Operations management

MODULE - 1
Introduction
Operations management is the management of processes that transform inputs into goods and
services that add value for the customer.
The goal of operations management is to maximize efficiency while producing goods and services that
effectively fulfil customer needs.
• The business function responsible for planning, coordinating, and controlling the resources
needed to produce products and services for a company
• A management functions
• An organization’s core function
• In every organization whether Service or Manufacturing, profit or not for profit

Production vs operations
Production Operations
 It implies the creation of goods and  It refers to a function or system that
services to satisfy human needs transforms input into output of greater
 Involves conversion of input [ resources] value.
into output [ products]  It is defined as a transformation or
 Earlier word ‘manufacturing was used conversion process
synonymously with ‘production’. But  System encouraging transformation of
now former is limited to tangible goods 5m to output is called production system
and latter to tangibles and intangibles and transformation process is
[accepted by limited management ‘production’
practitioners]  Thus, both terms operation and
 Value addition is brought by alteration, production can be considered as
transportation, storage and quality synonymous
assurance

Nature of operations
 It is a system [system concept]
 Organizational function
 Conversion process
 As a means of creating utility.
 Dynamic
 Transformational process
 Continuous process
Objectives of operation management
 Maximum customer satisfaction through quality, reliability, cost, delivery time.
 Minimum scrap resulting in better quality
  Maximum utilization of resources
 Minimum possible inventory level
 Maximum employee satisfaction
 Maximum production
 Minimum cycle time
 Concern for protection of environment
Decision areas of OM
1. Strategic decision
 Manufacturing process and technology design
 Plant location
 Plant layout
 Long range capacity planning
2. Operations decisions
 Production planning
 Inventory planning
 Procurement planning
3. Control decision
 Labour productivity
 Quality
 Maintenance
History of OM
The historical milestones in Operations management are discussed below

 The Industrial Revolution

 Post-Civil War Period
 Scientific Management
 Human Relations and Behaviourism
 Operations Research
 The Service Revolution
OM in manufacturing sectors

All manufacturers set out to perform the same basic function: to transform resources into
finished goods. To perform this function in today’s business environment, manufacturers
must continually strive to improve operational efficiency. They must fine-tune their
production processes to focus on quality, to hold down the costs of materials and labor, and
to eliminate all costs that add no value to the finished product. Making the decisions
involved in the effort to attain these goals is the job of the operations manager. That
person’s responsibilities can be grouped as follows:

 Production planning. During production planning, managers determine how goods

will be produced, where production will take place, and how manufacturing facilities
will be laid out.
  Production control. Once the production process is under way, managers must
continually schedule and monitor the activities that make up that process. They must
solicit and respond to feedback and make adjustments where needed. At this stage,
they also oversee the purchasing of raw materials and the handling of inventories.
 Quality control. Finally, the operations manager is directly involved in efforts to
ensure that goods are produced according to specifications and that quality
standards are maintained.

Comparison of manufacturing vs. operational sectors

Manufacturing sectors Operational sector

• Physical, durable product • Intangible, perishable product
• Output can be inventoried • Output cannot be inventoried
• Low customer contact • High customer contact
• Long response time • Short response time
• Regional, national & international • Local markets
markets • Labour intensive
• Large facilities • Quality not measured easily
• Capital intensive
• Quality easily measured

Operation strategy
A set of goals, policies and self-imposed restrictions that together describe how organization
directs its resources so as to achieve its mission (survival, profitability or growth)

Perspectives of Operation Strategy

 Top-down perspective: It suggest that operation strategy is derived from organization’s
business strategy
 Bottom-up perspective:
* It is experienced based
* The strategy emerges through decisions taken over time
 Operations led perspective:
* The excellence in operations is used to drive the organization strategy
* It is based on Resource Based View (RBV) of firm
  Market led perspective: Operation strategy is developed as per the need/ response of
market environment
Elements Of Operation Strategy

 Positioning the production system

• selecting type of product, its design, type of processing system etc
• 2 types of product design include custom and standardized
 Focus on factory or service facility
• An important aspect of OS is to make the production facility specialized in some way
• Create it as a competitive advantage so that firm can strive in market
 product/ service design & development
• After product is designed it goes through various stages of life cycle [PLC]  The
activities of operations, service, marketing and engineering are intensive during new
product or service development stage
• As it moves to latter stages of PLC, the efforts can be reduced
• Product design affects quality, production cost etc. This effort diminishes as product
moves through later stage of PLC (introducing, growth, maturity etc)
 Allocation of resources to strategic alternatives
• Resources like capital, Human resource, machine materials etc directly affect
production.
• As availability of resources vary at each time, it should be allocated such that
objectives of organization are achieved at its best
 Facility planning, location selection
• The decisions involved regarding acquisition of land and production equipment,
specialized production technologies, location of new factories are considered here
• These decisions are crucial as they have long lasting effects and also are subjected to
high risk
 Technology selection and process development
• An essential art of OS is determination of how product will be produced
• It involves deciding and planning every detail of production process and facilities
Operation Strategy as a Competitive Weapon
 The main aim of operations strategy is to help the organization achieve its purpose. This
purpose is passed down from the mission, through corporate & business strategy, on to
operations strategy and then to operations functions.
 Operations strategy act as a competitive weapon because it is the link between abstract/
fuzzy higher strategies and more precise details needed by operations
 To develop competitive advantage, operation strategy aims in developing distinctive
capabilities for the business.
3 levels of competitive weapons
1. Operations strategy implements the higher strategies
 Here the main role of OS is to provide a path for transmitting organization’s aims,
downwards from its corporate & business strategy
 This is a supporting role, because we assume that higher strategies are already fixed
and operations strategy is concerned with allocation of resources
 This step is to ‘operationalize higher strategies’ and Using distinctive methods of
operationalizing can create competitive advantage
2. Operations strategy supports the higher strategies
 This step tries to make sure that the higher strategies are actually achievable before
considering implementation
 The operations department need to develop strategies & capabilities that help in
achieving the strategies
3. Operations strategy drives the higher strategies
 An organization can only succeed in the long term if customers perceive their
products as somehow better than those of competitors.
 For this, they develop distinctive capabilities that can give a competitive advantage.
 In many cases, this are included in business & corporate strategies. In this cases, the
operations strategy shows more dominance that it is even able to define higher
strategies
5 P’s of operations
1. Product
 Defined as anything that can be offered to a market that might satisfy a want or need
 In manufacturing, products are purchased as raw materials and sold as finished
goods.
 Various aspects of products to be considered include
Performance
Quality and reliability
Aesthetics
Quantity and selling price
Delivery schedule
2. Plant
 Refers to a place where goods and services are produced
 Commonly referred as factory, mill or establishment.
 The plant is concerned with activities;
Design and layout of building and offices
Reliability, perfect, maintenance of equipment’s
Safety of operations
The financial constraint
3. People
 Referred as human resources who are engaged in operations
 Following factors should be considered
1. Wages/salary administration
2. Conditions of work/safety
3. Motivation
4. Training of employees
4. Programmes
 Defined as a planned series of events
 The programme prepares schedules for:
1. Purchasing
2. Transforming
3. Maintenance
4. Cash
5. Storage and transport
5. Process
 Defined as a designed sequence of activities for changing the properties or attributes
of an object or system
 In deciding about the process, it is necessary to examine the following factors:
1. Available capacity
2. Manpower skills available
3. Type of production
4. Layout of plant
5. Safety
6. Maintenance required
7. Manufacturing costs
 MODULE – 2 Process design and product development
Product strategy
A product can be defined as – Anything that can be offered to a market attention, acquisition,
use, or consumption that might satisfy a want or need. Product strategy is defined as the road
map of a product. The company must be clear in terms of the target market of the product in
order for them to plan the activities needed so as to reach the destination and to achieve its
goals.
The product strategy is composed of a variety of sequential processes to effectively achieve
the vision. The company must know where they would like the product to take them in order
to identify and plan for the necessary activities to reach that destination. This is similar in
nature to a strategic vision of how a company wants to achieve its goals
Elements of product strategy
• Design
• Features
• Quality
• Branding
• Target marketing
• Positioning
Product strategy process

1. Generating - Using SWOT analysis (strengths, weaknesses, opportunities, threats) and

current market trends to generate ideas. The company may want to develop several
different roadmaps to suit different types of projects along with risks management
involved.
2. Screening the Idea - Set specific criteria for the product. The main factor to be
considered- Will customers in the market benefit from this product?
3. Testing the Concept - Using quantitative or qualitative responses to assess consumer
responses to the product idea before introducing the product to the marketplace.
4. Business Analytics - A detailed marketing strategy will be included in terms of whether
the product will be profitable in the marketplace. This will also include the reactions
from the target markets and product positioning to evaluate if there's demand from
the market.
5. Marketability Tests - Prototype product will be introduced followed by a test of the
product along with the proposed marketing plan. Modification can be made when
necessary
6. Technicalities and Product Development - Prototype will be created in the
marketplace allowing exact and real-life investigations, product specifications and any
manufacturing methods. This stage also includes the process of logistics plan, supplier
collaboration, engineering operations planning and quality management.
7. Commercialise - Product will be launched into the market alongside advertisements
and other promotions.
 8. Post Launch Review and Perfect Pricing - Review of the market performance in order
to assess the success of the project on the entire product portfolio. This stage will also
include product costs and the forecast of future profit and revenue, differing price and
using competitive technologies for competition in the market. Value chain analysis will
be useful for this stage of the process.
Intergrated product development
Integrated Product and Process Development (IPPD) is a management technique that
simultaneously integrates all essential acquisition activities through the use of
multidisciplinary teams to optimize the design, manufacturing and supportability processes
An integrated product team (IPT) is a multidisciplinary group of people who are collectively
responsible for delivering a defined product or process. IPTs are used in complex
development programs/projects for review and decision making. Objective of any
organization is to provide customer satisfaction by building product and services, which not
only satisfy needs and want but also create value for them.
Integration of new technologies and methods provide a completely new dimension to product
design process. This process starts with defining of the requirements of products based on
the customer feedback while considering the design layout and other constraints. Once the
finer details are finalized, they are fed into CAD models where extensive testing and modelling
are done to get the best product
Principles of IPD
1. Understand Customer Needs.
2. Plan and Manage the Product development Effort.
3. Use Integrated Teams.
4. Integrated Process Design.
5. Manage Cost from the Beginning.
6. Involve Stakeholders Early.
7. Develop Robust Designs.
8. Integrated CAD/CAM Tools.
9. Simulate the Product Performance and Manufacturing
10. Create an Efficient Development Approach
11. Continuously Improve the Design Process
Process strategy
Process strategy is the pattern of decisions made in managing processes so that they will
achieve their competitive priorities
Major process decisions include:
 Process Structure
 Customer Involvement
 Resource Flexibility
 Capital Intensity
Capacity planning decision - Every operating system uses a variety of resources including
labor, machines, materials, tools and fixtures. Capacity denotes the extent of availability of
these resources for the use of various processes. It also denotes the maximum output of
products and services one can achieve by using these resources.
The organizations can use three strategies for capacity build – proactive mode or reactive
mode or typical mode. In proactive mode, capacity is added in anticipation of future whereas
in reactive mode, firms wait until demand materializes sufficiently before augmenting
capacity. In typical mode, the firms go through a cycle of overcapacity, appropriate level of
capacity and insufficient capacity
Facilities location strategies
It can be defined as the process of determining a geographical site for a firm’s operations and
that can help the firm to achieve maximum operating economy and effectiveness
Importance of location strategy
• It influences cost structure & production technology.
• It depends on size & nature of business
• Location influences companies’ ability to serve customers
Factors affecting location strategy

• Market proximity
• Availability of labor & skills
• Site cost
• Availability of amenities
• availability of transportation facility
• availability of inputs
• availability of services
• sustainability of land & climate
• safety requirements
• political, cultural & economic environment
• Regional tax, import/ export barriers etc
Steps in location strategy

• Define location objectives & associated constraints

• Identify relevant decision criteria
Economic
Non-Economic Factors
• Perform field research
• Use the models to evaluate the alternate locations
• Select the location that best satisfies the criteria
Location evaluation methods
1. Cost Profit Volume/ Break Even Analysis
• Graphical & algebraic representation of relationship between output, cost, revenue
etc
 • Break even analysis helps to identify location where the profit is high Low-cost
location need not be maximum profit location as it always depends on price & volume
of sales at a location
2. Point Rating Method
• Companies have several objectives of various importance level while selecting sites
or location
• Potential site is evaluated with respect to various factors that firm is looking for.
• Points can be allotted to each of this factor
• Superior site is the one that end with more points
• Only intangible factors are assigned with points
3. Transportation Method
Aggregate planning
Aggregate plan defines the best combination of work force level, inventory & production
rate that matches company’s resources to market demand. It is the Process of planning
the quantity and timing of production over the intermediate time horizon. Using
Aggregate Production Planning, firms arrive at the quantity and timing of resources to be
committed to ensure continuous flow of goods and services to the customers
Objectives

• minimize production cost

• make appropriate changes in work force level, production rate etc so as to improve
profit
• customer service
• utilization of resources
• Feasibility [ plan should be able to provide for the portion of demand, that the firm
intends to meet.]
• Optimal solution
Aggregate planning techniques
 Graphical Method
• Popular techniques
• Easy to understand and use
• Trial-and-error approaches that do not guarantee an optimal solution
• Require only limited computations
 Heuristic Model [ problem solving, employ practical method but it doesn’t guarantee
perfect solution]
• Builds a model based on manager’s experience and performance
• A regression model is constructed to define the relationships between decision
variables
• Objective is to remove inconsistencies in decision making
 Computer Search Models
• Computer search methods are used when an organization has large quantity of
information on different production variables.
 • A computer program simulates conditions under all the possible combinations of
these variables and identifies the most cost-effective combination, which satisfies the
production requirements.
• It evaluates all possible combinations, based on specified search conditions and rules,
in order to identify the optimum aggregate plan.
Aggregate planning strategies
1. Pure planning strategy
Fluctuation in demand & uncertainties in production can be effectively managed by
• varying the workforce size in response to output requirements
• Varying the size of inventory
• varying plant capacity
• varying the utilization of workforce etc
If only one of these strategies is adopted without using others, then the strategy is
pure strategy
2. Chase Strategy
Matching the production rate to exactly meet the demand by hiring and laying off
workers as the demand varies.
3. Level Strategy
Maintain a stable workforce working at constant output rate; absorb demand
variations with inventory, or other means.
Master Production Schedule- Defines type & volume of each product that is to be produced.
It is a detailed plan that specifies the exact timing for production of each unit. The major
objective of MPS is to determine whether an operation can achieve the production objective
of organization
Function of MPS
 Translate aggregate plan
Master schedule of manufacturing sector breaks the planned total production of firm
into group of products or product lots. The determination is based on facility of firm and
economical character
 Evaluate alternative schedule.
- Uses computerized method and other control systems
- Each alternative evaluated with respect to materials, capacity & time requirement.
Organization uses computerized system which have simulation capabilities. Best one is
selected
 Identify material requirement
 Identify capacity requirement
Material Requirement Planning (MRP)
A system of planning & scheduling the time phased materials requirement for production
operations. Computerized ordering and scheduling system for manufacturing . It uses bills of
materials data, inventory data, and Master Production Schedule to project what material is
required, when, and in what quantity
 Use of MRP

• Reduce Inventory Levels

• Reduce Component Shortages
• Improve Shipping Performance
• Improve Customer Service
• Improve Productivity
• Simplified and Accurate Scheduling
• Reduce Purchasing Cost
• Improve Production Schedules
• Reduce Manufacturing Cost
• Reduce Lead Times
• Less Scrap and Rework
• Higher Production Quality
• Improve Communication
• Improve Plant Efficiency
• Reduce Freight Cost
• Reduction in Excess Inventory
• Reduce Overtime
• Improve Supply Schedules
• Improve Calculation of Material Requirements
• Improve Competitive Position

Three basic steps of MRP

1. Identifying Requirements
 Quantity on Hand
 Quantity on Open Purchase Order
 Quantity in/or Planned for Manufacturing
 Quantity Committed to Existing Orders
 Quantity Forecasted
2. Running MRP – Creating the Suggestions
 Critical Items- items of immediate importance
 Expedite Items-Expedite items are items that need to be speed up so that it is
completed in less than the normal lead time.
 Delay Items- Delay items are item that are not of vital importance and can be
delayed for the benefit of another item
3. Firming the Suggestions
 Manufacturing Orders
 Purchasing Orders
 Various Reports
Objective of MRP

• Improved customer service

• Reduced investment in inventory
• Improve operating efficiency
• Faster response to market changes
Capacity Requirement Planning (CRP)
 Computerized system that projects load from material plan.
 Create load profile
 Identifies underloads and overloads
 Information from the Material Requirements Planning which tells when you should
start the order so it can be completed on time.
 Information that details the requirements of equipment and labor to complete the
order as needed in the required time frame.
Reasons to use CRP
 It helps to determine how much that company must invest in its employees,
equipment and materials
 It helps to find the company’s place in the market.
 It helps to do on-time delivery of the products or services.
 CRP plays an important role in the success of the company
Basic strategies for timing capacity
CRP provides information to determine the timing of capacity expansion. The basic strategies
in relation to a steady growth in demand are:
 Capacity Lead Strategy
• In anticipation of demand, capacity is increased.
• This is an aggressive strategy and is used to lure customers away from competitors
 Capacity Lag Strategy
• Increase capacity after demand has increased.
• This is a conservative strategy and may result in loss of customers.
• You assume customers will return after capacity has been met.
 Average Capacity Strategy
• Average expected demand is calculated and capacity is increased accordingly.
• This is the most moderate strategy.
Material handling - Materials Handling is concerned with moving the right quantity of
materials-raw material, machinery spares, work in progress and finished goods-at the right
time in a given space. It includes movement, packing and sorting of materials. Handling
materials increases only cost of the product and not the value of the item.
Material handling strategies
 Planning Principle - All material handling should be the result of a deliberate plan where
the needs, performance objectives and functional specification of the proposed
methods are completely defined at the outset.
 Standardization Principle - Material handling methods, equipment, controls and
software should be standardized within the limits of achieving overall performance
objectives and without sacrificing needed flexibility, modularity and throughput
 Work Principle - Material handling work should be minimized without sacrificing
productivity or the level of service required of the operation.
 Ergonomic Principle- Human capabilities and limitations must be recognized and
respected in the design of material handling tasks and equipment to ensure safe and
effective operations.
 Unit Load Principle - Unit loads shall be appropriately sized and configured in a way
which achieves the material flow and inventory objectives at each stage in the supply
chain
 Space Utilization - Effective and efficient use must be made of all available space
 System Principle - Material movement and storage activities should be fully integrated
to form a coordinated, operational system which spans receiving, inspection, storage,
production, assembly, packaging, unitizing, order selection, shipping, transportation and
the handling of returns
 Automation Principle - Material handling operations should be mechanized and/or
automated where feasible to improve operational efficiency, increase responsiveness,
improve consistency and predictability, decrease operating costs and to eliminate
repetitive or potentially unsafe manual labor.
 Environmental Principle- Environmental impact and energy consumption should be
considered as criteria when designing or selecting alternative equipment and material
handling systems.
 Life Cycle Cost Principle- A thorough economic analysis should account for the entire life
cycle of all material handling equipment and resulting systems
Facility layout
A layout is a floor plan for determining and arranging the machinery & equipment in best
manner so as to
 allow quick flow of materials
 with minimum cost and
 With least handling processes
Types of layouts
I. Office layout
 Design positions, people, equipment, & offices for maximum information flow.
 Electronic and conventional communication patterns, separation needs, and other
conditions affecting employee effectiveness.
 layout trade-off is between proximity and privacy
 Examples  Insurance company  Software company
II. Retail layout
  Design maximizes product exposure to customers
 The objective is to maximize the profitability per square foot of floor space
 Category management
 Using computers & information systems to evaluate the profitability of various
merchandizing
 Slotting: e.g.) Manufacturer pay a fee to get their goods displayed on the shelf
III. Warehouse layout
 Design balances space (cube) utilization & handling cost
 Handling costs consists of incoming transport, storage and outgoing transport of
materials to be warehoused
 Another technique that can be followed includes Cross docking (Avoiding the
placement of materials or supplies in storage by processing them as they are received
for shipment.)
IV. Fixed-position layout
 Fixed-position layouts are typical of projects in which the product produced is too
fragile, bulky, or heavy to move.
 In this layout, the product remains stationary for the entire manufacturing cycle.
 Equipment, workers, materials, and other resources are brought to the production site.
 Ships, houses, and aircraft are examples
V. Process-oriented layout
 Also called functional layout, layout for job manufacture or batch production layout or
job shop layout
 Involve grouping of all similar equipment’s/ functions
 Deals with low volume high variety production (also called job shop)
 Workers in this layout need to be highly skilled & require technical supervision
 Advantage of this type of layout is that it brings greater flexibility
 Example: Hospital Layout
VI. Product-oriented layout
 Better known as assembly lines or straight-line layout or layout for serialized
manufacture, and it arranges activities in a line according to the sequence of operations
that need to be performed
 Product layouts are suitable for mass production or repetitive operations in which one
product is manufactured in large volume.
 Assembly line balancing: Obtaining output at each workstation on a production line so
delay is minimized
 The emphasis is on ‘special purpose machines’ in contrast to general purpose machines
[ in case of process layout]
VII. Cellular layout
 Combination of Product and process layout
 It combines the advantages of both layout systems
 Brings flexibility as well as reduces variable cost
 dissimilar machines are grouped into cells & each cell function like product layout
within a larger process layout
 each cell is formed to produce a part of the output (finished product)
VIII. hybrid layout
  layout that combines all three traditionally layouts considering product characteristics
and capacity requirement.
 It is proved that the methodology is effective to solve large size facility layout problems.
Group technology (GT)
 Group technology is a philosophy that seeks to exploit the commonality in
manufacturing and uses this as the basis for grouping components & resources. The
implementation of GT is often known as cellular manufacturing
 GT layout provides an alternative method for configuring resources in organizations
that have mid volume, mid variety product portfolios
 GT is a philosophy that aims in grouping components and resources
 In cellular manufacturing, available components are grouped into part families.
Corresponding to each part family, machine groups are identified. The layout ensures
that the cell has only a certain number of components to be processed.
 This also helps to implement several other operations management practices like
small group improvement activities, kaizen, JIT etc
Flexible manufacturing system

 An FMS is a manufacturing system that usually consists of numerical control [NC] machines
connected by an automated material handling system. It is operated through central
computer control and is capable of simultaneously processing a family of parts with low to
medium demand, different process cycles and operations sequences
 A flexible manufacturing system (FMS) is a manufacturing system in which there is some
amount of flexibility that allows the system to react in case of changes, whether predicted or
unpredicted
 MODULE – 3 Material Management & Vendor Management
Material Requirement Planning (MRP)
A system of planning & scheduling the time phased materials requirement for production
operations. Computerized ordering and scheduling system for manufacturing
It uses bills of materials data, inventory data, and Master Production Schedule to project what
material is required, when, and in what quantity
It is a planning and decision-making tool used in the production process which analyses
current inventory levels vs production capacity and the need to manufacture goods, based on
forecasts
MRP steps
1. Identifying requirements to meet demand.
2. Checking inventory and allocating resources
3. Scheduling production
4. Identifying issues and making recommendations
Manufacturing Resource Planning- Manufacturing Resources Planning is an integrated
information system used by businesses. The system is designed to centralize, integrate and
process information for effective decision making in scheduling, design engineering, inventory
management and cost control in manufacturing.
They include three functionalities
• Machine capacity scheduling
• Demand forecasting
• Quality assurance
• General accounting
Production Planning
 Production Planning can be referred to as a technique of forecasting every step in the
long process of production, taking them at right time and operations at the maximum
efficiency.
 The planning of industrial operations involves three considerations namely, what work
shall be done, how the work shall be done and lastly when the work shall be done.
Production control
 Production control is the process that keeps a watchful eye on the production flow
size of resources along with any deviation from the planned action. It also includes
arrangement for the prompt remedy or adjustment in case of any deviation so that
the production may run according to the original or revised schedules.
 Production control refers to ensuring that all which occurs is in accordance with the
rules established and instructions issued.
Characteristics of Production Planning and Control (PPC)
 It is the planning and control of manufacturing process in an enterprise.
  All type of inputs like materials, men, machines are efficiently used for maintain
efficiency of the manufacturing process.
 Various factors of production are integrated to use them efficiently and economically.
 The manufacturing process is organised in such a way that none of the work centres
is either overworked or under worked.
Objectives of PPC
1. Effective utilization of resources
2. Steady flow of production
3. Estimate the resources
4. Ensures optimum inventory
5. Co-ordinates activities of departments
6. Minimize wastage of raw materials
7. Improves the labour productivity
8. Help to capture the market
9. Provide a better working environment
10. Facilitates quality improvement
11. Results in consumer satisfaction
12. Reduces the production costs.
Limitation of PPC

 Lack of sound basis

 Rigidity in plant’s working
 Time consuming process
 Costly device or machine
 External limitation like natural calamities etc...
Materials management
Materials management encompasses all operations management functions from purchasing
to the final delivery of the end items. The materials management function handles the
physical movement of materials into, through and out of the firm.
Materials management connotes controlling the kind, amount, location and turning of the
various commodities used in and produced by the industrial enterprises. It is the control of
materials in such a manner that it ensures maximum return on working capital.
Function of material management
 Material Planning and Control
 Purchasing
 Stores Management
 Inventory Control or Management
 Standardization
 Simplification
 Value Analysis
 Ergonomics
 Just-in-Time (JIT)
Marketing management using ERP tool

An ideal ERP acts as a material requirement planning software, bringing to the system
numerous benefits such as better material control, inventory optimization, increased material
quality, cost reduction, improved handling of materials, timely availability of materials in right
quantity, enhanced productivity, improved relationship with the suppliers, and better cash
flow management, among others

The following are the activities that can be done with the help of ERP for Materials
management.

• Material Valuations: Material valuation helps in determining the price of a material

which then needs to be recorded in the general ledger account for financial
accounting.

• Lot and Serial Traceability: Lot and Serial Tracking is used to control and monitor from
receipt to shipment the allotment of lot or serial numbers for items part and finished
goods.

• Product Life Cycle management: new products are the backbone of your company’s
growth and profitability. But said that, the success of any product depends on the
stage that it is in, in the PLC. A proper analysis should be done to estimate which
products have a scope of selling more, which products are on the verge of being
defunct, which products need to be revamped.

• Material Management (MRP): Materials Requirement planning empowers the

company’s logistical processes. An ERP enables you coordinate warehousing measures
with your delivery schedule and enable your company to function efficiently with
minimum inventory levels to raise work orders and purchase orders.

• Inventory Replenishment: Allows you to execute differentiated, highly automated

inventory planning integrated with the demand forecast.

• Scheduling and Resourcing: Enables you to plan your resources efficiently by

streamlining all the work order scheduling and activity planning.

Vendor selection criteria

 Price. Your goal should always be to get the maximum value for the lowest possible
cost.
 Quality of Product or Service.
 Check References.
 Customer Service.
 Ethics and Integrity of The Vendor.
 Professional Employees.
 Recommendations from Others.
  Existing Relationships.
Vendors retention

• Retention process is Holding back a portion of payment to vendors who works for
your organization. For example, the retention amount is released to
the vendor when certain expectations are met or on a specified date that
your vendor has agreed upon

• An organization can have an agreement with the vendor that a certain percentage or
amount will be retained from the total amount that needs to be paid to be vendor.
The agreement can have a retention date on which the help back amount will be
paid to the vendor or when certain expectations are attained

Managing materials in JIT (just in time) manufacturing

Just-in-time also known as JIT is an inventory management method whereby labour, material
and goods (to be used in manufacturing) are re-filled or scheduled to arrive exactly when
needed in the manufacturing process.
• JIT is a manufacturing management process. It was first developed and applied in the
Toyota manufacturing plants in order to meet consumer demands with minimum
delays.
• Taiichi Ohno of Japan is referred to as the father of Just In Time. Toyota met the
increasing challenges for survival through a management approach that was entirely
focused on people, systems and plants
• The main focus of JIT is to identify and correct the obstacles in the production process.
It shows the hidden problems of inventory. The prime objective of JIT is to increase
the inventory turnover and reduce the holding and all connected cost.
• Just In Time method prevents a company from using excessive inventory and
smoothens production operations if a specific task takes longer than expected or a
defective part is discovered in the system. This is also one of the main reasons why
the companies (which are opted for JIT) invest in preventive maintenance; when a
part/equipment breaks down, the entire production process stops.
Advantages of JIT
 High quality
 Flexibility
 Reduced setup time
 Reduced need for indirect labor
 Less waste
 Low warehouse cost
 Synchronization between production scheduling and work hour
Disadvantage of JIT- Time consuming , No space product to meet an expected order, Supply
shock: if product do not reach on time, High risk factor
MODULE – 4 Lean Supply Chain Management & IT Enabled OM
Lean management
The lean management is a process by which the continuous efforts of all concerned parties
enable an organization to create a channel for the value stream by eliminating waste from
the system
It’s the philosophy that provides a set of tools and techniques to compete in an increasingly
fierce marketplace. It aims in creating value stream for customers and lean management is
based on the premise that by identifying waste in any system & removing it, it is possible to
create value stream for the products & services
Supply chain
The link connecting a set of facilities, companies, demand and supply points and service
providers. This chain links upstream supplier and downstream customers. The system of
suppliers, manufacturers, transportation, distributors, and vendors that exists to transform
raw materials to final products and supply those products to customers. That portion of the
supply chain which comes after the manufacturing process is sometimes known as the
distribution network
Lean + supply chain = Gives organizations ability to leverage their own lean journey more
easily.
Lean Supply Chain delivers better customer value by responding more efficiently, quickly, and
predictably to customer needs.
Lean supply chain
 Lean supply chain management represents a new way of thinking about supplier networks
 Lean principles require cooperative supplier relationships while balancing cooperation
and competition
 Cooperation involves a spectrum of collaborative relationships & coordination
mechanisms
 Supplier partnerships & strategic alliances represent a key feature of lean supply chain
management
 Lean supply chain management is not exclusively for those companies who manufacture
products, but by businesses who want to streamline their processes by eliminating waste
and non-value added activities.
Lean supply chain management
lean supply chain starts with operating on the principles of efficiency as well as overall quality.
This means a reduction of defective goods to zero, lowering waste, and in turn increasing the
efficiency.  The advantages to lean supply chain management practices includes following:
1. Better Manufacturing Techniques: The emphasis on quality control not only means
creating better products, but better means of creating products. This means that the
innovation focuses on improving the manufacturing process to eliminate mistakes.
2. Lower Administrative Costs: The costs associated in dealing with returns can be
considerable even when the number of items is relatively low. By reducing the number
 of defective goods, you reduce the associated administrative cost of working with
customers, replacing the item, and sending a new one back to them.
3. Improved Brand: By manufacturing goods that are tough, durable, and are less prone
to defects, you increase the status of your company. This can be a powerful advertising
tool that promote the company brand by word of mouth which is the most powerful
form of advertising.
Lead supply chain principle

 Focus on the supplier network value stream

 Eliminate waste
 Synchronize flow
 Minimize both transaction and production costs
 Establish collaborative relationships while balancing cooperation and competition
 Ensure visibility and transparency
 Develop quick response capability
 Manage uncertainty and risk
 Align core competencies and complementary capabilities
 Foster innovation and knowledge-sharing
Advantages of lean SC
Important element in developing long term value among customers

 Helps in increasing the performance of the business.

 Lean supply chain management system not only improves the quality but also
increases the productivity through the extraction of waste
 It ensures that every task will be adding value for the end user.
 Making all the people inside the organization to be involved in eliminating the wastage
occurring in supply chain.
 Preparing the processes running at the manufacturing phase to eliminate mistakes
that might happen in future.
 Creating a plan to standardize the process and listing out the best practices to be
followed.
 Making the flow of the products from the manufacturing plant to the customer
through supply chain without interruption.
 Delivering the products to the end customers at the right place, at the right time in
the right quantity
Making the vendors lean
 Step 1 - The Ability to See
For present day organisation, supply chain becomes the core process and the
suppliers and customers become the upstream and downstream processes. The
connection between these processes will be the flow of material and information.
The firm should include the vendors in all stage of decision making especially with
 regard to factors concerning quality, quantity, time of delivery, mode of delivery
etc. The vendors can be included in current state mapping of the business activity
so that it creates a win- win situation for both.
 Step 2 - Looking Ahead
Using the current state map will help the firm to identify waste opportunities.
Developing a future state map will help in providing a vision for both parties to
align on. If the firm is taking the future state step, then supplier has to be a part of
that process in order to prevent unrealistic goal setting.
 Step 3 - Sharing the Knowledge 
If vendor/supplier doesn't have their own improvement methodology, the firm
might consider sharing their methodology. The suppliers along with the firm can
have a joint participation in kaizen events, JIT initiatives, attend lean classes, or
even host a class at their site. This is another opportunity to improve alignment
between organizations.
 Step 4 - Using the Tools
Finally, shared kaizen events are another great way of integrating a value stream
or integrating multiple value streams. Understand that these events have to be
collaborative in nature. In long run, the collaboration becomes so integrated that
the supplier becomes a part of organization’s long-term planning objectives.
Lean cell design
The lean cell can be defined as the situation in which location of processing steps for a product
falls immediately adjacent to each other, so that parts, documents, etc., can be processed in
very nearly continuous flow, either one at a time or in small batch sizes that are maintained
through the complete sequence of processing steps.
Rules for lean cell design

• Keep it moving
• Keep it small & simple
• Keep it logical & sequential
• Make it ergonomic
• Economize on movement
• Optimize parts presentation
• Do it online
• Minimize wasteful handling
• Keep it open & flexible
Push and pull system

Push system- A method of controlling the flow of resources by replacing only what has been
consumed. Manufacturing system in which production is based on actual daily demand
(sales), and where information flows from market to management.
Push process

• Also referred as speculative process because they respond to speculated [forecasted]

demand rather than actual demand
 • Push or pull boundary in a SC separates push process from pull process
• Operate in uncertain environment
• Production and distribution decisions based on long-term forecasts.
• Manufacturer demand forecasts based on orders received from the retailer’s
warehouses
Benefits of push system

• An advantage to the push system is that the company is fairly assured it will have
enough product on hand to complete customer orders, preventing the inability to
meet customer demand for the product.
• High Inventory is available within the premise
• Producer centric
• Make -to-stock
Pull system- Resources are provided to the consumer based on forecasts or schedules. In a
push scheduling system, forecasts drive the entire production. Manufacturing system in
which production is based on a projected production plan and where information flows from
management to the market.
Pull process

• Also referred to as reactive process because they react to customer demand

• Operate in an environment where customer demand is known
• Production and distribution demand driven
o Coordinated with true customer demand rather than forecast demand
o firm does not hold any inventory and only responds to specific orders.
• Intuitively attractive:
o Reduced lead times through the ability to better anticipate incoming orders from
the retailers.
o Reduced inventory since inventory levels increase with lead times
o Less variability in the system
o Decreased inventory at the manufacturer due to the reduction in variability

Benefits of pull system

 Increases employee involvement

 Allows decision-making at appropriate levels
 Allows manufacture of only what is needed by the customer
 Improves communications of customer needs through visual controls
 Provides a common system for moving material through a plant
 Eliminates scheduling complexities
 Reduces lead time and work in process inventory
 Leads to lower unit cost
 Supports continuous improvements
 Counts inventory by counting number of pull signals
5S of lean concepts

1. Sort/segregate – when in doubt, throw it out

Go through your entire workspace and remove anything that is not involved in the
daily processes. Never have any items that are non-process related in the workspace.
2. Simplify/straighten – methods analysis tools
Make sure all things are in their place and that there is a place for everything. Organize
the items so that the daily work processes are made easier. Set the items in a logical
order; you should not have to go out of your way to get a tool.
3. Shine/sweep – clean daily
Daily efforts should be made to keep everything sparkling clean in your new organized,
clean workspace. This includes dusting, mopping and keeping any machines or tools
maintained in the workspace.
4. Standardize – remove variations from processes
Now that your workspace is organized perfectly and sparkling clean, you must create
a new standard for the processes to be carried out. This includes organizing how the
tasks will be performed. Include charts, lists and shift schedules if need be.
5. Sustain/self-discipline – review work and recognize progress
Maintain new practices, develop a team discipline if the processes involve an entire
team, or if it is a single person make sure the discipline is part of the company culture.
Total Preventive Maintenance (TPM)

 TPM is one of the more advanced Lean Enterprise tools

 Total Preventive Maintenance (TPM) is the application of preventive maintenance
strategies in an organized and standardized method.
 TPM is an approach that places the responsibility for routine maintenance on the
workers who operate the machinery, rather than employing separate maintenance
personnel for that function.
 Used in many Japanese companies, TPM gives employees a sense of responsibility
and awareness of the equipment they use.
 It has the side benefit of reducing the abuse and misuse of the equipment as
operators who are also in charge of the maintenance of equipment are more careful
about using it.
 It holds particular appeal for small manufacturers

Objectives of TPM

 Minimize loss of productive time

 Minimize repair time & cost
 Keep productive assets in working condition
 Minimize accidents
 Minimize total maintenance cost
 Improve quality of products

Kanban System- JIT manufacturers utilize a concept known as Kanban, which denotes a
card or a visible signal. Taiichi Ohno, the father of Toyota Production System, conceived the
logic of Kanban as a production control tool.
Four core principles of Kanban System

1. Visualize work
By creating a visual model of the work and workflow, one can observe the flow of work
moving through the system and this leads to increased communication and
collaboration.
2. Limit work-in-process
By limiting how much unfinished work is in process, the firm can reduce the time it
takes an item to travel through the Kanban system. Work station can also avoid
problems caused by task switching and reduce the need to constantly reprioritize
items.
3. Focus on flow
A consistent flow of work is essential for faster and more reliable delivery, bringing
greater value to your customers, team, and organization.
4. Continuous improvement
Once your Kanban system is in place, it becomes the cornerstone for a culture of
continuous improvement. Teams measure their effectiveness by tracking flow,
quality, throughput, lead times, and more. Experiments and analysis can change the
system to improve the team’s effectiveness. Continuous improvement is a Lean
improvement technique that helps streamline workflows, saving time and money
across the enterprises
Manufacturing Information System and Operations Management
The manufacturing information system is a system that supports the manufacturing functions
of purchasing, receiving, quality control, inventory management, material requirements
planning, capacity planning, production scheduling, and plant design.
The role of information in a manufacturing company is summarized in the illustration.
Consider the three main flows crossing an enterprise system—material, money and
information. It is easy to understand the specific importance of this information. Material flow
constrains money flow, that is, no payment until delivery. Information flow constraints
material flow, that is, there is no delivery until shipment documentation is issued. Information
flow constrains money flow, because there is no payment until an invoice is issued.
Overview of MIS life cycle
1. Strategic guidance- Identify expectations from Company’s Top Management. It
delivers
 Status and maturity level of the manufacturing information systems in terms of
services they provide, or constraints they impose
 Requested improvements & corresponding global economic impact
2. Master plan
 Based on strategic guidance, the Master Plan designs and maintains the roadmap
for implementing the necessary changes and monitors Master and
Implementation projects. It delivers:
 A continuously updated, sequenced, measured and controlled suite of projects,
consistent with master project components
 3. Master project- The Master Project is a permanent action covering the entire life
cycle of the company’s manufacturing facilities. It guaranties evolution & risk
mitigation of real projects and delivers:
 Resources models
 “Functional Core System”
 "Technical Core System”
 Development and deployment guidelines for all aspects of the Master and Instance
Projects execution
4. Instance projects
Instance projects are actual projects, implementing master project solution
components on particular facilities
5. Facility life
DSS & operations Management
DSS
 A DSS is a computer-based information system that supports business or
organizational decision-making activities.
 A DSS is a collection of integrated software applications and hardware that form the
backbone of an organization’s decision-making process and help to make decisions,
which may be rapidly changing and not easily specified in advance.
Objective of DSS
 Increase the effectiveness of the manager's decision-making process.
 Supports the manager in the decision-making process but does not replace it.
 Improve the director’s effectiveness of decision making
Characteristic of DSS
 Facilitation: DSS facilitate and support specific decision-making activities and/or
decision processes.
 Interaction: DSS are computer-based systems designed for interactive use by decision
makers or staff users who control the sequence of interaction and the operations
performed.
 Ancillary: DSS can support decision makers at any level in an organization. They are
NOT intended to replace decision makers.
 Repeated Use: DSS are intended for repeated use. A specific DSS may be used routinely
or used as needed for ad hoc decision support tasks.
 Identifiable: DSS may be independent systems that collect or replicate data from other
information systems OR subsystems of a larger, more integrated information system.
 Task-oriented: DSS provide specific capabilities that support one or more tasks related
to decision-making, including: intelligence and data analysis; identification and design
of alternatives; choice among alternatives; and decision implementation.
 Decision Impact: DSS are intended to improve the accuracy, timeliness, quality and
overall effectiveness of a specific decision or a set of related decisions.
 Supports individual and group decision making: It provides a single platform that
allows all users to access the same information and access the same version of truth,
 while providing autonomy to individual users and development groups to design
reporting content locally.
 Comprehensive Data Access: It allows users to access data from different sources
concurrently, leaving organizations the freedom to choose the data warehouse that
best suits their unique requirements and preferences.
 Easy to Develop and Deploy: DSS delivers an interactive, scalable platform for rapidly
developing and deploying projects. Multiple projects can be created within a single
shared metadata. Within each project, development teams create a wide variety of re-
usable metadata objects.
 Integrated software: DSS’s integrated platform enables administrators and IT
professionals to develop data models, perform sophisticated analysis, generate
analytical reports, and deliver these reports to end users via different channels (Web,
email, file, print and mobile devices).
 Flexibility: DSS features are flexible and can be altered according to need providing a
helping hand in the work process.
Components of DSS
 Inputs: Factors, numbers, and characteristics to analyze.
 User Knowledge and Expertise: Inputs requiring manual analysis by the user.
 Outputs: Transformed data from which DSS "decisions" are generated.
 Decisions: Results generated by the DSS based on user criteria.
Advantages using DSS by Operations Management
 Time savings
 Enhance effectiveness
 Improve interpersonal communication
 Competitive advantage
 Cost reduction
 Increase decision maker satisfaction
 Promote learning
 Improves personal efficiency
Major activities in operations management where DSS can be used
 Understand strategic objectives
 Develop an operations strategy -overall guiding principles, prioritising
 Design operations, for products and services
- Determined by physical form, shape and composition of products services and
processes,
- Direct responsibility for product design often belongs elsewhere - engineering or
marketing
 Plan and control operations
- resources allocation & utilization
- Manage capacity
 Improve performance of operations – (re)design decisions
 MODULE – 5 Lean Operations and Quality Management
Lean management

 Lean management is a new philosophy of operations management that provides a set

of tools & techniques to compete in the marketplace
 It is an organizational mechanism for defining value & thereby creating a value stream
for customers
 Lean management is based on the premise that by identifying waste in any system
and removing it, it is possible to create a value stream for products & services
 The concepts to be considered include: value added [VA], non-value added [NVA] &
necessary but non-value-added activities [NNVA]
Lean production
 Lean production or lean manufacturing
 Lean was generated from the Just-in-time (JIT) philosophy of continuous and forced
problem solving
 Lean manufacturing is the production of goods using less of everything compared to
traditional mass production: less waste, human effort, manufacturing space,
investment in tools, inventory, and engineering time to develop a new product
 Lean production is an approach to management that focuses on cutting out waste,
whilst ensuring quality. This approach can be applied to all aspects of a business –
from design, through production to distribution.
 Lean production aims to cut costs by making the business more efficient and
responsive to market needs.
 This approach sets out to cut out or minimise activities that do not add value to the
production process, such as holding of stock, repairing faulty product and unnecessary
movement of people and product around the business.
 Lean production originated in the manufacturing plants of Japan, but has now been
adopted well beyond large and sophisticated manufacturing activities. It is an
organizational mechanism for defining value & thereby creating a value stream for
customers
Objectives of lean production
 Doing the simple things well
 Doing things better
 Involving employees in the continuous process of improvement
 and as a result, avoiding waste
7 Wastes
 Overproduction – producing more than the customer orders or producing early.
Inventory of any kind is usually waste.
 Queues – idle time, storage, and waiting are wastes
 Transportation – moving material between plants, between work centres, and
handling more than once is waste
  Inventory – unnecessary raw material, work-in-process (WIP), finished goods, and
excess operating supplies
 Motion – movement of equipment or people
 Over processing – work performed on product that adds no value
Techniques of lean production
 5S
Strategy for creating a well-organized, smoothly flowing manufacturing process
 Single Minute Exchange of Dies
Method that focuses on the rapid conversion from manufacturing one product to the
next
 SMED needs to be treated as a constant improvement program
 Setup times cannot be minimized overnight
 Continuous evaluation and exploration of further improvements is absolutely
necessary
 Kanban
A system that uses replenishment signals to simplify inventory management Signals
(usually cards) hold product details like What to make, when to make it, how much to
make, and where to send it
 Cellular Manufacturing
Dividing the manufacture of products into semi-autonomous and multi-skilled teams
known as work cells
Lean principles
1. VALUE
 In terms of Lean, the value should always be considered from a customer
perspective
 Value is what customers really want, along with the price they are willing to pay
 The Lean approach begins with a detailed understanding of what value the
customer assigns to product and services. This is what determines what the
customer will pay.
 Establishing value allows organizations to create a top-down target price. The cost
to produce the products and services is then determined. The organization focuses
on eliminating waste so that they can deliver the value the customer expects at
the highest level of profitability.
2. THE VALUE STREAM
 The value stream is the totality of the product’s entire life-cycle from the raw
materials through to the customer’s use of, and eventual disposal of, the product.
 In order to eliminate waste, there must be an accurate and complete
understanding of the value stream.
 Processes are examined to determine what value is added. Steps, materials,
features, and movement that do not add value are eliminated. According to
Womack and Jones, value stream mapping will almost always reveal three types
of Muda. (Muda is Japanese for waste).
 Many steps will be found to unambiguously create value.
  Many other steps will be found to create no value but to be unavoidable with
current technologies and production assets.
 Many additional steps will be found to create o value and be immediately
avoidable
3. FLOW 
 Understanding flow is essential to the elimination of waste. If the value stream
stops moving forward at any point, waste is the inevitable by-product.
 The lean manufacturing principle of flow is about creating a value chain with no
interruption in the production process and a state where each activity is fully in
step with every other.
4. PULL
 Pull system is a lean manufacturing strategy used to reduce waste in the
production process. In this type of system, components used in the manufacturing
process are only replaced once they have been consumed so companies only make
enough products to meet customer demand.
 The lean principle of pull helps ensure flow by making sure that nothing is made
ahead of time, building up work-in-process inventory and stopping the
synchronized flow.
 Rather than using the traditional American manufacturing approach of pushing
work through based on a forecast and schedule, the pull approach dictates that
nothing is made until the customer orders it. This requires a great deal of flexibility
and short design to delivery cycle times. It also requires an efficient way of
communicating what is needed to each step in the value chain.
5. PERFECTION
 Lean practitioners strive to achieve nothing short of perfection. The march toward
perfect process happens step by step as continuous improvements address root
causes of quality problems and production waste. The relentless pursuit of
perfection is what drives users of the approach to dig deeper, measure more, and
change more often than their competitors
Basic lean tools
1. 5S
The 5 ‘S’ includes
 Sort (Eliminated what is not needed)
 Set to order [Organize what is needed]
 Standardize (Standardize the best practices)
 Sustain (Regularly Follow the Standards)
 Shine (Clean and organize the work area)
Advantage:
 Helps in saving time
 Saves time in looking for the items/tools.
 Improves workplace condition
 Clean, spacious work centres help in increasing safety.
 Helps in increasing productivity
 2. Continuous flow
 Work-in-process smoothly flows through production cycle with minimal (or no)
buffers between steps of the manufacturing process.
Advantages
 Helps in establishing the flow
 Reduces batching, establishes process flow, minimising waiting between steps,
improves quality and reduces lead time.
 Helps in eliminating waste of inventory, waste of waiting and waste of
transportation
 Helps in increasing the profit
3. Level Scheduling
 Heijunka means sequencing, or smoothing of production.
 By multiplying the tasks, [and distributing them better, and by standardising
them,] better use can be made of the working time available for creating value.
 Work is appropriately distributed and no individual has too much or too little work
Advantages:
 Helps in monitoring and load balancing
 Provides a performance dashboard to help monitor the work at all levels in real
time.
 Helps in better utilization of resources
4. Automation
 Built in quality at the source
 It is a tool that provides machine and operators the ability to automatically stop
the work if any abnormality occurs.
 Jidoka is based on
 Don’t accept defects
 Don’t make defects
 Don’t pass defects on
Advantages:
 Eliminates waste of defect
 It prevents defective products from passing to the next process.
 Helps in saving time and waste of raw material.
 Ensures client/customer satisfaction
 Helps in maintaining the quality of the product.
5. Just In Time (JIT)
 Production as per the customer’s demand
 The production is done as per the customer demand and not as per the projected
demand.
 Relies on many lean tools, such as Continuous Flow, Heijunka, Kanban,
Standardized Work
Advantages:
 Effective in reducing the Inventory level
  As the production is done after receiving the customer order, inventory storage is
not required. Hence, reduces the storage space.
 Helps is Improving the cash flow

6. Continuous Improvement
 Kaizen is the Japanese word for "improvement"
 Kaizen is a concept referring to business activities that continuously improve all
functions and involve all employees from the CEO to the assembly line workers.
Advantages:
 Helps in assigning responsibility/ segregation of duties
 Helps in providing strategy where employees work together proactively to achieve
regular, incremental improvements in the manufacturing process.
 Helps in eliminating wastes
7. Mistake Proofing
 Ensure that the process is error free
 Make the process in such a way that it is impossible to make errors.
 Use low-cost ways, reliable devices or innovation for preventing or detecting
errors by people or system in a process.
Advantages:
 Helps in eliminates waste as the defects are limited
 Helps in detecting and preventing the occurrence of defects in a process.
8. Value stream mapping (VSM)
 It is the process of Material and information flow mapping
 Commonly used in manufacturing, healthcare, software & product development,
logistics, supply chain, and service industries
Advantages:
 Helps in mapping the flow of the process
 Helps in mapping the current and future state of value stream.
 Helps in streamlining the process
9. Key Performance Indicator (KPI)- KPI can be defined as the Metrics designed to track
the progress towards the goals of the organization by assessing, analyzing and tracking
processes
Advantages:
 Helps in achieving the organization goal
 Helps in driving the desired behavior
10. Visual Management- Process of displaying critical information such as KPI’s relating
to production output, efficiency, quality and downtime on the production floor.
Advantages:
 Helps in driving the KPI’s
 Helps in increasing the performance/productivity.
Statistical quality control concepts- Statistical techniques are used in identifying the variation
in the process that ultimately affect the quality of final product/service. The methods include
 1. Control chart
 Used to monitor quality
 concept of all control chart is that different measurement criteria are plotted on the
chart with a central line and 2 control limits above & below central value
 It the noted attribute fall between control limit, the process is said to be in control
 If it falls outside limit, process is out of control & remedial actions should be taken
2. Acceptance plan
 Used to verify the quality of raw materials, purchased parts & components &
finished goods
 It is used to verify both incoming raw materials & outgoing finished materials
quality on the basis of acceptance plan, a manager can accept or reject a lot
 If the lot of raw material is accepted, it is placed in the inventory for use and if
rejected, it is returned to the supplier
 The key information is an acceptance plan is the criteria for accepting or
rejecting a lot Acceptance plan and acceptance sampling can be described
using
 Average Outgoing Quality (AOQ) curve
 AOQ indicates the average defects in the lot and all defects/ defective items
have been removed
 As the proportion of defective items in the lot increases, the chance or
probability of rejecting such lots increases
 These rejected lots are subjected to 100% inspection. As a result of more
lots being subjected to 100 % inspection AOQ level is improved
 It is a curve plotted against percent defectives
 Operating Characteristics (OC) Curve
 Inspection of all items in a lot is not practical or feasible
 Even after drawing a random sample from a lot, one cannot be certain
about the quality of items in the lot
 OC curve is an important feature of acceptance plan. It shows how well an
acceptance plan differentiates between good & bad lots
Seven tools of quality
1. Check sheets- The check sheet is a form (document) used to collect data in real time
at the location where the data is generated. The data it captures can be quantitative
or qualitative. When the information is quantitative, the check sheet is sometimes
called a tally sheet. Simple data recording device. Systematically record and compile
data from sources
2. Flow charts - A flowchart is a formalized graphic representation of a logic sequence,
work or manufacturing process, organization chart, or similar formalized structure.
Symbols commonly used: Arrows  Rectangular Box  rhombus
3. Histogram- A histogram is a bar graph that shows frequency data. It is used to
graphically summarize and display the distribution and variation of a process data set.
It provides the easiest way to evaluate the distribution of data
4. Pareto analysis- The Pareto chart can be used to display categories of problems
graphically so they can be properly prioritized. A Pareto chart or diagram indicates
which problem to tackle first by showing the proportion of the total problem that each
of the smaller problems comprise.
 5. Fish bone diagram - One analysis tool is the Cause and Effect or Fishbone diagram.
These are also called Ishikawa diagrams because Kaoru Ishikawa developed them in
1943. They are called fishbone diagrams since they resemble one with the long spine
and various connecting branches
6. Control charts - Control charts, also known as process-behavior charts, in statistical
process control are tools used to determine if a manufacturing or business process is
in a state of statistical control
7. Scatter diagram- A scatter diagram shows the correlation between two variables in a
process. The scatter diagram graphs pairs of numerical data, with one variable on each
axis, to look for a relationship between them. If the variables are correlated, the points
will fall along a line or curve. The better the correlation, the tighter the points will hug
the line.
Toyota Production System- TPS is the system that emphasizes continuous improvement,
respect for people, and standard work practice. TPS emphasizes employee learning and
empowerment in an assembly-line environment.
Aims of TPS
 Make what the customer needs, when it is needed, in the right amount
 Minimize inventories
 Separate machine work from human work and fully utilize both
 Produce a high mix of low volume products efficiently

Concepts of TPS
The Toyota Production System (TPS) was established based on two concepts:
 The first is called "Jidoka"(which can be loosely translated as "automation with a human
touch") which means that when a problem occurs, the equipment stops immediately,
preventing defective products from being produced;
 The second is the concept of "Just-in-Time, " in which each process produces only what is
needed by the next process in a continuous flow
Zero Waste Management Concepts
The concept of Zero Waste aims to minimize use of resources and maximize the ongoing
benefits of the essential value within the waste generated by society.
“Zero Waste” is a philosophy of eliminating the generation of materials that have no viable or
economic option for end-of-use management.
Initially we had the concept of 3 Rs are:

• Reduce - reduce generation of waste at the source.

• Reuse - maximise recovery of materials for reuse.
• Recycle - maximise recycling of discarded material.
Now its 5R

• Reduce - Reduce the amount of waste

• Reuse - Reuse resources
 • Recycle - Recycle resources
• Refuse - Refused to receive unnecessary objects
• Repair - Repair things for their prolonged use
Focus of zero waste concept

• Full awareness among citizens

• Segregated organic waste collection & treatment
• Separate collection for residential & commercial waste
• De-centralized Biogas Generation
• De-centralized Composting
• Savings in transportation cost, great savings in natural resources, 80%
• Generation of green employment
• Will advance the development of resource recovery
• Promote recycling
Six Sigma in Quality management
Six-Sigma focuses on improving quality by minimizing and eventually eliminating defects from
the system
Factors

• Committed leadership from top management

• Integration with existing initiatives, business strategy, and performance measurement
• Process thinking
• Disciplined customer and market intelligence gathering
• A bottom-line orientation and continuous reinforcement and rewards
• Training
Six Sigma methodologies
1. DFSS [DESIGN FOR SIX SIGMA]
• DFSS is a business-process management method related to traditional Six
Sigma
• It is used in many industries, like finance, marketing, basic engineering, process
industries, waste management, and electronics.
• It is based on the use of statistical tools like linear regression
• DFSS has the objective of determining the needs of customers and the
business, and driving those needs into the product solution so created.
• DFSS is relevant for relatively simple items / systems.
• It is used for product or process design in contrast with process improvement.
• Measurement is the most important part of most Six Sigma or DFSS
 2. DMAIC (Define, Measure, Analyze, Improve, Control)

DEFINE

• Identify customers and their priorities

• Identify business objectives
• Select a six-sigma project team
• Define the Critical-to-Quality (CTQ’s) characteristics that the customers consider to
have the most impact on quality
MEASURE

• Determine how to measure the processes

• Identify key internal processes that influence CTQ’s
• Measure the defect rates currently generated relative to those processes
ANALYZE

• Determine the most likely causes of defects.

• Identify key factors that are most likely to create process variation.
IMPROVE

• Identify means to remove causes of the defects.

• Confirm the key variables and quantify the effects on CTQ’s
• Identify maximum acceptable ranges for the key variables and a system to measure
deviations of the variable
• Modify the process to stay within the acceptable ranges
CONTROL

• Determine how to maintain the improvement

• Put tools in place to ensure that the key variables remain within the maximum
acceptable ranges under the modified process