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Part 2. Just-In-Time-Production

Assignment 4. Read the text below, and insert the eight words in the spaces.

capacity, component, inventory, lead times, location, outsourcing, plants, subcontractor

JUST-IN-TIME PRODUCTION

 

Manufacturing companies are faced with a 'make-or-buy decision' for every item or (1).............. they use (as well as for every process and service). Do they make it themselves or do they outsource, and buy from a (2).....? If a company assembles products supplied by a large number of subcontractors, they face the problem of how much (3)........ they require.

In Just-In-Time (JIT) production - also called lean production, stockless production, and continuous flow manufacture - nothing is bought or produced until it is needed. Each section of the production process makes the necessary quantity of the necessary units at the necessary time - which is when it is required by the next stage of the manufacturing process, or by distributors or customers.

The JIT system is usually credited to Taiichi Ohno, who was vice-president for manufacturing with Toyota in Japan in the early 1950s - although he stated that he got the idea from American supermarkets! JIT is wholly contrary to the European and American logic of encouraging greater productivity, and welcoming production that exceeds the agreed schedule or quota, and stocking extras in case of future problems.

JIT minimizes the cost of holding inventories, which are regarded negatively, as avoidable costs, rather than as assets. The large Japanese manufacturing companies have long practised (4)........., and generally use extensive networks of small subcontractors. Of course, if a single subcontractor fails to deliver a component on time, the whole production process is sabotaged, but the Japanese industrial system relies on mutual trust and long-term relationships. Small suppliers often attempt to situate their facilities close to the (5)............of a larger company with which they work.

The Japanese also prefer small, specialized production (6).......... with a limited (7)......., in which, wherever possible, all the machines required for a certain job are grouped together. This avoids all the waiting and moving time involved in sending half-finished items from one department to another, although it often requires flexible, multi-skilled employees.

JIT thus greatly reduces transportation and inventory costs, and should ensure that there is no waste from overproduction, or from idle workers waiting for parts. It allows increased productivity because of shortened throughput time. If factories are equipped so that set-up times are short, very small production runs are possible. Any quality problems or product defects should be noticed more quickly, production (8)................. are reduced, and the firm can react more rapidly to demand changes.

 

Assignment 5. According to the text, are the following sentences TRUE or FALSE? If they are false, say why.

 

1) In JIT, products are ‘pulled’ through the manufacturing process from the end, rather than ‘pushed’ through from the beginning.

2) JIT originated in American manufacturing.

3) JIT encourages production workers to exceed their production targets.

4) Companies using the JIT system and outsourcing many of their components are highly dependent on their subcontractors.

5) In a JIT system, a delivery of defective components can be replaced from the reserve inventory.

6) JIT depends on harmonious partnerships between a company and its suppliers.

7) Japanese production systems generally speed up the entire manufacturing process

8) JIT leads to economies of scale.

9) JIT production - manufacturing only when a customer places an order - does not encourage innovation or the creation of demand.

 

Part 3. Quality

 

Assignment 6. Answer the following questions:

 

1) When consumers talk about quality, what different aspects or criteria do they have in mind? How would you define quality in relation to the following?

a fast-food snack a small car (US automobile)

a restaurant meal a raincoat

a tennis club hi-fi equipment

 

2) A well-known book on production is called Quality is Free, in which Philip B. Crosby argues that what costs money is a lack of quality - not doing things right the first time. List some of the expenses a company can avoid by preventing poor quality before it happens.

 

Read an interview with Alan Severn, the Quality Manager of Arcam, a British manufacturer of specialized, high quality hi-fi equipment: CD players, amplifiers, tuners and cassette desks.

 

Alan Severn I’m Alan Severn, I’m the Quality Manager at Arcam, and my responsibilities are exactly that, for the quality of the product, the quality of the services, and the quality of all interfaces which involve the customer and our customers.

The word ‘quality’ is a very easy one that slips off the tongue, it’s quite easy to say but means an awful lot of things. I have a department of three people, but in essence, everybody in the company works for me, because everybody works for the word ‘quality’. Quality starts and must start at the conception of everything and go through every department within the company. You can’t pack quality into a box at the end of the line. You have to implant it at the start of a process, and it knocks on through every process until it goes into a box, into your home, into your living room, and you switch it on and you’re a happy person.

The two aspects of quality are that we must reproduce, must, sorry, design to reproduce excellent hi-fi equipment, and that must be a design which has got quality built into it in terms of the performance of the product, but also must have the ability to be produced in volume. Er, now, that means the designers have to have restraints put on them, and that restraint means that they must work to quality standards to ensure that their designs are reproducible in volume. They must design for manufacture. Now that’s one part of the quality aspect and that’s where it starts within Arcam, the ability to have (a) a perfect design and (b) that the design is reproducible.

They hand that information on to our manufacturing departments. Now the manufacturing departments have the same, erm, the same message, the same cause in life, to then, to make sure that the designs that are now designed for manufacture are

designed, sorryr, are manufactured, for production. Now that may sound a bit daft, but when you move in to the next stage you have to productionize the designs, you have to ensure that the things will go together every time on the line. And that’s a function of design, its a function of manufacture, that when two pieces of metal come together, that they go together every time, five hours a day, ten hours a day, 28 days in a month, etc., etc.

And to that end we have to then implant into our suppliers, and our manufacturing people, the quality standards which will achieve that aim, our goals. So, our message spreads then from our designers into our manufacturers and our subcontractors who make the metalwork, who make the printed circuit boards, who assemble the printed circuit boards, etc., etc.

Quality’s a very well-worn word and in this business, certainly in Arcam’s business, it is an ongoing activity within the company, and it’s called TQM, Total Quality Management, that we improve our quality on a daily, weekly, monthly, yearly basis. So we never stop refining the process. Erm...we don’t know when we’re going to arrive there because we don’t know what the ultimate quality is. 1 guess the ultimate quality is that we build a thousand units, we ship a thousand units, and we don’t get any of Леш back, and they last for ten years. That I think is probably...you’ve arrived.

English for Business Studies Second Edition © Cambridge University Press 2002

Assignment 7. Study the Active vocabulary and give the Ukrainian equivalents of the words and word combinations:

1.Assets
2.Average fixed cost per unit
3.Avoidable costs
4.Capacity
5.Circuit board
6.Component
7.Continuous flow manufacture
8.Cost of capital
9.Costs of storage
10.Defective shipment
11.Demand
12.Depreciation
13.Economies of scale
14.Excess capacity
15.Extensive networks
16.Flexible, multi-skilled employees
17.Half-finished items
18.Handling
19.Idle workers
20.Implant
21.Industrial production
22.Insufficient capacity
23.Inventory
24.JIT production (Just-In-Time)
25.Large facilities
26.Lead time
27.Location 28.Long-term relationships 29.Lost sales(orders) 30.Material flow 31.Mutual trust 32.Obsolescence 33.Operations manager 34.Opportunity cost of capital 35.Output 36.Outsourcing (contracting out) 37.Plant 38.Processed materials 39.Product sсheduling 40.Production department 41.Production manager 42.Production process 43.Production runs 44.Quality manager 45.Quantity discounts 46.Set-up 47.Set-up time 48.Shortage 49.Stockless production 50.Subcontractor 51.To assemble 52.To hold inventories 53.To sabotage 54.To stock extras 55.Under-utilize work force 57.Work in process

 

Assignment 8. Read the texts and translate theminto Ukrainian. Pay special attention to the words given in bold:

 

1) Avoidable cost is an expense that will not be incurred if a particular activity is not performed. Avoidable cost refers to variable costs that can be avoided, unlike most fixed costs, which are typically unavoidable.While avoidable costs are often viewed as negative costs, they may be necessary to achieve certain goals or thresholds.

2) Economies of scale is the cost advantage that arises with increased output of a product. Economies of scale arise because of the inverse relationship between the quantity produced and per-unit fixed costs; i.e. the greater the quantity of a good produced, the lower the per-unit fixed cost because these costs are shared over a larger number of goods.

3) Lead time is broken into several components: preprocessing, processing and post processing. Preprocessing involves determining resource requirements and initiating the steps required to fill an order. Processing involves the actual manufacturing or creation of the order. Post processing involves delivery of products to the market.

4) Just in time is a ‘pull’ system of production, so actual orders provide a signal for when a product should be manufactured. Demand-pull enables a firm to produce only what is required, in the correct quantity and at the correct time.

This means that stock levels of raw materials, components, work in progress and finished goods can be kept to a minimum. This requires a carefully planned scheduling and flow of resources through the production process. Modern manufacturing firms use sophisticated production scheduling software to plan production for each period of time, which includes ordering the correct stock. Supplies are delivered right to the production line only when they are needed.

5) Excess capacity refers to a situation in which actual production is less than what is achievable or optimal for a firm. This often means that the demand in the market for the product is below what the firm could potentially supply to the market.The amount of excess capacity within an industry is a signal of both the health of that industry and the demand for the products it produces.

Assignment 9. Translate into English. Use the words given in the Active vocabulary

То́чно в сро́к (ТВС) — наиболее распространенная в мире логистическая концепция. Основная идея концепции ТВС заключается в следующем: если производственное расписание задано, то можно так организовать движение материальных потоков, что все материалы, компоненты и полуфабрикаты будут поступать в необходимом количестве, в нужное место и точно к назначенному сроку для производства, сборки или реализации готовой продукции. При этом страховые запасы, замораживающие денежные средства фирмы, не нужны. ТВС является также одним из основных принципов бережливого производства.

Усреднённые данные, полученные при обследовании более 100 объектов, оказались такими:

Бережли́вое произво́дство —концепция управления производственным предприятием, основанная на постоянном стремлении к устранению всех видов потерь. Бережливое производство предполагает вовлечение в процесс оптимизации бизнеса каждого сотрудника и максимальную ориентацию на потребителя. Возникла как интерпретация идей производственной системы компании Toyota американскими исследователями её феномена.

Отправная точка концепции — оценка ценности для конечного потребителя на каждом этапе создания продукта. В качестве основной задачи концепция предполагает постановку процесса непрерывного устранения потерь — искоренение любых действий, которые потребляют ресурсы, но не создают ценности для конечного потребителя. Например, потребителю совершенно не нужно, чтобы готовый продукт или его детали лежали на складе. Тем не менее, при традиционной системе управления складские издержки, а также все расходы, связанные с переделкой, браком, и другие косвенные издержки перекладываются на потребителя.

В соответствии с концепцией бережливого производства вся деятельность предприятия делится на операции и процессы, добавляющие ценность для потребителя, и операции и процессы, не добавляющие ценности для потребителя. Задачей «бережливого производства» является планомерное сокращение процессов и операций, не добавляющих ценности.

Тайити Оно (1912—1990), один из создателей производственной системы компании Toyota, выделил 7 видов потерь:

· потери из-за перепроизводства;

· потери времени из-за ожидания;

· потери при ненужной транспортировке;

· потери из-за лишних этапов обработки;

· потери из-за лишних запасов;

· потери из-за ненужных перемещений;

· потери из-за выпуска дефектной продукции.

· нереализованный творческий потенциал сотрудников.

Test

Assignment 1. Find a suitable word or word combination for the following definition:

1. A period of time during which there is less trade, business activity and wealth than usual.

2. A country, company or person you are fighting or competing against; opponent.

3. To remove government rules and controls from some types of business activities.

4. To deliberately make someone or something appear less important or valuable than they really are.

5. To pay someone money because they have suffered injury, loss or damage.

6. The state of becoming old-fashioned and no longer useful because something else that is newer and better has been invented.

7. The act of loading and unloading and moving goods within a factory especially using mechanical devices.

8. A formal meeting at which someone is asked questions in order to find out whether they are suitable for a job, course or study.

9. To give someone a better, more responsible job in a company.

10. Money added to someone’s wages, especially as a reward for good work.

11. Someone who finds people with right skills and experience to do a particular job and persuades them to leave their present jobs.

12. A formal, usually written request for something such as a job, place at university or permission to do something.

13. A reduction of the value or price of something.

14. A group of similar or related goods that is produced by using a particular group of manufacturing procedures, processes and conditions.

15. People’s desire or need to buy or use particular goods or services.

 




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