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Throughout the 21 century, manufacturing industry will be asked to respond to an increasingly demanding set of threats and opportunities. The pressures will place demands on management to review their manufacturing strategies, and to optimise their use of tools and resources. Every company will have to strive for excellence in every area of their operations in order to be more competitive. Operations Management is 'the processes by which a range of inputs are converted into the products and services required by the customers of the organisation.' (Naylor, 1996) 'Just-In-Time' (JIT) is one of the operations management methods which 'aims to meet demand instantaneously, with perfect quality and no waste'. (Bicheno, 1997) This report evaluates a current operational process and provides some recommendations particular on JIT based on Fight Motorcycle Manufacturing.
In a telephone communication, the Section Leader of Marketing Department at Flight Motorcycle Manufacturing said that:' Flight Motorcycle Manufacturing is located in the countryside of North-east of China. Early established in 1982 as a small-scale enterprise, it only had workshops and dozens of workers and only produced some simple goods for local markets. After 20-year struggle, it has been strengthened so much that it has a fixed asset of over 8 million RMB as well as over 300 employees while covering 15,000 square meters in total and over 10,000 square meters in construction. It specializes in the production of all kinds of motorcycles with the annual turnover of 30,000. Nowadays, Flight has become a big motorcycle manufacturer which sells products to all over the country. Their products are greatly appreciated by all customers.' (Personal Communication, 2003)
steel, leather, rubber
operators, supervisors, maintenances,
cash, bank loan, mortgage
time, money, labour, material
price, forecast, advertisement
THE TRANSFORMATION PROCESS
Knowledge applying Information using Managing
With China's entry into WTO, more and more foreign motorcycle companies began to invest in China. At the same time, more and more motorcycles from different countries were bought into China's market. The competitive environment put so much pressure on Fight that they have to improve their operational process.
Facility management is 'an integrated approach to maintaining, improving and adapting the buildings of an organisation in order to create an environment that strongly supports the primary objectives of that organisation'. It is one of the fastest growing professional disciplines in the world. (Barrett, 1995) JIT has shown its important effect on facility management. Flight should pay attention to the facility management in order to improve the productivity.
Lay-out is 'the arrangement of a facility to provide working, service, reception, storage and administrative areas'. (Bicheno, 1997) A good lay out will improve decrease the time waste therefore improve the productivity. The machine tools in Flight are 'Cell Layout' which allocates dissimilar machines into cells to work on products that have similar shapes and processing requirements. The overall objective is to gain the benefits of product layout in work-shop production. These benefits include:
Better human relations. Cells consist of a few workers who form a small work team; a team turns out complete units of work.
Improved operator expertise. Workers see only a limited number of different parts in a finite production cycle, so repetition means quick learning.
Less in-process inventory and material handling. A cell combines several production stages, so fewer parts travel through the shop.
Faster production setup. Fewer jobs mean reduced tooling and hence faster tooling changes.
However, there are also some disadvantages using this type of lay-out because it needs a large plant which can be very costly. Furthermore, Flight keeps some distance between each cell. It looks nice but not sensible for JIT production because operators have to walk a long distance to communicate with others. The machine tools lay-out should near to each other so that the operator walking distance can be shorted. Some of machine tools need to be blocked up in order to make sure every machine tool is on the same level.
There are two types of maintenance: reactive maintenance and preventative maintenance. The former type means the maintenance staff wait in the office until the operators ask them for help; the latter one means the maintenance staff go to the workshops to see if they can help. It is obvious that the preventative maintenance is more flexible and more efficient. Unfortunately, the maintenance in Flight is the reactive one.
The cutting instruments easily become blunt. There is maintenance specialist in charge of keeping them. The operators have to find him and ask him to change a new one when the old one cannot work well. Much time is wasted in this process. Some operators are lazy and irresponsible may not change it unless it is too dull, which will badly affect the quality of the products. To avoid this problem, the conservator should put the cutting instrument into a box beside machine tools so that the operators can change it by themselves whenever they need to. The conservator should also collect the dull cutting instruments regularly and send them to repair. Furthermore, the cutting instruments must be changed regularly. It is an important measure to ensure the products quality, reduce the cutting instruments' depreciation and extend their lives.
There are some maintenance men in Flight who are in chare of repairing machinery. They have their own office and the operators have to go to find them and ask them to repair the machine if it is broken down, which waste much time. The maintenance men should walk around with the repair tools in the workshop and stay with the operators. In this way, the machinery problem can be found earlier and repaired as soon as possible. Furthermore, they must check the machines regularly and take good care of them. This is of importance to the operations of machinery.
Labour management can be considered to consist of two parts: supervisory management and personnel administration. (Lockyer, 1984) Supervisory management is exerted by the departmental head and his superiors in day-to-day relationships - the leadership exerted by the supervisor; and the other the direction of the conditions of work of the employee. Personnel administration is generally accepted to cover the employment and manpower planning, education, training and development, industrial relations, welfare, wages, health and safety.
Flight takes the office as the centre, all of the problems must be solved though the office because all the staff except operators are in the office. Therefore much time is wasted because the operators have to go to the office if something happens. The supervisors for each workshop also stay in the office and make their rounds to the workshop every one hour, which is difficult for monitoring. They should locate at the workshop itself in order to ensure the JIT production. There are three recommended policies can be used:
Take the workshops as the centre. The other departments of Flight must pay much attention to the workshop. They must take satisfying the demand of workshops as their most important responsibility. To solve the problems in workshops must be taken into the first place. Especially the technicians and managers must go to the workshops regularly and take necessary action.
Take the operators as the core. Flight must provide good service to the operators to ensure the 'just-in-time' production. They should drive the operators to create the valuation every second. The situation that the operators look everywhere to find somebody to solve the problems must be changed.
Take the supervisor as the leader. Flight can empower the supervisor of the workshops to organise, communication and control their workshops. They are familiar with the environment and staff, so that they can organise them together to solve the problems effectively and efficiently.
Facing the increased competition, Flight has introduced a new performance related reward system for the managers and the staff. It will encourage a performance orientated culture within the company and increase the motivation. Furthermore, once rewards linked to individual objectives, it will help drive these objectives. However, it also has some disadvantages such as possible subjectivity of measurement of performance against competencies. These disadvantages are even more seriously effect the Flight because the lack of communication. The culture in flight is very paternalistic and this performance related reward system was introduced very top-down. Some of employees especially the non-carrier staff felt difficult to accept it because they cannot see their future at Flight anymore. The supervisors in workshops are unsatisfied either because their workload is increased. In this case, Flight must improve the communication with all the staff in order to implement the new performance related reward system.
Written instructions and announcements by notices on boards, internal memoranda, notice in pay-packet, company magazines, letters to each employees
Large meeting of employees addressed by a senior manager.
Staff training - let every staff see their future in Flight
Establish a Human Resource department to help the supervisor
A reasonable benchmarking system needs to be set up.
The procedure management is one of the most important parts in operations management. Good procedure management will obviously increase the work efficiency and therefore improve the productivity. The current production procedure in Flight is separate production. That means each machine tool works separately. Every operator make their own products and the last working procedure is to decide how many and what kind of components will be used. Many materials and much time are wasted in the procedure because some components may be not enough and some may be too many. They have to wait until everything has been done. This lack of planning always embarrasses the producing process. Furthermore, because Flight is manufacturing in large batches for economy of scale, lack of planning can be very dangerous and lead to bad failure. Usually, the longer the machine or process is operating, the higher the utilisation. But in Flight this particular case, the effective utilisation is reduced by their poor planning. Large batches will cause excess inventory, space, lead times and handling cost. Large batches of components, material and product hide problems. They require lots of administration to keep track of them and they seriously reduce flexibility. Large batches lead to high cost and low quality. In this case, the following recommendations are provided:
One flow production. That means only one production is made on each machine tool. In this way the operators can easily control the production quality and avoid wasting material. The working capital will also be reduced because the production on process is reduced. Also, it can help to build up a good relationship between the operators. The problems in procedure can be easily discovered and therefore the work efficiency will improved.
Batch size reduction. In the attack on waste, reduce batch size to a suitable level is usually an extremely important issue. Once batches start to reduce, visibility and material flows can be established in the workplace and the manufacturing operation ca become much more flexible by changing more frequently in line with demand or customer orders. Of course, reducing batch sizes requires more changeovers, excellent quality control and synchronisation of all operations.
Set up reduction. Once the need to reduce batch sizes is recognised, it inevitably leads to the requirement to make more changeovers. The important aspect of set-ups is to understand that the changeover time represents the time from the last good piece to the next good piece. (Chase & Aquilano, 1998)
'Kanban' system. Kanban is believed to be Japanese for JIT, actually it is Japanese for cards and is an approach that Japanese companies developed to plan production based on the pull concept. The operator on latter working procedure need to pick up the components with Kanban from the operator on former working procedure. The number of components must be the same with that on Kanban. The former operator cannot consignment unless he received Kanban. This is a very simple and effective way of planning shop floor activities. Operations can start with large batch sizes and be gradually reduced. The inventory level is controlled by the number of Kanban authorised for each components.
This is the fundamental bedrock of JIT. Without high levels of quality there is no JIT. As more and more waste is taken out of production, the need improved quality in design, supply and processing sharply increases. The manager in Flight have realised the importance of quality control and have adopted some measures to ensure the production quality. There are some quality control inspectors who are in charge of testing productions. All the productions in Flight are strictly tested and have a 'Check Out' mark after passing the test. The productions that cannot pass the test have to be returned and reworked. This inspection system aims to prevent faulty products form reaching the customer and has a certain good effect on ensuring the quality performance. But, because this quality inspection is only at the end of the process, the rejects have to be more than expected. It wastes much time because the operators have to check every accessory to find out the problem and rework them. This approach cannot improve quality and it certainly does not add value to the products. According to the concept of quality, its evolution is as figure 2 below:
Figure 2. Evolution of the concept of Quality
Total Quality Management
It is obvious that the quality management is just at the beginning of step. A total quality management system needs to be established. For Flightï¼Œquality has to be attacked:
At Source - raw materials and components
This is the base of TQM. The quality of raw materials and components should be check before they are manufactured.
At Design - design to be made right first time
TQM is concerned with changing attitudes and skills so that the culture becomes on of preventing failure - dong the right things, right first time, every time.
In Process - through process control
There is a transformation process at every supplier-customer interface and each process in each area can be analysed by examination of inputs and outputs, which will determine the action necessary to improve quality. Flight should management the process according to the customer feedback.
In people - responsibility for quality where it matters with the operators.
Makes a public commitment from the top to develop all employees to achieve its business objectives
Regularly reviews the training needs of all employees
Takes action to train and develop individuals on recruitment and throughout their employment
Evaluates the investment in training and development to assess achievement and improve future effectiveness
Establish a self-check system and clear the responsibility.
Furthermore, three managerial components of TQM need to be noticed:
A Quality Assurance System
A documented quality system followed by everyone
Consistency can only be achieved if for every product/service - the same material, equipment, methods and procedures are used in exactly the same way, every time.
Audit and review are necessary to ensure that: people involved are operating according to the documented system; the system still meet the requirement; improvements in processes lead to changes in procedures and documentation
Quality Tools and Techniques
Check sheets/tally charts
Cause and effect analysis and brainstorming
Process improvement or solving complex problems should be tackled through teams
Groups can become teams when they understand the needs of the task, the individuals and the team.
Builds up trust
Improves communications/free exchange of ideas, knowledge, data and information.
PROCUREMENT AND DISTRIBUTION MANAGEMENT
Procurement and distribution management includes purchasing and supply management, physical distribution management, logistics, materials management and supply chain management. The main objective of purchasing is to 'obtain materials of the right quality in the right quantity from the right source delivered to the right place at the right time at the right price.' (Source, handout) In a e-mail communication, the Section Leader of the Marketing Department at Flight said that: 'According to the market research, the annual demands for Flight Motorcycle are 30,000. Flight operates 7 days week except 5 days holiday during the Spring Festival. The annual workdays are 360. So they place an order for material every 52 days (360/7) and each order is for 4,300 (30000/7) motorcycles. There are two staff are in charge of purchasing. Flight has to pay them more than Â¥13,000 for their accommodations, transportations and communications. The rent for warehouse is Â¥52,000. '(Personal communication)
It is obvious that the above calculation is too simple and has not considered the purchasing process. According to analysis of the figure 1, they should order before 25 days. If the safety inventory is 40, each order should be (25*30000/360) +40â‰ˆ250. Having taken into the safety inventory account, the material can be ordered a month before using.
Figure 3. Ordering Process
with the suppliers
Suppliers preparing the products
Furthermore, the demands for motorcycle are not always the same during the whole year. Figure 2 below shows that the peak time for sale is January. Because people can receive bonus for the New Year and some of them will spend it on purchasing a motorcycle. However, the demands are sharply reduced after New Year.
Figure 4. Monthly Motorcycle Demands
Accumulative Total Demands
In this case, a new order schedule needs to be drawn up. Flight can order more material for January and less for the other months. Also, they can rent the previous large warehouse only for January and February. A small warehouse can be rent for the other months. Furthermore, the number of staff for purchasing materials can be reduced to one except January. In these ways, Flight can save a large amount of money. A new order schedule is recommended as figure 3 below:
Figure 5. Ordering Plan and Stock Control
Opening finished products in store
Closing finished products in store
In the JIT environment, parts are produced or procured on a continuous basis. The ultimate goal is to produce or procure every part, everyday, at a steady rate. However, this goal is not always attainable; therefore, material planning and control software should be designed to support al environments, raging from the classic Manufacturing Requirement Planning (MPR) lot production to one which facilitates a quick and synchronous flow of material though the plant. (Galloway, 1998)
The following features should be included in advanced MRP software packages:
Electronic communication with suppliers
Backflushing and deduct-point relief
Revised performance measurement capabilities
Having identified the problems in the operational process at Flight, some recommendations have been provided. The recommendation clarifies actions to be taken, how much will be cost, by when and time-table against which to monitor progress.
Progress is to be monitored via the senior management meeting. It will be necessary to review and re-plan on a regular basis, as unforeseen factors become apparent.
The details of action plan are provided in Appendix. It should be noticed that the JIT implementation plan can only be started when the business and customer needs have been properly understood and defined.
The management identified a number of external and internal forces that would occur, and recognised that Just In Time could be used to meet these. According to the analysis of the operational process at Flight, some problems have been identified and recommendations have been provided included time-table and costs. These management processes and recommendations are particular relevant to the JIT production. The recommendations are expected to result in satisfy the operations management requirement in order to make a successful business. Future operations management will be explored once the JIT are successfully operating in Flight.
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Bicheno, J (1997) Operations Management. Oxford: Blackwell Business
Chase, B. and Aquilano, J. (1998) Production and Operations Management (8th edition). Boston: McGraw-Hill Inc.
Galloway, R. L. (1998) Principles of Operations Management (2nd edition.) London: International Thomson Business Press.
Lockyer, K. (1984) Production Management (4th edition). London: Pitman Publishing Limited.
Naylor, J. (1996) Operations Management. London: Financial Times Management.