OPERATIONS STARTEGY: ASSIGBNMENT 1

SECTION A:
1) WRITE SHORT NOTES ON
A) JUST IN TIME INVENTORY MANAGEMENT
B) COMPUTER AIDED DESIGN

A) Definition:
Just-in-Time (JIT) inventory management is the process of ordering and receiving inventory for
production and customer sales only as it is needed and not before. This means that the company does
not hold safety stock and operates with low inventory levels. This strategy helps companies lower their
inventory carrying costs.
Just-in-time inventory management is a cost-cutting inventory management strategy though it can lead
to stockouts. The goal of JIT is to improve return on investment by reducing non-essential costs.
Examples:
Just-in-time inventory management is used by Toyota Manufacturing as its inventory management
system.
B) Computer-aided design (CAD) is a computer technology that designs a product and documents
the design's process. CAD may facilitate the manufacturing process by transferring detailed
diagrams of a products materials, processes, tolerances and dimensions with specific
conventions for the product in question. It can be used to produce either two-dimensional or
three-dimensional diagrams, which can then when rotated to be viewed from any angle, even
from the inside looking out. A special printer or plotter is usually required for printing
professional design renderings.
The concept of designing geometric shapes for objects is very similar to CAD. It is called
computer-aided geometric design (CAGD).
CAD is also known as computer-aided design and drafting (CADD)
CAD is used as follows:
1. To produce detailed engineering designs through 3-D and 2-D drawings of the physical
components of manufactured products.
2. To create conceptual design, product layout, strength and dynamic analysis of assembly and the
manufacturing processes themselves.
3. To prepare environmental impact reports, in which computer-aided designs are used in
photographs to produce a rendering of the appearance when the new structures are built.
CAD systems exist today for all of the major computer platforms, including Windows, Linux, Unix and
Mac OS X. The user interface generally centers around a computer mouse, but a pen and digitizing
graphic tablet can also be used. View manipulation can be accomplished with a spacemouse (or
spaceball). Some systems allow stereoscopic glasses for viewing 3-D models.

Most U.S. universities no longer require classes for producing hand drawings using protractors and
compasses. Instead, there are many classes on different types of CAD software. Because hardware and
software costs are decreasing, universities and manufacturers now train students how to use these high-
level tools. These tools have also modified design work flows to make them more efficient, lowering
these training costs even further.

2) How does an operation manager get the advantage of quality management in making
Business decisions?

Operations management is a multi-disciplinary field that focuses on managing all aspects of an
organization's operations. The typical company carries out various functions as a part of its operation. The
dividing of a company's activities into functional categories occurs very early on, even in a company
formed and operated by a single individual. Most companies make a product of some kind or produce a
salable service. They must also carry out a sales and marketing function, an accounting function, and an
administrative function to manage employees and the business as a whole. Operations management
focuses on the function of providing the product or service. Their job is to assure the production of a
quality good and/or service. They apply ideas and technologies to increase productivity and reduce costs,
improve flexibility to meet rapidly changing customer needs, assure a safe workplace for all employees,
and when possible assist in assuring high-quality customer service.
For the most part, the title "Operations Manager" is used in companies that produce a tangible good
manufacturers on the whole. In service-oriented businesses, the person responsible for the operations
manager role is often called by another name, one that addresses the service being offered. Examples
include project manager, consultant, lawyer, accountant, office manager, datacenter manager, etc.
KEY ISSUES IN OPERATIONS
As an organization develops plans and strategies to deal with the opportunities and challenges that arise in
its particular operating environment, it should design a system that is capable of producing quality services
and goods in the quantities demanded and in the time frames necessary to meet the businesses
obligations.
Designing the System
Designing the system begins with product development. Product development involves determining the
characteristics and features of the product or service to be sold. It should begin with an assessment of
customer needs and eventually grow into a detailed product design. The facilities and equipment used in
production, as well as the information systems needed to monitor and control performance, are all a part
of this system design process. In fact, manufacturing process decisions are integral to the ultimate success
or failure of the system. Of all the structural decisions that the operations manager makes, the one likely
to have the greatest impact on the operation's success is choice of the process technology. This decision
answers the basic question: How will the product be made?
Product design is a critical task because it helps to determine the characteristics and features of the
product, as well as how the product functions. Product design determines a product's cost and quality, as
well as its features and performance. These are important factors on which customers make purchasing
decisions. In recent years, new design models such as Design for Manufacturing and Assembly (DFMA)
have been implemented to improve product quality and lower costs. DFMA focuses on operating issues
during product design. This can be critical even though design costs are a small part of the total cost of a
product, because, procedures that waste raw materials or duplicate effort can have a substantial negative
impact on a business's operating profitability. Another innovation similar to DFMA in its emphasis on
design is Quality Functional Deployment (QFD). QFD is a set of planning and communication routines that
are used to improve product design by focusing design efforts on customer needs.
Process design describes how the product will be made. The process design decision has two major
components: a technical (or engineering) component and a scale economy (or business) component. The
technical component includes selecting equipment and selecting a sequence for various phases of
operational production.
The scale economy or business component involves applying the proper amount of mechanization (tools
and equipment) to make the organization's work force more productive. This includes determining: 1) If
the demand for a product is large enough to justify mass production; 2) If there is sufficient variety in
customer demand so that flexible production systems are required; and 3) If demand for a product is so
small or seasonal that it cannot support a dedicated production facility.
Facility design involves determining the capacity, location, and layout for the production facility. Capacity is
a measure of an company's ability to provide the demanded product in the quantity requested by the
customer in a timely manner. Capacity planning involves estimating demand, determining the capacity of
facilities, and deciding how to change the organization's capacity to respond to demand.
Facility location is the placement of a facility with respect to its customers and suppliers. Facility location is
a strategic decision because it is a long-term commitment of resources that cannot easily or inexpensively
be changed. When evaluating a location, management should consider customer convenience, initial
investment necessary to secure land and facilities, government incentives, and operating transportation
costs. In addition, qualitative factors such as quality of life for employees, transportation infrastructure,
and labor environment should also be taken under consideration.
Facility layout is the arrangement of the workspace within a facility. It considers which departments or
work areas should be adjacent to one another so that the flow of product, information, and people can
move quickly and efficiently through the production system.
Implementation
Once a product is developed and the manufacturing system is designed, it must be implemented, a task
often more easily discussed than carried out. IF the system design function was done thoroughly, it will
have rendered an implementation plan which will guide activities during implementation. Nonetheless,
there will inevitably be changes needed. Decisions will have to be made throughout this implementation
period about tradeoffs. For example, the cost of the originally planned conveyor belt may have risen. This
change will make it necessary to consider changing the specified conveyor belt for another model. This, of
course, will impact upon other systems linked to the conveyor belt and the full implications of all these
changes will have to be assessed and compared to the cost of the price increase on the original conveyor
belt.
Planning and Forecasting
Running an efficient production system requires a great deal of planning. Long-range decisions could
include the number of facilities required to meet customer needs or studying how technological change
might affect the methods used to produce services and goods. The time horizon for long-term planning
varies with the industry and is dependent on both complexity and size of proposed changes. Typically,
however, long-term planning may involve determining work force size, developing training programs,
working with suppliers to improve product quality and improve delivery systems, and determining the
amount of material to order on an aggregate basis. Short-term scheduling, on the other hand, is concerned
with production planning for specific job orders (who will do the work, what equipment will be used,
which materials will be consumed, when the work will begin and end, and what mode of transportation
will be used to deliver the product when the order is completed).
Managing the System
Managing the system involves working with people to encourage participation and improve organizational
performance. Participative management and teamwork are an essential part of successful operations, as
are leadership, training, and culture. In addition, material management and quality are two key areas of
concern.
Material management includes decisions regarding the procurement, control, handling, storage, and
distribution of materials. Material management is becoming more important because, in many
organizations, the costs of purchased materials comprise more than 50 percent of the total production
cost. Questions regarding quantities and timing of material orders need to be addressed here as well when
companies weigh the qualities of various suppliers.
BUILDING SUCCESS WITH OPERATIONS
To understand operations and how they contribute to the success of an organization, it is important to
understand the strategic nature of operations, the value-added nature of operations, the impact
technology can have on performance and the globally competitive market place.

3) Describe the principles of the Maruti Car Production System and how it is a departure
from traditional production systems.

The Toyota Production System (TPS) is an integrated socio-technical system, developed by Toyota, that
comprises its management philosophy and practices. The TPS organizes manufacturing and logistics for
the automobile manufacturer, including interaction with suppliers and customers. The system is a major
precursor of the more generic "lean manufacturing." Taiichi Ohno, Shigeo Shingo and Eiji Toyoda
developed the system between 1948 and 1975.
Originally called "just-in-time production," it builds on the approach created by the founder of Toyota,
Sakichi Toyoda, his son Kiichiro Toyoda, and the engineer Taiichi Ohno. The principles underlying the TPS
are embodied in The Toyota Way.
The main objectives of the TPS are to design out overburden (muri) and inconsistency (mura), and to
eliminate waste (muda). The most significant effects on process value delivery are achieved by designing
a process capable of delivering the required results smoothly; by designing out "mura" (inconsistency). It
is also crucial to ensure that the process is as flexible as necessary without stress or "muri" (overburden)
since this generates "muda" (waste). Finally the tactical improvements of waste reduction or the
elimination of muda are very valuable. There are seven kinds of muda that are addressed in the TPS.
1. Waste of over production (largest waste)
2. Waste of time on hand (waiting)
3. Waste of transportation
4. Waste of processing itself
5. Waste of stock at hand
6. Waste of movement
7. Waste of making defective products
The elimination of waste has come to dominate the thinking of many when they look at the effects of
the TPS because it is the most familiar of the three to implement. In the TPS many initiatives are
triggered by inconsistency or over-run reduction which drives out waste without specific focus on its
reduction.
The underlying principles, called the Toyota Way, have been outlined by Toyota as follows:
Continuous improvement
Challenge (We form a long-term vision, meeting challenges with courage and creativity to
realize our dreams.)
Kaizen (We improve our business operations continuously, always driving for innovation and
evolution.)
Genchi Genbutsu (Go to the source to find the facts to make correct decisions.)
Respect for people
Respect (We respect others, make every effort to understand each other, take responsibility and
do our best to build mutual trust.)
Teamwork (We stimulate personal and professional growth, share the opportunities of
development and maximize individual and team performance.)
External observers have summarized the principles of the Toyota Way as:
Long-term philosophy
1. Base your management decisions on a long-term philosophy, even at the expense of short-term
financial goals.
The right process will produce the right results
1. Create continuous process flow to bring problems to the surface.
2. Use the "pull" system to avoid overproduction.
3. Level out the workload (heijunka). (Work like the tortoise, not the hare.)
4. Build a culture of stopping to fix problems, to get quality right from the first.
5. Standardized tasks are the foundation for continuous improvement and employee
empowerment.
6. Use visual control so no problems are hidden.
7. Use only reliable, thoroughly tested technology that serves your people and processes.
Add value to the organization by developing your people and partners
1. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others.
2. Develop exceptional people and teams who follow your company's philosophy.
3. Respect your extended network of partners and suppliers by challenging them and helping them
improve.
Continuously solving root problems drives organizational learning
1. Go and see for yourself to thoroughly understand the situation
2. Make decisions slowly by consensus, thoroughly considering all options; implement decisions
rapidly;
3. Become a learning organization through relentless reflection and continuous improvement .
The Toyota production system has been compared to squeezing water from a dry towel. What this
means is that it is a system for thorough waste elimination. Here, waste refers to anything which does
not advance the process, everything that does not increase added value. Many people settle for
eliminating the waste that everyone recognizes as waste. But much remains that simply has not yet
been recognized as waste or that people are willing to tolerate.
People had resigned themselves to certain problems, had become hostage to routine and abandoned
the practice of problem-solving. This going back to basics, exposing the real significance of problems and
then making fundamental improvements, can be witnessed throughout the Toyota Production System.
4) Explain the relationship between production rate and cycle time and their interpretation
in synchronous production. What does it mean for the workstations in a process to be balanced?

A workstation is a special computer designed for technical or scientific applications. Intended primarily
to be used by one person at a time, they are commonly connected to a local area network and run
multi-user operating systems. The term workstation has also been used loosely to refer to everything
from a mainframe computer terminal to a PC connected to a network, but the most common form
refers to the group of hardware offered by several current and defunct companies such as Sun
Microsystems, Silicon Graphics, Apollo Computer, DEC, HP and IBM which opened the door for the 3D
graphics animation revolution of the late 1990s.
Workstations offered higher performance than mainstream personal computers, especially with respect
to CPU and graphics, memory capacity, and multitasking capability. Workstations were optimized for the
visualization and manipulation of different types of complex data such as 3D mechanical design,
engineering simulation (e.g. computational fluid dynamics), animation and rendering of images, and
mathematical plots. Typically, the form factor is that of a desktop computer, consist of a high resolution
display, a keyboard and a mouse at a minimum, but also offer multiple displays, graphics tablets, 3D
mice (devices for manipulating 3D objects and navigating scenes), etc. Workstations were the first
segment of the computer market to present advanced accessories and collaboration tools.
The increasing capabilities of mainstream PCs in the late 1990s have blurred the lines somewhat with
technical/scientific workstations. The workstation market previously employed proprietary hardware
which made them distinct from PCs; for instance IBM used RISC-based CPUs for its workstations and
Intel x86 CPUs for its business/consumer PCs during the 1990s and 2000s. However by the late 2000s
this difference disappeared, as workstations now use highly commoditized hardware dominated by large
PC vendors, such as Dell and HP, selling Microsoft Windows or GNU/Linux systems running on x86-64
architecture such as Intel Xeon or AMD Opteron CPUs.






OPERATIONS STARTEGY: ASSIGBNMENT 2
SECTION A:
1) What is a product life cycle (PLC)? Explain each phases with an example of automobile sector in India.
The product life cycle (PLC)The stages (introduction, growth, maturity, decline) that a product may go
through over time. It includes the stages the product goes through after development, from
introduction to the end of the product. Just as children go through different phases in life (toddler,
elementary school, adolescent, young adult, and so on), products and services also age and go through
different stages. The PLC is a beneficial tool that helps marketers manage the stages of a products
acceptance and success in the marketplace, beginning with the products introduction, its growth in
market share, maturity, and possible decline in market share. Other tools such as the Boston Consulting
Group matrix and the General Electric approach may also be used to manage and make decisions about
what to do with products. For example, when a market is no longer growing but the product is doing
well (cash cow in the BCG approach), the company may decide to use the money from the cash cow to
invest in other products they have rather than continuing to invest in the product in a no-growth
market.
The product life cycle can vary for different products and different product categories. The following
figure illustrates an example of the product life cycle, showing how a product can move through four
stages. However, not all products go through all stages and the length of a stage varies. For example,
some products never experience market share growth and are withdrawn from the market.


2) Manufacturer is always under the dilemma in producing customized products. Why?

Mass Customization is the new paradigm that replaces mass production, which is no longer suitable for
todays turbulent markets, growing product variety, and opportunities for e-commerce. Mass
customization proactively manages product variety in the environment of rapidly evolving markets and
products, many niche markets, and individually customized products sold through stores or over the
internet.
1
Mass customizers can customize products quickly for individual customers or for niche markets at
better than mass production efficiency and speed. Using the same principles, mass customizers can
Build-to-Order both customized products and standard products without forecasts, inventory, or
purchasing delays.
These practical methodologies are taught through Dr. Anderson's in-house seminars and implemented
through his leading-edge consulting.
The M.C. Spectrum
There is a whole spectrum of ways that Mass Customization methodologies can benefit companies. At
the most visible end of the spectrum, companies can mass customize products for individual customers.
The most well know category of individual customization relates to products that people wear (clothing,
shoes, glasses) as well as bicycles and pagers.
Further along the spectrum is niche market customization. For instance, a company that makes
telephones has only a few customers (telephone companies) who want several dozen models in many
colors all with specific phone company logos. Exporters have to deal with many niche market products,
usually a different set of products for each country exported; and even if the differences seem minor,
the sheer variety of SKUs (stock keeping units) can have significant cost and flexibility implications.
Almost all companies could benefit from expansion into niche markets if they could do it efficiently.
At the other end of the spectrum are companies that have tremendous varieties of "standard"
products, for instance, industrial suppliers of valves, switches, instruments, electrical enclosures, or any
company with a catalog over a half an inch thick. As with product customization, there is a great
contrast between how mass producers and mass customizers manufacture a variety of standard
products. The mass-producer has the dilemma of trying to keep large enough inventories to sell a wide
variety of products from stock or alternatively using the slow, reactive process of ordering parts and
building products in very small batches after receipt of orders.
The mass-customizer can use flow manufacturing and CNC programmable machine tools to quickly
and efficiently make different products in a "batch size of one" -- either customized products or any
standard product from a large catalog.
The Need for Speed
Mass customized goods compete with standard goods which may be available right now at stores or
dealers. The biggest appeals of mass customization are being able to (1) provide customized goods, (2)
quickly resupply stores with standard products that have just been sold with built-to-order
replacements, and (3), for industrial suppliers, to be able to respond on-demand to assemblers pull
signals, which may be part of the spontaneous supply chain for the first two cases. For all of these speed
is imperative to minimize mass customizations biggest vulnerability: waiting.
In order to deliver products fast, mass customizers need flow manufacturing to make products fast in
small quantities and a spontaneous supply chain which can assure spontaneous availability of materials
and make parts on-demand.
Mass Customization Depends on Flow Manufacturing
The trend to smaller batches, approaching one, is what is pushing savvy manufacturers toward flow
manufacturing. Mass Customization relies on flow manufacturing to provide the batch-size-of-one
capability. Whether manufacturing a wide variety of standard products or individually customized
products, mass customizers depend on several elements of flow manufacturing to enable them to build
products economically in any order quantity, even as low as one.
Setup and its elimination. Being able to build in a batch (or lot) size of one depends on the elimination
of setup, for instance, to get parts, change dies and fixtures, download programs, find instructions, or
any kind of manual measurement, adjustment, or positioning of parts or fixtures. Mass producers are
forced to make products in batches to spread setup costs among as many products as possible. If setup
can be eliminated, then products could be made to-order as orders came in. This is the essence of
Spontaneous Build-to-Order. Setup elimination is also an essential prerequisite for mass customization
since every product could be different.
Setup and batches can be eliminated by (1) distributing parts at all the points of use to eliminate the
kitting, or the batching of parts, (2) eliminating tooling setup with versatile tool plates or tooling that can
be changed very quickly, (3) consolidating inflexible parts into very versatile standard parts, for instance,
for castings, plastic parts, stampings, extrusions, and bare printed circuit boards, (4) using CNC machine
tools to programmably make a wide variety of parts from standard shapes of raw material, and (5)
eliminating all setup from manual assembly, such as finding and understanding work instructions by
displaying instruction on monitors that instantly and clearly show what is to be done at that workstation
to any product being worked on.
2
Spontaneous Supply Chains
In order to build products on-demand, mass customizers must be able to build parts on-demand from
materials that are always available. This will require a spontaneous supply chain. The first steps in supply
chain management must be supply chain simplification.
Supply Chain Simplification. The simplification steps for supply chain management are standardization,
Automatic resupply techniques, and rationalization of the product line to eliminate or outsource the
unusual, low-volume products that contribute to part variety way out of proportion to their profit
generation ability. The goal of supply chain simplification is to drastically reduce the variety of parts and
raw materials to the point where these materials can be procured spontaneously by automatic and pull-
based resupply techniques. Reducing the part and material variety will also shrink the vendor base,
further simplifying the supply chain.
Standardization. Most products are designed around too many different parts and materials for mass
customization. Ironically, a rampant proliferation of parts is quite unnecessary, but occurs simply
because standardization is not emphasized. Part and material variety can be easily reduced with
standardization techniques by one or two orders of magnitude!
3

Automatic, spontaneous resupply. A key part of the spontaneous supply chain is automatic resupply
techniques such as kanban, "min-max," or breadtruck (free-stock). The simplest version of kanban uses
two bins for each part. After parts are depleted from the first bin, it goes back to its source to be filled,
and could be made in a batch mode if the combination of setup time, run time, and delivery time is
short enough to return the new bin of parts before the other bin runs out. Min-max is a similar concept
usually applied to stacks of raw material like sheet metal; when the "min" level is reached, this triggers
the resupply of enough material to reach the "max" level. Breadtruck or free-stock makes small
inexpensive parts like fasteners freely available at all points of use; these are resupplied automatically
by a supplier who simply keeps the bins full and bills the company monthly. This is much more efficient
than issuing expensive purchase orders for parts that may cost pennies. Parts that qualify can be made
in batches as long as the response time and bin (or delivery) size is adequate.
Spontaneous build-to-order of parts. For parts that do not qualify for kanban, suppliers or in-house
sources would need to implement spontaneous BTO so that they could actually build on-demand to the
pull signals from assembly. Spontaneous BTO of parts may require the development of vendor-partner
relationships for suppliers to establish the ability to build parts in any quantity on-demand.
Designing products for Mass Customization
For fast and easy production, mass customization products should be designed for
manufacturability.
4
A key element of DFM is designing for lean production, build-to-order, and mass
customization. Products should be developed in synergistic product families and be designed around
aggressively standardized parts and materials, designed for no setup, and designed for CNC
programmable machine tools.
How Products are Customized
There are three ways to customize products: modular, adjustable, and dimensional customization.
5

Modular Customization. Modules are "building blocks." Usually modules are literally building blocks
that can customize a product by assembling various combinations of modules. Examples of modules
would include many components in automobiles: engines, transmissions, audio equipment, tire/wheel
options, etc. In electronics, modules would include processor boards, power supplies, plug-in integrated
circuits, daughter-boards, and disk drives. In software, code could be written in modules (objects) that
can be combined into various combinations.
Adjustable Customization. Adjustments are a reversible way to customize a product, such as mechanical
or electrical adjustments. Adjustments could be infinitely variable. Discrete adjustments, or
configurations, would represent few choices, such as those provided by electronic switches, jumpers,
cables, or discrete software controlled configurations. These adjustments and configurations make the
product customizable by the factory, by dealers, or by customer. Software can be customized by user-
defined settings or by table driven programming in which the software is specifically written to
accommodate variables that can be customized by entering customer data into a table. The result is
customized software that does not does not have to be debugged.
6

Dimensional Customization. Dimensional customization involves a permanent cutting-to-fit, mixing, or
tailoring. Dimensional customization could be infinite or have a selection of discrete choices. Examples
of infinite dimensional customization would include the tailoring of clothing, drilling holes in bowling
balls, grinding eyeglasses, mixing of paints or chemicals, machining metal parts, and the cutting of sheet
metal, wire, or tubing. Examples of discrete dimensional customization would be hole punching, and
soldering selected electronic components onto a printed circuit board. Dimensionally customized parts
can be made automatically on CNC equipment running program instructions that are generated on
demand from data that originates in parametric CAD (see discussion below).
How Mass Customization Works
The following examples were created to show mass customization principles for electronic products
(Figure 1) and fabricated parts or products (Figure 2). The author creates perspective illustrations, like
these, for each mass customization client because they show, on one page, the flow of materials and
information through easily recognizable machinery. Further, three-dimensional drawings showing the
actual equipment are more meaningful than two-dimensional block representations to a broad
audience. These can be drawn in 3D CAD solid model software. In the following discussions, bold words
refer to labels on the illustration.
The process starts with a dialog with the customer in which customer queries are quickly answered.
This rapid dialog is the only one (the only two-way arrows in Figure 1) in mass customization, as opposed
to the traditional practice of many length inquires back and forth with Engineering, Procurement, and
Manufacturing departments. Various "what if" scenarios can be explored instantly, complete with price
and availability quotes, using configuration software (called "configurators"), which could be on a
salespersons laptop computer or on the company web-site.
When the customer has optimized the configuration and approves the order, the order information is
sent by modem input to the factory where it enters the order entry database, which accepts the
information and converts it into various data packets that go (1) to on-line assembly instruction
monitors, which tell workers how to assemble each product, and (2) to the parametric CAD/CAM work
station. This is an automatic or semi-automatic computer that accepts customer order data into
parametric CAD drawings, which are drawn with "floating" dimensions that accept the customers data
and then stretch all the part drawings, which also stretches the assembly drawings. Finally, this station
automatically translates these drawings into CNC Programs for the CNC equipment.

Write short notes on:
ERP and Applications
Enterprise resource planning (ERP) is a business management softwareusually a suite of integrated
applicationsthat a company can use to collect, store, manage and interpret data from many business
activities, including:-
Product planning, cost and development
Manufacturing or service delivery
Marketing and sales
Inventory management
Shipping and payment
ERP provides an integrated view of core business processes, often in real-time, using common databases
maintained by a database management system. ERP systems track business resourcescash, raw
materials, production capacityand the status of business commitments: orders, purchase orders, and
payroll. The applications that make up the system share data across the various departments
(manufacturing, purchasing, sales, accounting, etc.) that provide the data.
]
ERP facilitates information
flow between all business functions, and manages connections to outside stakeholders.
Enterprise system software is a multi-billion dollar industry that produces components that support a
variety of business functions. IT investments have become the largest category of capital expenditure in
United States-based businesses over the past decade. Though early ERP systems focused on large
enterprises, smaller enterprises increasingly use ERP systems.
Organizations consider the ERP system a vital organizational tool because it integrates varied
organizational systems and facilitates error-free transactions and production. However, ERP system
development is different from traditional systems development. ERP systems run on a variety of
computer hardware and network configurations, typically using a database as an information repository.
Quality is a never ending quest and Continuous Process Improvement (CPI) is a never ending effort to
discover and eliminate the main causes of problems. It accomplishes this by using small-steps
improvements, rather than implementing one huge improvement. The Japanese have a term for this
called kaizen which involves everyone, from the hourly workers to top-management.
CPI means making things better. It is NOT fighting fires. Its goal is NOT to blame people for problems or
failures. . . it is simply a way of looking at how we can do our work better. When we take a problem
solving approach, we often never get to the root causes because our main goal is to put out the fire. But
when we engage in process improvement, we seek to learn what causes things to happen and then use
this knowledge to:
o Reduce variation.
o Remove activities that have no value to the organization.
o Improve customer satisfaction.
Process improvement is important as Rummler & Brache's research (1995) showed that process account
for about 80% of all problems while people account for the remaining 20%.
CPI Procedure
CPI has been described using a number of models. This manual will use the system approach or ADDIE
(Analysis, Design, Development, Implement, Evaluate) model. There are five phases in this model:
o Analysis Phase Identify areas of opportunity and target specific problems. These areas and
problems are based on team brain-storming sessions, process definition sessions,
recommendations forwarded to the team by organizational members, and other various analysis
techniques.
o Design Phase Generate solutions through brain-storming sessions. Identify the required
resources to implement the chosen solution and identify baselines to measure.
o Development Phase Formulate a detailed procedure for implementing the approved solution.
o Implementation Phase Execute the solution.
o Evaluation Phase Build measurement tools, monitor implementation, and evaluate
measurements to baseline. Please note that this phase is performed throughout the entire
process. The chart below shows that this is a dynamic, not a static model: