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IB BUsiness MAnagement:
5.3 Lean Production and Quality Management

Streamlining production to increase efficiency and reduce wastage is the focus of lean production. For the customer, quality means that a good or service must fulfill its purpose and meet or exceed expectations of the user. This means that quality does not just apply to expensive products. 

Key Learning Outcomes:

  • Explain the concept of quality
  • Understand the difference between quality control and quality assurance - total quality management
  • Explain the role of Kaizen, Just in Time, Kanban and Andon in quality improvement
  • Evaluate different approaches to quality improvement
  • Explain the role of local and national standards in assuring quality for customers
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A quality product does not necessarily have to be the 'best possible'.

A manufacturer on the importance of quality

Quality is important

  • Quality is not an option. It is a fundamental aspect of all successful businesses.
  • Quality is an issue for all firms, in all sectors of industry. It is essential for business to put quality of products and customer service at the top of their priorities to survive in competitive markets. Improving quality has obvious cost advantages if the rate of defective products is reduced.
  • Satisfying customers will give clear marketing advantages when seeking further sales.
  • Involving all staff in quality improvement programmes can lead to a more motivated workforce.

Quality and Quality Assurance

Consumer expectations will be very different for goods and services sold at different prices. a quality product does not have to be made with the highest quality materials to the most exacting standards - but it must meet consumer requirements for it.

In certain cases, a product must meet the highest quality standards and the high cost of it becomes almost insignificant. Internal parts for a jet engine used on a passenger plane will be expected to have a failure rate of less than 1 in 1 million. However, if a pair of jeans was made to the same exacting standards with regards to stitching, buttons, zips, and so on - how much would a pair of jeans cost then? Designing too much quality into a product that consumers do not expect to last for many years can make the product very expensive and uncompetitive.

A quality product does not need to be expensive. If low-cost lightbulbs and clothes pegs last for several years in normal use, then they have still met consumer expectations and have been of the required quality. So, a highly priced good may still be of low quality if it fails to come up to consumer requirements. A cheap good can be considered of good quality if it performs as expected. It should now be clear that quality is a relative concept and not an absolute one - it depends on the products price and the expectations of consumers.
Quality control is the traditional approach to achieving quality based on inspection or checking, usually of the completed product or of the service as it is being provided to a consumer. Examples of quality control failure are illustrated in the videos below.

Big brands, big quality fail! I

Big brands, big quality fail! II

Quality product: A good or service that meets customers' expectations and is therefore 'fit for purpose'.

Quality standards: The expectations of customers expressed in terms of the minimum acceptable production or service standards.

The advantages of producing quality products and services:

  • Easier to create customer loyalty
  • Saves on costs associated with customer complaints; e.g. compensation and replacement
  • Defective products and loss of customer goodwill
  • Less advertising may be necessary as the brand will establish a quality image through the performance of its products
  • A higher price - premium price - could be charged for such goods and services. Quality can, therefore, be profitable.

Quality control and quality assurance

Quality control: This is based on the inspection of the product or a sample of products.

Quality assurance: This is a system of agreeing and meeting quality standards at each stage of production to ensure customer satisfaction.

Quality Control

Quality control: This is based on the inspection of the product or a sample of products.

3 stages of effective quality control:

  1. Prevention: this is the most effective way of improving quality. The design of the product should follow requirements of the customer and allow for accurate production. Quality should be 'designed into' a product.
  2. Inspection: traditionally this has been the most important stage, but it does have high costs and these could be reduced by 'zero-defect manufacturing (TQM).
  3. Correction and improvement: this is not just about correcting faulty products but is also concerned with correcting the process that caused the failure in the first place, to improve quality in the future.

Weaknesses of inspecting for quality: 

  • It is looking for problems and is, therefore, negative in its culture. It can cause resentment among workers (inspectors believe they have been 'successful' when finding faults). Workers are likely to view the inspectors as management employees who are there just to check on output and find problems with the work - a rather negative image of those perceived as being responsible for quality.
  • The job of inspection can be tedious, so inspectors become demotivated and may not carry out their tasks efficiently.
  • If checking takes place only at specific points in the production process, then faulty products may pass through several production stages before being identified - extra cost and time wasted.
  • The main drawback is that it takes away from the workers the responsibility for quality (inspectors now assume this responsibility) which can be demotivating and will result in lower quality output.

Quality Assurance in Manufacturing:
Computer Chips

Quality Assurance in Manufacturing:
Jet Engines

Quality Assurance

Quality assurance: This is a system of agreeing and meeting quality standards at each stage of production to ensure customer satisfaction is achieved.

It does not just focus on the finished product. This approach does involve self-checking by workers of their own output against these agreed quality standards.

Toyota: Quality Assurance
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The quality assurance department will need to consider all areas of the firm. Agreed standards must be established at all stages of the process from initial product idea to it finally reaching the consumer.

How quality assurance is different from quality control:

  • Puts much more emphasis on prevention of poor quality by designing products for easy fault-free manufacture, rather than inspecting for poor-quality products - 'getting it right first time'.
  • Stresses the need for workers to get it right the first time and reduces the chances of faulty products occurring or expensive reworking of faulty goods.
  • Establishes quality standards and targets for each stage of the production process.
  • Checks components, materials and services bought into the business at the point of arrival or delivery - not at the end of the production process by which stage much time and many resources may have been wasted.

Why it is important to establish quality assurance systems:  

  • To involve all staff and this can promote team work and a sense of belonging which aids motivation.
  • To set quality standards for all stages of production so that all materials and all production phases are checked before it is 'too late' and the whole product has been complete.
  • To reduce costs of final inspection as this should become less necessary as all stages and sub-sections of the process have been judged against quality standards.
  • To reduce total quality costs by instilling in the whole organisation a culture of quality, it is possible for quality assurance to lead to reduced costs of wastage and faulty products.
  • To gain accreditation for quality awards, e.g, ISO 9000.

Advantages of Quality Assurance

  • It makes everyone responsible for quality - this can be a form of job enrichment.
  • Self-checking and making efforts to improve the quality increases motivation.
  • The system can be used to 'trace back' quality problems to the stage of the production process where a problem might have been occurring.
  • It reduces the need for expensive final inspection and correction or reworking of faulty products.

The importance of  reviewing quality assurance systems 

INternational quality standards

A standard is a document that provides requirements, specifications, guidelines or characteristics that can be used consistently to ensure that materials, products, processes and services are fit for their purpose.

ISO 9000

ISO 9000: Internationally recognised certificate that acknowledges the existence of a quality procedure that meets certain conditions.

To obtain ISO 9000 accreditation a firm must show that it has:

  • Staff training and appraisal methods
  • Methods for checking on suppliers
  • Quality standards for all areas of the business
  • Procedures for dealing with defective products and quality failures
  •  After-sales service

Quality Assurance: Case Study I

Quality Assurance: Case Study II

Total Quality Management (TQM)

This approach to quality assurance requires the involvement of all employees in an organisation. It is based on the principle that everyone within a business has a contribution to make to the overall quality of the finished product. Workers should be empowered with the responsibility of checking quality level before passing their work onto the next production stage. By reducing waste and cost of rejected low-quality products TQM is a key component of the approach to operations management known as lean production.

TQM aims to cut the costs of faulty or defective products by encouraging all staff to 'get it right first time' and to achieve 'zero defects'. Under TQM, if quality is improved and guaranteed, then reject costs should fall and demand for the product rises over time. However, TQM will only work if everyone in the firm is committed to the idea. It cannot just be introduced in one section of the business if defective products coming from other sections are not reduced. The TQM philosophy requires a commitment from senior management to allow the workforce authority and empowerment, as TQM will not work in a rigid and authoritarian structure.

Internal customers: People within the organisation who depend upon the quality of work being done by others.

Zero defects: The aim of achieving perfect products every time.

TQM explained

Total quality management (TQM) : An approach to quality that aims to involve all employees in the quality improvement process.

Lean Production explained

Lean production: Producing goods and services with the minimum of wasted resources while maintaining high quality

TQM Case Study I

TQM Case Study II

Kaizen - Continuous Improvement

Kaizen is a Japanese term meaning continuous improvement. The Kaizen philosophy suggests that, in many cases, workers actually know more than managers about how a job should be done or how productivity might be improved. 

Another key feature of this idea is that improvements in productivity do not just result from massive one-off investments in new technology. A series of small improvements, suggested by staff teams, can, over time, amount to as big an improvement in efficiency as a major new investment.
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Kaizen compared to one-off changes

Conditions necessary for Kaizen to operate:

  1. Management culture must be directed towards involving staff and giving their views and ideas importance (the experience of workers in their day-to-day jobs is invaluable).
  2. Team working - suggesting and discussing new ideas to improve quality or productivity is best done in groups. Each Kaizen group should meet regularly.
  3. Empowerment - by giving each Kaizen group the power to take decisions regarding workplace improvements, this will allow speedier introduction of new ideas and motivate staff to pursue further ideas.
  4. All staff should be involved.

Kaizen - Lean Management

Toyota and Kaizen

Limitations of Kaizen

  • Some changes cannot be introduced gradually and may need a radical and expensive solution.
  • There may be real resistance from senior managements due to their existing culture (especially authoritarian managers).
  • At least in the short-term there may be tangible costs to the business of such a scheme, such as staff training to organise meetings and lost output as a result of meeting time.
  • The most important advances tend to be made early on during the Kaizen programme, with later changes showing diminishing returns.

Kaizen: Case Study I

Kaizen: Case Study II

Lean Production - Kanban

Kanban Notes + worked example

Andon in Lean manufacturing

Andon is derived from a Japanese term for a type of paper lantern. In manufacturing, Andon systems provide visual feedback to the plant floor. Typically, Andon systems indicate line status, show when assistance is needed (e.g. supervisor or maintenance calls), and empower operators to stop the production process if quality issues arise.
In lean manufacturing, Andon refers to any visual display that shows status information on the plant floor. The first Andons in manufacturing were simple lights that enabled operators to signal line status based on color: green for normal operation; yellow when assistance was needed; and red when the line was down. Today, more sophisticated visual displays are often used for Andons, but their purpose – efficient, real-time communication of plant floor status – remains the same.

Lean Manufacturing Andon are powerful and effective communication tools that:
  • Bring immediate attention to problems as they occur in the manufacturing process.
  • Provide a simple and consistent mechanism for communicating information on the plant floor.
  • Encourage immediate reaction to quality, down time, and safety problems.
  • Improve accountability of operators by increasing their responsibility for 'good' production and empowering them to take action when problems occur.
  • Improve the ability of supervisors to quickly identify and resolve manufacturing issues.

Cradle to cradle design and manufacturing

With cradle to cradle manufacturing, production is guaranteed by certification that the whole production process is fully sustainable for future generations.
This framework seeks to create production techniques that are not just efficient but are essentially waste free. In cradle to cradle production all material inputs and outputs are seen either as technical or biological nutrients. Technical 'nutrients' can be recycled or reused with no loss of quality and biological nutrients composted or consumed. 

Benchmarking

Benchmarking: Comparing the performance - including quality - of a business with performance standards throughout the industry.
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Stages in the Benchmarking process

Advantages and limitations of benchmarking

5.3 Lean Production and Quality MAnagement: 
Summary PowerPoint notes

5.3 LEAN PRODUCTION AND QUALITY MANAGEMENT:  
Mr Burton explains 

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