UNIT 12 JUST- IN- TIME (JIT)

Objectives
Upon completion of this unit, you will get to know:
.
What is the philosophy of just-in-time(TIT) operation
. Characteristics of just-in-time system
. Pull method versus push method of operation
.
Prerequisite for TIT manufacturing
. Benefits of TIT manufacturing
.
Kanban system of manufacturing

Structur
e
12. Introduction
1
12.1.1 Raw Material, WIP, Finished
12.2 Stock
GoodsPoints in a Production- Distribution
12.3 Just-In-Time

12.4 Characteristics of Just-In-Time Systems

12.5 The Just-In-Time Manufacturing Philosophy
12.5.1 Prerequisite for JIT manufacturing
12.6 Elements of Manufacturing
12.6.1 Eliminating Waste
12.6.2 Enforced Problem Solving and Continuous
Improvements 12.6.3 Benefits of JIT Manufacturing
12.7 TIT Purchasing
12.8 The Kanban System
12.9 TIT Implementation in Industries
12.10 Summary
12.11 Self-Assessment Exercises
12.12 Further Readings

12.1 INTRODUCTION
In financial parlance, inventory is detined as the sum of the value of raw materials, fuels and
lubricants, spare parts, maintenance consumables, semi-processed materials and finished
goods stock at any given point of time. The operational definition of inventory would be:
the amount of raw materials, fuel and lllbricants, spare parts and semi-processed material to
be stocked for the smooth running of the plan-1 Since these resources are idle when kept in
the stores, inventory is defined as an idle resource or any kind having an economic value.

Inventories are maintained basically for the operational smoothness which they can effect
by uncoupling successive stages of production, whereas the monetary value of inventory
serves as a guide to indicate the size of the investment made to achieve this operational
convenience. The materials management department is expected to provide this operational
convenience with a minimum possible investment in inventories. The o~iectives of
inventory, operational and financial, needless to say, are cont1icting. The materials
department is accused of both stock outs as well as large investment in inventories. The
solution lies in exercising a selective inventory control and application of inventory control
techniques.
Inventory control has been attracting the attention of managers in India for a long time.
12.1.1 Raw Material, WIP, Finished Goods
For control purposes, it is very essential to study the inventory in detail- raw materials,
production components, work-in-progress and finished goods inventories should be
segregated as the reasons for their existence and the causes f<f their size are different.
Raw materials and production components are purchased from outside suppliers and the
reason for their existence is to uncouple the purchasing function from the production
function. The size of this inventory is depent upon factors such as intemallead time for
purchase, supplier lead time, vendor relations availability of the material government import
policy, in the case of imported material, the annual consumption of the materials (ABC
classification) and the relative criticality of the material (VED classification).
Work-in progress inventory might eJfist merely because of the production cycle time or
could also be maintained for decoupling successive manufacturing operations. The
decoupling could be employed either for implementing an incentive scheme or to enable
each of the production departments to plan independently. The size of this inventory is
dependent on the production cycle time, the percentage of machine utilization, the make/
buy policies of the company, and the management policy for decoupling the various stages
of manufacturing.

The tinished goods inventory is maintained to assure a free-flowing supply to the customers
and for this the marketing department insists on substantial finished goods inventory. The
size also depends on the ability of the marketing department to push the products, the
company's ability to stick to the delivery schedule of the client, the shelf life and the
warehousing capacity.
Two factors which influence the inventories of all types are: the accuracy and details of the
final forecast-all the inventories are geared for future requirements and are therefore
sensitives to this factor-and the available storage space-the logical sequence to this factor is
the shelf life of the items stored, a factor for consideration in the case of perishable goods.

12.2 STOCK POINTS IN A PRODUCTION.

DISTRIBUTION "
Figure 12.1 identifies the. main stock points that occur in a production- distribution system
from raw materials and ordering of supplies through the productivity process, culminating
in availability for use. At tile head of the system, we must have raw materials and supplies
in order to carry out tile production process. If we are to be able to produce at minimum
cost and by tile required schedule, these materials and supplies need to be available.
Therefore, we need to develop policies for deciding when to replenish these inventories
and how much to order at one time. These issues are compounded by price discounts and
by the need to ensure that delays in supply time and temporary increases in requirements
will not disrupt operations.

Productive Factory Distributor Retailer

System Warehouse
Raw Materials In-process Finished goods (How often to (How often
to order
and supplies inventory inventory order from
from
(Wnen to order -? factory ware -7 distributor, USER
and how (How often to produce at one house, and how and how
much?
much?) time and how much? much?)
)
Figure 12.1 Main Stock Points in a Production-Distribution System

Adaptedfrom BujJa, E S; Modern Production! Operations Management, 71e. Wiley Eastern Ltd.

As a part of the conversion process within the productivity system we have in process
inventories, which are converted to tinished good inventories. The tinished goods
inventory levels depend on the policies used for deciding on the production lot sizes and
their timing and on the usage rates determined by distributor's orders. High volume items
would justify different policies for production and inventory replenishment than medium
or low - volume items. The production lot size decisions and their timing are very
important in relation to the economical use of personnel and equipment and may justify
continuous production of a high volume item. On the other hand, low volume items will
be produced only periodically in economic lots. Again, we will need policy guidelines to
determine the ,'~ize of buffer inventories to absorb the etlects to production delays and
random variations in demand by distributors.
The functions of distributors and retailers are those of inventorying products to make them
available. Distributors and retailers often carry a wide range of items, and they need
replenishment policies that take into account this kind of complexity. They commonly place
routine orders periodically, ordering a variety of items from each supplier. Price discounts
are often an additionat factor to consider.
Although the details of problems may differ at each level in the production-distribution
system, note that at each level the basic policy issues are in the inventory replenishment
process, focused on the order quantity and when to order.

12.3 JUST-IN-TIME
Just-in- Time (TIT) is a Japanese innovation, and key features of this were perfected by
Toyota. Some facets of the management practices Toyota developed are ideologically
related to Japan's unique customs, culture, and labour - management relations. However
there is nothing uniquely Japanese about JIT production and it is usable anywhere. The
concepts have been applied successfully in many companies throughout the world. JIT
production'means producing and buying in very small quantities just in time for use. It is
simple hand to mouth mode of industrial operations that directly cuts inventories and also
reduces the need for storage space, racks, conveyors, forklifts, computer terminals for
inventory control and of course material control personnel. Products are assembled just
before they are sold, subassemblies are made just before the products are assembled, and
components are fabricated just before the subassemblies, are made - so work-in-process
(WIP) inventory is low and production lead titnes are short. To operate with these low
inventories, the companies must be excellent in other areas. They must have consistently
high quality throughout the organizations. To achieve this quality and coordination, they
must have the participation and cooperation of all employees. 'So JIT manufacturing or
manufacturing excellence is a broad philosophy of continuous improvement. More
important, the absence of continuous improvement. More important, the absence of extra
inventories creates an imperative tQ run alJ erro~ free operation 15ecause there is no
cushion of excess parts to keep production going when problems crop up, causes of error
are rooted out, never to occur again.

The JIT transformation begins with inventory removal. Fewer materials are bought, and
parts and products are made in smaller numbers; that is the lot size inventories thereby
decrease. This immediately results in work stoppages. Production comes to standstill
because feeder processes breakdown or produce too many detectives and there are no
buffer stock to keep things going on. Once this happens, analysts and engineers try to solve
the problems and keep things going on. Each round of problem exposure and solution
increases productivity and quality too;
Just-in-time (JIT) is a philosophy of improvement through aggressively discovering and
resolving any problems or weaknesses that impede the organization's effectiveness and
efficiency. Basically, it seeks to eliminate all waste within the organisation, including the
waste of underutilizing the talents, skills, and potential of its employees. Anything that
does not contribute to addin value for an internal or external customer is considered waste.
The philosophy orginated in manufacturing operations, but its concepts have been applied
in other area such as a means of work, service and distribution. JIT can be very effective
and powerful as a means of improvement.
Activity A
What is Just-in-time (JlT) production? How does it differ from Manufacturing Resource
Planning (MRP)? What is MRP-Jl1; system?
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Activity B

VI~it a repetitive manufacturing facihty in your area. What are the major causes of
inventory? Be sure to ask about lot sizes and setup times. Would a lIT system work in this
facIlIty? Why and why not?
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........ ... ...
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12.4 CHARACTERISTICS OF JUST-IN-TIME

SYSTEMS
Just-in-time systems focus on reducing inefficiency and unproductive time in the
production process to improve continuously the process and the quality of the produce or
service. Employee involvement and inventory reduction are essential to JIT operations.
Just-in-time systems are known by many different names, including zero inventory
synchronous manufacturing, lean production, stock less production (Hewlett- Packard),
material as needed (Harley - Davidson ), and continuous flow manufacturing (IBM). In this
section we discuss the following characteristics of lIT systems: People involvement, Team
Work, Discipline, Total quality management, pull method of material flow, small lot sizes,
short setup times, uniform workstation loads, standardized components and work methods,
close supplier ties, flexible work force, product focus, automated production, and
preventive maintenance.
12.4.1 People Involvement
Probability all management efforts have some behavioural aspe~ts, because management
is working through other people to accomplish the organization's objectives. Management
plans and decisions only lay the groundwork. This is the resulting human behaviour that
determines a company's success or failure. Such terms as zero inventory and stock less
production have given some people the impression that lIT is only an inventory
programm. JIT has a strong human resources management components that must be
recognized if the technical component is to be fully successful. Much of the success of JIT
can be traced to the fact that companies that use it train their employees to have the
appropriate skill, give them responsibility, and coordinate and motivate them.
The lIT philosophy of continuous improvement and minimization of waste considers
waste to be any activity thatdo~s not add value to the product or serve the customer,in
some way. One form of waste that is inconspicuous and difficult to combat is the
underutilization of human talent. JIT seeks to utilize-more fully the creative talents of
employees, suppliers, subcontractors, and others who may contribute to the company's
improvement.
,
Businesses ultimately succeed or fail because of their people. lIT is no exception to this
rule. Because JIT is a system of enforced problem solving, having a dedicated work force
committed to working together to solve production problems is essential. JIT
manufacturing, therefore, has a strong element of training and involvement of workers in
all phases of manufacturing.
12.4.2 Teamwork
First, and foremost, a culture of mutual trust and teamwork must be developed in an
organization. Managers and workers must see each other as co-workers committed to the
company's success.
Successful people involvement steams from a culture of open trust and teamwork in which
people interact to recognize, define, and solve problems. Sometimes it is mistakenly
assumed that this component is just another program, such as a suggestion program or a
quality circle program. People involvement can include these programs and others, such as
adhoc project teams that focus on specific improvement targets and semi-autonomous work
teams whose membership seldom changes. The involvement components of lIT is much
broader than a program or two: it is a management style and a permanent company wide
attitude of teamwork. So that each person works to improve the company. People are
encouraged to suggest ways to improve methods which are quickly and fairly considered.
 and the companies are open to trying something,new that seem like a worthwhile
improvement.
Another important factor that is crucial to TIT is the empowerment of workers. This means
that workers are given the authority to take the initiative in solving production problems.
Rather than waiting for guidance from above, workers have the authority to stop production
at any time for such things as quality problems machine malfunctions or safety concerns.
Groups of workers are then encouraged to work togather to quickly get production going
again. Once workers have identified problems. They are encouraged to meet during breaks
before work or after work to discuss the problems. Having workers actively involved in
problem solving is the objective of worker empowerment.
People, suppliers, workers, managers and customers must all be motivated and committed
to teamwork for TIT manufacturing to be effective.
12.4.3 Discipline
\
This open, improvement - driven atmosphere does not mean, however, that any employee
is free to work by any method he or she choose to try. Usually there is a standard way each.
job is to be done. If an improvement is suggested and approved, a new standard procedure
will be adopted. This standardization prevents variations in products or services which can
cause defects. Defects occore because some variation has been introduced into a material
or procedure that normally products good result. When an efficient procedure that results in
good quality is established, it is to be followed until a better way is tested and approved.
You can see that creativity and openness to change are needed, but it is creativity in
conjunction with teamwork and discipline that achieves consistent good quality and leads
to improvements.
12.4.4 Total Quality Management (TQM)
TIT systems seek to eliminate scrap and rework in order to achieve a uniform fl9w of
materials. Efficient TIT operations require conformance to product or service specifications.
TIT systems control quality at the source, with workers acting as their own quality
inspectors.
TIT manufacturing depends on a system of TQM being in place. Successful TIT
manufacturing goes hand-in-hand with an organization-wide TQM culture. Just as everyone
has to be involved in JIT, so also must everyone be involved in TQM. Total commitment to
producing products of perfect quality every time and total commitment to producing
products for fast delivery to customers have one essential thing in common: Both are finely
focused on the overall goal of satisfied customers.

12.4.5 Pull Method of Material Flow

Just-in-time systems utilize the pull method of material flow. However, another popular
method of material flow is the push method. To differentiate between these two systems, we
consider the production system for a fast food dish at a restaurant. There are two
workstations. The dish maker is the person responsible for producing this dish: the cutlets
must be prepared; buns must be toasted and then dressed with ketchup, pickles, onions,
lettuce, and cheese; and the cutlets must be inserted into buns and put on a tray. The final
assembler takes the tray, wraps the buns in paper, and restocks the inventory. Inventories
i must be kept low because any buns left unsold after ten minutes must be destroyed.
The flow of materials is from the dish maker to the final assembler to the customer. One way
to manage this flow is by using the push method, in which the production of the item. begins
in advance of customer needs. With this method, management schedules the receipt of all
raw materials (e.g., vegetables, buns, and condiments) and authorizes the start of production,
all in advance of the dish needs. The dish maker starts of production of 24 no. of dish (the
capacity of the griddle) and, when they are completed, pushes them along to the final
assembler's station, where they might have to wait until he is ready for them. The packaged
dishes then wait on a warming tray until a customer purchases one.
The other way to manage the flow among the dish maker, the final assembler, and the
customer is to use the pull method, in which customer demand activates production of the
item. With the pull method, as customer purchase dish, tlle final assembler checks the
inventory level of dish and, when they are almost depleted, orders six more. The dish
maker produces the six dish and gives the tray to the final assembler, who completes the
assembly and places the dish in the inventory for sale. The pull method is better for the
 production of dish: The two workers can coordinate the two workstations to keep
inventory low, important because of the ten-minute time limit. The production of dish is a
highly repetitive process, setup times and process times are low, and the flow of materials
is well defined. There is no need to produce to anticipated needs more than a few minutes
ahead.
Firms that tend to have highly repetitive manufacturing processes and well-defined
material flows use just-in-time systems because the pull method allows closer control of
inventory and production at the workstations. Other firms, such as job shops, producing
products in low volumes with low repeatability in the production process, tend to use a
push method such as MRP. In this environment a customer order is promised for delivery
on some future date. Production is started at the first workstation and pushed ahead to the
next one. Inventory accumulates in anticipation of shipping the completed order on the
promised date.
12.4.6 Small Lot Sizes
Rather than building up a cushion of inventory, users of TIT systems maintain inventory
with lot sizes that are as small as possible. Small lot size have three benefits. First, small lot
sizes reduce cycle inventory, the inventory in excess of the safety stock carried between
orders. The average cycle inventory equals one-half the lot size: As the lot size gets smaller,
so does cycle inventory. Reducing cycle inventory reduces the time and space involved in
manufacturing and holding inventory.
Second, small lot size help cut lead times. A decline in lead time in turn cuts pipeline (WIP)
inventory because the total processing time at each workstation is greater for large lots than
for small lots. Also, a large lot often has to wait longer to be processed at the next
workstation while that workstation finishes working on another large lot. In addition, if any
defective items are discovered, large lots cause longer delays because the entire lot must be
inspected to find all the items that need rework.
Finally, small lots help achieve a uniform operating system workload. Large lots consume
large chunks of processing time on one workstation and therefore complicate scheduling.

12.4.7 Short Setup Times

Reduced lot sizes have the disadvantage of increased setup frequency. In operations where
the setup times are normally low, small lots are feasible. However, in fabrication operations
with sizable setup times, increasing the frequency of setups may result in wasting employee
and equipment time. Theses operations must reduce setup times to realize the benefits of
small-lot production.
12.4.8 Uniform Workstation Loads
The TIT systems works best if the daily load on individual workstation is relatively
uniform. Uniform loads can be achieved by assembling the same type and number of units
each day, thus creating a uniform daily demand at all workstations. Capacity planning,
which recognizes 'capacity constraints at critical workstations, and line balancing are used
to develop the monthly master production schedule.
12.4.9 Standardized Components and Work Methods
.. The standardization of components, called part commonality or modularity, increases
repeatability. For example, a firm producing 10 products from 1000 different components
could redesign its products so that they consist of only 100 ditIerentcomponents with large
daily requirements. Because the requirements per components increase, so does
repeatability; that is, each worker performs a standardized task or work method more often
each day. Productivity tends to increase because workers learn to do the task more
efficiently. Standardization of components and work methods aids in achieving the high-
productivity, low-inventory objectives of JIT systems.

12.4.10 Close Supplier Ties

The JIT philosophy may extend beyond the walls of the company applying JIT, to inclpde
its suppliers. It has an impact on the entire logistics system, or "supply chain." Because JIT
systems operate with very low levels of inventory, close rehitionships with supplier are
necessary. Stock shipments must be frequent, have short lead times, arrive on schedule, and
be of high quality. A contract might require a supplier to deliver goods to a factory as
often as several times per day. Purchasing managers focus on three areas: reducing the
number of supplier, using local suppliers, and improving supplier relations.
Typically, one of the first actions undertaken when a JIT systems is implemented is to pare
the number of suppliers. Xerox, for example, reduced the number of its suppliers for 5000
to just 300. This approach puts a lot of pressure on these suppliers to deliver high-quality
components on time. By placing a bigger percentage of its business with its business with
its best suppliers, the company can improve its quality and the reliability of receiving items.
The partnership is a long term agreement so the companies can develop a smooth working
relationship. The desire is for the supplier to become an extension of the company so that
the supply chain is a seamless organization that works to serve the ultimate customer better
than an~ competing supply chain could. The JIT company can also benefit from the
supplier's expertise by having supplier representatives participate in the design phase of few
products and recommend improvements. They also work with their suppliers' vendors,
trying to achieve lIT inventory flows throughout the entire supplier chain.

It can be beneficial to a supplier to work in such a relationship, particularly with a high-

volume manufacturer. When a company reduces the number of suppliers for an item, the
volume of purchase from the remaining supplier or supplier can increase dramatically.
Continuous improvement is central to the philosophy of lIT and is a key reason for its
success.
12.4.11 Flexible Work Force
Workers in t1exible work forces can perform more than one job. When the skill levels
required to perform most tasks are low, a high degree of t1exibility in the work force CM
be achieved with little training. In situations requiring higher skill levels, such as at the Hi-
tech industries, shifting workers to other jobs may require extensive, costly training.
Flexibility can be very beneficial. Workers can be shifted among workstations to help
relieve bottlenecks as they arise without resorting to inventory butfers. This is an
important aspect to the uniform t10w of JIT systems. They can also step in and do the job
for those on vacation or out sick. Although assigning workers to tasks they don't usually
perform may reduce effIciency, some rotation relieves boredom and refreshes workers.
12.4.12 Product Focus
A product focus can reduce the frequency of setups. If volumes of specific products are
large enough, groups of machines and workers can be organized into a product layout to
eliminate setups entirely. It volume is insuffIcient to keep a line of similar products busy,
group technology can be used to design small production lines that manufacture, volume, in
families of components with common attributes. Changeovers from a components in one
product family to the next component in the same family are minimal.
12.4.13 Automated Production
Automation plays a big role in JIT systems and is a key to low-cost production. Sakichi
Toyota, the founder of Toyota, once said "whenever there is money, invest it into
machinery". Money freed up because of JIT inventory reductions can be invested in
automation to reduce costs. The benefits, of course, are greater profits, greater market
market share (because prices can be cut), or both. Automation should be planned carefully,
however, many managers believe that if some automation is good, more is better. That isn't
always the case.
12.4.14 Preventive Maintenance
Because JIT emphasizes finely tuned material t10ws and little buffer inventory between
workstations, unplanned machine downtime can be disruptive. Preventive maintenance can
reduce the frequency and duration of machine downtime. After the technician has performed
routine maintenance activities, he/she can rest other parts that might need to be
.replaced. Replacement during regularly scheduled maintenance periods is easier and quicker
than dealing with machine failures during production. Maintenance is done on a schedule
that balances the cost of the preventive maintenance program against the risks and costs of
machine failure.
Another tactic is to make workers responsible for routinely maintaining their own equipment
and develop employee pride in keeping
~ their machines
~ in top condition. T~is
tactic, however, typically is limited to general housekeeping chores, mini lubrication, and
adjustments. High-tech machines need trained specialists. Doing even simple maintenance
tasks goes a long way toward improving machine performance.

12.4.15 Production Methods

Procsses are designed so that there is less specialization of workers. The physical layout is
arranged so that a worker can operate two or three differentlmachines, thus providing
flexibility in processes that might precedes the assembly line. The benefits that result from
this organisation of multi -function workers are:
. reduction of inventory between what would otherwise be separate processes
. decrease in the number of workers required, resulting in a direct increase in
productivity
. increased worker satisfaction because of more broadly defined jobs
. multi-functional workers can engage in teamwork

There are three elements of job standardization that are included on a ,standard operation
sheet stacked up for all workers to see:
\

Cycle time, operations routing, and standard quantity of work in process.

Based on the computed cycle time that is derived from market demand, the aggregate
number of workers required to produce one unit of output i1\ the cycle time is determined.
Rebalancing may then be necessary to schedule for minimum labour input for a given
output objective. The standard quantity of work input for a given output objective. The
standard quantity of work in process indicates the in-process inventory required for smooth
How.

The smoothing of production is regarded as the most critical element in the Just-in- Time
objective. As will be described in morc detail under the heading Kanban which fonows,
workers go to the preceding process to withdraw the required parts and components for
their operations. If there are fluctuations in the rates at which these materials are
withdrawn, then the preceding process must hold buffer in-process inventories to give 01'1'-
the-shelf service. The required in-process inventories would increase also for upstream
processes. This results in the objective of minimizing production fluctuations in the final
assembly line by scheduling small lots of individual models, and focusing \'all out" efforts
on minimizing setup times for all processes.

Activity C

Given your current understanding of Japanese business practices, would you like to work
for a Japanese corporation in your homeland? What would be the positive aspects? The
negative aspects?

...
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12.5 THE JUST-IN-TIME MANUFACTURING

PHILOSOPHY
"For years manufacturing firms have sought to provide products with the most value for
lowest cost. Now the leading firms provide products with the most value for lowest cost
with the fastest response time. Quick response to macket demands provide a powerful,
sustainable competitive advantage. Indeed, time has emerged as a dominant dimension of
global competition, fundamentally changing the way organization compete." It is no
longer good enough for firms to be high-quality and low cost products. To successes
today, they must also be first in getting products and services to the customer fast. .TIT is
the weapons of choice today in reducing the elapsed time of this cycle.
 --'--~

12.5.1 Prerequisites for JIT Manufacturing

The basic idea of TIT is rather simple- drastically reduce work-in-process (WIP) inventories
throughout the production system. In this way, products flow from suppliers to production to
customers with little or no delays or interruptions beyond the amount of time they spend
being produced at work centers in manufacturing. The overall objective of JIT
manufacturing is to reduce manufacturing lead times, and this is achieved by drastic
reduction in WIP. The result is a smooth, uninterrupted flow of small lots of products
throughout production.
Most successful JIT applications have been in repetitive manufacturing, operations where
batches of standard products are produced at high speeds and high volumes with materials
moving in a continuous flow. The Toyota automobile factories, where the notion of JIT may
have started, are perhaps the best example of the use of TIT in repetitive manufacturing. In
these factories, the continuous of products makes planning and control rather simple, and
TIT works best in these shop-floor situations. Successful use of TIT is rare in large highly
complexjob shops where production planning and control is extremely complicated.
Smaller, less complex job shops have used JIT, but these companies have taken many steps
to change operations so that they behave somewhat like repetitive manufacturing. We will
discuss more about this in the next section.
TIT does not come free-certain changes to the factory and the way it is managed must
occur before the benetits can be realized. Among these changes are: .

1) Stabilize production schedules.

2) Make the factories more focused.
3) Increase production capacities of manufacturing work centers.

4) Improve products quality.

5) Cross-train workers so that they are multi skilled and competent in several jobs.

6) Reduce equipment breakdowns through preventive maintenance.

12.6 ELEMENTS OF MANUFACTURING

We will discuss JIT by examining its important components, and controlling production,
and several of its ongoing activities.
12.6.1 Eliminating waste
,I

'Biminating waste of all kinds is the deep-seated idealogy behind TIT. Shigeo, a JIT
authority at Toyota, identified seven waste in production that should be eliminat~d. Table 12.1 lists
and describes these waste.

Table 12.1: Toward Eliminating Waste in Manufacturing

A recognised lIT authority and engineer at the Toyota Motor company, Shigeo Shingo, identifies
seven wast~s.

1. Overproduction: Make only what is needed now.

2. Waiting: Coordinate
Transportation: flows
Design between
facility operations
layouts andorbalance
that reduce loadmaterials
eliminate imbalances by flexible
handl;ing and
workers and equipment.
3. shipping. i \
U
nneeded production: Eliminate all unneeded production steps.
4.
Work in Process (WIP) inventories: Eliminate by reducing setup times. increasIng
5.
production rates, and better coordination of production rates between work statio.C'
6. Motion and Effort: Improve productivity and quality by eliminating unnecessary human
7. motions,
Defective
Source: products:
R Hall,make
Attaining Eliminate defects
Manufacturing
necessary motions and inspection.
Excellence
more Make perfect
( Homewood,
efficient, mechanize, products.
IL: Dow
then \
Jones-Irwi/'i<1987) 26.
automate.
12.6.2 Enforced Problem Solving and Continuous Improvement
In traditional manufacturing in-process inventories allow production to continue even if
production problems occur: thus, high machine and worker utilization is achieved. If
defective products are discovered, machines malfunction, or material stock outs occur, in
process inventory can be used to feed what would otherwise be idle workers' and machines.
The in-process inventory covers up production problems in traditional manufacturing.
Behind IIT is the continuous drive to improve production process and methods. Toward that
end, IIT strives to reduce inventories because high inventory levels are thought to cover up
production problems. By drastically reducing in-process inventories, production problems
are uncovered and production stops until the causes of the production problems are solved.
Only when the machine is fixed, the quality control problem is solved, or the cause behind
the stock out is found and corrected only then can productiQn begin again.

IIT is realy a system of enforced problem solving. There are few safety factors in IIT. Every
material is expected to meet quality standards, every part is expected to arrive exactly at the
time promised and precisely at the place it is supposed to be, every worker is expected to
work productively, and every machine is expected to function as intended without
breakdowns. Managers in IIT manufacturing have a choice. They can put a huge effort into
finding and solving the causes of production problems, or they can live with an intolerable
level of interruption. One of the approaches to implementing a IITprogram is to reduce in-
process inventories incrementally in small steps. At each step, different production
problems have been removed.

But the job eliminating production problems is not over. Vigilance in continuing to study
potential problem areas is needed to ensure continuous improvement. Japanese
manufacturers have long practiced what they called kaizen, the goal of continous
improvement in every pbase of manufacturing. Managers may encourage workers to
reduce in process inventories a step further to see if any production problem occur, thus
identifying a target for the workers to eliminate. Machine setups may be studied with
workers and managers working to strip away the fat so that setups are almost
instantaneous. Japanese manufacturers have long used the tenn less than a minute set up,
meaning that their goal is to have all setups take less than a minute.

12.6.3 Benefits of JIT Manufacturing

Some of the benefits that a IIT system provides are:

1) Inventory levels are drastically reduced.

2) The time it takes for products to get through the factory is greatly reduced, thus
enabling factories to engage in time based competition, using speed as a weapon to capture
share.
3) Product qQality is improved, and the cost of scrap is reduced. Product quality
improves because of worker involvement in solving the causes of production problem
and witl) smaller lots, defective parts are discovered earlier.

4) Witb less irl-process inventory, less space is taken up with inventory and materials
handling equipment. Workers are closer together so that they can see each other,
communicate more easily, work out problems more efficiently, learn each other's jobs,
and switch job as needed. This promotes teamwork among workers and flexibility in
work assignments.

5) Becaus~ the focus in manufacturing is on finding and correcting the causes of

production problems, manufacturing operations are streamlined and problem-free.

+
12.7 Jfr PURCHASING
j

The same }J.Ill type approach in IIT is applied to purchasing shipments of parts from
suppliers. In IIT purchasing, supplier use the replacement principle of Kanban by using
small. Stardardize containers and make several shipments daily to each customer. If
Kanban i~used by a supplier. Kanban cards authorize the movement of containers of parts
between the supplier's shop and the customer. In such arrangements, suppliers are
ordinarily located near their customers. JIT therefore not only reduces in-process
inventories by using Kanban, but raw-materials inventories are also reduced by applying
the name principles to suppliers.

The essential elements of TIT purchasing are as follows:

1) Supplier development and supplier relations undergo fundamental changes. The

nature of the relationships between customers and suppliers shifts from being
adversarial to being cooperative. The Japanese call these relationships subcontractor
networks and costs and improving quality, and even tinancing are often shared by
customers and suppliers.

2) Purchasing departments develop long-term relationships with suppliers. The result is

long-term supply contracts with a few suppliers rather than short-term supply
contracts with many suppliers. Repeat business is awarded to the same suppliers, and
competitive bidding is ordinarily limited to new parts.

3) Although price is important, delivery scheduled, product quality, and mutual trust and
cooperation become the primary basis for supplier selection.

Suppliers are encouraged to extend TIT methods to their own suppliers.

4)
Suppliers are ordinarily located near the buying firm's factory, or if they are same
5)
distance from the factory, they are usually clustered together. This causes lead times
to be shorter and more reliable.

6) Shipments are delivered directly to the to the customer's production line. Because
suppliers are encouraged to products and supply parts at a steady rate that matches
the use rate of the buying firm. Company-owned hauling equipment tends to be
preferred.

7) Parts delivered in small, standard-size containers with a minimum of paperwork and

in exact quantities.
8) Delivered material is of near-perfect quality. Because suppliers have a long-tenn
relationship with the buying firms and because parts are delivered in small lot sizes,
the quality" of purchased materials tends to be higher.

12.8 THE KANBAN SYSTEM

Accomplishing the Just-in- Time objective rests on systems for determining production
methods, and the information system called Kanban. Both of these concepts contributed to
the objective of having the right number of parts or components at the right place at the
right time.

The Kanban system is a unique Japanese information system that "hannoniously" controls
the production quantities in each process.
The Kanban system is a simple information system used by a Work Centre (WC) to signal
/
its supplier WC to send a container of an item and to authorize the supplier WC to make
another container of the particular item. The name comes from the Japanese word kanban,
which means "card" or "sign". Originally a card was used to signal the supplying work
center. A WC can use any of a variety of methods to trigger resupply by its supplier WC.
For example, a flashing light, the empty container itself, or a message on a computer JI'
terminal can communicate a request for more material. We discuss the two-card kanban
system to provide some detail about how it is linking work centers.
In the two-card kanban system, one type of card, called a production card, or P-card,
authorize a WC to make one standard container of a particular part specified on the card.
The second type of card, called a move card, or M-card, authorizes the movement of one
container of the specified part from a particular WC to another WC as specified on the
card. These cards are ordinarily recirculated and new cards are issued only when
production of an item is to be started or changed signiticantly. The production card
circulates repeatedly between the outbound material location at a WC and the work area
where the item is produced. Similar card transactions link the supplier WC and the WCs that
supply it. The user WC will also be linked to one or more WCs that supplies. A series of
these linkages connects the tinal assembly operation with the WC that performs the first
operations in making the product. Often, even the raw material vendor is linked with the
starting operation through a kanban signal. Kanbans picked up when one delivery is made
authorize the vendor to make specitied items and deliver them on the next delivery.
The kanban systems can be a very simple, inexpensive, and etfective method of
coordinating work centers and vendors. The organizations must be well disciplined so that
there is always an authorizing kanban with every container, ensuring that only the
appropriate items are produced and excessive inventory does not build up. There is also the
opposite danger-that some WC might run out of material and cause work to stop at work to
stop at all subsequent WCs. If this or any other pull method is to work well with small
inventories, there must be no problems to disrupt production: because there simply is not
enough inventory to keep the plant running while a problem is corrected.

Numeric example of Kanban system:

Example: (Adapted from Production and Operations Management by E.E.Adam and
R.J .Ebert, PHI. New Delhi)
The peocess of making component xy943 for the Digital Maestro CD player involves five
work stations. The cycle time is tllfee minutes per item for every work station. This means
tllat Kanban card will be returned from any work station particular to the previous work
station, on average~ every three minutes times the lot size: What would be the impact of
reducing lot sizes from ten units to two? Using lot sizes of ten units and two units, average
WIP inventory levels and flow-through times are calculated.
Solution:

WIP inventory levels:

Lot size = 10: Average WIP = 5 work stations x 10 units/lot = 50 units

Lot size = 2: Average WIP = 5x2 = 10 units

Process now-through time (average)

Lot size = 10: Flow-through time = 5 work stations x 10 units / lot x 3 minutes /
cycle = 150 minutes
Lot size = 2: now-through time = 5 x 2 x 3 = 30 minutes

In the example, by reducing lot sizes from 10 units to 2 units, the CD manufacturer was
able to reduce WIP by a factor of 5 from 50 to 10 units, and now-tllfough time also by a
factor of 5, from 150 to 30 minutes. Many companies have experienced similar drastic
improvements through the introduction of Kanban. For this reason, they are able to give
better customer service and have lower investments in inventories than do their
competitors.

Activity D
Review Shigeo Sbingo's seven wastes. Which of these wastes are addressed by the
following JIT techniques?
1) Pull production
2) Kanhan
3) JIT purchasing
Flexible
4)
manufacturing
..........................................................................................................................................
............. .
........................................................................,........................................................
Activity E
There is a lot of discussion about but very few documented applications of JIT in service
organisations. What JIT techniques would be valid in the following situations? Be prepare
to explain your choices.
a) A bank
b) A restaurant
A copy
c)
center
d) A university
......... ... ..............

..........................................................................................................................................

......
Activity F
Suppose a JIT work center is being operated with a container size 9f 25 units and a
demand rate of 100 units per hour. Also assume it takes 120 minutes for a container to
circulate.
a) How many containers are required to operate this system?
b) How much maximum inventory can accumulate?
c) How many Kanban cards are required?
..........................................................................................................................................
..........................................................................................................................................
............................................................................................................................................

12.9 JIT IMPLEMENTATION IN INDUSTRIES

1) Kanban System at an American Toyota Motor Facility
The plant fabricated, assembled and painted four models of truck beds for Toyota light
trucks, with an annual capacity of 150,000 units a year. The JIT implementation began in
assembly area an then progressed through manufacturing functions to a selected number of
suppliers, over a two year period. The system used material requirement planning (MRP)
for overall production planning and Kanban for shop floor control.
The salient featurer of JIT application are :

Company Toyota Motor Facility

Product category Truck beds

Productivity improvement Labour - 20%
Setup time reduction Significant
Inventory reduction Raw material - 21 % WIP - 45%

Quality improvement Significant

Space saving Significant

Others
Warehousing cost reduced by 30%, Reduction in
presses 30%, Production volume up by 40%, 30%
reduction in forklifts. I

2) ]IT as the basis for Revitalisation at Harley Davidson-Motor Co.

Harley-Davidson the dominant US producer of motorcycles, faced serious problems
throughout the seventies due to high inventory, scrap, rework, production bottlenecks, etc.
Harley-Davidson adopted.TIT as a revitalisation strategy. The company called its .TIT
programme -"MAN" i.e., Material as Needed. The programme encompassed reduction of
setups inventories and lead time; tlow processing and schedule stabilisation : use of
preventive maintenance, statistical process control and quality circles; employee
involvement and vendor programmes. The salient features of JIT application are:

Company Harley Davidson

Product category
Productivity improvement:
Setup time reduction
Inventory reduction
Quality improvement
Space savings
Lead times
Mptorcycles
Vehicles per employee up-32% Revenue per employee up
100%
Overall setup reduction by 75% (many operations-
combined)
WIP and RM reduction by 50%
35% decrease in warranty 50% decrease in scrap rework,
Manufacturing errors down by two-third defects per unit
down by 70%
35% reduction in warehouse 15% reduction in
manufacturing
All Suppliers within 200 miles weekly or daily delivery

3) JIT in an Auto Components Company

A UK based Auto components company adopted JIT as a strategy to contend with the
Japanese competition. The company employed 600 people and fabricated automotive
components. The change to JIT had the following objectives-reduction in through put time
from average 10 days to under 1 working day, reduction ofWIP to minimum necessary,
doubling of sales per employee, and reduction in scrap rates and rework. The salient
features of JIT application are:

Company Tokai Rika

Product Category
Productivity improvement
Set up Time Reduction
Inventory Reduction
Quality Improvement
Space Savings Lead
Time Reduction
4) JIT in Automobile Company
Automotive parts
(Indexed) 100 to 145, equivalent to 317 people.
Die cast: 40 to 2 min. 90 min. to 20 sec.
(Indexed) 100 in 1975 to 35 in 1976. 17 days in 1975
to 6 days in 1976.
Significant
Significant, elimination of warehouses.
Significant

The salient features of JIT application are :

Company : Toyo Kagyo
Product Category Productivity Automobiles.

Improvement 70 to 80% gain from elimination of waste.

Set up Time Reduction
Inventory Reduction
Quality Improvement
Space Savings Lead
Time Reduction
Ring gear cutter.30 min. in 1976 to 13 min. in 1980
(Indexed) 100 in 1973 to 31 in 1981.
Significant, Mhchine down time reduced to 50 to 60
hours/month.
Signiticant
Signiticant

JIT in Electronics, Computers, Telecommunication and

Instrumentation
1) lIT at Hewlett Packard
The computer systems division of Hewlett packard Inc., USA had experienced a number
of problems in manufacturing. The standard lead times for a lot of single in-house made
PCB was as much as 11-15 workdays and 10-45 days for subcontracted assemblies. The
schedules in the Random Access Memory circuit testing were not linked with MRP,
causing late deliveries. TIT systems were introduced to achieve, small lot, continuous How
manufacturing. Kanban control areas were developed for material How regulation, at
various segments of manufacturing How. The salient feratures of TIT application are:

Company Hewlett Packard Computers

Product Category and Test Systems 87 to 39
Productivity Improvement stanard hours
Set up Time Reduction 30% to 45% reduction in manual setup
Inventory Reduction Significant ($2 million inventory eliminated)
Quality Improvement First to improvement JITffQ(:. PC
Space Savings assembly: 8500 to 5750 sq.ft. PC
Lead Times assembly: 15 to 1.5 days
2) JIT as a basic for the world claw manufacturing (WCM) at Calcomp
JIT strategy was used as a basic to achieve World Class Manufacturing (WCM) at Display
Products Division of Calcomp Inc. - a Lockhead company. The division produced
computer graphics in a number of models and options. To began with, a simple keyboard
unit. Streamlined layout, mixed model progressive value adding assembly concept, use of
Kanban squares for control of the production flow and worker centered inspection were
features of the successful pilot implementation. Similar methods were then implemented in
a maj or final assembly area containing hundreds of parts. The salient features of JIT
application are:

WCM.
Company Product
Category Computer graphics. 41
Productivity Improvement % increase in yields.
Setup Time Reduction Decrease in mfg.cycle time from 12 weeks to 4 weeks. 60%

Inventory Reduction decrease in average inventory.

Quality Improvement 67% decrease in annual scrap and rework.
Space Savings 75000 sq.ft. reduction in Hoor space.
Lead Times 53% improvement in supplier on time delivery.

3) JIT at Sundstrand Data Control

Sundstrand Data Control's Instrument System Division began its JlT programme with its Q-
Flex Accelerometer, a high volume miked - model production line. It implemented JIT on a phased
basis, over a period of two years. To do this, it formed a steering committee of top level
managers and an operating committee of personel from relevant areas. The other features of
TIT included: i) Training workshop for all employees, H) Setting up Key bench mark for
WIP, cycle time and quality levels, Hi) Use of balanced assembly line, iv) Movement of
stock room close to the line, v) Pull system of production, and vi) Worker centered quality
control. The salient features of JlT application are:

SUNDRAND
Company Product
Category Q-t1ex accelerometer
Productivity Impmvement 20% improvement in total capacity.
Setup Time Reduction Cycle time reduced to 90% per unit.
Inventory Reduction Reduction by 80%
Quality Improvement Up by 50%; Rework reduced by 66% Scrap costs cut
by 60%
Space Savings Significant
Lead Times 100 days to 2.5 days
4) JIT at Apple Computers
The salient features of JIT application are :

Company Product Apple Computers

Category Micro computers
Productivity Improvement: i) Inspection labour from 25 to 9.
ii) Assembly Labour from 22 to 4
Setup Time Reduction Estimate to 30% (lines mostly dedicated, started JIT)
Inventory Reduction Estimate of 90% in WIP and raw material.
Quality Improvement
Scrap and rework reduced by 10%, incoming material
quality up by 20%
Space Savings No need for warehouse; material delivered to point of use
Lead Times All computers less than two days. Daily schedule.

JIT in Process Type Industry

1) JIT in Hand Blown Glass Manufacture
An application of JIT in a hand blown glass manufacturing plant has been reported by
Byrd and Carter. The JIT production system was introduced in 1986. The objective was to
reduce the inventories. The overall impact of the project was:
- Over $ 750,000 in cost saving manufacturing
- Reduction in manufacturing cycle time of the glass from three weeks to 4 hours. -
Reduction in material flow through the plant by 81 %.
- Release of over 1000 sq. ft. of tloor space for better use.
- Reduction in material handling by 7 moves in one product line and 4 moves in
another product line.
2) JIT Manufacturing at Avon Cosmetics
Avon Product Inc. is amongst the biggest producer of cosmetics in the world. It is a direct
selling enterprise and its high quality products include cosmetics and fashion jewellery.
Avon adopted JIT in 1982. A trend prognosis system was setup for improving accuracy of
the sales forecasts.
JIT oriented material disposition and purchasing were brought about using long tean
contracts; frequent deliveries, approved vendors and vendor rating schemes. Introduction
of Quality and Productivity Improvement Programme (QPIP)worldwide resulted in many
quantity and productivity improvement system. Results obtained over a 5 years period
(1982-87) were as follows:
- Reduction in inventory of finished goods by 25%, Components (53%), raw
ingredients (52%).
- Reduction in warehousing and handling cost (25%), reduction in average run size
(18%) and improvement in readiness to deliver (5.7).
- Quality improvement in materials (6.2%), production (1.3%).
3) JIT in Food Processing Industry
In the food industry, the adoption of JIT principles has been largely due to the increasing
demands from key customers for a better package of services and product options. The key
challenges facing food industry are : improving order perfoanance, improving
responsiveness on pack deliveries, enhanced product quality and freshness, and providing
greater pack option variety.
A limited shelf life food-producer in UK in response to many of these pressures, responded
effectively to the challenge through several innovations to enable JIT operation. The
application produced the following results:
- Initial reduction in clean down time (45%)
- Reduction in setup time (65%)
 - Reduction in process losses rylated to changeovers (60%)
- Reduction in type outer cartons for packaging from 20 to 2, and
- Increasing the weekly deliveries to key retailers to thrice a week.
Other non-quantified benefits were: enhanced customer sevice, elimination of out of code
returns, reduction in capital charges, lower material handling and quality costs, much
reduced chill store requirement and simplified planning and logistic systems.
4) JIT at Asia Securities Printing
The new production system application at Asia Securities Printing (ASP) is an illustration
of nT in the printing and publishing industry. ASP adopted nT, on becoming a number of
NPSRA of Japan. It specialised in printing securities-a high value added product.
i

The
important requirements in this industry are:
i) Short lead time from order -receipt to delivery,
ii) Error free printing, and
iii) Flexibility to print different types of documents.
ASP faced problems like large paper inventory and a number of non-value adding
operations like stacking and un stacking etc., prior to HT. The switch to .TIT had the
following results:
- daily delivery of paper,
- debottlenecking the printing process to reduce lead time, and
- use of stockless based on production smoothing and staggered deliveries to customer,
as needed, to reduce customer inventory.
HT enabled ASP to develop a full service business in printing all kinds of documents, and
expand its customer base by 50-60 customers per year. Its sales were targeted to rise at least
25% per year. Moreover, it helped the customer to reduce his inventory.

.TIT in Seasonal Demand Industry

1) The World Company
The fashion garment industry is example of a high seasonal industry. Fashion gannents are
highly style and fashion sensitive ~nd get out-dated quickly. Thus, discount sales and
financial losses are not uncommon. World company is a leading producer of fashion
garments in Japan. It is a member of NPSRA. Prior to HT, world used mass production
system, which made it suffer from over-production, and excessive inventory.
As part of its .TIT strategy, world dispensed with the mass production machinery. It adopted
"slow speed" machines to achieve balanced, synchronised gannent production. 'Multitask'
production was adopted, where in each worker operated not one but several machines which
perfo11Iled different tasks, in a well defined cycle. With transition to JIT, world reduced the
lead time from one month to two hours, enabling it to produce to orders, eliminate
inventories and discounting.
2) Use of Kanban in a Job Environment

A manufacturer in Canda operated ajob shop to manufacture to orders, high quality outdoor
clothing used for camping, hunting, canoeing, skiing and so on. Both summer and winter
clothes were produced. The manufacturer faced problems resulting in out of phase
production. Traditionally the orders were grouped in to a production run that included all the
sizes and colours required. This resulted in highWIP and long lead times.
After implementing KANBAN and JIT, following improvements were observerved :
improved quality due to small lots, less WIP, lower congestion in packing and shipping
areas, increase in throughput capacity, quicker availability of finished products, and release
of 40-50% of space.

Other Manufacturing Industries

1) JIT Implementation in Lucas Industries, UK
HT implementation was brought about in 18 months. The steps involved:
- Training for all levels of management -
Factory redesign on a cellular basis
- Job redesign and reclassification to suit cellular organisation -
Reduction in the machine and process change-over times
- Use of Kanban system.
Introduction of JIT resulted in reduction of lead time from 14 days to 1 day. Productivity
increased by 25%. The tinal assembly operated with only 15 hrs. of stock. Stock levels
were reduced by 7.5 million pounds. The staff strength was reduced by 300. Business
turnover ratio increased from 7 to 15 times.
2) JIT at Kawasaki Electricals
TIT was implemented at Kawasaki Electric of Japan, a member of NPSRA, as a way to
over come the near bankruptcy condition of the company in 1982. Kawasaki operated in
the electrical switch board industry. Kawasaki began JIT with a focus on orderlines and
organisation leading to a plant clean up campaign. The benetits derived were as follows:
- Space saving of 53,000 sq.ft.
- Overall workforce decreased by 157 over a four a four year period.
3) JIT at Misawa Homes
A unique example of application of JIT in prefabricated housing industry is provided by
Miswa Homes of Japan. Miswa was the leader in this industry in Japan. It was however
facing difficulties due to poor sales and profit, on account of an industry recession.
Miswa's inventory of unsold homes was mounting. It then adopted JIT and developed
seven new design for the homes to match seven stages of a person's life cycle. Thus there
were 49 combinations of design and life cycle stages. The strategy called for high
diversified, small volume production, often customised, but at no additional costs. The
results observed were:
- Capital investment per year reduced from $4 million/year to $1.2 million/year.
- Manufacturing lead time decreased from 2 months to 1 day. -
Inventory went down to $ 2.8 million.
- Productivity went up 2-3 times.
- Vast amount of space released.
JIT in Service and Administration Operations
JIT philosophy has atready demonstrated its usefulness in service and administratiove
operations. The various case applications are :
1) JIT at Skylark Restaurant Chain
Prior to JIT Skylark owned a chain of 300 restaurant in Japan. To service these, it prepared
food, using mass production equipment, in its centralised kitchen facility. This, coupled with
the need to cater a large variety resulted in large quantities of each variety. A large
refrigeration facility was used to preserve the prepared foods. These practices led to large
amount of wastage, enormous cost and very low capital turnover.
Transition to JIT was achieved by dismantling much of the mass production equipment in
favour of the single item production methods. Kanban method was used in production and in
production and in keeping the restaurant clean. The switch to TIT produced impressive
results. Free space was released. The inventory was cut to half in just 3 months of TIT
introduction. TIT enabled Skylark to switch to custom production in a highly cost effective
manner.
2) JIT at a Customer Service Centre
Northern Telecom's customer service centre repaired printed circuit packs (PCPS) which
become inoperable in digital switches. The labour intensive operation had four major steps:
PCP moditication, testing and trouble shooting, repair and shipping. The centre faced
problems which caused quality errors, high WIP, long repair cycle time of one week, and an
85% customer service level. In 1987, JIT was started at the centre. Following a
ttaining programme in JIT, work cells were implemented, each of which was full
responsible for the complete repair of a specified group of PCPS. WIP and work flow
were conttolled by the use of Kanbans and remarkable: 100% customer service level,
89% improvement in quality, 75% reduction in WIP and two day repair cycle time for
PCP.
3) m in a Mail Order Operation
A company called Semantodontics in USA adopted JIT in a mail order operation. It sold
nationwide to dentists by mail order catalogue and had a major production line called
personalised printed products. The large number of customer complaints on this products.
The large number of customer complaints on this product mainly arose on account of
information delays on the amount charged and order delivery delays. These were caused by
the customer waiting times of three or more weeks and a monthly charging of customers.

A JIT like operation was achieved by the use of three order batches per day, elimination of
new customer set-up processes, and faster pace of working in the order verification area. As
a result, the order processing lead time went down from 4 days to 4 hours. The complaint
calls went down sharply.

12.10 SUMMARY
JIT is a new approach to repetitive manufacturing, whereas MRP is suited to job shop or
batch production. We have seen how parts should be produced just-in-time rather then Just-
in-Case they are needed. This is accomplished by a simple visual system of production
conttol and dedication toward constant reduction in inventories. The objecrtive of JIT is to
improve return on investment. This is done by increasing revenues, reducing costs, and
reducing the investment required. It is based on philosophy of eliminating the waste and
utilising the full capability of each worKer. This system was originally developed in Japan
and gradually picking up in Indian industties . In Kanban system a fixed number of
containers are provided for each plant required. When these containers full, no more parts
are produced, thus limiting the inventory of each part. Improvement activities are
encouraged by workers and management to reduce the number of containers, size of
containers and inventory. Implementation of JIT systems requires a staged progression of
activities. Top management must provide leadership and support.

~,
12.11
SELF-ASSESSMENT EXERCISES
1) Why did the JIT approach evolve in Japan and not in western countties?
2) How can lot sizes and inventories be reduced in a JIT system? Mention specific
approach.
3) Why has repetitive manufacturing tended to use long runs and large lot sizes in the
past?
Describe vendor relations both before and after installation of a JIT approach.
4)
5) What are the effects of JIT system on workers and manager?
6) Suppose a work center has a setup plus run time of 30 minutes to make 50 parts. Also
assume that it takes 10 minutes to move a standard container of 50 parts. Also assume
that it takes 10 minutes to move a standard container of 50 parts to the next work
center, and 'the demand rate is one part per minute through the day.
a) Schedule this situation by drawing a picture of when work center. A should be
producing and idle and when movements of containers take place from A to B.
b) How many standard containers are needed for this part to calculate the picture in
part a.
c) Use the formula n = DTI C to calculate the number of container.
7) Why is it important to study Japanese manufacturing in a production and operation
and operations management course?
8) The process of making a certain component involves seven work stations. The cycle
time for all of the work stations is nine minutes. The cyrrent lot size is 25 units. What
would be the effect on WIP levels and process flow-through times if the lot size were
reduced to :
a) 19 units
b) 12 units
c) 5 units
d) 1 units
9) What are the most critical things needed to implement lIT? Compare these things to
implementation of an lIT system.

10) Will the EOQ formula work in lIT enviroment?

11) The process for making alarm clocks involves six work stations with cycle times of
four minutes per item for every work station. The single card kanban system uses 10
units in each bin. The quality circle group has found a method to eliminate one stage
of production, reducing the number of work stations to five. What are the reductions
in work-in-process inventories and in tlow-through time?
12) Discuss how JIT reduces costs (material, labor, overhead)- not including inventory.
Be specific.
13) For a particular operation, the setup time is 10 minutes at a cost of $10 in lost machine
time and labor. The run time is 50 minutes to produce a standard lot of 400 parts.
Assume a holding cost of $2 per part per month a production rate of 20000 parts per
month. It takes 3 hours to circulate a container of parts.

a) Calculate the EOQ for this part.

b) How many standard containers are needed?
c) If the setup time can be cut to I minute, recalculate the lot size and number of
containers needed.

12.12 FURTHER READINGS

1) Buffa, E. S; Modern Production/Operations Management, 7 Ie, Wiley Eastern Ltd.

2) Dilwort, James B; Operations Management, 2/e, The McGraw Hill Companies, Inc.
3) Gaither Norman; Production & Operations Management, 6/e, The Dryden Press, A
Harcourt Brace College Publisher.
4) Krajewski/Ritzman, Operations Management-Strategy & Analysis, 4/e, Addison
Wesley Publishing Co.
5) Hutchins, D. Just-in-TIme
6) Korgaonkar, M.G., lust-in-TIme Manufacturing
7) Ohno, T and Mito, S., lust-in-TIme for Today and Tomorrow 8)
Hall, Robert. W., Attaining Manufacturing Excellence
9) Hirano., lIT Factory Revolution
10) Ansari, A., and Modaress, B., lust-in- Time Purchasing
 UNIT 3 TOTAL QUALITY MANAGEMENT
Objectives
After going through this unit, you should be able to understand: .
Quality is a qualifier
. How TQM emerged
.
Difference between QC, QA TQC and TQM
. The various terms and their relationships
. Voice of the customer
. Quality function deployment (QFD)
. House of quality (HOQ)
. Identifying the process
. Measuring processes
. Cost of quality Organized
. problem solving
. Improving the process
.
Process capability studies
. Importance of employee participation and empowered decision making in TQM
.
What a quality systems standard means
Structur
e
3.1 Introduction
3.2 TQM: A Historical Perspective
3.3 Quality Tenllinolo!,'Y
3.4 Understanding the Customer
3.5 Understanding and Improving the Process Employee
3.6 Involvement and Empowerment
1.7 ISO 9000: The International Quality System Standard
3.8 Summary Self-Assessment
3.lJ
Exercises
3.10 Further Reading
3.11 Appendix: ISO 9000 Quality System Standards

3.1 INTRODUCTION
Total Quality Management (TQM) is a systems approach to ensuring quality in an
organization. TQM is not just quality control or quality assurance. Nor is it limited to the
boundaries of a Total Quality Control system. It is a dynamic process with a strong
philosophical base which incorporates many of the concepts upon which Total Quality
Control Systems are based. The emphasis is on involving everyone in the organization in
activities which provide for continuous never-ending improvements. Quality activities are
planned and managed into the system and are oriented towards the achievement of complete
customer satisfaction. The liberalized economy isforcing Indian companies to establish
Total Quality Management Systems. It is a struggle which has just b.egun and Indian
compa Illes will continue to do so just to be in the race -lest they perish. Quality will be just
a qualifier. not a competitive advantage an)1nore.
TQM efforts arc led by top management by involving everyone in. the company with the
prime objective of satisfYing the external customer. This focuses the organizational efforts
towards satisfying the internal customer with the help of a quality management system for
doing things right the first time. The traditional approach ofpost-prodl1ction detection of
defects is discouraged and a prevention philosophy is adopted to bring down the
nonconformances. The organization seeks continuous never-ending improvements which
are tracked with the help of appropriate measureme11l.")l.,.tems.

In this chapter the focus will be on understanding the customer and the process and then
satisfying the customer by improving the process through total involvement of employees.
After a brief historical perspective on TQM and its relevance to Indian organizations
(Section 3.2), we will define the various terms relevant to quality management (Section
3.3).

TQM organizations focus on understanding and responding to the needs of the customer.
The voice of the customer is clearly identified and then deployed throughout the
organization with minimum of distortions. In section 3.4, we will discuss the techniques
used to identify cllstomer satist:1ction and their expectations. We will understand what
Quality Function Deployment (QFD) means and what is a house of quality.
Inmost organizations there arc different functions which are geared towards supporting the
core manufacturing (or service) process. Functions. such as, design, engineering,
marketing. finance, systems. R&D. administration. health care and so on. All these
ftmctions can be seen as processes which are designed to satisfY customer needs. All
processes have variations which need to be controlled and then improved in a never ending
cycle of efforts aimed at continuous improvement. In section 3.5, we will discuss how to
get into the path of continuous improvement. "",nious problem solving tools will be
presented. Procedures will be explained for identifying major nonconfonuances and
therefore the major problem are.:1S. 'Since we flre aiming for continuous improvement,
measurement systems for monitoring the quality performance will be discussed. We sketch
out a measurement framework for identifying nonconformances. We wilt" also understand
what cost of quality means and how to establish a measurement system.

Even though customers arc the driving force behind the process, without total employee
involvement (in terms of alignment, motivation and empowennent) and top management
leadership, the TQM efforts become ftltile. Methods need to be adopted to stimulate total
involvement and move toward the common goals of systematic and continuous
improvement with the ultimate aim of satisfying customers. employees and stakeholders.
These aspects wiII be discussed in section 3.6.

Before concluding, in section 3.7, we wiII introduce an International quality systems

standard called ISO 9000. Even though a TQM organization is beyond ISO 9000,
the
exercise undergone for geuing the quality systems certification brings in the discipline
much needed for a organization practicing TQM.

3.2 TQM: A HISTO~ICAL PERSPECTIVE

Quality management systems have evolved through quality control (QC), quality assurance
(QA), and totl1lquality control (TQc) systems to total quality management (TQM) systems.
We will briefly sketch out each of these systems.
Quality control is concerned with defect detection by using post-production inspection
procedures. Statistical quality control techniques are used while inspecting the finished
goods. Main focus is on the product - Le.. what is wrong with the product (or part).
Techniques such as acceptance sampling, control charts, control by attributes and control by
variables are typically used by the QC inspectors while controlling the quality of goods
manufactured. The extent of employee involvement is minimal. Only few inspectors from
the QC depanment
Quality arc involved
assurance systems aim toinproduce
quality control activities.
as per design It takes a real
specifications and shon time (within
emphasize
days) to install a QC system. However, such systems do not help identify problems.
defect prevention. Quality is buill into the system (that produces the product) by using
production and operations management principles. Statistical process control techniques
 are used to monitor the process by allowing random variations and eliminating non-random
variations. Main focus is on the process - i.e., what is wrong with the process which
manufactures the product. Quality system standards (such as ISO 9000) are adopted to
assure quality in the process. ISO 9000 is an International systems standard which shows
how an organization can establish, document and maintain an effective quality system. It
helps demonstrate to the customer that the organization is committed to quality and has the
ability to meet their requirements. The employee involvement is limited within the
'centralized staff function of the QA department. It takes between six to twelve months to
install such a system. The main theme her is to document (with well defined procedures)
what you do and do what you document.

Total qualit), control systems are concerned with cost reduction efforts as a drivp t~ ~...s.
continual improvement. Here quality is organized into the system. These systems take off
oncc the cost of quality is calculated. Problem areas are identified and problem solving
techniques are used extensively during the continuous impr~vement cycle. Performance is
monitored with the help of the COQ system. These efforts enhance the product quality. Here
waste identification and removal is an important benefit. Philip Crosby's zero defects
progmm (Table 3.1) is a TQC approach. So is the Taguchi methodology which emphasizes
the importance of a robust design to take care of all downstream fluctuations. In TQC
systems we have more involvement in the fonn of various quality circles working towards
improving the processes. Time to install is between one to three years. It may be noted that
QA standards fonn the basis for a TQC or TQM approach.
-
Total fJllality m~tDagement systems manage quality in. They have a strong
philosophical
base that incorporates several important concepts of TQC systems. Management efforts
are oriented towards the achievement of complete customer satisfaction. Here we find an
organization wide responsibility for quality. Time to install is three to five years. The
evolution shows a culture change in the organization which achieves customer orientation
through various stages of development that progress through a systems oriented to an
improvement oriented to a prevention oriented state.

Employee
Involvcment
Total Quality
Customer
. orientation
. Company wide

....

improvement

Quality Assurance
. System oriented

...
. System accreditation
....

. Supplier assessment

Quality Control
11940 & Produdct
]950s I I ] 960s & 1970s I 11980S & 1990s I
. oriented
Defect detection ..
. from Fundamentals of Quality Mgmt. by Dennis F Kehoe
I. modified I
Post prodn. inspection
.
)<'ig.3.1: Evolution of quality management systems
 Table 3.1: Emergence of Total Quality Management
(World War I) 1920s Statistical methods applied to man\dacturing
Shewhart
(World War II) 1940s Increased emphasis on process improvement
(Deming, Juran)
]950s Deming assists General Douglas MacArthur in Japan
Emerging forces:

. Japanese revolution in quality

. Prominence of prodtict quality in public mind

I 960s TQC emerges in United States

(Deming, Juran, Feigenbaum)

-
] 960s 1970s Japan emerges as world quality leader
(Deming, Ishikawa, Taguchi)

] 9608 - ] 970s Zero defects movement in tIs

(Crosby)

1980s - 1990s
(Deming, Juran, Taguchi, Crosby) TQM emerges in the developed nations.
1990s INDIA: We are in the process of"understanding"
these philosophies. We need to undei'stand them
Figure 3.1 and Table 3.1 show how TQM wellemerged
enough toover the century
be able and who
to implement them were the
quality gums who were responsible for the status this philosophy commands today. The
successfully.
progress from quality control to quality assurance to total quality control to total quality
management took almost a century of concerted efforts from quality gurus, such as, Walter
Shewhart, W. Edwards Deming, Joseph Juran, Kaoru Ishikawa, Genichi Taguchi. Annand
Feigenbaum, and Philip Crosby. The quality movement was initiated in Japan by Deming
and Juran. It was later picked up by the Japanese who have made the quality movement a
big success story. Around the 80s Japanese companies, on a continuous cycle of never-
ending improvements, surpassed the west. They captured the markets with their consistent
quality products and have now shifted their priorities on to satisfying customers with
products having high quality at low price.
We will take a brief look into the Indian scenario. According to the World Competitiveness
Report (1994) Indian companies lag far behind their global competitors in tenus of customer
orientation, time to innovate, time to market arid, in general, in terms of TQM practices.
Under the liberalized scenario, it is more of a concern because the global players are now
entering the Indian market. We may be having global capacities in some cases but we fail in
-
tenus of global quality. For us it is a Catch 22 with a difference ifwe don ~ practice TQM we
die; if we practice TQM we struggle to survive (we may not surpass but we do survive and may
be succeed). I used the word survive because our competitors are already much 'SUperior to
us in terms of quality practices. For example global players may be having component
rejection rates of 1 in 10,000 while Indian companies are struggling with rejection rates of 1
in 100. A case in point is the US based company Motorola, which has made the slogan six
sigma quite famous by targeting 99.99997% defect free manufacturing. According to a 1995
Business Today survey. Indian plants have trouble achieving even 95% defect free
manufacturing. In most cases the burden of high rejection is passed on to the customer. But
with liberalization becoming a reality the customer has a choice. And companies have to
listen to the voice of the customer to drive their quality initiatives. With mass customization
becoming a goal of most quality programs, there is a lot of pressure on the Indian
companies. There is a need, in most sectors, for instant trcmslation of new designs into
finished products with no defects.

3.3 QUALITY TERMINOLOGY

In this section we will define some of the terms which are norn1811y used in TQM classes. We will
try to understand the meaning of quality, customer, product, quality of design and
 quality of coDrormance (relationship between product and customer through quality)
quality cost, quality measurement (relationship befWeen quality and cost), value addition,
small q, big Q, non-confonnance~ and ~work' (relationship between qualityand
productivity).
Quality: There are several definitions of this word. For example:
"Quality is customer satisfaction"
"Quality means meeting customer reqUirements" ,>'

'''Quality means fitness for use"

"Quality is confonnance to specifications"
"Totality of features and cWiracteristics of a product or service that bear' on its
abil~ty to satisfy stated or implied needs"
~stomer: "Anyone who is impacted by the product OJyervice". By this definition we find
that Utere are several customers w~ting down the line when a product is being processed
through several stages in an Qrganization before it reaches the final consumer. Thus we have
people who are impacted within the organization and also people impacted outside ~he
-
organization. Thus we have two type of customers the internal customers and the external
customers.

External customer: One who purchases a commodity or service. External customers are the
_~ving forces behind an organizations business. Figure 3.2 below showsthe external
customer. '

.!pl. I.. r!Sl.t.m...

Raw MitI
Input w t..u ill Output '
.
Finished goods
E

section I section 2 section 3

I = internal customer E ORGANIZATION

= external customer S
= supplier
m = Value addition

Fig.3. 2: The external and Internal customers

Internal customer: Any individual (or group or organization) who receives and uses what an
individual (or group or organiza~on) provides (see Figure 3.2). Should section 1 meet the
needs of section 2? What happens to section 2. if the section 2 requirements (in terms of
quality specifications) are not met by section I? What if section 1 is not capable of meeting
section 2 needs? Should the section I work in that case be outsourced? That would m~
making section I redundant. Taking another example, manufacturing departments are
internal customers of product design and development depa~ments. If the design department
supplies engineering designs that are not producible by the manufacturing department then
the internal supplier customer relationship suffers. The supplier here is unable to satisfy its
internal customer. Should manufacturing somehow produce it over-riding the design
specifications? How would it affect the overall quality of the product in that case? Or should
design sensitize itself to manufacturing capabilities before developing products intended for
satisfying the external customer?
Hence, almost everyone in an organization has a customer. Satisfying the customer (either
external or internal) involves defining their needs and expectations and also meeting them.
Dissati$fied customers are lost opportunities. Studies have indicated that dissatisfied
customers express their dissatisfaction to other potential customers. Moreover, developing
new customers to repiace dissatisfied ones is costlier than retaining satisfied
customers. Hence organizations must try their best to satisfy customers by listening to their
'

dissatisfaction and deploying their voice through the organization so that the situations
causing the dissatisfaction are remedied. A proactive stance is necessary in identifying
sources of dissatisfaction because when there are no complaints it does not necessarily
mean that there are no dissatisfactions. 'Jypical methods used are surveys, questionnaires,
follow-up phone calls and so on.
Product: Output of any process. Classified into goods, software and services.
Qunlity and Customer Sntisfaction: We achieve customer satisfaction with the help of
sever*'Product features. Or through products that are free from deficiencies. Products
having good features meant to attract customers are said to have good quality of design. The
various dimensions of design q.tality could be performance, reliabi}ity, durability, ease-of-
use, serviceability, aesthetics, availability of options (additional features and expandability),
and reputation. In a service setup the dimensions are accuracy, timeliness, completeness,
friendliness, anticipating customer need§, knowledge of server, aesthetics and reputation.
Hence they have the capabilities of commandilfg bigh price and share and therefore earning
higher revenue. On the other hand products baving less deficiencies are said to have good
quality of conformance. Lower deficiencies are achieved througb waste reduction leading to
lower costs thereby yielding higher profits. Freedom from deficiencies or conformance to
standards are necessary at delivery, during use and during servicing. In addition, other
supporting business processes such as sales and billing sbould be free from errors. Higber
conformance means fewer complaints which implies greater customer satisfaction. The net
effect of improved quality of design and conformance is increased profits (Figure 3.3).

Improved features Freedom from deficiencies

(quality of design) (quality of conformance)

Increased Productivity . Lower warranty &

& Lower rework/scrap Product liability costs

Increased Profits

modified trom "The Management & Control of Quality by Evan.q and Lindsay

Fij!ure 3.3: Quality and profitability relationship

Quality and Productivity: The focus of productivity is now shifting. The old factory-
oriented definition of productivity is "product (or service) output per unit of resource
input". The new market-oriented concept is "sa/ab/e. good quality product (or service)
output per unit of resource input." The higher the value the better is the productivity.
Figure 3 uses the new definition of productivity.
Quality and Profitability: Profitability is driven by quality.

We know, profit = revenue - cost revenue

and = price * quantity sold

~ Profit increases if revenue increases or cost decreases.
~ Revenue increases if price increases (quantity sold remaining constant)
or if quantity sold increases (price remaining fixed)
Qualit)" and Cost: There are two debatable viewpoints regarding this relationship. Both the
views are justified depending on the frdme of reference. Vie}tpoint J: Improved quality
requires more expensive materials. additional labor. more precise machines and therefore
lead to higher costs. Viewpoint 2 : Improved quality is possible through savings in rework.
scrap and warranty expenses leading to decrease in costs.
 .. meeting customer requirements . customer/product support

. fitness for use

process integrity (minimum
. product service
. flexibility to meet customer
.. variances)
elemination of waste
continuous improvement
. demands
flexibility to meet'market changes
if\
(QUALITY) *
(SERVICE)
VALUE =
(COST) * (CYCLE TIME)

. design & engineering . . time-to-market (concept to

delivery, order entry to delivery)
.
conversion
quality
assurance .
. response to market forces lead time
(design, conversion. engineering
and delivery)
distribution
. administration
. materials
Source: Business Process Reengineering: Breakpoint Strategies for Market Dominance by II,).
Johansson. Patrick McHugh. AJ. Pendlebury. W.A.Wheeler III

FiI.3.4: Definition of value

Value Addition: When r.:1\V material is processed in an organization, at each stage there is
a value addi tion taking place. until it COnICS out as finished product (see Fig 3.2). In
TQM organizations the value addition does not stop here. Rather it continues right up to the
customer. Figure 3.4 shows tIle definition of value .
Small q vs Big Q: The above discussions indicate a need for broadening the scope of the
quality f'tmction. The traditional approach which used to be product oriented was based on
the post-production defect detection philosophy. It used to serve well under monopolistic
situations where both the organization and the market were treated as black boxes. But the
big Q focus has a much larger scope with a strong customer orientation that enhances the
product quality by improving the process. The customer is the driving force which provides
the feedback for error free product development and production. Error prevention
philosophy is adopted and there is a high degree of organizational learning which helps the
organization to satisfy customers in a highly competitive market.

Total Quality Management: Like quality there are several definitions ofTQM. A couple of
them collected from different texts are stated below. These definitions summarize most of
what we have been discussing so far.
"TQM is the system of activities directed at achieving delighted customers,
empowered employees, higher revenues and lower costs".
'Total quality is perfonnance superiority directed at delighting the customers. The
means used are people, committed to employing organizational resources
to provide value to customers, by doing the right things right the first
time, every time"
Note: user-based definitions ought to be translated into product-based definitions which are
to be supported by manufacturing-based definitions.

Activity A
Describe how increased market share and profitability might result from improved quality in
your organisations.
-....................."......,......,.................................................".....
 """"""""" "'"'''''''''''''''''''''''' ...........................................................................................

Activity B

Select one staff department (e.g. accounting, finance, marketing services. human resources)
and describe how this department can deliver quality service to its internal customers.
........,....................,.......................................................""'''''' """"""""............................""""""""'"..............................,..
........,.................,.
"""""""""""""""""""""""""""..................................................................................................................................................."""'.........................................,.

............................................, ....................."
.............................................................,.........

Activity C
How would an organisation's commitment to quality facilitate or improve tbe following:
- The planning Process
- Organisation
- Control
.......... ...............................................................
..........,.............................,.....,...............,.................""'"......................."..................................,.....,.......,
..............
...........................,....................,.............................................................................................................."..........................................""..........,
...........................,

3.4 UNDERSTANDING THE CUSTOMER

We have seen how customers are the driving force behind big Q efforts. We also noted thut
virtually everyone has a customer. Understanding the stated and implied needs of the
customer is vital for any organization practicing TQM. We have to translate the user based
definitions of quality into product-based definitions. One method of translating the voice of
the customer into design specifications of a product is quality function deployment (QFD).
In this section we try to understand what QFD is and how it is used by TQM organizations.
Quality Function Deployment
QFD is a method used to identify critical customer attributes and to create a specific link
between customer attributes and design parameters. It helps marketing and design to answer
three primary questions:

1. What Attributes are critical to our customers'?

2. What design parameters are important in driving those attributes'? What

3. should the design parameter targets be for tbe new design'?
Market driven companies having a sharp customer focus produce designs that are
responsive to customer needs and expectations. Most importantly these designs must be
producible with 'minimum of inter-departmental conflicts. We therefore need procedures
for listening to the customer and translating them into finished product realities. QFD
provides a cross functional approach which uses a planning tool called "House of Quality"
for organizing and linking the customer survey information with the product design
attributes and later deploying it in stages throughout the organization. Customer feedback is
used by the QFD team to make engineering, marketing and design decisions. Each step in
the QFD process involves building up a section in the house o~ quality matrix thereby
simplifying the presentation 0(.1 large amount of data. The steps involved in building the
house of quality are: (i) identifying customer needs through market survey, (ii) identifYing
customer counterpart product characteristics, (iii) relating thecustomer attributes to produc~
characteristics. (iv) evaluating product characteristics and developing targets, (v) evaluating
products of competitors by performing internal as well as external comparisons, and (vi)
detennining which product features to deploy throughout the production process. The
matrix comprises of the following sections (see
Figure 3.5):
. A WHAT section
. A HOW section
 . A WHAT - HOW relationship section
. A HOW MUCH section
. A CORRELATION section (roofofthe matrix)
. IMPORTANCE RATINGS section
. A CUSTOMER ASSESSMENT section An
-.
ENGINEERING ASSESSMENT section

Importance
to customer"""""""""1
Competitive
evaluation
.:"

jillf.J:~ ~ - ":

Imporlance Competitiv
Weighting- - - -. .. e Assessments

Fig.3. 5: House of Quality Matrix

The process of developing the House of Quality involves:

a) Establishing critical customer attributes for the product based on their expectations
and give them weights according to their importance (i.e., filling the what section
along with the importance rating column). This specifies the voice of the customer. The
importance to customer is shown alongside each what in a scale of 1 to 10.
b) Establishing critical design parameters that drive system performance (i.e., fitling the
how section). Here product features are defined in measurable terms. These are the
operating characteristics that are likely to affect the customer attributes. The how much
section is also filled up to give the target values and other technical specifications for
each design attribute which are believed to fulfill the desired customer attributes.
c) Establishing the relationship between the customer wants and the design parameters (i.e.,
filling the body of the central relationship matrix). Each cell in this matrix shows a
relationship (either strong/weak or positive/negative) between the customer attributes
and design parameters. These relationships are shown in the form of symbols.
Importance weighting section shows the significance of each design attribute as it is
linked with the customer attributes through the relationship matrix.
d) Identifying the inter-relationships between the various design parameters to establish
trade-offs (i.e., filling the roof matrix). The~ may be either strong/weak or
positive/negative correlationships between the design features. If there are strong
negative correlations between features, we redesign the product to ~liminate such trade-
offs.

e) Focusing on customer perceptions of the company's existing product compared to its

competitors. Here we fill in the customer a.\:\'e.\smenl section. It corresponds to the
what column. These comparisons help in identifying our strengths and weaknesses and
can focus our attention to areas where we can get a competitive advantage. This is
external benchmarking which helps us study the customers perception.
 f) Focusing on the internal asSessment by filling in the engineering assessment section. It
corresponds to the how column. Here we benchmark ourselves with our competitors.

Analyzing the matrix and choosing pnority items. For example, if there is a mismatch between
g) the engineering assessment and the customer assessment, we follow it up by
. revising the design requirements to meet Ole true customer requirements. A mismatch may occur
i~ situations where the internal assessment puts us in ~ superior position (as' compared to our
competitor), while the customer assessments have rated us inferior on that particular requirement.

dep.!9L....
.. .....
design attributes
~.~P.!'?L. ...'"
,;. p
.:,sb)m..:r deooi
~ art
atrihut..:s
attnh...
gn
attri

Product Part Deployment Process Planning

Flg.3.6: The deployment pnK:ess

Several houses of quality are required in dePloying the voice of the customer. Figure 3.6
shows an example of how the voice of the customer can be deployed. QFD will be most
effective if we take a systems-approach to implementing quality practices in the
organization. Thus early involvement in the product development process with the help of
cross-functional teams is an absolute necessity to prevent problems downstream.

3.5 UNDERSTANDING AND IMPROVING THE

PROCESS
In the previous sections we discussed who is a customer and what the VOIce of the
customer means to the company. In this section we will try to understand and identify
processes that can be aligned to satisfy the customer needs. We will establish ~ system to
measure the performance of the process. We will present the seven QC tools that will help
us in identifying and solving major problelns. We will unders..and what process variability
means and how to strive for continuous improvement by reducing variability. We will then
define the voice of the process by undertaking process capability studies.
Identifying the PrtJce...s
In Section 3.3 we saw how organizational inputs are transfonned through a series of stages
involving man. machine. method, materials and other resources into value added outputs that
are meant to satis(v customer needs. Figure 3.2 shows an organized series of sequential stages
representing a process that can convert a .certain measurable input into measurable outputs.
The concept of a process is further defined in the Appendix (see Fig Al and Fig A2). An
important element here is the feedback that is essential for process monitoring and
improvement. These figures also identify the various groups that are involved in the process,
namely, customers. suppliers and .process owners. All of them are
responsible for the quality performance ofthe process. J
In TQM we try to identify the key processes on which the success ofthe organization depends.
Key processes could be (a) processes that produce the most important products wanted by
customers. (b) processes having high visibility with customers. or (c) processes having well
deJined problem areas indicating a high potential for improvement. Once the processes h,ave
been identified the own~rship has to be assigned to fix autJtority and responsibility for
maintaining, operating and improving the process. Quality improvement is achieved through
systematic and continuous improvement ofthese key processes.
A framework for measuring the proces.<;

To know whether a system is improving or not we need to have a measurement framework

to monitor the system performance. Performance monitoring can be done by recording cost
of quality summaries. Quality
I.
costs include costs of assuring and ensuring quality together
with the losses incurred through failures within and outside the organization. Cost of
quality can be broadly classified into cost of conformance and cost of nonconformance. Cost of
conformance includes costs of prevention and appraisal while cost of nonconformance includes costs
of ~nternal and exte11U1l failures. Appraisal costs are costs of inspection, testing, verification and
control at any stage In the process mea{lt to ensure acceptance of the product or process. Preventiqn
costs involve costs of activities undertaken to prevent or reduce the risk of nonconformity. Prevention
activities include identification ofnonconfonnities. identification of their causes and also actions taken
to remove such causes. Thus prevention costs are incurred in getting things done right the first time.
Internal failure ccsts are due to defects and nonconformities that are identified within the organization.
They include costs due to scrap, rework. repair, and re-test. External failure costs are due to defects
passing out of the organization. They include costs such as warranty claims, loss of customer goodwill,
replacement costs and so on. Refer the recommended texis at the end of this chapter to get an
exhaustive list of these quality related cos.ts. It has been estimated that quality costs account for 20 to
30 percent of a company's revenue. Cutting down the cost of quality is the goal ofTQM organizations.
In organizations implementing TQM prevention costs rise in the initial stages because of investments
in systems, processes, planning and training. Appraisal costs gradually reduce because post production
inspection activities are no longer necessary. As prevention measures start taking effect the failure
Ct>sts and the total quality costs start decreasing. This is in contrast to the traditional quality
measurements processes where quality products were supposed to be delivered at high costs.. Figure
3.7 shows the difference between traditional quality and total quality concepts. Thus having a cost of
quality system in place can help a company track improvements over time.

~ ...........,.
..........FOSIS
.

.'
...........ects

Time
, ~
\~.
'-"" . -'-.
fects

Time
TraditionaJ Concept Total Quality Concept
Fig.3.7: TnaditioRal Quality versus Total Quality

We can also measure and monitor a systems quality improvement program by identifying
nonconformances. A nonconformance is any deviation from measurable quality
specifications that need to be satisfied. Quality improvement programs are most effective if
we identify nonconfonnances in tenns of quantity and cost, and systematically strive to
eliminate dominant nonconfonnances. Nonconformances could be in one of the following
several forms:
Defects (Le.. work not to specification)
Rework (i.e., work requiring correction)
Scrap (i.e., work thrown away)
Backlogs (i.e., work behind schedule)
Late deiiveries(i.e., work after due date)
Surplus items or ov.er-production (i.e., work not required)
We need a well defined measurement system to capture .nonconformances in a database.
Next we sort the data and identify dominant nonconformances (in different sections of
the organization) to prioritize quality improvement actions appropriately. We generate
summaries of: (a) nonconfonnance quantities and costs, (b)scrap, rework and repair.
actions, (c) supplier perfonnance, (d) product performance in the field and (e) cost of quality.
Then we undel1ake improvement activities to eliminate the nonconformances as far as
possible in a continuous cycle using various problem solving tools.
Activity D
Choose a manufacturing company and a service company. Identify a key activity for
improving quality in each.

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Activity E
Describe the elements of the TQM infrastructure.
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Organized IJroblem solving

Problems have several viewpoint perspectives. Solving the problems in an organized
manner helps realize the maximum benefits. Organized problem solving assists solvers to
analYl!:e the causes thorougWy before jumping into conclusions. It helps generate
maximum ideas from members in a team.
The problem solving process involves understanding the existing process(es). and
collecting facts, figures and information to help define the problem. A problem well
defined is half solved.. Data analysis is done and the assumptions are reexamined.
Techniques are used to generate ideas for developing potential solutions. All the alternative
solutions are evaluated and the best ones are selected and implemented. Table 3.2 shows
the steps involved in creative problem solving along with the corresponding seven quality
Control tools.

Table,3.2: Creative Problem Solving and Seven QC Tools

Problem-solving Step Useful Tools

Understanding the mess Flowcharts

Finding facts (data collection) Checksheets

IdentifYing problems Pareto diagrams Histograms I

r --,
Generating ieas Cause-and-etfect diagrams ITools for I
(or fishbone or Ishikawa diagrams) IAnalvsis
L- :... .J
Developing solutions Scatter diagrams ,
Implementation Control charts I-
-
Source: The Management and (.ontro[l?fQuality byJ. R. Evan.1 and WM.Lindsay

Apart from these tools we have other.

basic tools. such as, brainstorming.
~~ .~ -~ output grouping and stratification to help
guide the problem solving process.
.,
~ Data
~~ ~Data ~
Brainstorming is a group process in
Data which group members express their
. ideas in a.creative atmosphere. All ideas
are acceptable. The objective is to
generate a lot of ideas which can be
further refined in stages to identify the
Fig.J.B: Stratified Data CoUectlon
root causes of problems. Grouping
helps in focusing the problem solving efforts. Sometime problems can be stated in several
different forms by different individuals. These can be grouped under one key topic. This
helps in summarizing rather long lists of problems into short general categories on which
problem solving efforts can be' focused. S(ratification helps in breaking down data into
levels (for .example, data collection by time, shifts, machines, stages etc.). Sometimes it is Tot
more meaningful to analyze stratified data. Figure 3.8 shows an example where we have a
certain process consisting ofthtee machines' that are necessary for processing a product.
Suppose the final output has a wide variation in the quality characteristic that is being
measured. To identify the cause ofthis problem we collect data at different stages in the
production process and analyze them fOr variations.
Figure 3.9 shows simplified versions of the seven QC tools which can be applied to almost
any practical problem. Flowcharts are used to understand the larger process and how each
stage affects the other. They help identify all customers, activities, problem areas and
redundant operations (if any). Critical quality characteristics that need to be controlled at
the appropriate stages are also identified. Thus flowcharts help in identifying quality
problems and areas of productivity improvement. Checksheets help collect and report data
in a systematic manner. We use special data collection forms and use tally marks to collect
the frequency of occurrences of characteristics that affect quality. Figure 3.9 shows a
portion of a checksheet where the frequency data is being collected for a certain quality
dimension of a product. Histograms are graphical representations ofthe variation in a set of
data. In processes they help identify variations and their patterns. The tally marks in the
checksheet are arranged in the form of a histogram to show the distribution ofthe data.

Diameter Tallv
9.8 7fH..
9.9 7fH.. 'fH./.. III "ffH,:"!

10.0 tH.

10.1 frH. "7lfI. "7lfI.11

10.2 //11
Flowchart Checksheet

~~ va
lu
~L
e
nonconformance type
Histogram Pareto Chart

m,

Fishbone Diagram

u~..' ~
YI~:--:I .
---
mean
.. . -'-"'"''''.........- - '"'' -......LCL

x
Scatter Control Chart
Diagram
Ili2Urt' 3.9: The SeveJ! QC Tools for Problem Solving and Prucess Improvement
 --,
While drawing histograms samples have to be designed carefully so that they are
representative of the prOCess (or the population). Pareto diagram is a histogram of data
(e.g. the various types ofnonconformances) arranged according to their descending order of
frequencies. Pareto diagrams help segregate the- major few problem areas from the trivial
many thereby short-listing potential projects for improvement. When tracked over time they
show ~results of improvement prQgrams taking eff~. Cause-and-efJect diagrams help
identify causes for a certain problem (the effe~t): There could be various categories of
causes, such as, man, :nachine, material, environment, method and so on. Through
brainstorming problem causes are listed under the various categories. Once the various
causes have been collected. those having the biggest impact on the problem are identified.
Scatter diagrams help identify the nature of the various cause-effect relationships. Causes
having strong positive and negative correlation with the problems arc identified for the
improvement program. Control charts are graphical tools representing the state of control of
a process. Samples coming out of a process are collected at frequent intervals, their quality
characteristics measu~ed and then plotted on the appropriate chart for analysis. If the
process is in control there is a high probability the sample will fall between the statistically
calculated upper and lower control limits. Walter Shewhart, in thc
1920s at Bell Laboratories, was the first to propose control charts for distinguishing
between common causes (or random variations) and special causes (or non-random
variations). We have control charts both for variable and attribute measures.
Thus organized problem solving involves defining the problem. identifying the root causc
of the problem, identifyin~ the varioGs solutions, selecting the best solution, and
recommending corrective action procedures for either controlling, reducing, or eliminating
problems.
Improving the process
Control means maintaining a
certain level of performance
while improvement means
achieving a higher level of
~j
."
old zone
u;.~ ~: ~.
Sl l
'""~

perfoffilance. Figure 3.10

""
new le"o:loof

shows the difference between ..~

1: of control po:rtimnallco:

......................................
control and improvement. To
monitor the performance,
processes must be 'measurable. .
We use statistical process Time
control (SPC) techniques to Improvement
, measure and analyze variations
in a process. In any process,
the process-performance Fig.3.10: Improvement versus Control
measures fluctuate randomly,
due to common causes, around a certain target value (or average value known as process
mean). However, due to some special cause~ we also have non-random variations taking
place. We use control charts to identify these non-random deviations in a process caused by
the sporadic problems. We get rid of these underlying causes to bring the process under
control. On the other hand, to improve the process wt need to achieve higher performance
levels by reducing t~e random chronic problems (or the common causes of fluctuation)
around new and superior target levels.
Thus we use SPC to detect special causes of process variation from common causes. A
process is said tei be in a state of statistical control when the process variations are due to the
inherent common causes only. Such processes are considered to be stable and predictable
within appropriate limits. A stable process, which also meets the product specifications, can
produce acceptable products. However. attaining stability is not an end in itself. Rather
continuous~v striving to reduce the random (or ,natural) variations in the process is the
main objective of any continuous improvement program. SPC is implemented on the key
processes where the sources of variability have been identified. The operators are trained to
gather preliminary data and prepare and use control charts.
Process Capability Studies
Continuous improvement leads t°1>rocess improvement which means variability reduction
through enhancement of process capability. We will try to understand what process
capability means.
TQM organizations that depend on outside suppliers often expect their suppliers to provide
process capability data along with the parts that are supplied. Process capability quantifies
the amount of variation inherent in the processes producing these parts thereby helping the
customer organization to determine the quality of the parts supplied. If there is excessive
variability in the process, it will have difficulty in meeting the specifications. Thus the
process capability will be low and consequently there would be lot of defectives in the goods
supplied. Similarly within the organization itself, process Capability data of the core
processes are necessary upstream for the designers in determining the design specifications
and tolerances. Designers should not specify tight tolerances if the products are to be
manufactured in processes having excessive variability (i.e., low capability). On the other
hand highly capable processes should not be underutilized (or wrongly utilized) by
specifying loose tolerances.
Figure 3.11 shows processes
.having certain natural
tolerances (or variations) and
how they are performing in
relation to the design
tolerances (or specifications).
Process A is a higWy capable
one because it is well within
the design limits. Process B,
however, has excessive
variability and hence is less
capable of producing
consistent quality products.
Fig.J.ll: Design vel'!!US natural toler.l11ce For process B the natural
tolerance is equal to the
design tolerance. This can be translated into .27 defects in 100 parts that are manufactured.
These are the defectives that lie outside the three sigma limits. Does not seem that bad. But
what if we are producing a million parts? It translates into having 2700 defects per million.
This is not an insignificant number ifthe loss per defect is very high. As some articles report,
it could mean 20,000 wrong drug prescriptions a year, or 15000 babies accidentally dropped
by nurses each year, or 500 incorrect surgical operations each week and so on. Hence
having a design tolerance equal to the process tolerance is not a good idea when we consider
the three sigma limits. Now if six sigma limits correspond with the design limits, then there
is a lot of reduction in the variability of the process. Under such situations we have a highly
capable process which, if centered on the mean, translates into having defectives of only 2
parts per billion. Motorola has made six sigma famous by focusing on product design and
process capability improvements. Motorola's design limit of six sigma with a slight shift in
the process achieved defectives up to 3.4 parts per million (ppm). Both the processes in
Figure 3.11 are centered around the mean value.
Thus, we can improve the process capability either by reducing variations in the process
(thereby changing its natural limits) or by revising the design tolerances (thereby making
changes to the design). To measure the quality of a process (and thereby its products) we
need to know two things: (a) how capable is the process (measured by' Cp index) and (b)
how well centered it is (measured by C k index).
pp
C determines what tile process is capable
of based on the process standard deviation and the total design tolerance.

Tolerance
Cp = 6a

where, tolerance = upper specification limit - lower specification limit

Cpk determines how well the process is centered by comparing the process mean with the
nearest specification limit (NSL).
C = mean-NSL
pk 3a

Note that when the process is centered, C = C p pk a six sigma company C p= C pk

. For
= 2.
Figure 12 shows Process X having a shift in the process average. Even though it is as
capable as Process Y. it has a greater chance of not meeting the USL. Both the processes
are, however:, more capable than Process Z. If process Y has a standard deviation equal to .
7 units. and if the design tolerance is specified as 8 units. then the. process capability Cp =
 8 + 4.2 = 1.9 and Cpk = 4 +
(3*.7) = 1.9. However. for
process X (having same
. standard deviation) the C value will
be lower than r. 9 and

the C will be equal to 1.9.

p

Before discontinuing our

discussion on specification limits
and process performance, let us
briefly look at a traditional
approach. According to this
approach all products meeting
Fi&.3.12: Process Capability
design specifications are equally
design specifications are equally bad (see good and those just missing the
Figure 3.13). This is also known as the
.~ Taguc-hi Loss Function
goalpost syndrome. However, according to
Taguchi the target or the nominal .-\11 produc1s
: .-\1] produc'ts
All products <qually ~~ually good
specification is more important than the bad 1\ ~qually bad
tolerance specifications (or the goal-posts).
Hence, the farther away we are from the ", ..- . ~uali~
target value the greater is the loss in the. LSL Target USL
cns1i
quality of the part. He has represented this loss in <
the form of a quadratic function. This is known as
the Taguchi loss function. Fig.3.13: Tague".i approach versus the traditional
approach
In summary, the voice of the customer if translated properly provides the tolerance
specifications needed in satisfying customer requirements. The process control limits for any'
stable process, provide the limits to the natural variation of a process. This is the voice of
the process (or the characteristic ofthat particular process). These natural variations are due
to common (or random) causes. The capability of this process in meeting the customer

requirements can be quantified in the form of a process capability index (C p).

- - - _ri;;;r;;: q;;ality by i;;easing th~;';;e;;;to;::t
I ! Can be done by tocusing on upstream activiti.:s!
such as marketing, design and engineering
C= T L__________________________________J
Now, ,II
6C rI Improve quality by reducing the denominator, ,!
J Can be done by focusing on downstream
L ! acti~ities such as manufa~1uring, delivery and!
- - - -""S~I::__________________________J
Note that higher the index the better is the process capability. It 1\1CanS that the natuml variations are
too small and the specified tolenmce is large enough for the process to meet the customer requirements
consistently. TQM organizations aim to improve the process capability index by managing both the
numerator and tlle denominator of the above ratio (i.e., by making it an organization wide approach).

3.6 EMPLOYEE INVOLVEMENT AND

EMPOWERMENT
Processes cannot be improved if employees are either not fully involved or fully
empowercd. Employee involvement means each employee contributes toward achieving the
organizational goals. These contributions are valued by the management and they both
recognize that the organization's success depends on total employee involvement. Employee
empowerment means authorization of employees to identifY and solve problems hindering
quality efforts. Process owners need to be empowered by the management to recognize and
solve problems. We discussed how non-random variations in the process lead to root cause
identification of the underlying problem. For effective TQM implementation. the process
owners must be empowered to use organizational resources for eliminating such problems.
Similarly without employee involvement we caml0t have process control tools being
effectively used for quality improvement.
To facilitate employee involvement we need to recognize the potential value of each individual. assign
work where they can be successful. understand their motivation and listen to them. TQM organizations
can initiate formal suggestion schemes which can help them in listening to their employees. These
schemes can be used for collecting quality improvement suggestions. Some companies give cash
awards and incentives for suggestions which get approved. Some ideas may not find approval for
implement.ation. However, it is important for the management to get back to the employee with the
appropriate feedback so that he knows why his ideas got turned down. Listening to the employee
suggestions and getting back to them with a feedback is a must for ensuring employee involvement.
Employee involvement also requires management's willingness to empower subordinates. At the same
ti-,::, empowered employees who are not sensitized to the organizational goals cannot apply their
empowerment effectively. It is the management's responsibility to define the common vision for the
organization so that empowered employees know what their roles are in achieving these objectives.
Empowered employees must be trained prope~ly to take up organized problem solving initiatives.
Organizational resources. if necessary for implementing the suggestions, must be provided to help
them perform better. There could be improvement concepts that cannot be approved by the
management. In such cases the management must give reasons as to why it cannot be implemented.
Thus employee involvement and empowerment are essential to tap the full potential of the workforce
in attaining organizational objectives. Discretionary efforts of empowered emp loyees arc recognized
and tapped for ensuring the success .of continuous improvement programs. Top management must be
committed and involved in setting up systems to support TQM activities. Mechanisms must be in place
so that their subordinates can take up greater responsibiiity.

Activity F
What effect does employee involvement have on motivation? Explain the effect in terms of
motivational theory.
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Activity G
Assume that a company hasj~st committed to change from a traditional style of management
to one b~1sed on TQM. What topics would you include
for
-- Shop floor employee
Front-line supervisors -
Middle-level managers
"""""" ",,"

"........
.
Activity H
Decribe how training in problem solving would improve
- Process control
- Employee motivation,
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3.7 ISO 9000: THE INTERNATIONAL QUALITY

SYSTEM STANDARD
ISO 9000 is a series of standards agreed upon by the Geneva based International
Organization for Standardization (ISO). It was adopted in 1987. It is a set of written
standards laying down a quality system. The basic elements of the system are definedthrough
documentation. The guidelines ensure universally recognized and unifonn quality systems that are
rooted in the customer's requirements. ISO 9000 creates a discipline requiredfor a TQM organization.

Here are some highlights:

. ISO 9000 CERTIFICATION IS ISSUED BY INDEPENDENT ISO-CERTIFIED

AUDITORS.

. REGISTRATION WILL BE INCREASINGLY DRIVEN BY CUSTOMER

REQUIREMENTS & COMPETITIVE PRESSURES, NOT VIA OFFICIAL OR
STATUTORY MANDATE.

. CERTIFICATION ONLY VERIFIES THAT YOUR FACTORY: YOUR

LABORATORY, OR YOUR OFFICE MEETS A SET OF PREDETERMINED (by
ISO) QUALITY MANAGEMENT REQUIREMENTS.
. DOCUMENTATION IS CENTRAL TO ISO 9000 REQUIREMENTS, FOR THE
PURPOSES OF PLANNING, CONTROLLING, TRAINING & PROVIDING
OBJECTIVE EVIDENCE OF COMPLIANCE.
. ISO 9000'IS NOT A PRODUCT STANDARD BUT A QUALITY SYSTEM
STANDARD. IT IS DESIGNED & INTENDED TO APPLY TO VIRTUALLY ANY
PRODUCT OR SERVICE MADE BY ANY PROCESS ANYWHERE IN THE
WORLD.
. ISO 9000 REQUIRES THAT THE QUALITY SYSTEM MONITOR
CONFORMANCE TO REQUIREMENTS.
. OBLIGATES MANAGEMENT TO IMPLEMENT STATISTICAL TECHNIQUES
WHEN & AS APPROPRIATE.
ISO 9000 helps companies that market their products in the European markets. It is essential
for companies (or vendors) supplying to other companies that demand ISO 9000
certification. It is also necessary for companies whose competitors are certified or are
seeking ISO 9000 certification. Companies with geographically scattered facilities & global
operations find it easier to convince customers about their quality standards, if they have
ISO 9000 certification. It is also meant for companies whose transnational parents are
seeking ISO 9000 certification.
ISO 9000 originated from the U.S. Department of Defense (quality) standards. The British
Standards Institute adopted these standards in 1979 for business processes and used them as
its national standard under the name of British Standard 57~0. BS5750 was adopted by ISO
in 1987 and called it ISO 9000 series. These series have undergone revision in 1994.
Here are some hannonized versions ofISO 9000.
HARMONIZED VERSIONS OF ISO 9000

NATION STANDARD
AUSTRALIA AS3900

BELGIUM NBNX50

CANADA CSAZ299

DENMARK DStEN 29000

GERMANY DIN ISO 9000

INDIA IS 14000 SS

SWEDEN ISO 9000

BS 5750
UK COMPONENTS OF
THE ISO 9000 STANDARD
. ISO 9000 is Ii misnomer. Companies do not get an ISO 9000 certification. Instead
they get either an ISO 9()(H. ISO 9002 or ISO 9003 certification.
 Quality System Models:
ISO' 9001
ISO 9002
ISO 9003
for facilities seeking ISO 9000 registration for "contractual" purposes.
Quality Management Guidelines:
ISO 9004
ISO 9004-2
ISO, 9000-3
facilities do pot register to these guidelines. These are mainly guidelines for facilities
wishing to implement ISO 9000.
Guidelines for Auditing:
Audits (or Assessments) to obtain evidence about the performance of the system against
specified requirements.
INTERNAL ASSESSMENTS (by OWN FACILITY PERSONNEL)
SECOND-PARTY ASSESSMENTS (by CUSTOMER)
THIRD-PARTY ASSESSMENTS (by an ACCREDITED THIRD PARTY)
ISO lOOn SERIES (GUIDELINES FOR AUDITING QUALITY SYSTEMS)

ISO 10Q11-1 (1990) "AUDITI,NG"

, .
ISO 10011-2 (1990) "QUALIFICATION CRITERIA FOR QUALITY
SYSTEMS AUDITING"
ISO 10011-3 (1990) "MGMNT OF AUDIT PROGRAMS"

Guidelines for Measuring Equipment:

For many facilities monitoring means taking measurements.
ISO 10012-1 (1992) "QUALITY ASSURANCE REQUIREMENTS FOR
MEASURING EQUIPMENT' (guidance docu)
Supporting Documents:
ISO 9000 "QUALITY MANGMNT & QUALITY ASSURANCE
STANDARDS:
GUIDELINES FOR SELECTION & USE"
"QUALITY VOCABULARY"
ISO 8402
generic guidelines for the application ofthe contractual models
ISO 9000-2
ISO 9000 for Quality Management Purposes:
The Guidance Documents
ISO 9004 and ISO 9004-2 provide a clearer & more graphic illustration of an integrated
quality system than do the contractual models. '

ISO 9004 for MANUFACTURING & SERVICE SECTOR

ISO 9004-2 for SERVICE SECTOR
ISO 9000-3 A-SPECIALIZED SET OF GUIDELINES FOR
APPLYING ISO 9001 TO FACILITIES WHICH
DEVELOP AND MAINTAIN COMPUTER SOFTWARE
ISO 9000 for Contractual Purel)Oses:
The Quality System Models
The following are generic models. They apply to virtually any facility produting any
jtroduct or service for virtually any market. They mostly encourage the use of good
business practices and time proven quality methods. (see Table 3.3)
 ISO 90(11
- most comprehensive
- covers facilities whose process includes
DESIGNIDEVELOPMENT. PRODUCTIbN~
INSTALLATION & SERVICING
J
- cont.1ins 20 sections describing various .J

elements of the quality system

ISO 9002 - more limited
j
1
- applies to facilities making products 4
which arc designed and serviced by others
1

- includes 18 of the 20 sections found in ISO 9001

ISO 9003 - most limited
- applies only to facilities performing
final inspection & test functions
- includeS 12 <of the 20seclions found in
Let us summarize what we have ISO 9(K))
said so far regarding ISO 9000. Stated simply ISO 9(KICI
guides you to "document what you do and then do what you 'documented" It creates <an
awareness and brings in the discipline much needed for continuous improvement and TQM<
ISO 9000 specifies the way a company operates along with its quality standards. service
leVels. delivery performances and so on. It helps a company to be in a customer company's
short-list of supplier firms. The best certification for a company is through a accredited third
party. Certification can take from six to twelve months or morc depending on the companies
existing standards. organization culture and top management commitment.

T-ahlc 3.3: ISO 9001 . 9003 CROSS REFERENCE (Section numbers) -

SECTION COVERAGE ISO 9001 ISO 9002 ISO 9003

Management Responsibility 4.1 4.1 4.1

2 Quality System 4.2 4.2 4.2

3 Contract Review 4.3 4.3
4 Design ControJ 4.4 -
5 Docwnent Control 4.5 4.4 4.3
6 Purchasing 4.6 4.5
7 Control of Customer-Supplied Product 4.7 4.6
8 ProductIdentitication
& Traceability 4.8 4.7 4.4
9 Process Control 4.9 4.8 -
1
Inspection & Tcsting 4.10 4.9 4.5
0
11 Control of Inspection,
Measuring & Test Equipment 4.11 4.10 4.6
12 Inspection & Test Status 4.12 4.11 4.7
13 Control ofNonconfonning Product 4.13 4.12 4.8
14 Corrcctive Action 4.14 4.13 -
15 Handling, Storage.
Packaging and Delivery 4.15 4.14 4.9
16 Quality Records 4.16 4.15 4.10
17 Intemal Quality Audits 4.17 4.16 -
18 Training 4.18' 4.17 4.11
19 Servicing 4.19 -
20 Statistical Techniques 4.20 4.18 4.12
Note: The appendix at the cnd of this chapter gives some more details on ISO l)OOO.
 ..........................................................................,.................................................................................................., ,..................

3.8 SUMMARY
In this unit we have discussed how TQM gained its importance over the century. How
quality systems evolved from a reactionary post-production defect detection oriented
approach to a more proactive defect prevention approach. To drive TQM efforts we realize
the importance of customers and the need for understanding and deploying their
expectations through the organization. We discussed the need for orienting our processes to
be in line with the quality requirements of our customers. Process perfonnance measures
need to be developed for monitoring improvements. Organized problem solving techniques
were discussed to identify major problem areas. We also discussed statistical process control
techniques and process capability studies for ensuring continuous improvement. To make
TQM implementation successful. employee participation and empowerment is essential. We
also discussed the impon:mce ofiSO 9t"") as an International systems standard meant for
assuring quality.

3.9 SELF-ASSESMENT EXERCISES

I. Illustrate how the TQM concept can integrate design. engineering. manufacturing and
services.
2. Explain why quality should be better by following the TQM concept them in a system
that depends on final inspection.
3. What common clements or principles can you identify among (I) the Baldridge criteria
and (2) Deming. Jurian. and Crosby?
List the characteristics of excellent leadership (or TQM.
4.
Describe how sctt ing targets for quality improvement helps to establish a culture and
5.
climate.
6. Gj\'C un cxmnple of a comp:my culture as reflected in a statement of basic beliefs.
Would such a st:nemcnt help to institutionalise a quality culture? If so how'!
7. Dcscribe how leadership by top management is the driven of quality.
K. Choose two functions on activitics (market research. R & D. design. production
planning. procurenlcnt. hum:m resources) and show ho\v information can serve to
integrate them across functional lines.
9. How does infonnation technology dect organisational structure'! Give an example of
how infonnation technology can facilitate TQM'!
10. Why is if important for U.S. firms to comply with ISO 90()O'!
II. Answer thc criticisms tl13t meeting ISO standards will add to production costs.
12. What are the benefits of I SO 9t)(N.) cenification'!
13. Identify the quality cost elements associated with any of the institutions listed
below.
Define each ofthe elelnents. and suggest how each might be quantified in practice: (a) a
uni\'ersity (b) a hospital (c) the local bus line (d) a bank (e) a manufacturer ohny of
these wooden furniture. collon cloth. men's shoe. glass bottle. casting. drugs. (t) a text
~k publisher.
14. B:lsed on your own experience. give one or two ex:unples of situations whcre pareto
:m:llysis might help imprO\c qualit)' or productivit)'.
15. What are the steps in moving from a system affinal inspection to process control'!
16. Choose a non-manufacturing (service) process and show how stutistical quality
control would be'appropriate.
3.9
3.9 SELF-ASSESMENT
SELF-ASSESMENT EXERCISES
EXERCISES
1.
1. Illustrate how the TQM concept can intc:grate design, engineering, manufacturing and services.
lllustrate how the TQM concept can integrate design, engineering, manufacturing and
services.
2. Explain why quality should be better by following the TQM concept than in a system
2. Explain why quality should be better by following the TQM concept than in a system
that depends on final inspection.
that depends on final inspection.
3. What common elements o!" principles can you identify among (I) the Baldridge
3. What common elements o!" principles can you identify among (I) the Baldridge
criteria and (2) Deming, Juram, and Crosby?
criteria and (2) Deming, Juram, and Crosby?
4. List the characteristics of excellent leadership for TQM.
4. List the characteristics of excellent leadership for TQM.
5. Describe how setting targets for quality improvement helps to establish a culture and
5. Describe how setting targets for quality improvement helps to establish a culture and
climate.
climate.
6. Give au exampl~ of a company culture as reflected in a statement of basic beliefs.
6. Give an exatttple of a company culture as reflected in a statement of basic beliefs.
Would such a statem~nt help to institutionalise a quality culture? If so, how?
Would such a statement help to institutionalise a quality culture? If so, how?

3.10
3.10 FURTHER
FURTHER READING
READING
Berk, 1. and Berk, S. (1993) "Total Quality Management: Implementing Continuous
Berk, 1. and Berk, S. (1993) "Total Quality Management: Implementing Continuous
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3.11 APPENDIX:
3.11 APPENDIX: ISO
ISO 9000
9000 QUALITY
QUALITY SYSTEM
SYSTEM
STANDARDS
STANDARDS
.. ISO 9000 FAMILY:
ISO 9000 FAMILY:
ALL THOSE INTERNATIONAL STANDARDS PRODUCED BY THE
ALL THOSE INTERNATIONAL STANDARDS PRODUCED BY THE
TECHNICAL COMMITTEE ISOrrC 176. AT PRESENT THE FAMILY
TECHNICAL COMMITTEE Isorrc 176. AT PRESENT THE FAMILY
COMPRISES:
COMPRISES:
a) All International Standards numbered ISO 9000 through to ISO 9004, including
a) All International Standards nwnbered ISO 9000 through to ISO 9004, including
all parts of ISO 9000 and ISO 9004.
all parts of ISO 9000 and ISO 9004.
b) All International Standards numbered ISO 10001 through 10020, including all
b) All International Standards numbered ISO 1000 I through 10020, including all
parts; and
parts; and
c) ISO 8402
.. c) ISO 8402
SCOPE OF ISO 9000-1 :
SCOPE OF ISO 9000-1 :
CLARIFIES PRINCIPAL QUALITY -RELATED CONCEPTS & THE
CLARIFIES PRINCIPAL QUALITY -RELATED CONCEPTS & THE
DISTINCTIONS
DISTINCTIONS
& INTERRELATIONSHIPS AMONG THEM. .
& INTERRELATIONSHIPS AMONG THEM. .

PROVIDES GUIDANCE FOR THE SELECTION & pSE OF THE ISO 9000
PROVIDES GUIDANCE FOR THE SELECTION & llSE OF THE ISO 9000
FAMILY OF INTERNATIONAL STANDARDS ON QUALITY MGMNT &
FAMILY OF INTERNATIONAL STANDARDS ON QUALITY MGMNT &
QUALITY ASSURANCE.
QUALITY ASSURANCE.
CONCEPT OF A PROCESS is defined.
CONCEPT OF A PROCESS is defined.
.. QUALITY:
SOME TERMS Totality of characteristics
& DEFINITIONS TAKEN or a1\
of entityISO
FROM
SOME TERMS & DEFINITIONS TAKEN FROM ISO 8402: 1994
that8402:
bear on its ability to satisfY staled &
1994
implied needs.