Q1. WHAT IS PRODUCTIVITY? WRITE A BRIEF NOTE ON CAPITAL PRODUCTIVITY.

A1. Productivity is a measure of the efficiency of production. Productivity is a ratio of production output to what is required to produce it (inputs). The measure of productivity is defined as a total output per one unit of a total input.

These definitions are short but too general and insufficient to make the phenomenon productivity understandable. A more detailed theory of productivity is needed, which explains the phenomenon productivity and makes it comprehensible. Furthermore is needed operationalization of the concept productivity that makes it a measureable quantity. In explaining and operationalizing a set of production models are used. A production model is a numerical expression of the production process that is based on production data, i.e. measured data in the form of prices and quantities of inputs and outputs.

It is most advisable to examine any phenomenon whatsoever only after defining the entity the phenomenon under review forms part of. Then it will be possible to analyse the phenomenon as part of such an entity. Hence, productivity cannot be examined as a phenomenon independently but it is necessary to identify the entity it belongs to. Such an entity is defined as production process. It goes without saying that productivity is a critical factor of production process in one way or another. To define the way is the object of this article.

The benefits of high productivity are manifold. At the national level, productivity growth raises living standards because more real income improves people's ability to purchase goods and services, enjoy leisure, improve housing and education and contribute to social and environmental programs. Productivity growth is important to the firm because it means that the firm can meet its (perhaps growing) obligations to customers, suppliers, workers, shareholders, and governments (taxes and regulation), and still remain competitive or even improve its competitiveness in the market place.

Capital Productivity

Output per unit of value of fixed production assets (fixed capital). In a socialist economy, capital productivity characterizes the efficiency with which fixed capital stock is used. It is commonly employed in economic analysis and in the formulation of production plans and plans for capital expenditures, both for the national economy as a whole and for individual sectors, production associations, and enterprises.

Data on the gross social product and on national income (from productive activities) are used in calculating capital productivity for the national economy as a whole; for calculating the productivity of individual sectors, data on gross (commodity) or net output are used. In sectors where the output is homogeneous (petroleum, coal, cement), physical units are sometimes

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used in the calculations. Capital productivity is calculated on the basis of the balance valuation of the fixed production assets (depreciation costs included), using either the average value over the year or the value as of the end of the year. Capital productivity is the reciprocal of the capital-output ratio.

Capital productivity differs from one branch of material production to another. Thus, the national income produced in current prices per ruble of fixed production assets in the USSR in 1975 amounted to 45 kopeks in the national economy as a whole, 50 kopeks in industry, 36 kopeks in agriculture, 13.4 kopeks in transport and communications, and 1.18 rubles in construction. Productivity is influenced by a number of factors. Its growth depends primarily on the level of technology, the organizational and technical measures employed in managing production capacities, and the proportion of capital investment earmarked for reconstruction and retooling.

Many factors act to lower productivity. For example, the accelerated development of industrial branches with relatively low capital productivities may lower productivity for industry as a whole. The expansion of production in the country’s eastern and northern regions has the same effect because the cost of fixed capital stock is between 30 and 50 percent higher there than in the European part of the USSR. Various purification facilities included in industrial projects which do not directly influence the volume of production nevertheless raise the total cost of the fixed capital stock, thereby lowering capital productivity. The working of mineral deposits at greater depths requires additional expenditures in fixed capital, again leading to lower productivity. The level of capital productivity and the pattern of changes in productivity depend in large measure on technical and economic indicators describing the utilization of machinery and equipment and especially on increases in the equipment shift index.

Capital productivity has fluctuated over the years because it is simultaneously influenced by a variety of factors. Thus, capital productivity in industry in the USSR rose through the 1950’s and declined between 1961 and 1965. During the eighth five-year plan (1966–70), productivity showed no change with regard to gross output but increased with regard to net output. During the ninth five-year plan, there was a slight decline (by 3 percent), caused primarily by construction programs launched in the country’s eastern and northern regions, by the deterioration of geological and mining conditions in the existing mineral deposits, and by difficulties encountered in supplying light industry and the food processing industry with agricultural raw materials because of extremely adverse weather conditions over a number of years. Improved use of fixed capital stock is reflected not only in higher capital productivity but also in higher labor productivity, lower production costs, and improved product quality. Thus, if outlays for additional fixed capital stock can be recouped in the period prescribed by norms, the investment is economically warranted even if capital productivity is slightly lowered. The raising

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of capital productivity leads to increased efficiency of production. Five-year plans make provision for better use of fixed capital stock and for the development and implementation of programs to raise capital productivity in various sectors of the national economy, at enterprises, and in organizations.

Q2. DESCRIBE BRIEFLY THE AUTOMATED FLOW LINES.

A2. When several automated machines are linked by a transfer system which moves the parts by using handling machines which are also automated, we have an automated flow line. After completing an operation on a machine, the semi finished parts are machine in the sequence determined by the process requirements a flow line is established. The parts at various stages from raw material to ready for fitment or assembly are processed continuously to attain the required shapes or acquire special properties to enable them to perform desired functions. The materials need to be moved, held, rotated, lifted, positioned etc. for completing different operations.

Sometimes, a few of the operations can be done on a single machine with a number of attachments. They are moved further to other machines for performing further operations. Human intervention may be needed to verify that the operations are taking place according to standards. When these can be achieved with the help of automation and the processes are conducted with self regulation, we will have automated flow lines established. One important consideration is to balance times that different machines take to complete the operations assigned to them. It is necessary to design the machines in such a way that the operation times are the same throughout the sequence in the flow of the martial. In fixed automation or hard automation, where one component is manufactured using several operations and machines it is possible to achieve this condition – or very nearly. We assume that product life cycles are sufficiently stable to invest heavily on the automated flow lines to achieve reduced cost per unit. The global trends are favouring flexibility in the manufacturing systems. The costs involved in changing the set up of automated flow lines are high. So, automated flow lines are considered only when the product is required to be made in high volumes over a relatively long period. Designers now incorporate flexibility in the machines which will take care of small changes in dimensions by making adjustments or minor changes in the existing machine or layout. The change in movements needed can be achieved by programming the machines. Provision for extra pallets or tool holders or conveyors are made in the original design to accommodate anticipated changes. The logic to be followed is to find out whether the reduction in cost per piece justifies the costs of designing, manufacturing and setting up automated flow lines. Group Technology, Cellular Manufacturing along with conventional Product and Process Layouts are still resorted to as they allow flexibility for the production system. With methodologies of JIT and Lean Manufacturing finding importance and relevance in

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the competitive field of manufacturing, many companies have found that well designed flow lines suit their purpose well. Flow lines compel engineers to put in place equipments that balance their production rates. It is not possible to think of inventories (Work

In Process) in a flow line. Bottlenecks cannot be permitted. By necessity, every bottleneck gets focused upon and solutions found to ease them. Production managers see every bottleneck as an opportunity to hasten the flow and reduce inventories. However, it is important to note that setting up automated flow lines will not be suitable for many industries

Automated Assembly Lines : All equipments needed to make a finished product are laid out in such a way as to follow the sequence in which the parts or subassemblies are put together and fitted. Usually, a frame, body, base will be the starting point of an assembly. The frame itself consists of a construction made up of several components and would have been ‘assembled’ or ‘fabricated’ in a separate bay or plant and brought to the assembly line. All parts or subassemblies are fitted to enable the product to be in readiness to perform the function it was designed to. This process is called assembly.

Methodologies of achieving the final result may vary, but the basic principle is to fit all parts together and ensure linkages so that their functions are integrated and give out the desired output. Product Layouts are designed so that the assembly tasks are performed in the sequence they are designed. You will note that the same task gets repeated at each station continuously. The finished item comes out at the end of the line

The material goes from station 1 to 5 sequentially. Operation 2 takes longer time, say twice as long. To see that the flow is kept at the same pace we provide two locations 2a and 2b so that operations 3, 4 an 5 need not wait. At 5, we may provide more personnel to complete operations. The time taken at any of the locations should be the same. Otherwise the flow is interrupted. In automated assembly lines the moving pallets move the materials from station to station and moving arms pick up parts, place them at specified places and fasten them by pressing, riveting, screwing or even welding. Sensors will keep track of these activities and move the assemblies to the next stage. An operator will oversee that the assemblies are happening and there are no stoppages. The main consideration for using automated assembly lines is that the volumes justify the huge expenses involved in setting up the system.

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Rapid Prototyping : Prototyping is a process by which a new product is developed in small numbers so as to determine the suitability of the materials, study the various methods of manufacture, type of machinery required and to develop techniques to overcome problems that my be encountered when full scale manufacture is undertaken. Prototypes do meet the specifications of the components that enter a product and performance can be measured on those. It helps in confirming the design and any shortcomings can be rectified at low cost. If serious defects or problems arise during the manufacture, a thorough change in design or even its replacement may be considered. To arrive at decisions to make use of the advantages stated above, it is important that the prototypes are made within the shortest possible time. Rapid prototyping facilitates this. It uses virtual designs from Computer Aided Design – CAD or animation modeling which transforms dimensional data to 3dimensional views. The physical space of the product is amenable to have cross sections made.

Cross sections taken at very close positions gives thin layers which enable the generation of a solid model of the designed product. The data that is thus created helps build a solid model exactly as per the drawings. Any shape can be generated in this method. Advanced technologies like – SLS ( Selective Laser Sintering), FDM (Fused Deposition Modeling), LOM (Laminated Object Manufacture), EBM (Electronic Beam Melting) are some of Rapid Prototype Modeling Processes.

Since the basis data about the product is already available in CAD, the above processes can produce models in a matter of a few days. Conventional machines like lathes, milling machines, grinding machines, EDM (Electro Discharge Machining) also help in the production of prototypes. Because of their advantages Rapid Prototyping is being increasingly used. A bimonthly

magazine TCT Magazine – calling the Rapid Prototyping as Time Compressing Techniques – is dedicated to the publication of latest developments in this field as researched and developed by practitioners around the world

Q3. WHAT IS MEANT BY TOTAL QUALITY MANAGEMENT? MENTION THE 14 POINTS OF DEMING’S APPROACH TO MANAGEMENT.

A3. Total quality management or TQM is an integrative philosophy of management for continuously improving the quality of products and processes. TQM functions on the premise that the quality of products and processes is the responsibility of everyone who is involved with the creation or consumption of the products or services offered by an organization. In other words, TQM capitalizes on the involvement of management, workforce, suppliers, and even customers, in order to meet or exceed customer expectations. Considering the practices of TQM as discussed in six empirical studies, Cua, McKone, and Schroeder (2001) identified the

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nine common TQM practices as cross-functional product design, process management, supplier quality management, customer involvement, information and feedback, committed leadership, strategic planning, cross-functional training, and employee involvement.

1. Create Constancy of PurposeThe customer is the most important part of transport service. Customer demandsare always changing. It is mistake to presume that services offered at present cankeep an organization solvent and ahead of competition. The transport agencymust create a constancy of purpose by putting the customer first.The transportation organization’s highest priority must be to provide the besttransportation services to its community at the lowest cost possible. The organizationis responsible to both its community and its own workforce in maintaining a high level of excellence and value. Therefore, the transportation organization muststrive to maximize efficiency and effectiveness through constant improvement.To create a constancy of purpose necessitates the development of a mission statementfor the transport corporation. The plan-do-check-act (P-D-C-A) cycle allowsthe statement to evolve as customer demand grows and changes. This flexibilitypermits innovation, which is achieved by putting resources into research, education,and maintenance of the transport system. Innovation generates new andimproved services. For example, use of electric- and gas-based vehicles can reducepollution in urban areas (Shridharan 2002). The corporate sector should lobby forelectric-and gas-based vehicles for urban areas. A real concern is the availabilityof a wide network of service stations supplying gas or replacing discharged batterieswith charged ones. Gas and battery industries can work together with theautomakers industry to provide solutions with sustained business opportunitiesfor themselves.

2. Adopt New PhilosophyIn today’s economic age, businesses cannot survive with commonly accepted levelsof mistakes, defects, people on the job who do not understand the job and areafraid to ask questions, and management’s failure to understand problems withinthe corporation.Acceptable defective services and poor work performance are among the mostsevere roadblocks to better quality. Everyone working in a transport corporationcan find ways to promote quality and efficiency, to improve all aspects of thetransportation system, and to promote excellence and personal accountability.Employees, with the support of top management, should adopt a new work philosophyby meeting in cross-functional teams or quality circles to set priorities forstaff training. The major benefit of the new philosophy is the creation of a continuouslearning environment. The common thread in adopting a new philosophyis meeting the needs of those who pay for and use the services provided by thetransportation organization.

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3. Cease Dependence on Mass InspectionLasting quality comes not from inspection, but from improvements in the system.To achieve best economy and productivity, transport agencies should know whatquality they are delivering. The organization’s managers must be knowledgeablein the statistical control of quality. They must proceed under the new philosophy:the right service quality characteristics must be built in without dependence on inspection. The statistical control of the process provides the only way for transportoperators to build quality service and the only way to provide managers evidenceof uniform, repeatable quality and cost of service. One of the first steps formanagers is to learn enough about the statistical control of quality to access thequalification of an operator by talking with them in statistical language.

4. End the Practice of Awarding Business on Price Tag AloneToday’s requirements for transport service suppliers are uniformity and reliability.Price has no meaning without a measure of quality. Without adequate measuresof quality, business drifts to the lowest bidder, low quality and high cost beingthe inevitable results. Instead, the organization should seek the best quality ina long-term relationship with a single supplier for only one item. The results ofimplementing this strategy are longer lasting items and greater quality service atno additional cost. Transport agencies should select suppliers that can providestatistical evidence of quality. Since transport organizations tend to think of theirsuppliers as “partners” in their operations, they must consider joint planning forimprovement and joint improvement activities to serve customers better thantheir competitors.

5. Improve the System of Transport ServiceQuality can be built into all transportation activities and services and can beassured by continuous examination to identify potential improvements. Thisrequires close cooperation between those who provide the services and those whoconsume them. Improvement is not a one-time effort. Management is obligated to look continually for ways to reduce waste and improve quality. Every worker and every departmentmust commit to constant improvement. Quality circles/cross-functionalteams work together to improve transport service delivery. These groups may usebasic quality tools to identify issues that need attention. For example, which faultsare local and which ones belong to the system? The responsibilities should begiven where this fault belongs. The use of statistical quality tools helps to identifytrouble spots and their sources. Quality circles/teams continuously work to meetthe needs of the people they serve, resulting in lower costs and improved qualityof transport operations and services. Thus, improved transport service can resultfrom focusing not only on achieving present performance levels, but more importantly,by breaking through existing performance levels to new, higher levels.

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6. Institute TrainingQuality circles help the human resource division to select training programs thatincrease the job skills of both main and support staff. Training must be totallyreconstructed. Statistical methods must be used to learn when training is finishedand when further training would be beneficial. On-the-job quality improvementtraining ensures that every employee has a thorough understanding of customerneeds for transport services.

7. Institute LeadershipThe leader creates opportunities for all employees (good and bad performers) tointeract and identify opportunities for improvement. The job of supervisor is notto tell employees what to do or to punish but to lead them toward better job performance.Leading consists of helping workers do a better job and of using learningby objective methods for those employees in need of individual help. Supervisorsshould be trained continually. They should receive training in synergetic or cooperativesupervision and work in supportive teams to improve instructions andlearning. Leadership training will help to introduce new best practices in transportationservices to satisfy customer needs.

8. Drive Out FearImproved performance cannot occur unless employees in the transport organizationfeel comfortable to speak truthfully and feel confident that their suggestionswill be taken seriously. Most workers are afraid to ask questions or to reporttrouble. Suggesting new ideas is risky; people fear punitive assignments or otherforms of discrimination or harassment. To counter this fear, total quality encouragesapplying new methods, creating new solutions, and implementing innovativeexperiments. The economic loss from fear is appalling. To ensure better qualityand productivity, employees must feel secure. In a secure environment, workersare not afraid to express ideas not afraid to ask questions, not afraid to ask for furtherinstructions, and not afraid to report vehicles out of order, poor lighting, orother working conditions that impair quality service in transportation.

9. Breakdown Barriers Between DepartmentsAccording to Deming, people can work superbly in their respective departments,but if departmental goals conflict, the company could face ruin. Lack of coordinationor disintegration between departments can lead to costly rework, unnecessaryduplication of effort, and a heavy loss in resources. Quality Function Deployment (QFD) and quality circles improve cross-communication and encourage brainstorming among members of the transport organization. QFD helps to capture the “voice of the customer” and convert it into service design requirements. This strategy is not only a powerful tool for integratingdepartments of the transportation organization, but it also strongly promotes theprinciple of “do it right the first time” (Srividya and Metri 2000). Sharing a unifiedpurpose and direction helps to improve the transport organization’s services.

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10. Eliminate Slogans, Exhortations, and Targets for the WorkforceSlogans, like those encouraging zero accidents or zero defects, and posters reinforcingthe slogans do not help workers do a better job. Slogans, posters, and othersuch devices are management’s lazy way out. A better approach is to provide themeans to the desired ends. For instance, the transportation staff prevents wasteand reduces accidents by managing its own quota-free environment. If the transportorganization’s focus is on improving its work processes, service quality willincrease, efficiency and effectiveness will rise, and nonvalue-added activities willdiminish.

11. Eliminate Numerical QuotasNumerical quotas will not help workers do a better job. In fact, numerical quotascost as much as loss in terms of poor materials and mistakes. In many factories atthe end of the day, workers are idle the last hour or two. They have completed theirquotas for the day and are waiting for the whistle to blow; they do no more workyet they cannot go to home. Numerical goals can even produce a negative effectbecause they generate frustration. Therefore, the quota system will not help theorganization’s competitive position or contribute to continuous improvement.Instead of numerical quotas, hard work, pride, service, and growth should beemphasized. Removing quotas encourages employees to apply new ideas to oldtasks. For instance, bus transportation schedules and stop locations are nowplanned to meet the community’s needs. The goal is to fulfill the needs of thecommunity, not to increase the number of people transported.

12. Remove Barriers to Pride of WorkmanshipThe transport industry cannot function properly without employees who areproud of their output and who feel respected as individuals and professionals. Forexample, inspection simply identifies defects but does not explain how to preventthem. Intrinsically, people want to provide service without defects. Leadershipand continuous system improvement make this possible. To achieve pride inwork, superiors must listen to the transport staff/employees and transport staffmust listen to the recipients of their service (i.e., the community). Often, staff andcommunity do not have the same knowledge base or purpose of work. Communicatingthe organization’s mission and achieving respect among the staff and thecommunity is one of the greatest challenges facing transport organizations.

13. Encourage Education and Self-improvement for All EmployeesThe transport organization needs not only good people, but people who aregrowing through education and life experiences as well. Both management andemployees must continuously acquire knowledge to be of service to the community.They should be educated in new methods, including teamwork and statisticaltechniques. For instance, transport employees may receive training on ISO 14000

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for providing environmental-friendly transport services to the community.

14. Take Action to Accomplish TransformationThe essence of TQT is an organization-wide focus on meeting the needs of thosewho use and/or pay for transport services. Every activity, every process, and everyjob in the transport organization can be improved. Everyone within the organizationcan be given an opportunity to understand the TQT program and their individualrole within that effort. Improvement teams that include broad representationthroughout the organization can help ensure success of initial efforts andcreate opportunities for cross-disciplinary dialog and information exchange.Implementation of Deming’s 14 points requires a special top management team,such as a quality council, with a plan of action to carry out the transport agency’squality mission.

Q4. DESCRIBE BRIEFLY THE PROJECT MONITORING AND CONTROL.

A4. Project Management is the discipline of planning, organizing, securing, and managing resources to achieve specific goals. A project is a temporary endeavor with a defined beginning and end (usually time-constrained, and often constrained by funding or deliverables), undertaken to meet unique goals and objectives,typically to bring about beneficial change or added value. The temporary nature of projects stands in contrast with business as usual (or operations), which are repetitive, permanent, or semi-permanent functional activities to produce products or services. In practice, the management of these two systems is often quite different, and as such requires the development of distinct technical skills and management strategies.

The primary challenge of project management is to achieve all of the project goals and objectives while honoring the preconceived constraints. Typical constraints are scope, time, and budget. The secondary—and more ambitious—challenge is to optimize the allocation of necessary inputs and integrate them to meet pre-defined objectives.

Monitoring and controlling

Monitoring and controlling process group processes. Monitoring and controlling consists of those processes performed to observe project execution so that potential problems can be identified in a timely manner and corrective action can be taken, when necessary, to control the execution of the project. The key benefit is that project performance is observed and measured regularly to identify variances from the project management plan.

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Monitoring and controlling includes

Measuring the ongoing project activities ('where we are'); Monitoring the project variables (cost, effort, scope, etc.) against the project

management plan and the project performance baseline (where we should be); Identify corrective actions to address issues and risks properly (How can we get on track

again); Influencing the factors that could circumvent integrated change control so only

approved changes are implemented.

In multi-phase projects, the monitoring and control process also provides feedback between project phases, in order to implement corrective or preventive actions to bring the project into compliance with the project management plan.

Project maintenance is an ongoing process, and it includes

Continuing support of end-users Correction of errors Updates of the software over time

Monitoring and controlling cycle

In this stage, auditors should pay attention to how effectively and quickly user problems are resolved.

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Over the course of any construction project, the work scope may change. Change is a normal and expected part of the construction process. Changes can be the result of necessary design modifications, differing site conditions, material availability, contractor-requested changes, value engineering and impacts from third parties, to name a few. Beyond executing the change in the field, the change normally needs to be documented to show what was actually constructed. This is referred to as change management. Hence, the owner usually requires a final record to show all changes or, more specifically, any change that modifies the tangible portions of the finished work. The record is made on the contract documents – usually, but not necessarily limited to, the design drawings. The end product of this effort is what the industry terms as-built drawings, or more simply, “as built.” The requirement for providing them is a norm in construction contracts.

When changes are introduced to the project, the viability of the project has to be re-assessed. It is important not to lose sight of the initial goals and targets of the projects. When the changes accumulate, the forecasted result may not justify the original proposed investment in the project.

Q5. WRITE A BRIEF NOTE ON JUST-IN-TIME (JIT).

A5. Just in time (JIT) is a production strategy that strives to improve a business return on investment by reducing in-process inventory and associated carrying costs. Just-in-time production method is also called the Toyota Production System. To meet JIT objectives, the process relies on signals or Kanban between different points in the process, which tell production when to make the next part. Kanban are usually 'tickets' but can be simple visual signals, such as the presence or absence of a part on a shelf. Implemented correctly, JIT focuses on continuous improvement and can improve a manufacturing organization's return on investment, quality, and efficiency. To achieve continuous improvement key areas of focus could be flow, employee involvement and quality.

Quick notice that stock depletion requires personnel to order new stock is critical to the inventory reduction at the center of JIT. This saves warehouse space and costs. However, the complete mechanism for making this work is often misunderstood.

For instance, its effective application cannot be independent of other key components of a lean manufacturing system or it can "...end up with the opposite of the desired result." In recent years manufacturers have continued to try to hone forecasting methods such as applying a trailing 13 week average as a better predictor for JIT planning; however, some research demonstrates that basing JIT on the presumption of stability is inherently flawed.

The philosophy of JIT is simple: inventory is waste. JIT inventory systems expose hidden cost of keeping inventory, and are therefore not a simple solution for a company to adopt. The company must follow an array of new methods to manage the consequences of the change.

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The ideas in this way of working come from many different disciplines including statistics, industrial engineering, production management, and behavioral science. The JIT inventory philosophy defines how inventory is viewed and how it relates to management.

Inventory is seen as incurring costs, or waste, instead of adding and storing value, contrary to traditional accounting. This does not mean to say JIT is implemented without awareness that removing inventory exposes pre-existing manufacturing issues. This way of working encourages businesses to eliminate inventory that does not compensate for manufacturing process issues, and to constantly improve those processes to require less inventory. Secondly, allowing any stock habituates management to stock keeping. Management may be tempted to keep stock to hide production problems. These problems include backups at work centers, machine reliability, and process variability, lack of flexibility of employees and equipment, and inadequate capacity.

In short, the Just-in-Time inventory system focus is having “the right material, at the right time, at the right place, and in the exact amount”-Ryan Grabosky, without the safety net of inventory. The JIT system has broad implications for implementers.

Transaction cost approach

JIT reduces inventory in a firm. However, a firm may simply be outsourcing their input inventory to suppliers, even if those suppliers don't use Just-in-Time (Naj 1993). Newman (1994) investigated this effect and found that suppliers in Japan charged JIT customers, on average, a 5% price premium.

Environmental concerns

During the birth of JIT, multiple daily deliveries were often made by bicycle. Increased scale has required a move to vans and lorries (trucks). Cusumano (1994) highlighted the potential and actual problems this causes with regard to gridlock and burning of fossil fuels. This violates three JIT waste guidelines:

Time—wasted in traffic jams

Inventory—specifically pipeline (in transport) inventory

Scrap—fuel burned while not physically moving

Price volatility

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JIT implicitly assumes a level of input price stability that obviates the need to buy parts in advance of price rises. Where input prices are expected to rise, storing inventory may be desirable.

Quality volatility

JIT implicitly assumes that input parts quality remains constant over time. If not, firms may hoard high-quality inputs. As with price volatility, a solution is to work with selected suppliers to help them improve their processes to reduce variation and costs. Longer term price agreements can then be negotiated and agreed-on quality standards made the responsibility of the supplier. Fixing up of standards for volatility of quality according to the quality circle

Demand stability

Karmarker (1989) highlights the importance of relatively stable demand, which helps ensure efficient capital utilization rates. Karmarker argues that without significantly stable demand, JIT becomes untenable in high capital cost production.

Supply stability

In the U.S., the 1992 railway strikes caused General Motors to idle a 75,000-worker plant because they had no supply.

Benefits

Main benefits of JIT include:

Reduced setup time. Cutting setup time allows the company to reduce or eliminate inventory for "changeover" time. The tool used here is SMED (single-minute exchange of dies).

The flow of goods from warehouse to shelves improves. Small or individual piece lot sizes reduce lot delay inventories, which simplifies inventory flow and its management.

Employees with multiple skills are used more efficiently. Having employees trained to work on different parts of the process allows companies to move workers where they are needed.

Production scheduling and work hour consistency synchronized with demand. If there is no demand for a product at the time, it is not made. This saves the company money, either by not having to pay workers overtime or by having them focus on other work or participate in training.

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Increased emphasis on supplier relationships. A company without inventory does not want a supply system problem that creates a part shortage. This makes supplier relationships extremely important.

Supplies come in at regular intervals throughout the production day. Supply is synchronized with production demand and the optimal amount of inventory is on hand at any time. When parts move directly from the truck to the point of assembly, the need for storage facilities is reduced.

Minimizes storage space needed. Smaller chance of inventory breaking/expiring.

Q6. WHAT IS VALUE ENGINEERING? EXPLAIN ITS SIGNIFICANCE.

A6. Value engineering (VE) is a systematic method to improve the "value" of goods or products and services by using an examination of function. Value, as defined, is the ratio of function to cost. Value can therefore be increased by either improving the function or reducing the cost. It is a primary tenet of value engineering that basic functions be preserved and not be reduced as a consequence of pursuing value improvements.

In the United States, value engineering is specifically spelled out in Public Law 104-106, which states “Each executive agency shall establish and maintain cost-effective value engineering procedures and processes."

Value engineering is sometimes taught within the project management or industrial engineering body of knowledge as a technique in which the value of a system’s outputs is optimized by crafting a mix of performance (function) and costs. In most cases this practice identifies and removes unnecessary expenditures, thereby increasing the value for the manufacturer and/or their customers.

VE follows a structured thought process that is based exclusively on "function", i.e. what something "does" not what it is. For example a screw driver that is being used to stir a can of paint has a "function" of mixing the contents of a paint can and not the original connotation of securing a screw into a screw-hole. In value engineering "functions" are always described in a two word abridgment consisting of an active verb and measurable noun (what is being done - the verb - and what it is being done to - the noun) and to do so in the most non-prescriptive way possible. In the screw driver and can of paint example, the most basic function would be "blend liquid" which is less prescriptive than "stir paint" which can be seen to limit the action (by stirring) and to limit the application (only considers paint.) This is the basis of what value engineering refers to as "function analysis".

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Value Engineering helps your organization in :

Lowering O & M costs Improving quality management Improving resource efficiecy Simplifying procedures Minimizing paperwork Lowering staff costs Increasing procedural efficiency Optimizing construction expenditures Developing value attitudes in staff Competing more sucessfully in marketplace

Value Engineering helps you to learn how to :

Improve your career skills Separate "Symptoms" from "problems" Solve "root cause" problems and capture opportunities Become more competitive by improving "benchmarking" process Take command of a powerful problem solving methodology to use in any situation

How is Value Engineering Applied?

The technique of Value Engineering is governed by a structured decision making process to assess the value of procedures or services. Whenever unsatisfactory value is found, a Value Management Job plan can be followed. This procedure involves the following 8 phases :

1. Orientation 2. Information 3. Function 4. Creativity 5. Evaluation 6. Recommendation 7. Implementation 8. Audit

Where can I find more about Value Engineering?

The best and most convenient way to learn the technique of Value Engineering and its application, is by becoming a member of Indian Value Engineering Society (INVEST).

INVEST is a professional society established in October, 1977 and dedicated to the advancement of Value Engineering through education. This provides a better understanding of the principles, methods and concepts of value technology. INVEST has members in virtually every state in India. It maintains a network of chapters throughout the country and provides its members with additional educational opportunities at the local level.

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