Chapter 2 - Modern Business Environment Flashcards
Characteristics of modern business environment
Global
Flexibility
Empowered Employees
World Class Manufacturing
under TQM - emphasis on the resolution of problems
JIT
just in time: produce as required or for use and not for inventory. A pull-system, which requires a versatile labour force - grouped product lines (not by functions) - infallible information system (flow) - get it right the first time - strong supplier relationship
TQM
total quality management: get it right, first time. continuous improvement.
Cost of quality
CONFORMANCE preventative costs: maintenance training quality design asses quality of designs
appraisal costs:
incoming inspections
setup inspections
process control costs
NON-CONFORMANCE Internal failure: costs of scrap rework cost of corrective actions (mfg or engineering)
external failure:
marketing costs for failed products and lost goodwill
mfg and processing costs related to failed products
compensation and replacement costs
repair costs
travel costs for remediation
liability costs
Guideline to good quality programs
- only the customer matters
- customer and supplier are interlinked and only together achieve success
- prevent defects in the first place and do not sort out product that failed inspections
- move from acceptable quality levels to defects per million
- enforce zero defect programs
- gain quality certification
- total cost of quality: does create savings.
Commitment to quality
improved business efficiency and effectiveness
adopted by all parts of the business
Quality chains
sequence of quality focused team members:
A. customers
B. Suppliers
Quality circles
team of 4-12, meet periodically, voluntarily
Management Accounting for Quality
normal: input material cost reduction or minimized losses
non-financial: defects, rework, recalls, complaints, time per request
ToC: formula
Goldratt and Cox
theory of constraints
throughput = sales revenues - direct materials
- bottleneck
- exploit bottleneck
- subordinate everything to step 2
- elevate the bottleneck
- if still constraint, go to step #1
Constraints examples
inadequately trained sales force
poor reputation for meeting delivery dates
unreliable suppliers, delivery or quality
inadequate production resources
inappropriate mgmt accounting systems
Kaizen costing
cost REDUCTION concepts
assumes improvement in manufacturing
achieves cost reduction targets
Kaizen costing techniques
cost reduction targets are set and applied monthly
continuous improvement
target Kaizen costing vs actual cost reduction
Business Process Re-engineering
develop vision and process objectives identify processes to redesign understand and measure existing processes as baseline identify IT levers design and build prototype
Supply chain management
Porter value chain, value systems
Purchasing
Inventories
Customer ordering
Delivery and logistics
