Motorola is one of the companies that successfully implement benchmark. Motorola have tried to benchmark from Dominos Pizza and Federal Express in order to improve their delivery process. At the mid-1980s, Motorola found that the largest number of customers’ complaint about doing business with Motorola was related time issues. These complaints ranged from very long promised delivery time and frequent delinquencies to find the correct person in Motorola to answer questions and the length of time to get phone calls returned. In short, Motorola was perceived as being a difficult and unresponsive company with which to do business.
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After they benchmark from Domino’s Pizza and Federal Express, they have come to a concept of Total Cycle Time, which was defined as the total time elapsed between the expressions of an interest by a customer and receipt of a product or service by that customer. This highlighted that functions in addition to manufacturing is important to meet the expectation of customers. To customers, delays in purchasing parts from suppliers are equal to delay in production line. In the concept of Total Cycle Time, Motorola tend to eliminate the unnecessary work, concentrating only on the essential work. More important, the determination of what is and is not value-added work must come from the customer of the product or service, not the performer of work.
After Motorola has implemented the Total Cycle Time, the cycle time for their manufacturing and engineering process has reduced for typically 60%-70%. This means that a process that usually takes three weeks can be reduced to one week. Besides, for the administrative or service processes, the reduction of cycle time is in a range of 90%-95%.
The benefits of implementing the benchmark are cost reductions and productivity increases. Besides, long term benefits also occur which is improved quality. This has help Motorola to maintain their competitive advantage of high quality product of their company. Consider that it now takes ten weeks to do something. Start it today, and the final result can be inspected ten weeks from today. This is a ten-week cycle time. If the result is examined for potential improvements, these improvements can be tried in the next complete process, starting ten weeks from today and finishing twenty weeks from today. The cycle time is equivalent to a cycle of learning. If, on the other hand, the cycle time was reduced to one week, learning could occur every week. Reduced cycle time reduces the time for a cycle of learning. If the effort is taken to improve the process based on examining the most recent results, shorter learning cycles can result in more rapid quality improvement. As such, reducing cycle time can be the single most potent quality tool available to an organization.
Organization that successfully implemented ERP
Company that successfully implement ERP solution is Phillips & Smith Ltd (PSL). PSL is experiencing huge growth in commodity based products for the consumer market which are generally imported and distributed with limited local manufactured input. With significant growth in export opportunities, there was a need for a new and improved ERP solution that delivered strong sales and distribution functionality. Whilst the existing solution handled manufacturing well, the technology was outdated and was not effectively managing distribution and sales.
PSL’s manufacturing facility is also the cornerstone to its growth in export over the next few years. With this in mind SYSPRO was selected because of its flexibility and broad functionality. PSL don’t wish to compete with China on mass produced item like commodity fire fittings. What it can do, is excel at short run, extremely specialised, high quality, customised work. A great deal of PSL’s manufacturing will move away from long run stock-type items, to job shop and make-to-order products. SYSPRO is strong in this area and PSL felt it could handle the change in their business strategy with ease.
Besides, PSL also required improving visibility of information and modern system architecture to enable easy custom reporting and integration with web-based and sales force automation applications. In addition, the import costing process was lengthy and primarily manual, resulting in inaccurate costing of imported product being updated to inventory. PSL couldn’t drill down into detailed information, or quickly assess an overall picture of business performance. Many reports were custom written and difficult to distribute to users.
SYSPRO is implemented in most of their modules; users are staff from upper management through to factory and store people. Sales people use SYSPRO to access information and facilitate day-to-day decisions. Previously it was difficult to analyze information and PSL had to wait until after month end to get the data. Now, the data is updated daily and it’s available at the touch of a button. Besides, SYSPRO is saving time for the staffs’ day-to-day duties, especially in purchasing and inspection, which is critical to the business. Previously, there was much manual intervention with two different databases storing information and the Purchasing officer manually recording when inspection was required. SYSPRO has automates the process and the percentage of time saving is about 40%-50%.
SYSPRO has help PSL to maintain their competitive advantage in term of their cost. This is because the human resources can be reduced. Company no need to pay so much money for the staffs for them to do the job as the most of the job has been automated and the company can use the money to make improvement on their product or introducing a new product.
Organization that successfully implemented JIT
Toyota is considered by many to the poster child for JIT success. The Toyota production strategy is highlighted by the fact that raw materials are not brought to the production floor until an order is received and this product is ready to be built. No parts are allowed at a node unless they are required for the next node, or they are part of an assembly for the next node. This philosophy has allowed Toyota to keep a minimum amount of inventory which means lower costs. This also means that Toyota can adapt quickly to change in demand without having to worry about disposing of expensive inventory.
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The important factors for Toyota to success in implementing JIT is that the small amounts of raw material inventory must be kept at each node in production, so that production can take place for any product. These parts are then replenished when they are used. Besides, the accuracy of forecasting is important so the correct amount of raw materials can be stocked.
JIT is an inventory strategy implemented to improve the return on investment of a business by reducing in-process inventory and associated carrying costs, JIT can lead to dramatic improvement in a manufacturing organization’s return on investment, quality and efficiency.
With the JIT management, Toyota has dramatically improved its product quality. Using JIT, a company only hold enough inventories for current production, zero defects must be maintained. Once parts are put into production, attention to quality must continue since no finished goods inventory will be held. JIT is generally recognized that the implementation of the system will result significant reduction in inventory. Inventory levels are a key measurement of JIT process.
Toyota has maintained their competitive advantage as a cost leadership after the implementation of JIT system. This is because JIT system produces only quantities necessary to fulfil the demand of the next demand. The quantity is pulled when it is needed, where it is needed and in the exact quantity which is needed. Toyota can make great strides in JIT system by reducing setup and changeover time for machinery. JIT recognizes that any motion which does not add value to a product increases the no value added cost of the product. Reduction of setup and changeover time reduces the no value added costs attached to a product. Besides, one of the benefits of JIT is the elimination of separate raw materials and work-in-process inventory accounts. These accounts are replaced by one account call Raw and in-Process Inventory. All materials and conversion cost are charged to this account. Due to the reduction of in-process inventories, the computation of equivalent unit of production is simplified.
Main features of the Benchmarking
(i) Continuous method of measuring and comparing a firm’s business processes against those of another firm.
(ii) Discover performance gaps between one’s own processes and those of leading forms.
(iii) Incorporate leading firm’s processes into one’s own strategy to fill the gaps and improve performance.
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