Business and Quality Improvement Programs:
After studying this chapter you
should be able to understand the basic concepts underlying:
- Just in time (JIT) manufacturing
system.
- Total quality management (TQM).
- Business process reengineering
(BPR).
- Theory of constraints (TOC).
The last two decades have been a period of
tremendous upheaval and change in the business environment, including the
explosive growth of the internet.
Competition in many industries has become
world wide in scope, and the space of innovation in products and services
has accelerated. This has been good news for consumers, since intensified
competition has generally led to lower prices, higher quality and more
choices. However, the last two decades have
been a period of wrenching change for many businesses and their employees.
Many managers have learned that cherished ways of doing business don't work
any more and that major changes must be made in how
organizations are
managed and in how work gets done. These changes are so great that some
observers view them as a second industrial revolution. This
revolution is having a profound effect on the practice of
managerial
accounting - as we will see through the rest of the text. First, however. it
is necessary to have an appreciation of the ways in which organizations are
transforming themselves to become more competitive. Since the early 1980s,
many companies have gone through several waves of Business and Quality improvement programs,
starting with
Just-In-Time (JIT) and passing onto
Total Quality Management (TQM),
Process reengineering, and various other management
programs-including in some companies The
Theory of Constrains (COT), When
properly implemented, these improvement programs can enhance quality, reduce
cost, increase output, eliminate delays in responding to customers, and
ultimately increase profits. They have not, however, always been wisely
implemented, and there is considerable controversy concerning the ultimate
value of each of these programs. Nevertheless, the current business
environment cannot be properly understood without some appreciation of what
each of these approaches attempts to accomplish. Each is worthy of extended
study, but we will discuss them only in the broadest terms the details are
best handled in
operations management courses.
- Just-in-Time (JIT) Manufacturing
and Inventory Control System:
Traditionally manufacturers have forecasted demand for their products into
the future and then have attempted to smooth out production to meet that
forecasted demand. At the same time, they have also attempted to keep
everyone as busy as possible producing output so as to maximize "efficiency"
and (hopefully) reduce costs. Unfortunately, this approach has a number of
major drawbacks including large inventories, long production times, high
defect rates, production obsolescence, inability to meet delivery schedules,
and (ironically) high costs. Non of this is obvious-if it were, companies
would long ago have abandoned this approach......
Click here to read full article
- KANBAN:
A KANBAN system is a means to achieve
just in time (JIT)
production. It works on the basis that each process on a production line
pulls just the number and type of components the process requires, at just
the right time. The mechanism used is a KANBAN card. This is usually a
physical card but other devices can be used Two types of such cards are
usually used...... Click here to read full article.
-
Total Quality Management
(TQM) System:
Total quality management (TQM) is an improvement program which provides tools
and techniques for continuous improvement based on facts and analysis; and if
properly implemented, it avoids counterproductive organizational infighting......
Click here to read full article.
- Six Sigma:
Motorola popularized the use of stringent quality standards more than 30
years ago through a trade marked quality improvement program called six
sigma...... Click here to read full article.
- Business Process Reengineering (BPR):
Business Process reengineering
(BPR)
is a more radical approach to improvement than
total quality management (TQM).
Instead of tweaking the existing system in a series of incremental
improvements, in process reengineering a business process is diagramed in
detail, questioned, and then completely redesigned to eliminate unnecessary
steps, to reduce opportunities for errors, and to reduce costs......
Click here to read full article
- Theory of Constraints (TOC):
Theory of constraints (TOC) is a
management approach
that emphasizes the importance of managing constraints. A
constraint or
bottleneck is any thing that prevents you from getting more of what you
want. Study of constraints or bottlenecks, keeping their record and taking
necessary steps to improve them is also known as bottleneck
accounting...... Click here to read
full article.
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