Purchasing is a function of procuring goods and services from sources external to the organization. In the words of Alford and Beaty,”Purchasing is the procuring of materials, supplies, machine tools and services required for the equipment, maintenance, and operation of a manufacturing plant.” According to yet another authority,” Purchasing is the procuring of materials, tools, stores and services required for the manufacture of a product, maintenance of the machines, and un-interrupted running of the manufacturing plant in a manner that guarantees the marketing of the company’s products in the quantities desired, at the time promised and at the competitive price consistent with quality desired.” Purchasing in essence is the task of buying goods of right quality, in the right quantities, at the right time and at a right price. Since raw materials, components and services account for a significant as much as 50 to 70% proportion of the company’s total Continue reading
Operations Management Concepts
Analyzing Toyota’s Recipe for Success – The Toyota Way
The fundamental reason for Toyota’s success in the global marketplace lies in the so called “Toyota way”. The Toyota Way is not only about technology and efficiency, it is about doing the right thing for the company, its employees, the customer and the society as a whole. In other words, the incredible success of the Toyota way is a direct result of operational excellence. Toyota has turned operational excellence into a strategic weapon. This operational excellence is only in part based on tools and quality improvement methods made famous by Toyota in the manufacturing world, such as JIT, Kaizen, and one-piece-flow. Although such techniques helped spawn the “lean manufacturing” revolution, tools and techniques are no secret weapon for transforming a business. Toyota’s continued success at implementing this tools stems from a deeper business philosophy based on its understanding of people and human motivation. Its success is ultimately based on its Continue reading
Kaizen and Kanban in Lean Manufacturing
Kaizen Kaizen is broadly interpreted as the Japanese term for continuous improvement, although it is perhaps more accurately translated as a form of control. It applies to all aspects of organisational output, and can thus be linked to both Toyota Production System (TPS) and types of waste, as well as the means of introducing and managing basic employee working conditions. One of the most popular tools of Kaizen is a Kanban, which of itself translates to differing types of organisational process control, which collectively lead to greater organisational production efficiency. The overarching principle of Kaizen, and Kanban within that, is to create a ‘pull through’ organisational process, as opposed to push through. Historically, for many manufacturing organisations, understandably, they would place the manufacturing process itself at the heart of operations, and would strive to make this element as efficient as possible working towards metrics such as overall equipment Continue reading
Concept of Supplier Relationship Management (SRM)
An important feature of a world class organisation is the way the organisation has been able to develop and link its suppliers with its external processes. Supplier relationship management can be defined as the relationship that exists between the supplier and its buyer based on long term commitments and trust with the ultimate aim to maximize the potential value of the relationship. This will include the management of different forms of supply relationships such as partnership, joint venture and vertical integration. The critical importance of supplier relationship types to achieve supply chain competitiveness can be viewed under the following headings: The effective use of strategic partnership Typical traditional short term relationship is characterize by irregular or ‘one-off’ transactions that give rise to supply uncertainties, difficulties in choosing suppliers, and is price oriented making this type of relationship unreliable and unsupported. Organisations can move from this type of relationship towards a Continue reading
The Toyota Production System (TPS) – Meaning and Methods
A key success factor that enabled Toyota to become the world’s most successful automobile company is its famous manufacturing method, the so called Toyota Production System (TPS). The evolution of the Toyota production system approach can be traced to the period immediately following the second world war when the economic outlook was uncertain and human, natural and capital resources were in limited supply. Against this background, the most important objective of the Toyota System has been to increase production efficiency by consistently and thoroughly eliminating waste. This concept developed between 1948 and 1975 by Toyota’s former president Toyoda Kiichiro and later by Ohno Taiichi and Eiji Toyoda represents a highly efficient production system that is similar to that of Henry Ford several decades earlier, although Toyota’s approach to both product development and distribution proved to be much more consumer-friendly and market-driven. The main objective of TPS is to produce goods Continue reading
Operations Management – Definition, Elements and Objectives
An operation may be defined as the process of changing inputs into outputs thereby adding value to some entity. Right quality, right quantity, right time and right price are the four basic requirements of the customers and as such they determine the extent of customer satisfaction. And if these can be provided at a minimum cost, then the value of goods produced or services rendered increases. Operations management is concerned with managing the resources that directly produce the organisation service and products. The resources are generally consist of people, material, technology and information but may go wider than this. These resources are brought together by a series of processes so that they are utilized to deliver the primary service or product of the organization. Thus operation management is concerned with managing inputs (resources) through transformation processes to deliver outputs (service or products). The objectives of production management are “to Continue reading