idea of minimizing waste, including excess
inventory, overproduction, and unnecessary waiting time. By producing only what is
needed, when it is needed, companies can reduce costs, improve efficiency, and
respond quickly to changes in demand.

The JIT approach requires close coordination between suppliers,

manufacturers, and customers to ensure that materials and products are delivered
on time and in the right quantities. It also requires a high level of quality control to
ensure that products meet customer expectations and minimize the risk of defects or
delays.

Overall, the JIT strategy has been widely adopted in manufacturing industries
around the world, and it has proven to be an effective way to improve productivity,
reduce waste, and enhance customer satisfaction.

The process of JIT

The process of JIT (Just-In-Time) involves a series of steps and strategies that aim
to streamline production and inventory management. The following are the key steps
involved in the JIT process:
1.Demand forecasting: To implement JIT, it is crucial to have accurate demand
forecasting. This involves predicting customer demand for products and services, so
that production can be planned accordingly.

2. Supplier management: JIT requires close coordination with suppliers to ensure

timely delivery of materials and components. Suppliers must be reliable and able to
deliver high-quality products on time.

3. Production planning: Based on demand forecasting, production schedules are

created to ensure that products are manufactured in the right quantities and at the
right time. This involves minimizing setup times, reducing batch sizes, and increasing
flexibility in production.

4. Inventory management: JIT aims to minimize inventory levels by producing only

what is needed, when it is needed. This requires careful monitoring of inventory
levels to avoid overstocking or stock outs.

5. Quality control: JIT relies on high-quality products that meet customer

requirements. Quality control measures must be in place to ensure that products
meet specifications and minimize the risk of defects.

6. Continuous improvement: JIT is a continuous improvement process that aims to

identify and eliminate waste, improve efficiency, and enhance customer satisfaction.
This involves ongoing evaluation of the production process and making adjustments
as needed.

Overall, the JIT process requires careful planning, coordination, and execution
to ensure that products are delivered to customers quickly, efficiently, and with the
highest level of quality. By implementing JIT, companies can reduce costs, improve
productivity, and enhance customer satisfaction.

The utility of JIT in production Management

Just-in-time (JIT) is a production strategy that aims to increase efficiency by

minimizing inventory and reducing waste. JIT is a widely used approach in
production management that has proven to be incredibly beneficial for organizations
of all sizes.
 One of the main advantages of JIT is that it eliminates the need for large
inventories. This means that companies can reduce their storage costs and improve
their cash flow. With JIT, companies only produce what is needed, when it is
needed, and in the quantity required. This approach has been shown to reduce
inventory holding costs by up to 50%, which is a significant cost-saving advantage.

Another benefit of JIT is that it promotes flexibility in production. This means

that companies can quickly adapt to changes in demand or product design without
the need for significant changes to the production process. This flexibility is achieved
by having a well-coordinated production process that allows for quick changes in the
production line.

JIT also reduces waste by promoting a lean manufacturing process. By only

producing what is needed, companies can reduce the amount of waste they
produce. This is not only environmentally friendly, but it also saves companies
money on disposal costs.

One of the challenges of JIT is that it requires good communication and

coordination between different departments within a company. This includes
coordination between production, sales, and purchasing. However, with the right
training and management support, companies can overcome these challenges and
reap the benefits of JIT.

Overall, JIT is a valuable tool for production management. It helps companies

improve efficiency, reduce costs, and increase flexibility. By utilizing this approach,
companies can achieve a competitive advantage in the marketplace and improve
their bottom line.

Quality and Costs of Quality,

Quality refers to the degree of excellence or superiority of a product or service. In

business, quality is an important factor that can affect customer satisfaction, brand
reputation, and profitability. The costs of quality, on the other hand, refer to the costs
that are incurred to achieve, maintain, or improve quality.
There are two main types of costs of quality:

 Prevention costs: These are costs that are incurred to prevent defects from
occurring in the first place. Examples of prevention costs include training
employees, improving processes, and conducting quality inspections.
 Appraisal costs: These are costs that are incurred to evaluate or measure the
level of quality. Examples of appraisal costs include inspection costs, testing
costs, and warranty costs.

In addition to these two types of costs, there are also costs of internal and external
failures:
 Internal failure costs: These are costs that are incurred when defects are
detected before the product is shipped to the customer. Examples of internal
failure costs include rework costs, scrap costs, and downtime costs.
 External failure costs: These are costs that are incurred when defects are
detected after the product is shipped to the customer. Examples of external
failure costs include warranty costs, customer complaints, and lost sales.

While the costs of quality can be significant, the benefits of achieving high-quality
products and services can far outweigh the costs. High-quality products and services
can lead to increased customer satisfaction, improved brand reputation, and
increased market share. Additionally, by preventing defects, companies can save
costs associated with rework, scrap, and downtime.

In conclusion, quality is an important factor in business that can affect customer

satisfaction, brand reputation, and profitability. The costs of quality are incurred to
achieve, maintain, or improve quality, and can be divided into prevention costs,
appraisal costs, internal failure costs, and external failure costs. By investing in
quality, companies can achieve a competitive advantage in the marketplace and
improve their bottom line.
Nature &Characteristics of quality
Quality refers to the degree of excellence or superiority of a product or service. It is a
multidimensional concept that can be defined and measured in different ways
depending on the context. However, there are some common characteristics of
quality that are widely recognized across different industries and domains.

1. Fitness for purpose: Quality products or services must meet the intended purpose
for which they were designed or intended. This means that they must be fit for the
purpose and meet the needs and expectations of customers.

2. Customer satisfaction: Quality is closely linked to customer satisfaction. High-

quality products or services are those that meet or exceed the expectations of
customers and provide a positive experience.

3. Consistency: Quality products or services must be consistent in their performance

over time. They must meet the same level of quality every time they are produced or
delivered.

4. Reliability: Quality products or services must be reliable and dependable. They

must perform as expected and not fail or break down easily.

5. Durability: Quality products or services must be durable and able to withstand

wear and tear over time. They must have a long lifespan and require minimal
maintenance.

6. Safety: Quality products or services must be safe for customers to use. They must
meet all relevant safety standards and regulations.

7. Aesthetics: Quality products or services must be visually appealing and

aesthetically pleasing. They must have an attractive design and be well presented.

8. Cost-effective: Quality products or services must be cost-effective. They must

provide value for money and be affordable for customers.
 In conclusion, quality is a multidimensional concept that is characterized by
fitness for purpose, customer satisfaction, consistency, reliability, durability, safety,
aesthetics, and cost-effectiveness. By understanding these characteristics,
companies can strive to produce high-quality products and services that meet the
needs and expectations of customers while providing value for money.

The quality process

The quality process refers to the degree to which a process meets the requirements
and expectations of its stakeholders. A process is a series of steps or activities that
are performed to achieve a specific goal or outcome. The quality of the process is
important because it can affect the quality of the products or services that are
produced by the process.

There are several characteristics of a high-quality process:

i) Efficiency: A high-quality process is efficient in terms of time, resources, and cost.

It minimizes waste and maximizes productivity.

ii) Effectiveness: A high-quality process is effective in achieving its intended goal or

outcome. It produces the desired result and meets the requirements and
expectations of stakeholders.

iii) Consistency: A high-quality process is consistent in its performance over time. It

produces the same level of quality every time it is executed.

iv) Flexibility: A high-quality process is flexible and adaptable to changing

requirements and circumstances. It can be modified or adjusted as needed to meet
new challenges or opportunities.

v) Transparency: A high-quality process is transparent and open to scrutiny. Its

inputs, outputs, and activities are visible and understandable to stakeholders.

vi) Collaboration: A high-quality process involves collaboration and cooperation

among stakeholders. It encourages communication and teamwork to achieve the
desired outcome.

vii) Continuous improvement: A high-quality process is continuously improving. It

seeks to identify and eliminate waste, defects, and inefficiencies to achieve higher
levels of quality and productivity.
 In conclusion, the quality of the process is an important factor in achieving
high-quality products or services. A high-quality process is efficient, effective,
consistent, flexible, transparent, collaborative, and continuously improving. By
focusing on these characteristics, organizations can improve their processes and
deliver better outcomes for their stakeholders.

The seven tools of statistics:

The seven tools of statistics are a set of techniques and graphical representations
used to analyze data and solve quality-related problems in various industries. The
tools were originally developed by Dr.Kaoru Ishikawa, a Japanese quality control
expert, and are commonly referred to as the "7QC tools". The seven tools of
statistics are:

1. Cause-and-effect diagram: Also known as the Ishikawa diagram or fishbone

diagram, this tool is used to identify the root causes of a problem by visually
displaying the relationships between the potential causes and the effect being
analysed.

2. Check sheet: This tool is a simple data collection form that is used to record data
in a structured and organized manner. It enables workers to easily and accurately
collect data on a specific process or issue.

3. Control chart: This tool is used to monitor and control a process by tracking data
over time and identifying any trends or patterns that may indicate a change in the
process.

4. Histogram: This tool is a graphical representation of data that displays the

frequency distribution of a set of continuous data. It is used to identify the shape of
the data and any outliers or unusual occurrences.

5. Pareto Chart: This tool is a bar graph that displays the relative frequency or size
of problems in descending order of importance. It is used to prioritize the most
important issues that need to be addressed.
6. Scatter diagram: This tool is used to examine the relationship between two
variables by plotting them on a graph. It helps to identify any patterns or trends that
may exist between the variables.

7. Stratification: This tool is used to classify data into different categories based on
specific criteria. It helps to identify any patterns or differences in the data that may be
related to the categories.

In conclusion, the seven tools of statistics are essential techniques for

analysing data and solving quality-related problems in various industries. By
mastering these tools, organizations can improve their processes, reduce waste and
defects, and deliver better outcomes for their customers.

Quality planning and improvement tools

Quality planning and improvement tools are essential for any organization that wants
to achieve high levels of efficiency, productivity, and customer satisfaction. These
tools help identify areas for improvement, set goals, and measure progress towards
achieving those goals. Here are some of the most commonly used quality planning
and improvement tools:

1. SWOT Analysis: This tool helps organizations identify their strengths,

weaknesses, opportunities, and threats. By analysing these factors, companies can
develop strategies to capitalize on their strengths, address their weaknesses, take
advantage of opportunities, and mitigate threats.

2. Six Sigma: This is a data-driven methodology that aims to eliminate defects and
reduce variability in processes. It involves a structured approach to problem-solving,
using statistical techniques to measure and analyze data, and implementing process
improvements to reduce defects and variability.

3. Lean Manufacturing: This tool focuses on reducing waste and increasing

efficiency in manufacturing processes. It involves identifying and eliminating non-
value-added activities, streamlining processes, and optimizing resources to improve
productivity and reduce costs.

4. Total Quality Management (TQM): It is a management approach that focuses on

continuously improving the quality of products and services by involving all
employees in the organization. TQM is based on the principle that every employee
has a role to play in improving quality and meeting customer needs. It involves the
following key elements:Customer Focus, Continuous Improvement, Employee
Involvement, Process Improvement, Data-Driven, Leadership etc.

Quality Specification and Control limits

Quality specification and control limits are important tools in ensuring that
products and services meet the required quality standards. Quality specification
refers to the set of requirements that a product or service must meet to be
considered acceptable.

Quality specification is typically determined by customer requirements, industry

standards, and regulatory requirements. It includes factors such as product
dimensions, material specifications, performance requirements, and safety
standards. These specifications serve as a benchmark for measuring the quality of
the product or service.

There are several benefits of having quality specifications in place:

1. Improved customer satisfaction: Quality specifications ensure that products and

services meet customer requirements and expectations. When customers receive
products or services that meet their needs, they are more likely to be satisfied, and
this can lead to repeat business and positive referrals.

2. Increased efficiency: Quality specifications provide clear guidelines for production

or service delivery, which can help to reduce waste and improve efficiency. This can
result in cost savings and increased productivity.

3. Consistency: Quality specifications ensure that products and services are

produced consistently, which can help to build trust and loyalty among customers.
Consistency also makes it easier to identify and resolve quality issues.
4. Compliance: Quality specifications can help businesses to comply with industry
standards and regulations. This can help to avoid fines, legal action, and damage to
reputation.

5. Competitive advantage: Businesses that have quality specifications in place can

differentiate themselves from competitors by demonstrating their commitment to
quality. This can help to attract and retain customers, and improve brand reputation.

Control limits: These are the boundaries within which a process is expected to
operate. Quality specification and control limits work together to ensure that products
and services meet the desired quality standards consistently.

Control limits are established based on the variability of a process. They are
used to determine whether a process is operating within acceptable limits. Control
limits are typically set based on statistical analysis of data collected over time. The
upper and lower control limits are used to determine whether a process is in control
or out of control. If a process falls outside the control limits, it is considered to be out
of control, and corrective action

Total Quality Management (TQM)

Total Quality Management, or TQM, is a management philosophy or approach that
emphasizes the continuous improvement of all aspects of an organization. TQM is
based on the belief that an organization can improve its products, services, and
processes by involving all employees in quality improvement efforts.

The goal of TQM is to create a culture of continuous improvement, where

everyone in the organization is focused on meeting or exceeding customer
expectations.

TQM involves a holistic approach to quality management, where quality is seen as

everyone's responsibility, from top-level management to frontline workers. It involves
the following key principles:
1. Continuous improvement: TQM emphasizes the importance of continuously
improving processes, products, and services. This involves identifying and
eliminating errors, defects, and waste, and making incremental improvements to
processes and products.

2. Customer focus: TQM is centered on meeting or exceeding customer

expectations. It involves understanding the customer's needs and preferences and
using that knowledge to improve products and services.

3. Employee empowerment: TQM involves empowering employees to identify and

solve problems, make suggestions for improvement,

The principles of Total Quality Management (TQM)

The principles of TQMinclude the following :

1. Customer Focus: TQM is centered on meeting or exceeding customer
expectations. This involves understanding the customer's needs and preferences
and using that knowledge to improve products and services.

2. Continuous Improvement: TQM emphasizes the importance of continuously

improving processes, products, and services. This involves identifying and
eliminating errors, defects, and waste, and making incremental improvements to
processes and products.

3. Employee Empowerment: TQM involves empowering employees to identify and

solve problems, make suggestions for improvement, and take ownership of their
work. This can be achieved through training, involvement in decision-making, and
recognition for their contributions.

4. Leadership Involvement: TQM requires leadership to take an active role in

promoting and implementing quality improvement efforts. Leaders must provide the
necessary resources, support, and guidance to enable employees to achieve quality
objectives.

5. Process Approach: TQM involves a process approach to quality management,

where the focus is on improving the process.
Deming’s 14 points
Deming's 14 points are a set of management principles developed by W. Edwards
Deming, a renowned American quality control expert. The 14 points are as follows:

1. Create constancy of purpose for improving products and services.

2. Adopt the new philosophy.

3. Cease dependence on inspection to achieve quality.

4. End the practice of awarding business on price alone.

5. Improve constantly and forever every process for planning, production and
service.

6. Institute training on the job.

7. Adopt and institute leadership.

8. Drive out fear.

9. Break down barriers between staff areas.

10. Eliminate slogans, exhortations, and targets for the workforce.

11. Eliminate numerical quotas for the workforce and numerical goals for
management.

12. Remove barriers that rob people of pride of workmanship.

13. Institute a vigorous program of education and self-improvement for everyone.

14. Put everybody in the company to work to accomplish the transformation.

Taken as a whole, the 14 points are a guide to the importance of building

customer awareness, reducing variation, and fostering constant continuous change
and improvement throughout organizations.