2. Total Quality Management Techniques

Question 1

What was the result of traditional approaches to promote efficiency?

Answer 1

High volume production runs, with low cost per unit, standardised products and high inventory levels

Question 2

What are the 3 significant developments in the modern environment, leading away from the traditional efficiency/inventory approach?

Answer 2

1. Globalisation
2. Technology
3. Fast changing consumer tastes

Question 3

What are the 2 main results from modern environmental changes?

Answer 3

1. Shorter product life cycles

2. Greater competitive pressures

Question 4

What is total quality management?

Answer 4

An integrated and comprehensive system of planning and controlling all business functions so that products or services are produced which meet or exceed customer expectations

Question 5

What 4 principles are key to TQM?

Answer 5

1. Continuous improvement
2. Right first time
3. Employee involvement
4. Customer focus

Question 6

What is the cost of quality?

Answer 6

The difference between the actual cost of producing, selling and supporting products and the equivalent costs if there were no failures during production or usage

Question 7

What are the 2 types of conformance costs?

Answer 7

Prevention and Appraisal

Question 8

What are the 2 types of non-conformance costs?

Answer 8

Internal and external failure costs

Question 9

What are prevention costs?

Answer 9

Costs incurred prior to or during production in order to prevent substandard or defective products or services from being produced

Question 10

What are appraisal costs?

Answer 10

Costs incurred in order to ensure that outputs produced meet required quality standards

Question 11

What are internal failure costs?

Answer 11

Costs arising from inadequate quality which are identified before transfer of ownership from supplier to purchaser

Question 12

What are external failure costs?

Answer 12

Costs arising from inadequate quality discovered after the transfer of ownership from supplier to purchaser

Question 13

What is the expected impact on quality costs of implementing a TQM approach?

Answer 13

Increasing appraisal and prevention costs in the short term and decreasing internal and external failure costs in the long term

Question 14

What is the Just in Time system of inventory management?

Answer 14

A system whose objective is to produce or procure products or components as they are required by a customer for use, rather than for stock

Question 15

Is a JIT system push or pull?

Answer 15

Pull - driven by demand

Question 16

What is just in time production?

Answer 16

A production system which is driven by demand for finished products whereby each component on a production line is produced only when needed for the next stage

Question 17

What is just in time purchasing?

Answer 17

A purchasing system in which material purchases are contracted so that receipt and usage of material coincide

Question 18

What are the 5 key characteristics of JIT purchasing?

Answer 18

1. Reduced number of suppliers
2. Long term relationships with nearby suppliers
3. Helping suppliers to increase quality
4. Not hung up on single sourcing
5. Stable and good communication throughout the firm

Question 19

What are the 5 key characteristics of JIT production?

Answer 19

1. Reduced set up and cycle times
2. Flexible staff
3. Efficient QC in production
4. Customer order driven production
5. Reduced inventory levels throughout

Question 20

What is the theory of constraints?

Answer 20

A procedure based on identifying bottlenecks (constraints), exploiting their use, subordinating everything else, alleviating bottlenecks and re-evaluating the whole system

Question 21

What is a constraint/bottleneck?

Answer 21

An activity, resource or policy that limits the ability to achieve an objective

Question 22

What does measuring the throughput do?

Answer 22

Measures how fast revenue is being earned compared to how fast costs are being incurred

Question 23

Why is throughput accounting sometimes referred to as super variable costing?

Answer 23

It considers materials to be the only truly variable cost

Question 24

What is the equation for throughput contribution?

Answer 24

Sales revenue - materials

Question 25

What is the equation for the throughput ratio?

Answer 25

Throughput contr per time period / Conversion cost per time period

Question 26

How are products ranked for production using throughput accounting?

Answer 26

Rank the products by contribution per bottleneck hour

Question 27

What are the 3 specific focuses of JIT, TOC and TQM?

Answer 27

1. Efficiency
2. Inventory management
3. Cost reduction (in the long term)

Question 28

What is continuous improvement?

Answer 28

The continuous search to reduce costs, eliminate waste, improve quality and performance of activities and increase customer satisfaction/value

Question 29

What is Kaizen costing?

Answer 29

Setting a target cost for each function of a product/service, using this to create the target cost for a product and reviewing based on actual costs

Question 30

What is business process re-engineering?

Answer 30

Seeking radical (rather than continuous) improvements, focusing on the best way to achieve an outcome that will add to customer value

Question 31

What are the 5 steps to business process re-engineering?

Answer 31

1. Develop the Vision and Objectives
2. Identify the process
3. Understand and measure the current process
4. Identify aids to change
5. Design and build a prototype

Question 32

What are the 5 biggest issues with business process re-engineering?

Answer 32

1. Dehumanises the workplace
2. An excuse to downsize
3. Exaggerated expectations
4. Resistance to change and lack of management support
5. Generic ‘best practise’ don’t always fit company needs