After studying this article you should be able to understand the basic concepts underlying:
- Just in time (JIT) manufacturing system.
- Total quality management (TQM).
- Business process reengineering (BPR).
- Theory of constraints (TOC).
The last two decades have been a period of tremendous upheaval and change in the business environment, including the explosive growth of the internet.
Competition in many industries has become world wide in scope, and the space of innovation in products and services has accelerated. This has been good news for consumers, since intensified competition has generally led to lower prices, higher quality and more choices. However, the last two decades have been a period of wrenching change for many businesses and their employees. Many managers have learned that cherished ways of doing business don’t work any more and that major changes must be made in how organizations are managed and in how work gets done. These changes are so great that some observers view them as a second industrial revolution. This revolution is having a profound effect on the practice of managerial accounting – as we will see through the rest of the text. First, however. it is necessary to have an appreciation of the ways in which organizations are transforming themselves to become more competitive. Since the early 1980s, many companies have gone through several waves of Business and Quality improvement programs, starting with Just-In-Time (JIT) and passing onto Total Quality Management (TQM), Process reengineering, and various other management programs-including in some companies The Theory of Constrains (COT), When properly implemented, these improvement programs can enhance quality, reduce cost, increase output, eliminate delays in responding to customers, and ultimately increase profits. They have not, however, always been wisely implemented, and there is considerable controversy concerning the ultimate value of each of these programs. Nevertheless, the current business environment cannot be properly understood without some appreciation of what each of these approaches attempts to accomplish. Each is worthy of extended study, but we will discuss them only in the broadest terms the details are best handled in operations management courses.
- Just-in-Time (JIT) Manufacturing and Inventory Control System:
Traditionally manufacturers have forecasted demand for their products into the future and then have attempted to smooth out production to meet that forecasted demand. At the same time, they have also attempted to keep everyone as busy as possible producing output so as to maximize “efficiency” and (hopefully) reduce costs. Unfortunately, this approach has a number of major drawbacks including large inventories, long production times, high defect rates, production obsolescence, inability to meet delivery schedules, and (ironically) high costs. Non of this is obvious-if it were, companies would long ago have abandoned this approach…… Click here to read full article
- KANBAN:A KANBAN system is a means to achieve just in time (JIT) production. It works on the basis that each process on a production line pulls just the number and type of components the process requires, at just the right time. The mechanism used is a KANBAN card. This is usually a physical card but other devices can be used Two types of such cards are usually used…… Click here to read full article.
- Total Quality Management (TQM) System:
Total quality management (TQM) is an improvement program which provides tools and techniques for continuous improvement based on facts and analysis; and if properly implemented, it avoids counterproductive organizational infighting…… Click here to read full article.
- Six Sigma:
Motorola popularized the use of stringent quality standards more than 30 years ago through a trade marked quality improvement program called six sigma…… Click here to read full article.
- Business Process Reengineering (BPR):
Business Process reengineering (BPR) is a more radical approach to improvement than total quality management (TQM). Instead of tweaking the existing system in a series of incremental improvements, in process reengineering a business process is diagramed in detail, questioned, and then completely redesigned to eliminate unnecessary steps, to reduce opportunities for errors, and to reduce costs…… Click here to read full article
- Theory of Constraints (TOC):
Theory of constraints (TOC) is a management approach that emphasizes the importance of managing constraints. A constraint or bottleneck is any thing that prevents you from getting more of what you want. Study of constraints or bottlenecks, keeping their record and taking necessary steps to improve them is also known as bottleneck accounting…… Click here to read full article.