Deming cycle

Deming cycle is a tool for continuous improvement and it is a tool for an ongoing effort to improve products, services or processes. These efforts can seek “incremental” improvement over time or “breakthrough” improvement all at once. Among the most widely used tools for continuous improvement is a four-step quality model—the plan-do- check-act (PDCA) cycle, also known as Deming Cycle or Shewhart Cycle:

The four stages of PDCA/Shewhart Cycle or Deming Wheel are:

1. PLAN

· Study & Document the existing process.

· Collect data to identify problems.

· Survey data and develop a plan for improvement.

· Specify measures for evaluating the plan.

2. DO

· Implement the plan on a small scale.

· Document any changes made during this phase.

· Collect data systematically for evaluation.

3. CHECK

· Evaluate the data collection during this phase.

· Check how closely the results match the original goals of the plan phase.

4. ACT

· If the results are successful, standardize the new method and communicate the new method to all people associate with the process.

· Implement training for the new method.

· If results are unsuccessful, revise the plan and repeat the process or cease this project.

Deming cycle was developed to link the production of a product with consumer needs and focus the resources of all departments (research, design, production, and marketing) in a cooperative effort to meet those needs. The Deming Cycle proceeds as follows:

1. Conduct consumer research and use it in planning the product (PLAN).

2. Produce the product (DO).

3. Check the product to make sure it was produced in accordance with the plan (CHECK).

4. Market the product (ACT).

5. Analyze how the product is received in the marketplace in terms of quality, cost, and other criteria (ANALYZE).

Deming cycle

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Just In Time (JIT)

Just In Time (JIT) is an inventory strategy implemented to improve the return on investment of a business by reducing in process inventory and its associated carrying costs. JIT fits well under the TQM umbrella, for many of the ideas and techniques are very similar and, moreover, JIT will not work without TQM in operation. Writing down a definition of JIT for all types of organization is extremely difficult, because the range of products, services and organization structures leads to different impressions of the nature and scope of JIT. It is essentially:

· A series of operating concepts that allows systematic identification of operational problems.

· A series of technology-based tools for correcting problems following their identification.

An important outcome of JIT is a disciplined program for improving productivity and reducing waste. This program leads to cost-effective production or operation and delivery of only the required goods or services, in the correct quantity, at the right time and place.

Principle: The process is driven by a series of signals, which can be Kanban, that tell production processes when to make the next part. Kanban are usually 'tickets' but can be simple visual signals, such as the presence or absence of a part on a shelf. When implemented correctly, JIT can lead to dramatic improvements in a manufacturing organization's return on investment, quality, and efficiency.

Aims of JIT:

The fundamental aims of JIT are to produce or operate to meet the requirements of the customer exactly, without waste, immediately on demand. In some manufacturing companies JIT has been introduced as ‘continuous flow production’, which describes very well the objective of achieving conversion of purchased material or service receipt to delivery, i.e. from supplier to customer. If this extends into the supplier and customer chains, all operating with JIT a perfectly continuous flow of material, information or service will be achieved. JIT may be used in non-manufacturing, in administration areas, for example, by using external standards as reference points.

The JIT concepts identify operational problems by tracking the following:

1 Material movement – When material stops, diverts or turns backwards, these always correlate with an aberration in the ‘process’.

2 Material accumulations – These are there as a buffer for problems, excessive variability, etc.

3 Process flexibility – An absolute necessity for flexible operation and design.

4 Value-added efforts – Where much of what is done does not add value, the customer will not pay for it.

The operation of JIT:

The tools to carry out the monitoring required are familiar quality and operations management methods, such as:

· Flowcharting.

· Process study and analysis.

· Preventive maintenance.

· Plant layout methods.

· Standardized design.

· Statistical process control.

· Value analysis and value engineering.

But some techniques are more directly associated with the operation of JIT systems:

1. Batch or lot size reduction.

2. Flexible workforce.

3. Kanban or cards with material visibility.

4. Mistake-proofing.

5. Pull-scheduling.

6. Set-up time reduction.

7. Standardized containers.

In addition, joint development programs with suppliers and customers will be required to establish long-term relationships and develop single sourcing arrangements that provide frequent deliveries in small quantities. These can only be achieved through close communications and meaningful certified quality.

Advantages of JIT:

· Lower stock holding means a reduction in storage space which saves rent and insurance costs

· As stock is only obtained when it is needed, less working capital is tied up in stock

· There is less likelihood of stock perishing, becoming obsolete or out of date

· Avoids the build-up of unsold finished product that can occur with sudden changes in demand

· Less time is spent on checking and re-working the product of others as the emphasis is on getting the work right first time

Disadvantages of JIT:

· There is little room for mistakes as minimal stock is kept for re-working faulty product

· Production is very reliant on suppliers and if stock is not delivered on time, the whole production schedule can be delayed

· There is no spare finished product available to meet unexpected orders, because all product is made to meet actual orders.

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Benchmarking

Benchmarkingis an important tool for bringing about continuous improvement that is required to survive competitive world of business these days. It is a structured management tool that involves comparison of management process and learning from the others for the further organizational improvement. Not the whole process is to be change but the important and critical processes can be changed according to the need in view of improvement.

Benchmarking will be result oriented when approach to the learning is positive and mind of the learner is ready to adopt the changes.

Benchmarking is of following types

Internal Benchmarking: Internal benchmarking involves comparison of two or more departments /units or division within the organization.

Competitive Benchmarking: It is type of benchmarking in which comparison is done directly against the competitor. It is usually done through the help of third party or consultant. It is crucial to select the appropriate organization to compare with.

Functional Benchmarking: it involves improving the specific function’s quality and efficiency like advertisement process, HR policies, marketing process.

Generic Benchmarking: This type of benchmarking involves comparison of various common functions and system across the different companies or industry such as inventory system, customer interaction, and billing.

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Six-Sigma

Six-Sigma refers to a quality improvement and business strategy concept started by Motorola, USA in 1986.  In statistical terms, Six-Sigma is the abbreviated form of 6 standard deviations from the mean. Six-Sigma is a set of methodologies used by businesses to achieve extremely low failure rates in any process. It provides the techniques and tools to improve the capability and reduce the defects in any process.

Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction or profit increase). A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects (3.4 defects per million opportunities or 3.4 DPMO).

Six Sigma projects follow two methods inspired by Deming's Plan-Do-Check-Act Cycle.

DMAIC:

Define the problem.

Measure key aspects of the current process.

Analyze the data to investigate and verify cause-and-effect relationships.

Improve the current process based upon data analysis using techniques.

Control the future state process to ensure that there is no deviations from target.

DMADV or DFSS:

Define design goals that are consistent with customer demands.

Measure and identify CTQs (characteristics that are Critical To Quality).

Analyze to develop and design alternatives.

Design details, optimize the design, and plan for design verification.

Verify the design, set up pilot runs, implement the production process and hand it over to the process owner(s).

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Cost of Quality

It’s a term that’s widely used – and widely misunderstood. The “cost of quality” isn’t the price of creating a quality product or service. It’s the cost of NOT creating a quality product or service. Every time work is redone, the cost of quality increases. Obvious examples include:

• The reworking of a manufactured item.

• The retesting of an assembly.

• The rebuilding of a tool.

• The correction of a bank statement.

• The reworking of a service, such as the reprocessing of a loan operation or the replacement of a food order in a restaurant.

In short, any cost that would not have been expended if quality were perfect contributes to the cost of quality.

 

Total Quality Costs:

As the table below shows, quality costs are the total of the cost incurred by:

• Investing in the prevention of nonconformance to requirements.

• Appraising a product or service for conformance to requirements.

• Failing to meet requirements.

Quality Costs—general description:

Prevention Costs:

The costs of all activities specifically designed to prevent poor quality in products or services.

Examples are the costs of:

• New product review

• Quality planning

• Supplier capability surveys

• Process capability evaluations

• Quality improvement team meetings

• Quality improvement projects

• Quality education and training

Appraisal Costs:

The costs associated with measuring, evaluating or auditing products or services to assure conformance to quality standards and performance requirements.

These include the costs of:

• Incoming and source inspection/test of purchased material

• In-process and final inspection/test

• Product, process or service audits

• Calibration of measuring and test equipment

• Associated supplies and materials

Failure Costs:

The costs resulting from products or services not conforming to requirements or customer/user needs. Failure costs are divided into internal and external failure categories.

Internal Failure Costs: Failure costs occurring prior to delivery or shipment of the product, or the furnishing of a service, to the customer.

Examples are the costs of:

• Scrap

• Rework

• Re-inspection

• Re-testing

• Material review

• Downgrading

External Failure Costs: Failure costs occurring after delivery or shipment of the product and during or after furnishing of a service to the customer.

Examples are the costs of:

• Processing customer complaints

• Customer returns

• Warranty claims

• Product recalls

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5-S

It is a Housekeeping System Developed by the Japanese. It helps in Creating a Better Working. It also improves the quality process. In order to achieve high levels of quality, safety, and productivity, workers must have a conducive working.

5-S consists of

SEIRI – Organisation/Sort out

SEITON – Orderliness/Systemize

SEISO – The Cleaning/Shining

SEIKETSU – STANDARDIZE

SHITSUKE - Sustain/Discipline

SEIRI (ORGANISING)

· Decide what you need.

· Remove unnecessary clutter.

· All tools, gauges, materials, classified and then stored.

· Remove items which are broken, unusable or only occasionally used.

SEITON (ORDERLINESS)

· Once you have eliminated all the unneeded items, Now turn to the left over items and arrange them in order.

· Organize layout of tools and equipment

· Designated locations

· Use tapes and labels

· Ensure everything is available as it is needed and at the “point of use”

· Positions of aisles and storage places clearly marked.

· Tools classified and stored by frequency of use.

· Pallets stacked correctly.

· Safety equipment should be easily accessible.

· Floors should be in good condition.

SEISO (CLEANINESS/SHINE)

· Create a spotless workplace

· Identify and eliminate causes of dirt and grime – remove the need to clean

· Sweep, dust, polish and paint

· Divide areas into zones

· Define responsibilities for cleaning

· Tools and equipment must be owned by an individual

· Focus on removing the need to clean

SEIKETSU (STANDARDISATION)

· Generate a maintenance system for the first three

· Develop procedures, schedules, practices

· Continue to assess the use and disposal of items

· Regularly audit using checklists and measures of housekeeping

· Real challenge is to keep it clean

SHITSUKE (SUSTAIN / DISCIPLINE)

· Means inoculate courtesy & good habits

· Driving force behind all 5S

· Make it a way of life

· Part of health and safety

· Involve the whole workforce

· Develop and keep good habits

Advantages of 5-S:

· Items are easy to locate.

· This leads to higher workstation efficiency, a fundamental goal in mass production.

· A clean and tidy workplace leads to greater well being and increased motivation

· Company image improves

· Health and Safety is ensured

· Well maintained machines

· Produces good Quality

· Productivity increases.

· Lean Manufacturing

· Smooth working, no obstruction

· Time saving

· Quick retrieval

· Accidents & mistakes minimized

· Increases space

· Creates workplace ownership

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Product Life Cycle

We often hear the term short and long product lives which reflect upon the idea how product lives are governed by Technological rate of change. In other words the need and utility of the Product gets severely reduced. E.g. VCR no longer enjoys the source of entertainment it enjoyed in 1970s to 1990s. Most of the products exhibit Product Life cycles except wooden pencils, paper clips, nails, knives etc.

 

Cycles of Products or Services normally entail the following phases.

1. INTRODUCTION PHASE: When items are first introduced, it is received with curiosity. Demand is low in the beginning then when buyers begin familiar with the product and see it as a reliable and good buy, they start buying it.

2. GROWTH PHASE: With the passage of time, production and design improvements lead to decrease in cost and price becomes an attractive feature with increase in reliability.

3. MATURITY PHASE: When the product reaches maturity stage its demand can only increase if design is refined or changed and some differentiation feature is added this may increase the demand but when it goes down.

4. SATURATION PHASE: In this phase product demand declines and the market is saturated with either a compatible product or substitutes.

5. DECLINE: In this phase, most of the organizations adopt a defensive design R&D Strategy in an attempt to prolong the life of the product by employing new packaging, redesigning it, improving its reliability.

As students of Operations Management, you may be asked to suggest the Product Life Cycle for Telecom Industry constituents or in other words where would you place cell phones, wireless phones, landline phones or satellite/cable based telephones in view of the life cycle you just studied. You can make an attempt to answer this for India as well as other developed countries.

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Total Quality Management

Total Quality Management is a philosophy that involves each and every individual in an organization in a continual effort to improve quality and achieve customer satisfaction.

The TQM Approach

TQM is not called philosophy for nothing. It is that common viewpoint as well as attitude shared by the whole organization that helps the organization achieves its prime objective of increase in revenue as well as a continuous relationship with the customer, by providing a quality based service which fulfills the customer’s needs and requirements.

If we apply the TQM approach we can identify the role played by various departments and interfaces of the organization. These roles at the functional and departmental levels if not in line with the organizational strategy would not allow the organization to pursue TQM.

Sr. No.	TQM Approach	Department
1.	Find out what the customer wants	Marketing
2.	Design a product or service that meets or exceeds customer wants	Design Dept
3.	Design processes that facilitates doing the job right the first time	Operations Dept
4.	Monitor and Audit (Keeping track of) results	Senior/GM Managers
5.	Extend these concepts to suppliers	SCM/Logistics/Warehouse/Materials

Elements of TQM

TQM is a philosophy so its elements consist of the various strategies, tactics which includes the following:

· Continual improvement

· Competitive benchmarking

· Employee empowerment

· Team approach

· Decisions based on facts

· Knowledge of tools

· Supplier quality

· Champion

· Quality at the source

· Suppliers

Of the elements described above, we should also focus our attention on the idea of continuous Improvement as well as Quality at the Source. Continuous Improvement: Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs. The Japanese manufacturer as well as service providers have longed used this concept. Kaizen is the Japanese word for continuous improvement.

Quality at the Source: The philosophy of making each worker responsible for the quality of his or her work.

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Terminology used in Quality

Quality: is fitness for use (Juran)

Quality Control: It is a system where the qualities of products or services are inspected into to produce them economically to meet the requirement of the purchaser. It is the operational technique.

Quality Assurance: It means to assure quality in a product so that a customer can buy it with confidence and use it for a large period of time with satisfaction. According to ISO, QA means,” all those planned and systematic actions necessary to provide adequate confidence that a product or service will satisfy given requirements for quality.

Quality Management system refers to the organization's structure for managing its processes – or activities - that transform inputs of resources into a product or service which meet the organization's objectives, such as satisfying the customer's quality requirements, complying to regulations, or meeting environmental objectives.

Total Quality Management: TQM is both philosophy and a set of guiding principles that represent the foundation of a continuously improving organization. It is the application of quantitative methods as well as human resources to improve the whole supply chain for customers and suppliers.

Customer: Any one who receives or is affected by the product, service, or process.

External Customer: The one outside the company walls or office/department walls or the next one in chain who receives your product, service or idea.

Internal Customers: Staff members, employees or any one who works for the interest of a company or office or boss and expects a reward or salary or benefit from the company or office or boss.

Investor Customer: The one who has invested his fortune and finance to build a company and expects a good return on his/her financial capital or fortune. Shareholders, Stockholders

Social Customer: The society at large.

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