University of Wollongong Thesis Collections University of Wollongong Thesis Collection University of Wollongong Year An appropriate manufacturing strategy model for the Thai food processing industry Chaitamlong Pongpattanasili University of Wollongong Pongpattanasili, Chaitamlong, An appropriate manufacturing strategy model for the Thai food processing industry, PhD thesis, Faculty of Engineering, University of Wollongong, 2004. http://ro.uow.edu.au/theses/576 This paper is posted at Research Online. http://ro.uow.edu.au/theses/576
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University of Wollongong Thesis Collections
University of Wollongong Thesis Collection
University of Wollongong Year
An appropriate manufacturing strategy
model for the Thai food processing
industry
Chaitamlong PongpattanasiliUniversity of Wollongong
Pongpattanasili, Chaitamlong, An appropriate manufacturing strategy model for the Thaifood processing industry, PhD thesis, Faculty of Engineering, University of Wollongong,2004. http://ro.uow.edu.au/theses/576
This paper is posted at Research Online.
http://ro.uow.edu.au/theses/576
NOTE
This online version of the thesis may have different page formatting and pagination from the paper copy held in the University of Wollongong Library.
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AN APPROPRIATE MANUFACTURING STRATEGY MODEL FOR THE THAI FOOD PROCESSING
INDUSTRY
A thesis submitted in fulfilment of the requirements for the award of the degree
DOCTOR OF PHILOSOPHY
from
UNIVERSITY OF WOLLONGONG
by
Chaitamlong Pongpattanasili
MEngSC ( UNSW)
Faculty of Engineering
2004
DECLARATION OF ORIGINAL AUTHORSHIP The work contained in this thesis has not been previously submitted for a degree or
diploma at any other University of higher education institution. The thesis contains
no material previously published or written by another person except where due
reference has been made.
Chaitamlong Pongpattanasili 24 August 2004
i
ABSTRACT
Thailand is well recognised for its high potential as an agricultural country and major
food supplier. It provides a major source of agricultural product and agricultural
manufacturing based industries. The most important sector is the food processing
industry. This area is the most important sub-sector in Thai industry. The value in
exports in the year 2002 was approximately 14.4% of the country’s total GDP.
However, a high potential for growth still exists.
Food production in Thailand is based on local agricultural raw materials, comprising
of fruit and vegetables, cereal and oils, fish and livestock and provides employment to
20 million people within the agricultural and food processing sector. This thesis
discusses the characteristics of the Thai food processing industry and suggests an
appropriate manufacturing strategy model is needed in order for it to achieve
manufacturing excellence.
This study presents a classification of the Thai agricultural industry and compares
one of its sectors, the agricultural manufacturing industry with another industrial
sector viz. the electrical/electronic industry. The thesis investigates both industries
contribution and reveals why the food processing industry is important for Thailand.
After an overall analysis of the industry and its importance, the results of a survey of
350 food processing companies are compared, including characteristics of the Thai
food processing industry, the focus of manufacturing strategies and the
implementation of manufacturing practices.
Based on this, and in order to assist the Thai food processing industry to achieve
manufacturing excellence, the thesis then develops an integrated model combining
GMP, HACCP, TPM and TQM, and provides guideline for their implementation.
ii
Acknowledgement I am deeply grateful to my Academic Supervisor, Associate Professor Peter Gibson
and Co-Supervisor Professor Guenter Arndt, for their kind support, guidance and
encouragement at all stages. Without their valuable criticisms, comments, and
suggestions, I would not have been able to complete my thesis.
I am also very grateful to Mr Chatre Limpongsi, Board of Investment, Thailand for
his suggestions and managerial support in Thailand. I am also grateful to all staff of
the Department of Industrial, Naresuan University, for their encouragement. My
appreciation also goes to those who provide valuable information for my mail survey
and case studies, there are too many to mention by name.
Thanks are also due to Joan Phillips for her most efficient and kind proofreading in
this thesis.
I would also like to thank Mr. Sumret Wanthip and Miss Fiona O Beirne for providing
generous support during my study in Australia.
Last but not least, I wish to thank my family (especially to Varintorn) for their
patience and enduring support granted during a seemingly endless decade of tertiary
education full of periods of stress and challenges but also achievement and
satisfaction.
Pongpattansasili C.
iii
TABLE of CONTENTS Abstract i
Acknowledgements ii
List of Contents iii
List of Tables x
List of Figures xiii
List of Abbreviations xvi
Chapter 1: Introduction
1.1 Background of Thai Food Processing Manufacturing Industry 1
1.2 Problem Statement 3
1.3 Objective of the Research 3
1.4 Scope of the Research 4
1.5 Importance of the Research 4
1.6 Research Outline 4
Chapter 2: An Overview of Thai Industry and the Importance of its
Agricultural Manufacturing Industry
2.1 Introduction 6
2.2 General Picture of the Thai Economy 6
2.3 Classification of the Thai industry sector 9
2.4 Industrial Transition 9
2.5 Export and Import patterns 12
2.6 Direct Foreign Investment in Electrical/Electronic Products in Thailand 15
2.7 Thai Agriculture Products 18
2.7.1 Definition of agricultural manufacturing industry 19
2.7.2 Definition of food processing industry 20
2.8 Agricultural Manufacturing Industry 20
2.9 Food Processing in Industry 20
2.10 Non Food Products 22
2.11 Relative Importance of Agricultural Manufacturing Industry and 23
Electrical / Electronic Industry
iv
2.12 Conclusion 24
Chapter 3: Analysis of the Thai Food Processing Industry and the
Importance of SMEs
3.1 Introduction 27
3.2 Moving Towards Industry-Based Agriculture 27
3.3 Thai National Economic Objectives for 28
Agricultural Manufacturing Industry
3.4 Definition of Thai Small and Medium Enterprise (SME) Sector 29
3.5 Definition of Thai Food Processing Industry 30
3.6 Food Processing Industry in Thailand 30
3.7 Profitability of Thai Industry 32
3.8 Government Policies Development Plan: __________________ 34
The Thai Food Processing Industry
3.9 Classification of Thai food processing industry 35
3.10 Common Food Processing Industry in Thailand 35
3.10.1 Fruit and vegetable processing 36
3.10.2 Marine products 36
3.10.3 Edible oils 37
3.10.4 Dairy products and baked goods 37
3.10.5 Animal feed and feed production 37
3.10.6 Meat products 38
3.10.7 Poultry 38
3.10.8 Beverage industry 38
3.10.9 Sugar and confectionery industry 39
3.10.10 Spice and condiment industry 39
3.11 Factories Based on Classification of Thai Food Processing Industry 40
3.11.1 Tobacco curing factories 40
3.11.2 Agricultural product-related factories 40
3.11.3 Dairy product factories 40
3.11.4 Marine-related factories 41
3.11.5 Edible pant oil or animal oil-related factories 41
3.11.6 Vegetable and fruit related factories 41
v
3.11.7 Grain or plant head-related factories 41
3.11.8 Sugar production from came, beet, sweet grass 41
3.11.9 Tea, coffee, chocolate or dessert-related factories 42
3.11.10 Cooking ingredients related factories 42
3.11.11 Spirit boiling, distillation or mixing related factories 42
3.11.12 Malts, beer related factories 42
3.12 Conclusion 43
Chapter 4: Present Thai Food Processing Industry Manufacturing Strategies
4.1 Introduction 44
4.2 Good Manufacturing Practice (GMP) 45
4.2.1 Requirements of Good Manufacturing Practices for Thai food 47
processing industry
4.3 Hazard Analysis Critical Control Point (HACCP) 50
4.4 Total Productive Maintenance (TPM) 54
4.5 Just- In-Time (JIT) Manufacturing 58
4.6 Total Quality Management (TQM) 60
4.6.1 A note on the ISO 9000 concepts for Thai food processing industry 64
4.6.1.1 The important of ISO 9000 for Thai food processing industry___65
4.6.2 A note on Six Sigma Concept for the Thai food processing industry 66
4.7 A Flow Chart of the Development Appropriate to the Manufacturing 68
Strategy Model for Thai Food Processing Industry
4.8 Practices of an Appropriate Integrated Model of TQM, JIT, GMP and 69
HACCP
4.9 Linking Infrastructures Practices of the Integrated Model 74
(HACCP, JIT, TPM and TQM)
4.10 Suggested Implantation Step Combined Model of GMP, HACCP, JIT, 81
TPM, and TQM
4.11 Appropriate Manufacturing Strategies output Model (AMS output) 85
4.12 Conclusion 88 Chapter 5: Research Method and Hypotheses
5.1 Introduction 89
5.2 Research Method 90
vi
5.3 Research Plan 91
5.4 Hypotheses 92
5.5 Survey Instrument 93
5.6 Data Collection 94
5.7 Data Analysis 95
5.8 Conclusion 96
Chapter 6: Pilot Survey of Thai Food Processing Industry
6.1 Introduction 98
6.2 Analysis of Thai Food Processing Industry from Pilot Survey 98
6.2.1 Company characteristics 98
6.2.2 Focus of manufacturing strategies 99
6.2.3 Implementation of factory practice 100
6.2.4 Machinery and equipment problems 101
6.3 Comparison of Industry Manufacturing Practices 104
6.4 Conclusion 104
Chapter 7: Main Survey of Thai Food Processing Companies
7.1 Introduction 105
7.2 General Characteristics of Thai Food Processing Companies 105
7.3 Problems in Thai food Processing Companies 108
7.3.1 Human Resource Problems 108
7.3.2 Quality Problems 110
7.3.3 Basic Infrastructure Problems 112
7.3.4 Competition Problems 114
7.4 Problem Solving Potential 116
7.4.1 Human resource problems 116
7.5 Business Performance 119
7.6 Basic Company Characteristics Relating Tools and Techniques Best 121
Practices
7.7 Manufacturing Practices for Thai Food Processing Companies: 127
GMP, HACCP, JIT, TPM and TQM
7.8 Best Manufacturing Practice for Thai food Processing companies 132
7.9 Conclusion 137
vii
Chapter 8: Hypotheses Test and Analysis
8.1 Introduction 138
8.2 Need for the Development of Integrated Model of Best Practice 138
and Market Requirements
8.3 Implementation of Integrated model 142
8.4 Relationship between Industrial Characteristics and Product and 148
Process Strategies
8.5 Training 154
8.5.1 GMP training 156
8.5.2 HACCP training 158
8.5.3 TPM training 160
8.5.4 TQM training 161
8.5.5 JIT training 162
8.6 Conclusion 162
Chapter 9: Data Analysis Supporting the implementation of an
Appropriate Thai Food Processing Manufacturing Strategy Model
9.1 Introduction 163
9.2 Elements or Basic Infrastructure of Organisation 163
9.2.1 Organisational structure 164
9.2.2 Management systems 165
9.2.3 Management activities 166
9.2.4 Potential of problem solving 166
9.2.5 The relationship between Organisational Characteristics 168
9.3 Manufacturing Practices 173
9.4 Application of Tools and Techniques 174
9.4.1 Tools and Techniques related to GMP and HACCP 174
9.4.2 Basic Tools and Techniques 176
9.4.3 Tools and Techniques related to supplier management 178
9.4.4 Management Tools and Techniques 189
9.5 Conclusion 180
viii
Chapter 10: A New Appropriate Thai Food Processing Industry
Manufacturing Strategy Model
10.1 Introduction 182
10.2 Suggestion of Tools and Techniques for Solving Problems 182
10.3 The Model of Excellence for the Thai Food Processing Industry 189
10.3.1 Extension of GMP 193
10.3.2 HACCP building 193
10.3.3 Focus on human aspects by implementing TQM 194
10.3.4 Focus on effective equipment management by 194
implementing TPM
10.3.5 Selected tools and techniques to use in the model 195
10.4 Training Courses 195
10.5 Preliminary Test of New Model: Result from 3 Case Studies______ 198
10.5.1 Characteristics of participation Thai food processing companies___198
(Company A, B, and C)
10.5.2 Implementation of manufacturing practice models in____________199
Company A, B, and C
10.5.2.1 Company A 199
10.5.2.2 Company B 200
10.5.2.3 Company C 200
10.5.3 Comparison of Company A, B and C__________________ 200
10.5.3.2 Benefit of manufacturing practices 202
10.5.3.3 Tools and techniques 202
10.6 Survey of Implementation of Integrated Model 203
10.7 Recommendation of Six Sigma as an Appropriate Manufacturing 206
Strategy Model for the Thai Food Processing industry
10.8 Recommendation ISO 9000 as an Appropriate Manufacturing Strategy 208
Model for the Thai Food Processing Industry
10.8.1 Relationship of ISO 9000, GMP and HACCP 208
10.9 Conclusion 210
ix
Chapter 11: Conclusion 212
References 216
Appendix A Thai Industry Classification and Main Statistic 246
Appendix B Output and Value Added by Thai Manufacturing industry 251
Appendix C Pilot Questionnaire 252
Appendix D Main Survey Questionnaire 257
Appendix E Statistical Analysis 269
- E1 Main survey 269
- E2 Hypotheses test 281
Appendix F Tools and Techniques 291
x
List of Tables Table 2.3.1 Specific Industries in the Primary, Secondary, and Tertiary
Categories, Based on the International Standard Industrial
Classification (ISIC)
9
Table 2.4.1 Share of Gross Domestics Product by Industrial Origin and
Growth at 1980 Prices
10
Table 2.5.1 Structure of Thailand’s Export Products 13
Table 2.6.1 Structure of Thai Electrical/Electronic Industries 17
Table 2.12 Comparison of the Thai Agricultural Manufacturing Industry and
Electrical/Electronic Industry
26
Table 3.4.1 Definition of SMEs by Total Assets Value 29
Table 3.6.1 Number of Factories, Capital Investment, and Employment of
Registered Factories in Thailand, 1998
31
Table 3.6.2 Proportion of SMEs by Factory, Investment, and Employment
1998
31
Table 3.6.3 Thailand’s Top Ten food Exports in 1998 31
Table 4.3.1 Principles of HACCP 52
Table 4.5.1 Definitions of JIT Manufacturing 59
Table 4.6.1 Requirements for Effective Quality Management 63
Table 4.9.1 Relationship between Element Practices of GMP, HACCP, JIT,
TPM and TQM
74
Table 4.11 Factors Necessary for Success of Integrated System of TQM,
TPM, JIT, GMP and HACCP
87
Table 6.3.1 Thai Food Processing Industry Manufacturing Practices 104
Table 8.3.1 Manufacturing Practices and Business Performance 147
Table 9.1 Competitive Business Performance 164
Table 9.2.1 Organisation Structure 165
Table 9.2.2 Management Systems 165
Table 9.2.3 Management Activities 166
Table 9.2.4a Potential of Solving Human Resource Problems 167
Table9.2.4 b Potential of Solving Quality Problems 167
Table 9.2.4c Potential of Solving Basic Infrastructure Problems 167
xi
List of Tables Table 9.2.4d Potential of Solving Problems Regarding Competitors 168
Table 9.2.5a Group (a)- Safety elements 169
Table 9.2.5b Group (b)- Maintenance Elements 169
Table 9.2.5c Group I – Production Elements 169
Table 9.2.5d Group (d) – Supplier Elements 169
Table 9.2.4e Group (e) – Strategic Management Elements 169
Table 9.2.5f Group (f) – Financial Management Elements 169
Table 9.2.5g Group (g) – Development of New Product Elements 170
Table 9.2.5h Group (h) – Sales and Marketing Elements 170
Table 9.2.5i Group (i) – Performance Management Elements 170
Table 9.2.5j Group (j) – Education and Training Elements 170
Table 9.2.5k Group (k) – Co-operation Elements 170
Table 9.2.5l Group (l) – Quality Management Elements 171
Table 9.2.5m Group (m) – Continuous Improvement Activities 171
Table 9.2.5n Group (n) – Organisation Aspects 171
Table 9.4.1 Degree of Importance of Tools and Techniques related to GMP
and HACCP
176
Table 9.4.2 Degree of Importance of Basic Tools and Techniques 177
Table 9.4.3 Degree of Importance of Tools and Techniques related with
Supplier Management
178
Table 9.4.4 Degree of Importance of Management Tools and Techniques 180
Table 10.2 Relationship between Problems and Manufacturing Practices and
suggested Tools and Techniques
182
Table 10.2a Tools and Techniques which are used by Top Management 187
Table 10.2b Tools and Techniques which are used by Middle Management 187
Table 10.2c Tools and Techniques which are used by Engineer 188
Table 10.2d Tools and Techniques which are used by Supervisor 188
Table 10.2e Tools and Techniques which are used by Front-Line Operator 189
Table 10.4.1 Training Courses for Particular Job Positions 197
Table 10.4.2a Basic Training for each Particular Job Levels 197
Table 10.4.2b Management Training for each Particular Job Levels 198
xii
List of Tables Table 10.4.2c Technical Training for each Particular Job Levels 198
Table 10.4.2d Maintenance Training for each Particular Job Levels 198
Table 10.5 Characteristics of the Thai Food Processing Companies
Table 10.6a Tools and Techniques of the Suggested Integrated Model
suitable for Top Management in Company D
204
Table 10.6b Tools and Techniques of the Suggested Integrated Model
suitable for Middle Management in Company D
204
Table 10.6c Tools and Techniques of the Suggested Integrated Model
suitable for Engineer in Company D
205
Table 10.6d Tools and Techniques of the Suggested Integrated Model
suitable for Supervisor in Company D
205
Table 10.6e Tools and Techniques of the Suggested Integrated Model
suitable for Front-Line Operator in Company D
206
xiii
List of Tables Figure 2.2.1 Number of Factory Closures in Thailand in 1998 8
Figure 2.5.1 Thailand’s Import Product 14
Figure 2.6.1 Net Foreign Investment Flow in the Thai Electrical/Electronic
Sector Classified according to Country
16
Figure 2.7.1 Sector Classification for Thai Agricultural Manufacturing
Industry
18
Figure 2.11 Comparison of Trade Balance Figure for Thai Export Products 24
Figure 3.7.1 Gross Output by Division of Industry 33
Figure 3.7.2 Value added by Industry Sector 33
Figure 4.2.1 GMP for the Thai Food Industry Components of Good
Manufacturing Practices
49
Figure 4.7.1 Flow Chart of Develop Appropriate Thai Food Processing
Manufacturing Strategy Model
67
Figure 4.8.1 Elements of infrastructure practice among GMP 70
Figure 4.8.2 Food Safety Assurance 71
Figure 4.8.3 Relationship between HACCP and TQM 72
Figure 4.8.4 Revised Model for Quality Systems in the UK Food and Drinks
Industry
73
Figure 4.10.1 Integrated Model of GMP, HACCP, JIT, TPM and TQM 82
Figure 4.11 Appropriate Manufacturing Strategy Model Output 88
Figure 6.2.1 Type of Thai Food Processing Industry 99
Figure 6.2.2 Focus of Manufacturing Strategies 100
Figure 6.2.3 Manufacturing Practice 100
Figure 6.2.4 Machine Problem 101
Figure 6.2.5 Cause of Production delay in Thai Food Processing Companies 102
Figure 6.2.6 Future plan to improve business Performance 102
Figure 7.2.1 Type of Production 106
Figure 7.2.2 The Company Main Market 106
Figure 7.2.3 Focus of Manufacturing Strategies 107
Figure 7.2.4 Ratio of Technology used for Value-adding Operation 107
Figure 7.3.1a Human Resource Problem and Frequency of Problems 109
xiv
List of Tables
Figure 7.3.1b Frequency of Human Resource Problems 109
Figure7.3.1c Human Resource Problem and Urgency of Problem 110
Figure 7.3.2a Quality Problem and Frequency of Quality Problems 111
Figure 7.3.2b Frequency of Quality Problems 111
Figure 7.3.2c Urgency of Quality Problems 112
Figure 7.3.3a Basic Infrastructure and Frequency of Problems 113
Figure 7.3.3b Basic Infrastructure Problems and Urgency of Problem 112
Figure 7.3.4a Problems with Competitions and Frequency of problems 115
Figure 7.3.4b Problems with Competitions and Urgency of Problems 115
Figure 7.4.1 Potential of Solving Human Resource Problems 116
Figure 7.4.2a Potential of Solving Quality Problems 117
Figure 7.4.2b Difficulty of Solving Quality Problems 117
Figure 7.4.3a Potential of Solving Basic Infrastructure Problems 118
Figure 7.4.3b Difficulty of Solving Basic Infrastructure Problems 118
Figure 7.4.4 Potential of Solving Competition Problems 119
Figure 7.5.1 Current Quality Status and Degree of Important 120
Figure 7.5.2 Business Performance needed to outperform Competitors 121
Figure 7.6.1a Organisation Structure and Implementation 122
Figure 7.6.1b Full Implementation of Organisation Structure 122
Figure 7.6.2a Management Characteristics and Implementation 123
Figure 7.6.2b Management Characteristics to be improved 124
Figure 7.6.3a Management Activities and Implementation 125
Figure 7.6.3b Management Activities to be improved 125
Figure 7.6.4 Quality Aspects used to develop the Manufacturing Strategies 126
Figure 7.7.1 Familiarity with manufacturing practices 128
Figure 7.7.2 Introduction of manufacturing practices 128
Figure 7.7.3 Current implementation of practices 129
Figure 7.7.4 Implementation status of GMP, HACCP, TQM, and TPM 130
Figure 7.7.5 Main Motivation for Implementation of GMP, HACCP, TPM,
JIT and TQM
131
Figure 7.7.6 Benefits of Company Performance from Manufacturing
Practices
131
xv
List of Tables Figure 7.8.1 Adaptation of Best Practices in Thai Food Processing
Companies
132
Figure 7.8.2 Barriers to Achieve the Best Practice Manufacturing for Thai
Food Processing Industry
133
Figure 7.8.3 The limitation of JIT Practice implementing for Thai Food
Processing Industry
134
Figure 7.8.4 The limitation of TPM practices implementation for Thai Food
Processing Industry
135
Figure 7.8.5 Company Expect from TPM Practice 137
Figure 8.2.1 Manufacturing Practices and Motivation 140
Figure 8.2.2 Manufacturing Strategies and Manufacturing Practices 142
Figure 8.3.1 Manufacturing Practices and Benefits 145
Figure 8.4.1 Company Size and Manufacturing Practices 149
Figure 8.4.2 Manufacturing Practices and Turnover 150
Figure 8.4.3 Manufacturing Process and Manufacturing Practices 151
Figure 8.5 Training Program in GMP, HACCP, TPM and TQM that are
necessary for Achieving Thai Food Processing Industry
Excellence
153
Figure 8.5.1 GMP Training 155
Figure 8.5.2 HACCP Training 157
Figure 8.5.3 TPM Training 159
Figure 8.5.4 TQM Training 161
Figure 9.4.1 Tools and Techniques Related to GMP and HACCP and Degree
of Importance
175
Figure 9.4.2 Basic Tools and Techniques and their Degree of Importance 177
Figure 9.4.3 Tools and Techniques related to Supplier Management and
Degree of Importance
178
Figure 9.44 Management Tools and Techniques and the Degree of
Importance
179
Figure 10.3 New Manufacturing Strategy Model for Thai Food Processing
Industry
190
Figure 10.3.5 Tools and Techniques for the Appropriate Thai Food Processing
Industry Manufacturing Strategy Model
196
xvi
List of Abbreviations ASEAN Association of South East Asian Nation
BOI Board of Investment (Thailand)
BOT Bank of Thailand
CCP Critical Control Point
DEP Department of Export Division
DIP Department of Industrial Promotion (Thailand)
FDA Food and Drug Agency (Thailand)
FSCS Food Safety Control System
GDP Gross Domestic Product
GNP Gross National Product
GMP Good Manufacturing Practice
GHP Good Hygiene Practice
HACCP Hazard Analysis Critical Control Point
HRM Human Resource Management
ISIC International Standards of Industry Classification
ISO International Standards Organisation
JIT Just-in-Time
MMS Maintenance Management System
NESDB National Economic as Social Development Board (Thailand)
NSTDA National Science and Technology Development Agency (Thailand)
PM Preventive Maintenance
QA Quality Assurance
QC Quality Control
QCC Quality Control Circles
QMS Quality Management System
SMEs Small and Medium Enterprise Sector
TDRI Thailand Development Research Institute
TPM Total Productive Maintenance
TQC Total Quality Control
TQM Total Quality Management
WCM World Class Manufacturing
WIP Work In Process
xvii
WM Workplace Management
WHO World Health Organisation
WTO World Trade Organisation
1
Chapter 1
Introduction
1.1 Background of Thai Food Processing Manufacturing Industry Thailand’s share of the huge agricultural market in Asia is already large and still
growing. This is due to several factors. Firstly, there has been an improvement in the
economic conditions in some Asian countries including Thailand. This has led to the
desire for better quality and greater variety of foods by consumers who show increasing
awareness of the value of nutrition and the importance of hygiene and food safety, and
desire convenience. Food distribution methods are changing rapidly with the advent of
modern transportation. An increase in the number of supermarkets, together with
changes in eating habits have created substantial changes in food consumption patterns.
The Thai economy reflects the trends.
Secondly, modern farming methods in Thailand have improved, giving higher yields
and better quality products. This in turn, has led to the establishment of a small but
growing, food processing manufacturing industry, which utilises the surplus agricultural
products and adds value to them. This is a current shift in most Asian countries
including Thailand, where retail food distribution is changing rapidly as the economy
grows.
According to some observers, opportunities in the Thai food processing industry are as
high as in other high technology industries. Both domestic and international food
companies are expanding their presence and strengthening their positions in Asia. Those
which succeed are generally based with regional headquarters in Thailand and have a
local manufacturing strategy. This growth and increasing competition have created the
need for a new manufacturing strategy model for the Thai food processing industry, as
well as exerted pressure on existing Thai food processing companies to modernise. The
need for continuous improvement at the product and process levels has become
essential.
2
The term, agricultural manufacturing industry, encompasses both the food processing
and the agricultural product industries. The food processing industry is considered to be
among the most important industries in Thailand, with a high growth potential. It also
adds value to the agricultural production industry. The agricultural manufacturing
industry represented 50.3% of all manufacturing industries in Thailand in 2000, while
food and beverage processing accounted for more than a quarter of the total agricultural
manufacturing industries (Food and Agriculture Organisation and Ministry of
Agriculture, report 2000). Moreover, Jatupitak (2004) expressed the opinion that the
food industry is particularly important for Thailand for the following reasons: it links
the rural with the industrialised sectors, it uses a high percentage of local content, it
links Thailand to international markets, and it offers opportunities for increasing value
added through branding.
The Thai food processing industry is usually considered to be of a high standard.
However, this did not assist the industry to maintain its volume of export during the
economic crisis in 1997. Many Thai food processing companies lost their markets to
other countries such as Indonesia, Vietnam, the Philippines, and China. Thailand faced
export problems due to competition, supply shortages, and inefficient financial and
production management. To regain the competitive edge, Thailand will need to focus
more on the value-added food processing industries and concentrate on efficient
manufacturing strategies.
The Thai food processing industry has become the focus of the government’s attention,
which views it as an important opportunity to increase revenue for the Thai economy.
“Thailand can really become a giant in food “Kitchen for the World” (Shinawat, 2004).
The government’s attempts to support the Thai food processing industry have increased
the use of technological and advanced systems to meet or exceed international standards
including safety and hygiene. Jewaranon (2004) suggested that the private sectors
should work closely with the government to improve Thailand’s ability to distribute
food quickly and efficiently, both domestically and internationally.
3
This research concentrates on finding an appropriate manufacturing strategy for the
Thai food processing manufacturing industry and improving the competitiveness of its
products in the domestic and international markets, particularly by producing high
quality value-added products for the middle to luxury markets. This can be achieved by
upgrading technologies and machinery as well as the skills needed in such areas as
quality management, knowledge, production skills, technical education, and
maintenance of industrial equipment. This chapter provides an overview of the research
by describing its aim, background, targets, benefits, and the research plan.
1.2 Problem Statement This research examines the current manufacturing strategies in a representative group of
Thai food processing companies and, based on those findings, offers recommendations
for appropriate manufacturing improvement. The Thai food processing industry needs
to upgrade its manufacturing through the use of strategies more appropriate to it. The
aim of this research is to find a new model for such strategies.
1.3 Objectives of the Research
The objectives of this research are as follows:
1. To investigate the characteristics of the Thai food processing industry (SMEs);
2. To identify and analyse the main problems in the Thai food processing industry;
3. *To develop a manufacturing strategy model for the Thai food processing industry
combining Good Manufacturing Practices (GMP), Hazard Critical Control Point
(HACCP), Total Productive Maintenance (TPM), Just In Time (JIT) and Total
Quality Management (TQM), as a guide for implementation in companies trying to
achieve manufacturing excellence;
4. To test this model;
5. To suggest that the model is appropriate as a manufacturing strategy for the Thai
food processing industry in general.
* These above objectives are discussed fully in chapter 4.
4
1.4 Scope of the Research
The scope of the study is limited to small and medium sized food processing companies
that have a focus on manufacturing strategies such as GMP, HACCP, TPM, JIT and
TQM. The use of these strategies enables these companies to be successful by
manufacturing products that fit market and consumer requirements respectively.
1.5 Importance of the Research
This research aims at developing an integrated manufacturing strategy model combining
Good Manufacturing Practices (GMP), Hazard Analysis Critical Control Point
(HACCP), Just-in-Time (JIT) Manufacturing, Total Productive Maintenance (TPM) and
Total Quality Management TQM), used to guide manufacturing organisations in
implementing them and measuring their performance towards achieving manufacturing
excellence. Japanese manufacturers that gain a significant competitive edge in the world
market often use these strategies. In reality, the Thai food processing companies have
never used HACCP without GMP. JIT, HACCP, and TQM are complementary and
TPM supports effective implementation of GMP.
1.6 Research Outline
To accomplish the above aim, a pilot survey is used in order to identify the areas to be
explored. This is presented in Chapter 2, which also contains a review of the Thai
agricultural manufacturing industry. Chapter 3 investigates the characteristics by which
the various Thai food processing industries are classified. Chapter 4 discusses the
theoretical justification of the proposed model and clarifies the manufacturing practices
being proposed in the research question. Chapter 5 discusses the development of a
hypothesis and details the research methodology of this thesis. Chapters 6 and 7 present
and analyse data collection from both the pilot survey and main survey of Thai food
processing companies. The pilot survey presents general information about the industry
and gives indications of problems in Thai food processing manufacturing practices
while the main survey focuses on manufacturing techniques and tools. Chapter 8
analyses and tests the hypothesis.
5
In Chapter 9 and Chapter 10 an appropriate Thai food processing industry
manufacturing strategy model is developed for the industry. Chapter 11 presents a
summary of the present study, its contribution to existing knowledge, its limitations, and
recommendations for further research.
6
Chapter 2
An Overview of Thai Industry and the Importance of its
Agricultural Manufacturing Industry
2.1 Introduction The two major industries in Thailand are agricultural manufacturing and
electrical/electronic manufacturing. Both are key industrial sectors, which have had
exports of about 63.4% of GDP or 731,651.7 million baht in 1997 (Bank of Thailand,
1998). In order to understand their importance it is necessary to examine the Thai
economic condition and government policies towards industrial growth.
Because of the Thai economic crisis in 1997, the government focused on the private
manufacturing sector products in order to counteract the negative economic changes in
general living conditions caused by this downturn as well as improved the agricultural
manufacturing industry sector as a means of increasing the overall revenue for Thailand.
In this chapter, the first section reviews the general economic conditions in Thailand,
from the 1970s to the present. The next section discusses the two major industrial
sectors: the electrical/electronic industry and the agricultural manufacturing industry.
These are compared in order to assess their relative importance in the Thai economy.
2.2 General Picture of the Thai Economy The structure of the Thai economy changed considerably during the 1970s and 1980s,
because the Thai government pursued an intense industrialisation strategy. It focused
upon import-substitution and export-promotion policies, in conjunction with low wages
and low-price commodities, with particular reference to agricultural products.
Thailand’s efforts were directed at diversifying the agricultural/industrial economy as a
means of economic growth, and with the aim of increasing the gross national product. It
was thought that this would obtain a more balanced development of agriculture and the
industry sectors, but mainly centering interest on the industrial sector.
7
In accordance with this policy, Thai firms increased their investment with short-term
borrowing from foreign financial institutions, and increased their cooperation with
foreign firms.
This became a major disadvantage for the Thai industrial sectors because it increased
their dependence on imported technologies, mainly from Japan, Western Europe and the
United States (Herderschee, 1996). However, the Thai industry could not increase its
capacity for the absorption of new technologies or make further use of technology
transferred from foreign firms because of misplaced Thai investment: primarily in the
finance and real estate sectors. At this stage industry, in general, was not prepared to
develop its own technology. This attitude caused a serious problem for the economy.
From the beginning of 1971 until 1995, the growth rate in the Thai economy was, on
average, in excess of 7%, with moderate inflation at a stable exchange rate. The strong
growth rate was accompanied by high savings rates (Dollar, 2000). This factor
contributed to the success of the Thai economy. A buoyant export performance,
dynamic investment, and private sector development strategies propelled this extended
period of growth.
In the early 1990s, Thailand embarked on a course of deregulation and financial
liberalisation starting with the acceptance of the International Monetary Fund (IMF).
This phase of capital liberalisation and capital flows caused deregulation in the
operation of financial institutions, and the partial entry of foreign competitors in the
domestic financial system. The liberalisation and globalisation of the financial system
without adequate safeguards against ineffective management of resources resulted in an
economic crisis in 1997. This affected Thai society by increasing unemployment, and
the closing and restructuring of businesses.
8
The Thai economic crisis was caused by both external and domestic factors, which in
many instances were interrelated. One of them was the exceptionally high rate of
growth, driven for many years by foreign investment and exports. Part of the foreign
capital was allocated to investments in non-tradeable sectors such as Property,
Construction, and Real Estate, which consequently generated an asset price bubble and
misallocation of economic resources. This shows a greater need for investment in the
industrial sector and improvement in technologies and services to avoid further crisis.
Figure 2.2.1 Number of Factory Closures in Thailand in 1998
Sources: Industrial statistics: annual report 1998, Department of Industry Promotion
The Thai economic crisis during January-March 1998 had the effect of closing down
factories as shown in Figure 2.2.1: of this total 59.6% were agricultural manufacturing
factories. A number of factories in the agricultural, construction, timber, furniture and
textile sectors laid off a total of 23,891 employees (Appendix A). To improve this state
of affairs, Thai Industry has to develop appropriate technologies in the agricultural
manufacturing industrial sector, which is the basic premise of this thesis.
9
2.3 Classification of Thai Industry Sectors
Industry is an important factor in the Thai economy. It can be classified into the
standard ISIC categories (Appendix A):
(1) Primary industries concerned with natural resources including agriculture (farming)
and mining;
(2) Industries converting the output of the primary industries into products;
(3) Tertiary industries including the service sector of the economy (Table 2.3.1).
Table 2.3.1 Specific Industries in the Primary, Secondary, and Tertiary Categories, based on the International Standard Industrial Classification (ISIC)
Source : Manufacturing Operations, Groover ,2001
2.4 Industrial Transition
Since the Thai government launched its industrial strategies in 1960, including import
substitution and export promotion, the structure of the Thai economy has changed. In
1985, for the first time, the industrial sector performed better than the agricultural
sector, a condition necessary for becoming an NIC (Newly Industrialising Country).
10
Herderschee (1995) shows that the proportion of agriculture in the real GDP had fallen
continuously since 1985. In fact, the decline had started as soon as the Thai government
launched its first economic development plan in 1961, when the agricultural sector
made up 40% of the GDP. In 1997, the proportion of agriculture in the total GDP was
9.5%, which is much smaller than the 42.8% of the industrial sector. It also shows that
the rising proportion of industry matched the falling proportion of agriculture (20% in
1999).
It will be shown below that industry exports also exceeded those of agriculture as early
as 1985, thus fulfilling another condition necessary for becoming an NIC. However, the
GDP per capita income of Thailand was still too low, even in 1990, to qualify as an
NIC. Since then the growth rates of industry in general as well as other related
agriculture and manufacturing have been increasing rapidly. If these trends continue, the
NIC status will become obtainable in the near future. It can be seen from Table 2.4.1
that the growth rate of the agricultural sector between 1977-1987 was 3.5%, which is
quite high compared with the period between 1988-1998, when the corresponding rate
of growth was 2.6% (Bank of Thailand, 2000).
Table 2.4.1 Share of Gross Domestic Product by Industrial Origin and Growth at
1980 Prices
Source: Bank of Thailand, 2000 (Manufacturing is included under “Industry”)
The industrial sector has been the largest sector since 1985, its growth rate having
increased from 6.9% between 1977-1987 to 8.8% between 1988-1997. At the same
time, Thai manufacturing exports expanded their markets to the USA, EU, Japan and
now included new markets (Bank of Thailand, 2000).
11
In 1997, during the economic crisis, the percentage growth rate of the industrial and
manufacturing sectors in the composition of the GDP fell to –0.6% and 2.5%
respectively. Thailand was undergoing its economic crisis. The manufacturing sector
increased to 6.2% between 1977 and the end of 1987, and started to increase again in
1998 (Bank of Thailand, 2000).
As mentioned above, Thailand adopted an import substitution policy in the early stages
of its industrialisation. In the early 1960s, the authorities adopted an industrial strategy
based on the private sector. The Board of Investment (BOI) was created to administer a
package of investment both from within and outside the country (Kohta,1990). Local
and foreign investments were actively promoted through investment promotion
packages (import-substitution strategy), which included guarantees against
nationalisation and competition from state enterprises; tariff and business tax
exemptions on imports of capital goods and raw materials, two-year corporate tax
holiday, and the possibility of import surcharges on competing imports.
However, the growth in the industrial sector was limited by the demand in the domestic
market and the role of the public sector was limited to providing a basic infrastructure.
In addition, there was the need for intermediate and capital goods to be domestically
produced in order to reduce the demand for imported finished consumer goods. In 1972,
the government improved its incentives for export of industrial products and because of
the skills adopted and low domestic labour cost, Thai exports enjoyed a comparative
advantage over many competitors, resulting in a sharp growth in export goods. Many
manufactured products such as garment, footwear, jewellery and processed food were
exported from the 1970s.
In the mid-1980s, the industrial development strategy was, in turn supported by changes
in financial policies. The value of the exchange rate with the US dollar was fixed in
1963. In addition, the economy was very open with current account transactions
generally free, and capital control was limited to outflow. As a result of these policies,
investment soared during the 1980s. Industrial output grew rapidly, initially in
agricultural industries such as food processing, textiles, and then in heavy industries
such as petroleum refining and transport equipment.
12
Although agriculture remained the prime industry in the economy, its share in the GDP
fell sharply. Added to this, the dominance of rice and other traditional crops began to be
challenged by new export goods such as sugarcane and cassava. This development was
greatly facilitated by substantial improvements in the infrastructure, especially
irrigation, electricity supply, transportation and the expansion of the commercial
banking system.
However, the development of the industrial sector has been limited due to major
obstacles not only in terms of infrastructure, but also due to shortages of skilled and
qualified staff in the fields of high technology and science required for advanced
manufacturing processes (Bhumiratana, 1990). The infrastructure bottleneck arising
from the rapid growth of the industrial sector is an increasingly serious problem. At the
same time, there have been grave shortages of qualified staff, in particular skilled
engineers and technicians. Consequently, environmental problems and a deterioration of
income distribution were also becoming major issues.
2.5 Export-Import Patterns
Since domestic production and the import and export of Thai industrial products are all
related, it is appropriate at this point to examine the structural changes in the Thai
economy. The expansion of the Thai economy from the late 1980s onwards depended
on rapid growth in exports and direct foreign investment, especially in 1995. There
were, however, a number of obstacles to continuous growth, relating to both trade and
investment. As mentioned above, political unrest was a major factor. In addition, the
prolonged recession in the US and European economies, as well as the deterioration of
the Japanese economy, influenced Thailand’s economic growth (Wilson, 2000).
The substantial increase in Thailand’s total exports in 1988 was seen as an important
factor contributing to the size of economic growth. As shown in Table 2.5.1, in 1989,
exports brought an income of 516,315 million baht, an increase of 21% over the export
values of 1987. The growth rates of total exports in 1991 and 1994 were about 18% and
12%, respectively (Department of Customer, 1998). Between 1991 and 1994, the export
growth rate had declined in response to external and internal developments.
13
The total growth rate of export in 1996 (0.33%) was less than in 1995 (19.0%), 1994
(18%), and 1997(11.2%). The growth rate declined continuously from 1991 until the
end of 1993. However, a better performance in 1994 led to a slight improvement by the
end of the year and the growth rate of total exports slowly rose during 1995 and 1996.
Table 2.5.1 also shows that industrial exports constituted the highest portion of
Thailand’s total exports in 1996 (about 73.0%).
Table 2.5.1 Structure of Thailand’s Export Products (Unit: Million Baht)
Source: Department of Customs, Year 1998
The major industrial exports that enjoyed high growth rates included plastic products,
computer components, electronic circuits, and processed food. However, the US was
still the major market exporter, followed by Japan, Singapore, the Netherlands and
Germany. Apart from exports, imports are a major factor that need to be considered.
Figure 2.5.1 shows that the rapidly growing economy of 1991 gave rise to a greater
demand for imported goods, intermediate products and raw materials. Total imports in
1991 amounted to 959,408 million baht, an increase of 11.49% over the value in 1990
(Department of Custom, 1998)
14
Figure 2.5.1 Thailand’s Import Product Source: Department of Business Economic, 2000 and Bank of Thailand 2000
In 1997, 1998 and 1999, the growth rates of total imports were similar to those of
exports: the growth rates of total imports were about 4.7%, -8% and 6% respectively.
These growth rates were less than those of 1991, 1992 and 1993. In 1997, Thailand was
hit by an economic crisis; hence, the above outcomes were affected by the demand for
imported goods, in particular, arising from decreased investment and production of
manufactured goods.
15
2.6 Direct Foreign Investment Electrical/Electronic Products
in Thailand
Investment in the Thai electrical/electronic industry mostly comes from abroad or as
joint ventures under the control of overseas companies. This sector of the industry is
quite small and almost all Thai producers operate either small or medium scale
businesses. Their production lacks transfer technology and is limited to assembling
parts. However, there are opportunities for these industries to expand their exports and
create linkages if transfer technology is utilised.
Direct foreign investment in Thailand had a particularly strong effect on the Thai
economy. These were not necessarily beneficial in the long term. The example of the
Thai electrical/electronic industry is an example of the effect of foreign investment on
the Thai economy. Thailand’s strategy for export promotion has maintained the growth
of direct foreign investment in Thailand, which had been growing since industrialisation
began in the early 1970s. During that time, investments averaged 18,000-19,000 million
baht but between 1994-1995, it increased sharply (Dollar, 2000). As shown in Figure
2.6.1, the total amount of foreign investment increased from 31,368.047 million baht in
1994 to 247,192 million baht in 1995.
As shown in Figure 2.6.1, more than half of the additional investment in 1995 came
from Japan (26.39%), followed by Hong Kong with a share of 13.44% and then by the
USA and Taiwan at 13.41% and 5.5% respectively (Bank of Thailand, 1996). The main
reason foreign firms invested in Thailand was because they could get greater benefits
from the Thai export policies. Recipients of the Thai export promotion were classified
into two groups: A and B.
Group A consisted mostly of capital-intensive industries such as the chemical industry,
electrical/electronic appliances, automobile, and shipbuilding industries which were
exempted from import duties, business, and sales tax on raw materials for five years
(Kohata, 1988). However, electrical/electronic assembly is classified under Group B
and was exempted from 50% of import duties, business and sales tax for five years.
16
Group A normally received the higher level of promotion. The majority of Thai
companies were categorised in this group. Small-scale entrepreneurs who were not
given promotional privileges faced problems of tax structure, resulting in disadvantages
in investment costs. This investment promotion is still provided by the Board of
Investment (BOI). However, this policy was not useful when applied to the promotion
of investment in Thailand to foreign firms (Krongkaew, 1995).
The substantial increase in Thailand’s total electrical/electronic exports in 1997 was an
important factor determining the size of economic growth. The export structure of
electrical/electronic products increased every year. As shown in Table 2.6.1, exports of
Thai electrical/electronic products were 601,151.4 million baht, an increase of
791,462.1 million baht, or 6.67% over the value of imports in 1998. Export data from
various sources shows good correlation (Appendix A). The majority of Thai
electrical/electronic products export were made up of integrated circuits, computers,
components, and televisions. The highest value exported item was PC Packaging
(about 58,538.6 million baht), and hard disks gained the greatest net profit for this
period (Bank of Thailand, 1996). Figure 2.6.1 Net foreign Investment Flow in the Thai Electrical/Electronic Sector
Classified according to Country
Source: Bank of Thailand, 1996
17
Table 2.6.1 Structure of Thai Electrical/Electronic Industries (Unit: Million Baht)
Source: Department of Business Economics, 2000
The majority of Thai industrial exports were electrical/electronic products destined for
industrial markets such as the US, Japan, Singapore, China, Malaysia, Taiwan, South
Korea and Germany (Department of customs, 1998). As a result, it can be seen that
foreign firms still have total control in the Thai electrical/electronic industry, including
imported raw materials, design and assembly products, manufacturing processes,
production of brand name goods, and export products. The only benefit for Thailand is
the creation of employment. For example, production costs for one computer monitor is
76.8% for imported raw materials, 13.6% for Thai domestic raw material, 2.5% for
labour costs, and 5.5% for overhead costs.
The current problem relating to foreign trade and investment in Thailand is the
competition with labour costs in other Asian countries, especially China. The Thai
government needs to put more emphasis on making this industry competitive in the
international markets. This industry must consider using more advanced technology if higher quality is its main objective rather than relying on the present low wage rates to
create its advantage. To solve this problem, this industry has to focus on employment
and labour training, company taxation, and transfer of technology to Thai firms and the
creation of Thai brands for export. This will make the Thai industry more competitive in
the international market.
18
2.7 Thai Agricultural Products
Thai agriculture helps the budding industrial sector by supplying food, labour, market
outlets, saving foreign exchange, which is necessary for industrialisation. In doing so,
the agricultural sector has been subjected to government taxation and various other
restrictions that have benefited the industrial sector. The structure of Thai agricultural
products is shown in Figure 2.7.1.
Figure 2.7.1 Sector Classification for Thai Agricultural Manufacturing Industry
Agriculture
Farming Agricultural Manufacturing Industry
Food processing Canning and preservation of meat, fruit and vegetable Canning and preservation of fish and other sea products Noodle and similar products Sugar products Coffee and tea processing Soft drink and carbonated beverages
Non- food processing Leather products Footwear, except rubber Wooden furniture and fixtures Pulp, paper and paperboard product Rubber sheet and block rubber Other rubber product Wood production Textiles
Rural industry
19
For the purpose of this thesis, the traditional crops of Thailand ‘s agricultural products
will be classified into two categories. The first is extended farming, for growing maize,
rubber, cassava, upland rice, sugar cane, sorghum and other crops outside the existing
farm holding and using common land. The second is intensive or rotation crops, grown
as a supplement income, including tobacco, mung beans, groundnuts, cotton and
soybeans mainly within the farm holding. These products are the important raw
materials used to supply Thai industries.
The volume of agricultural output, which has been generally forecasted to grow, is
expected to lead to a continued fall in agricultural prices. Even though there is a rising
trend in inflation, it is expected to still remain at a low level. Agriculture is important to
the Thai economy in five areas: (1) the increase of food supplies for domestic
consumption; (2) the release of labour for industrial employment; (3) the increase of the
size of the market for industrial output; (4) the increase of the raw material supplied for
agricultural industries, and (5) the earnings of foreign exchange capital.
Agriculture has contributed decisively to the significant industrialisation process in
Thailand. It has provided cheap raw material and supplied labour to various industries.
Agricultural exports, as a source of foreign exchange, have helped the country to earn
much needed income.
2.7.1 Definition of the agricultural manufacturing industry
The classification within agricultural manufacturing industry is arranged by size of
company, for example category D International Standard Industrial Classification of All
Economic Activities, ISIC: REV3, (Appendix A). This covers all manufacturing
establishments in Thailand employing 10 or more persons. Manufacturing is defined as
the mechanical or chemical transformation of substances into new products whether the
work is performed by power-driven machines or by hand, whether it is done in a
factory, a workshop or a household.
20
2.7.2 Definition of food processing industry
The food processing industry processes agricultural products for public consumption or
to be used as ingredients for further processing for human consumption. This industry
encompasses the preservation of agricultural products as semi-dried products after
initial or intermediate processing or as finished products.
2.8 Agricultural Manufacturing Industry
The agricultural manufacturing industry is very important to the Thai economy, because
it is the link which forms a relationship between domestic agriculture and the industrial
sector. This means that the agricultural manufacturing industry has given added value
to agricultural products in the form of manufactured products. These include processed
food, textiles and garments. This sector also made up about 17.34% of the export
products of the GDP in 1998 (Bank of Thailand, 2000). During the Thai economic
crisis, the agricultural manufacturing industry was not affected by such factors as
currency exchange rate and decreased exports because this sector mostly used domestic
raw material in its products, and it benefited from the currency exchange rate of exports
in the world market. The Thai agricultural manufacturing industry was more highly
competitive in the world market because Thai expertise in this field helped to develop
new technologies, better quality and low-cost products.
However, the Thai agricultural manufacturing industry now faces a problem in
increasing exports to the world market, due to bottlenecks in raw material supply, poor
infrastructure, promotion by tax breaks, poor labour skills and business management.
The agricultural manufacturing industry can be classified into two groups of products:
(1) food processing and (2) non food products.
2.9 Food Processing Industry
Exports from the food processing industry can be classified into 5 main sectors: fishery
products, livestock, canned food (fish, crustaceans, vegetable, fruit and other), rice and
cereals. In 1988, about 6,000 factories were involved in food processing employed
330,000 workers and raised revenue of 111,117 million baht, 8% of GDP. (Department
of Industry Promotion, 2000). In 1998, the export value was about 233,001 million baht.
21
The important markets were Japan, USA and the EU, with good opportunities for future
expansion into Canada, Australia and Asia. The Efficiency of Productivity Rate (ERR)
of production has been affected by tariff barriers and free trade agreements (World
Bank, 2000). This is because it no longer has a cheap labour force and Thai producers
get lower benefits from free trade.
Producers, when applying the Domestic Resource Cost (DRC), have the capability of
increasing production for export because the unit cost of domestic raw material is
cheaper than the imported (World Bank, 2000). Moreover, Thai export products were
competitive, according to the Revealed Comparative Advantage (RAC) index, and
compared to other products whose competitiveness decreased due to shortage of raw
materials and increased processing costs.
This type of food processing was aimed at reducing imported products used in the
domestic market. Domestic products such as animal food had an added value in the
market place of about 9,717 million baht: vegetable oil, 6,164 million baht and mill
products, 6,146 million baht. The local agricultural manufacturing industry sector had
added value to the raw material products from farming (Department of Industry
Promotion, 2000). For the food processing industry, cassava is the most important
product in Thailand. Cassava has several advantages: it can be grown almost anywhere,
even in very poor soil, is highly tolerant to drought and pests, and yields are high. The
cassava product industry has created employment for about 3 million people (TDRI,
1983). Cassava food products, along with non-food cassava products have an annual
export value of more than 20,000 million baht each year. Fifty-five percent of cassava
products used for Thai domestic industry are processed and exported to the EU. The
rest is made into cassava starch, which is exported to foreign markets and used as raw
material in domestic industries e.g. food, drink, candy, medicine, dental and seasoning
powder.
At present, Thailand has developed several uses for cassava starch. Nevertheless, to
maintain its past competitiveness, Thailand has to develop better technologies for
production that will increase the quality of products and reduce cost to compete in the
world market.
22
2.10 Non food products
There are about 8,110 factories in the non-food processing sector. This sector has a
total investment of about 74,200 million baht and 281,829 employees. In 1998, the
value of the export industry was about 136,808 million baht (Ketnin, 2000). Its exports
were rubber sheets, rubber blocks and rubber products (67%), with wood, furniture,
tanneries and leather finishing (12%). The main markets were Japan, US, EU and other
Asian countries. Considerations about competitiveness using the RCA index shows that
Thailand was highly competitive with regard to rubber sheets. The paper and paper
board industry produced approximately 626,000 tons according to an annual report that
was done in order to reduce imports during the last ten years.
The agricultural manufacturing industry is related to the rural industry the most
important sector in Thailand. The Thailand Development Research Institute (TDRI)
(1985) suggested that the rural industry represents an increasingly important concept in
the context of the Thai economy. There are many reasons for this; one of the more
important concerns is the emergence and dominance of a large city or a few highly
industrialised cities. This phenomenon has serious implications on the pattern of income
distribution and social activities between big industrialised cities in the rest of the
country. Large numbers of rural people are attracted to big cities and this creates
numerous social and economic problems. Another important aspect of the rural industry
is that it represents a process that can contribute positively to better distribution of
development benefits. The rural industry can also be looked on as a means of reducing
employment problems in less developed areas. This decentralisation can contribute to
better utilisation of existing labour particularly in the agricultural sector, the dominant
sector in Thailand.
For example, cottage industries creates jobs for more than 900,000 households or
1,700,000 people and make up 87% of agricultural manufacturing industry producers.
Production is still mostly carried out by small firms, which use simple equipment, with
a product value of about 300,000 baht per year. Therefore, it can be said that rural
producers are important in producing raw materials for the industrial sector.
23
2.11 Relative Importance of the Agricultural Manufacturing
Industry and the Electrical/Electronic Industry
In 1996, the agricultural manufacturing industry export decreased 0.01% of GDP and
increased to 17.27% in 1997, and 18.26% in 1998. The average export output ratio for
the electrical/electronic sector was twice that of the agricultural manufacturing industry,
increasing from 28.28% in 1997 to 65.57% in 1998 (Bank of Thailand, 2000). This
represented a drastic change in the Thai export structure. As recently as 1995-1999, the
export value of the agricultural industry was higher than that of the electrical/electronic
industry. Figure 2.11 shows that since 1997 the Thai electrical/electronic exports began
to match the agricultural manufacturing industrial exports (Bank of Thailand, 2000). At
present, Thailand's export industries are especially vulnerable to increases in labour
costs for two basic reasons. Firstly, many of Thailand's most successful export
industries are highly labour-intensive, so that an increase in wages has a large effect on
their costs (Tabucanon, 1993). Secondly, these export industries have little bargaining
power to counter the highly competitive international markets for their products. This
means that cost increases cannot be passed on in the form of increases in the
electrical/electronic products. The profit margin is small.
Figure 2.11 shows that the trade balance for Thai export products in the agricultural
manufacturing industrial sector exceeded that of the electrical/electronic sector. Also,
the agriculture manufacturing industry benefits the Thai economy by using more
domestic raw material compared to the electrical/electronic sector which imports more
than 60 % of its raw materials from overseas. Because labour in Thailand is no longer
cheap, it means that Thailand only gets the benefit of increased employment from the
electrical/electronic industry. However, the situation is changing and there are some
problems in export products because of an increase in price due to the increased labour
cost, lack of technically skilled workers and high risk of withdrawal of foreign
investment firms. The agricultural manufacturing industry is supplied with raw
materials from the agriculture sector, providing employment to the Thai agricultural
manufacturing industry. However, to increase competitiveness, the Thai agricultural
manufacturing industry needs appropriate technologies to improve quality and cost of
product, delivery, packaging, marketing, and organisation management.
24
Figure 2.11 Comparison of Trade Balance Figures for Thai Export Products Source: Comparison of trade balance figures for Thai export products
Based on Bank of Thailand 2000
2.12 Conclusion During 1978-1997, Thailand used a strategy focusing on export promotion. Like other
technologically underdeveloped counties, emphasis was placed on the importance of its
cheap labour costs that could be used for labour-intensive, low- technology export
goods. Such goods were cheaper than the same goods from industrialised countries, and
they could be sold both in the Thai domestic and international markets. These goods
are produced by both the domestic manufacturers and foreign firms (wholly owned or
joint ventures) that have their production base in Thailand. Thailand’s abundant labour
force had been seen as an attraction to foreign investors, and had formed the basis of an
export-led growth. In the short term, cheap and unskilled labour helped to promote
Thai industry, but in the long term, such labour could not support modern technologies
due to lack of proficiency. It is commonly accepted that this is what eventually led to
the Thai economic crisis of 1997.
At that time, Thai electrical/electronic producers relied heavily on the exploitation of
volume and low labour costs against foreign competition. In the future, such value-
based competition can no longer be maintained. It was found after the Thai economic
crisis, that electrical/electronic products could not compete in the market because these
25
products used imported raw materials, the cost of which increased more than 50%
because of the exchange rate. This caused foreign investors to lose interest in Thailand
and move their businesses to other countries with cheaper labour cost. The Thai
electrical/electronic industry’s profits have been declining due to labour cost
competition from other countries, such as China.
The other reason for the decline is that Thai firms had to import technologies at high
cost, increasing product price. Foreign firms are also reluctant to transfer technologies
to the local ones. This is an ongoing problem which seriously limits the growth of the
electrical/electronic industry in Thailand. In the Thai agricultural manufacturing
industry however, exports have increased dramatically. The fact that raw materials are
obtained from domestic agriculture allows products to be manufactured at low cost.
Low production cost and low exchange rate make agricultural industrial products
extremely competitive in the international market. The agricultural manufacturing
industry supports products from the agriculture sector, providing employment for 13
million in the agriculture sector, improving the quality of rural life and discouraging
migration into cities. One of the strong points of agricultural manufacturing is the
experience in developing technologies (R&D) and experienced workers. This should
lead to Thai-brand export products that are accepted by the international markets.
However, the Thai food processing industry sector needs new technologies for efficient
production of quality goods at prices that are competitive in the international market.
This thesis attempts to find appropriate technologies for the Thai agricultural
manufacturing industry to improve competitiveness of its products in the domestic and
international markets. New technologies are needed to make high value-added products
for the middle to luxury markets. This can be achieved by upgrading technologies and
machinery as well as the skill base, such as quality management, knowledge, production
skills and maintenance of skill industrial personnel. Table 2.12 presents the advantages
of the Thai agricultural manufacturing industry and disadvantages of Thai
electrical/electronic industry. There is the possibility of expansion into in the Middle
East and the EU.
26
Table 2.12 Comparison of the Thai Agricultural Manufacturing Industry and Electrical/Electronic Industry
The agricultural manufacturing industry The electrical/electronic industry - Income generated goes back into Thailand - Most of the raw material used comes from the
domestic market - 1,778,300 people were employed in the
agricultural manufacturing industry, 800,000 people in rural industry and there is a relationship with13 million farmers.
- The world market has accepted Thai brand industry.
- There are Thai firms with experience in R&D and skilled labour in this sector.
- It supports the quality of life that is created by employment opportunities for local society, and halts the exodus from country labour to Bangkok.
1. Most of the raw material is imported from overseas.
2. Business depends on foreign firms: - There is a high risk of foreign investment moving out because of highly competitive labor - intensive services of other countries such as China, Vietnam , Indonesia, and the Philippines. - Used foreign brand names to export. - Problems in transferring technologies
between local and foreign firms. - High cost of investment in new technologies,
because almost all Thai firms have had to import technologies.
- Foreign firm control nearly everything in this business, i.e. investment, importation of raw materials and export products.
- Increased employment opportunities. The income generated is salary.
3. Payment to local employees: - low skill of labour force - lack in engineering knowledge to support
industry - Ineffective organisational management. 4. Most of the raw material is imported from
overseas.
27
Chapter 3
Analysis of Thai Food Processing Industry and
the Importance of SMEs
3.1 Introduction Thai agricultural manufacturing-based industries, especially the food processing sector,
are considered to have the most potential for high growth. This growth is able to add
more value to agricultural products, and hence increase their price, reduce price
fluctuations, stimulate increased production, and foster distribution efficiency in the
agricultural sector. Food processing is the most important sub-sector industry in
Thailand. Food production in Thailand is based on local raw material, comprising fruit
and vegetables, cereals and oilseed, fish and livestock (Asia Pacific Food Industry,
1991), and accounts for approximately 30% of the total industrial sector production.
Food processing product exports were valued approximately 402,070 million baht in
1998 (Bank of Thailand, 1999). The major export items are chilled and frozen prawns,
fish and canned pineapple.
This chapter provides contextual information regarding the role of the food processing
sector in the agricultural manufacturing industry. Starting with an overview of key
development objectives identified within the national planning process, the discussion
shifts to the key characteristics of the Thai agricultural manufacturing industry, focusing
on the food processing sector.
.
3.2 Moving Towards Industry-Based Agriculture
As agricultural production techniques advance, surplus production increases. To benefit
from the surplus, technologies have been developed for handling and processing the raw
material by drying, freezing, milling, or manufacturing processing, and strengthening
the commodity’s value. These are advances in the industry that are largely responsible
for the transformation of an agriculture manufacturing based industry. Linkages with
farmers and farmers’ organisations either through contract farming or other types of
business operations were also established (Chayowan, 1997).
28
As Thailand adopted the 5-year National Economic and Social Development Plan to
promote the country’s development, the share of the agricultural sector in the country’s
GDP declined significantly from 24.9% in 1980 to 11.1% in 1995. However, the
manufacturing sector share increased from 21.7% to 28.2% during the same period
(Department of Custom, 1998). Such a change is common to a country in transition
from an agricultural to an industrial economy.
3.3 Thai National Economic Objectives for the Agricultural
Manufacturing Industry
Since 1961, the government has been using a national development plan to establish the
framework and guidelines for national development. The plan includes the allocation
and management of economic, natural, human, and financial resources, and government
administration machinery in order to improve the quality of life and safety. National
economic development work has expanded to encompass various development sectors.
This has led to an increase in production capacity, job creation, national revenue and
economic growth (TDRI, 1989). One of the target industries in this plan is the
agricultural manufacturing industry for which the guidelines are as follows:
1. Develop and support agricultural manufacturing industry that has a high
potential for export or import substitution in accordance with the needs of
markets and buyers, production inputs of each region and the potential of each
locality.
2. Expand the production base into new agricultural manufacturing industry with
high market potential from surpluses of such raw materials as rice, cassava and
rubber, and foods with developmental potential such as food processing from
fruit and vegetables and health foods from medicinal plants.
29
3.4 Definition of Thai Small and Medium Enterprise (SME)
Sector The Ministry of Industry Department Promotion defines three different categories of
SMEs:
1 .Production Sector SMEs (agricultural processing, manufacturing, and
mining)
2. Service Sector SMEs
3. Trading Sector SMEs (wholesale and retail)
According to a Bangkok Bank report (1998), there were 311,518 SMEs (92% of the
total enterprises). The majority of SMEs (43.1%) were in the trading sector, while only
90,122 (28.9%) belonged to the production (manufacturing) sector and 87,225 belonged
to the services sector. Many authors have noted (e.g. Nattapong, 1994) that there was
no single definition of SMEs in Thailand. Various agencies used different criteria such
as sales per annum, net fixed assets, number of employees and registered capital.
The Ministry of Industry defined medium enterprises as having 50 to 200 employees
and invested capital between 10 and 100 million baht. On the other hand, a small
enterprise was defined as not employing more than 50 workers and having invested
capital not exceeding 10 million baht (Table3.41).
Table 3.4.1 Definition of SMEs by Total Assets Value (Million Baht)
Source: Institute for SMEs Development (ISMED, 1999) Bangkok Bank report, 1998
30
3.5 Definition of Thai Food Processing Industry A food processing industry is based on using agricultural products as ingredients for
further processing. This includes the preservation of agricultural products e.g. semi-
dried after the initial or intermediate processing, tinned or finished packaged products.
3.6 Food Processing Industry in Thailand Development of the food industry was associated with the country’s entry into
international trade. A highlight of the industrial development of the food processing
industry during the years 1990-2002 was its realignment with greater emphasis on
quality and food safety. Thailand responds to competition in terms of a cheaper
production basis and an improving quality of products (Suwannaporn, 2000).
Responding to customer needs, greater emphasis is placed on hygiene and sanitation
during production, food safety, wholesomeness, lower production costs, value-adding,
and adherence to environmental regulations.
The Thai government is trying to encourage the upgrading of the food processing
industry by greater recognition and the need to conform to international standards and
practices (HACCP and GMP). There is a need for automation of processes for improved
throughput and reduced contamination, process technology upgrading, new methods of
preservation of cooked, prepared and ready-to-cook products, and production R&D
(Sinnawat, 2004). An important characteristic of the manufacturing sector in Thailand
is the predominance of SMEs. At the end of 1998, the Factory Control Division of the
Ministry of Industry announced that approximately 98% of the total registered factories
in Thailand were SMEs. Therefore, the trade data will be used to analyse trends in the
food processed industry for SMEs in Thailand (Table 3.6.1). Table 3.6.2 shows the
proportion by factory, investment and employment.
Thailand is amongst Asia’s largest trading countries in agricultural products. More than
60% of the total labour force involved is in the agricultural sector. It is the major
exporter of agricultural products such as tapioca, rice, kenaf, castor bean, rubber, corn
and sugar. Thailand also produces and exports large quantities of wood, livestock and
fish products.
31
Table 3.6.1 Number of Factories, Capital Investment, and Employment of Registered Factories in Thailand 1998
Source: Department of Industrial Promotion, Ministry of Industry, 1998
Note: Industrial Restructuring Plan, 1988-2000.
The number of food factories provides evidence of the significance of the food industry
in Thailand. In 1997, the number of food processing factories totalled 42% of the Thai
SME sector, and about 658,900 people were known to be employed in the food industry
sector (Department of Industrial Promotion, 1998).
In 1998, the top ten food industries earned approximately 402.1 billion baht, roughly
18.3% of the country’s total export (Table 3.6.3). In 1997, about 658,900 people were
know to be employed in the food processing industry (Kijkaosomwang, 1999). The
employment distribution of the workforce is as presented: 35.1% (seafood industry),
16.7% (cereal industry), 11.8% (fruit and vegetables), 10.3% (meat industry) and 6.8%
(sugar industry). In 1998, Thailand exported food products to North America mostly
(20.28%). This was followed by ASEAN (17.28%), Japan (16.27%) and 13.84% for
other significant markets. (Department of Business Economics Trade Statistic, 1998)
Table 3.6.2 Proportion of SME by Factory, Investment, and Employment 1998
Source: Department of Industrial Promotion, Ministry 1998.
32
Table 3.6.3 Thailand’s Top Ten Food Exports in 1998
Source: Department of Industrial Promotion, Ministry 1998
3.7 Profitability of Thai Industry The gross output of Thai industry was 3.5 million baht for the year 1997 (Bank of
Thailand, 1997). Companies engaged in the manufacturing of food products, beverages
and tobacco products had the highest proportion of value of gross output: 644.33
thousand million baht or 18.2 percent of the total value of the gross output in 1997. This
was followed by the manufacture of motor vehicles, trailers and semi-trailers and other
transport equipment, which had a gross output of approximately 485.0 thousand million
baht, or 13.7% of the total. Other divisions of industry had relatively low value of gross
output, each division had less than 10 percent of the total value of gross output
(Figure3.7.1) (See detail Appendix B).
The Division of Industry Source Report of the 1997 Industrial Census of the whole
Kingdom, the National Statistic Office shows that the manufacturing of food products
had the highest value of gross output, and was among the highest product profit from
value added products, approximately 213.9 thousand million baht or 21.4% of the total
value added profit. This was followed by the manufacture of motor vehicles, trailers and
semi-trailers and other transport equipment which provided additional value of about
14.7 percent and other value-added items of less than 10 percent of the total value.
(Figure3.7.2).
33
Figure 3.7.1 Gross Output by Division of Industry Source: Report of The 1997 industrial census of the whole Kingdom, National statistical office
Figure 3.7.2 Value added by Industry Sector Source: Report of The 1997 industrial census of the whole Kingdom, National statistical office
34
3.8 Government Policies Development Plan: The Thai Food
Processing Industry
The Thai Government policies development plan places:
1. An emphasis on the manufacturing of high value-added product from
local raw materials aimed at the export market.
2. The protection of honest manufacturers.
3. Promotion of the health and welfare of consumers by supervised
hygienic production.
4. Development of quality control for production and distribution of food,
both domestic and international market in order to ensure that quality and
safe foods are supplied to consumers.
The government has not only provided agribusiness with promotional privilege
packages, but has also encouraged foreign investment, enabling many industries to
develop rapidly. For example the Korat plateau was developed using Dutch and Danish
capital and expertise. Capital and technology from Taiwan were brought in to initiate
modern fish and prawn farming (Ongsritrakul and Hubbard, 1996). European capital has
contributed to feed-mill ventures. The USA has played a leading role in fruit canning
causing the price of the country’s agricultural products to fall drastically while the price
of imported processed food soared.
This was the major push factor that drove Thai entrepreneurs to venture in to agro-
processing. The government, in its attempt to maintain a healthy trade balance, has
strongly supported the agricultural food processing effort, marking the beginning of the
agricultural manufacturing industry.
The implementation of the National Economic and Social Development Plans (NSDP)
boosted economic development because natural and human resources were abundant
enough to provide occupational opportunities for the vast majority (The Eight Nation
Economic and Social Development Plan, 1997). Thailand’s economic success, however,
did not come without a price, as many social and environmental problems emerged,
which decreased the quality of life of the people.
35
A competitive country greatly depends on the capacity of its industry to innovate and
improve existing technology (Olarikovit, 1996). Recognising the weaknesses of the
food export industry, the government has supported the establishment of agencies with
the mandate of assisting and promoting development of food technology, which is
aimed towards increasing food processing and production efficiency.
3.9 Classification of Food Processing Industry The food processing industry is one of the most important development strategies for
Thailand. It is able to use local raw materials and provides employment and income
distribution in the countryside. It also stimulates the expanding economy because it has
strong links with other sectors. Food processing accounts for the majority of all
manufactured exports. It can be broadly classified into Food Processing, Animal Feed
and Meat Production (Bunrong,1984). The food processing industry could be classified
in various ways, one of the simplest is according to functions of raw material
acquisition, manufacturing and distribution.
1. Raw materials acquisition includes maintenance of raw material, flow at
optimum level, quality control and proper storage prior to conveyance to the
production line.
2. Manufacture includes maintenance of adequate manufacturing pace, quality
control and proper future production schedules.
3. Distribution includes maintenance of steady, timely distribution to consumer
centres. Quality control is gained through proper storage, shipping, and
market conditions.
3.10 Common Food Processing Industry in Thailand
Thailand’s processed food exports comprise frozen and canned food, roughly in equal
quantities. Shrimp, cattle and fish are the most popular frozen foods, while pineapple
juice and seafood make up the major part of canned products. Other exports include
many varieties of fresh, and dried fruits and vegetables.
36
3.10.1 Fruit and vegetable processing Fruit and vegetables are mostly processed by canning, dehydrating, chilling, freezing
and traditional processes. Canned fruit and vegetables have become an important source
for the Thai economy. This industry provides a great number of job opportunities and
has brought about a broad spectrum of advantages including the growing number of
value added items for the farm produce concerned. The major products are canned
pineapple and pineaple juice, lychee, rambutan, long an, corn, mushrooms, bamboo
shoots and tomato products (Gerasotikun, 1997). Canned pineapples and pineapple juice
account for over 90 % of canned fruit and vegetable export.
There are several problems besetting the canned fruit and vegetable industry such as
quality and the irregular supply of raw materials, inefficient manufacturing processes,
and quality control, etc. The dehydrated fruit and vegetable market has undergone rapid
growth in recent years, with products such as dried pineapple, papaya, banana, long an,
etc. These are produced on a small scale or in village-type industries and mostly
consumed locally. But the demand for exported dehydrated fruit has increased over the
last few years.
Traditional and fermented fruit and vegetables are mostly made in the form of sun-dried
fruit, fruit jam or brine-picked fruit (Fonkegchai, 1998). The present production of
traditional and fermented fruit and vegetables is for local demand and mostly produced
in household or cottage-type industries. The destinations of Thailand’s fruits and
vegetables are EU23%, US 22% Hong Kong 8%, Asean 7%, China 4%, Taiwan 4%
Australia 2% and Others 30% (National Food Institute, 2001). To ensure food safety,
the government of Thailand is promoting Good Agricultural Practices in agricultural
production and GMP and HACCP in the processing sector.
3.10.2 Marine products The fish meat industry in Thailand has recently gained economic importance as is
evident from the amount of annual fish meat production, and its contribution to related
industries such as the animal feed industry and livestock production. In term of export,
Thailand has ranked as one of the most important exporting countries over the past few
years.
37
The fish meat industry is considered as primary in the sense that it produces a primary
processed product, which will be utilized by secondary and tertiary industries. This
helps to increase the value added of small fish which are caught along with larger fish.
Thailand is one of the leading countries in fish production. Since 1961, after the first
National Economic and Social Development Plan was initiated, commercial fisheries
have developed at an explosive rate. In 1997, the value of fish exports was about
288,332 tons valued at 19,847 million baht.
The major processed fish and seafood products are:
1. Canned fish
2. Frozen fish
3. Traditional fish processing
3.10.3 Edible oils
The major raw materials are rice, soybeans, copra, cottonseed and castor beans.
Thailand’s edible oil industries operate as joint ventures with foreign companies with
modern technology.
3.10.4 Dairy products and baked goods Large portions of all household sectors use sweetened condensed milk, while the
government tries to promote dairy production in order to be less dependent on imported
milk. There is a large domestic demand for flour mills that supply manufacturers of
noodles, breads, cakes, buns and rolls, cookies, crackers and biscuits, but large
quantities of these products still have to be imported. Thai milk products are mostly
exported to Asean countries. Many multi-national companies have invested in dairy
processing in Thailand. As such, dairy factories are mostly equipped with modern
facilities ensuring safe production. Most dairy companies are also HACCP certified.
3.10.5 Animal feed and feed production Food for animal feeding is considered as raw material as is animal products such as
meat, milk and egg. Thailand’s important animal feed products for exports include
38
cassava pellets, bran oil cake, wastes from vegetable oil production, fish and aqua-
culture fish meals and animal pet foods (Bunrong,1984). Thailand has for many years
ranked third in the world for cassava production following Nigeria and Brazil: 60% of
cassava is exported to the EU (National Food Institute, 2001).
Because of the new hygiene requirement imposed by the EU, all Thai cassava exporters
have either GMP or HACCP quality system in place. Pet food is Thailand’s second
major animal food export; approximately 10 million baht in 2001 (National Food
Institute, 2001). Major markets for Thai pet foods are Japan, Australia, USA, Malaysia
and Vietnam. Pet food production, like human food production is covered by the same
hygiene and manufacturing regulations.
3.10.6 Meat products As meat is a vital protein food of high nutritional value, meat/animal production in
Thailand has become more important in the past decades. Meat/animal product numbers
are expected to grow in the future, and total meat supplies should keep pace with the
country’s increasing population along with increasing income and general national
education growth.
3.10.7 Poultry Poultry production is now heading towards large-scale operations, with an integrated,
export-oriented industry. The feed companies and allied operations perform all the
processing, including slaughtering, dressing, chilling or freezing, packaging and sale of
final products on the export and domestic market.
3.10.8 Beverage industry The beverage industry can be divided into four main groups namely:
1. Non-alcoholic non-carbonated. This includes bottled water, mineral drink,
syrup concentrates, and fruit flavoured syrup and other powdered drinks such
as ginger, chrysanthemum juice, bale fruit juice and orange-flavoured juice.
2. Non-alcoholic carbonated beverage. This includes soda and other carbonated
drinks.
39
3. Alcoholic non-carbonated beverage. This includes wine, vodka, rum and
other liquors.
4. Alcoholic carbonated beverage. This is exemplified by beer and champagne.
The increasing popularity of beverages combined with their good taste and attractive
packaging has made the industry highly competitive. Most beverages cater for local
consumption although there are some that are produced for export.
3.10.9 Sugar and confectionery industry Thailand is the third among leading sugar exporters, behind Brazil and France. The Thai
sugar industry is not competitive because of its generally high production cost and
inherently low sugar cane productivity. To survive foreign competition, the government
often has to intervene by providing monetary support to farmers and factories.
3.10.10 Spice and condiment industry Thai foods are often hot and spicy. Hence, about 70-80% of the country’s spice and
condiment production is destined for domestic consumption. However, Thailand’s main
export markets for ginger, black pepper, dried red pepper, cinnamon, mace, nutmeg,
turmeric, curry, saffron and cardamom are Japan (26%), EU (24%), Pakistan (10%) and
the US (10%) (National Food Institute, 2001). Thailand also exports a number of
condiments including fish sauce, soy sauce, sweet black soy sauce, oyster sauce, chilli
sauce, and a condiment pack that goes with instant noodles.
40
3.11 Factories Based on Classification of Thai Food Processing
Industry The Department of Factories has classified the Thai food processing industry according
to the raw material based on The Thai Factory Act of 1992. Each raw material is
divided into subgroups based on unit operations or the combination of operations as
follows:
3.11.1 Tobacco curing factories
3.11.2 Agricultural product-related factories 1. Steaming, boiling or drying of vegetables, seeds, grains or kernels.
2. Grain or grain shelling.
3. Tobacco or hemp pressing.
4. Cotton milling or pressing, kapok spinning or pressing.
5. Warehouse or transportation of vegetables or grains.
6. Grinding of plant components excluding grain or plant head.
7. Charcoal from coconut kernels, charcoal grinding.
8. Plantation of orchids, bean sprouts and mushrooms.
9. Cleaning, separation, sieving by size or quality of agricultural products.
10. Protection of agricultural products by x-rays.
11. Egg hatching by heat ovens.
3.11.3 Dairy products factories 1. Bactericidal processing e.g. pasteurization.
2. Fresh milk from powdered milk.
3. Concentrated milk, powdered milk or evaporated milk production.
4. Cream produced from milk.
5. Cheese or butter production from milk.
6. Yogurt or sour cream production.
41
3.11.4 Marine-related factories 1. Packing of seafood for export
2. Seafood protection by heating, drying, chilling and cool storage
3. Finished seafood, skinned or waxed products
4. Oil or wax extraction purification from seafood
5. Cleaning, dissection, boiling, carving, frying or grinding of seafood
3.11.5 Edible plant oil or animal oil-related factories 1. Plant or animal oil extraction
2. Pressing or mixing with the remains of plant or animal after oil extraction
3. Plant oil from hydrogenation
4. Purification of plant or animal oil
5. Cream of mixed oil for cooking
3.11.6 Vegetable and fruit related factories 1. Packaged products of food or drink from vegetables or fruits
2. Vegetable or fruit preservation by vaporization, drying, stirring, pickling
and chilling
3.11.7 Grain or plant head-related factories 1. Rice milling
2. Starch production
3. Grinding or mixing of grain or plant head
4. Finished food production from grain or plant head
5. Plant head peeling or cutting to required shape
3.11.8 Sugar production from cane, beet, sweat grass 1. Syrup production
2. Red sugar production
3. Raw sugar or sugar production
4. Raw sugar or purge sugar purification
42
5. Sugar lump or powdered sugar production
6. Glucose, dextrose, fructose or related product processing
7. Sugar from other plants (excluding sugar cane)
3.11.9 Tea, coffee, chocolate or dessert related factories 1. Tea drying or powdering
2. Roasting, grinding or mixing coffee or powdered coffee production
3. Powdered cocoa or desserts from cocoa production
4. Chocolate or powdered chocolate or dessert from chocolate production
5. Ginger or other plant powdering
6. Tamarind, lemon or others fruit palletizing
7. Syrup steeping or coating of fruit and peel
8. Drying and frying of nut or coating of the nuts with sugar, coffee, cocoa or
chocolate
3.11.10 Cooking ingredients related factories 1. Baking flour for bread production
2. Flavour enhancer and food colour production
3. Leavening agent starch production
4. Vinegar production
5. Mustard production
6. Sludge oil production
7. Grinding or mixing of spices
8. Chilli pepper grinding
3.11.11 Spirit boiling, distillation or mixing related factories
3.11.12 Malts, beer related factories
1. Malt grinding
2. Beer production
43
3.12 Conclusion The Food processing industry is one of strategic importance for the Thai economy. This
industry uses local raw materials and provides 42.2% employment. The Thai Food
processing industry can be broadly classified into food processing based on common
raw materials and unit operation that divides processes into subgroups. The Thai
economy depends to a great extent on the success of many small SMEs. Although a
number of large-scale companies, equipped with modern facilities and with GMP and
HACCP quality systems in place, are currently exporting, the industry is still largely
dominated by small and medium scale enterprise that cater to local markets. To upgrade
their production to international standard, they need to increase investments to improve
their food quality assurance system as well as their processing and packaging
technology. Many Thai SME are active in the international market, and export
significant quantities of goods all over the world.
44
Chapter 4
Present Thai Food Processing Industry Manufacturing
Strategies
4.1 Introduction
Manufacturing strategies are used in particular to maximise product quality and reduce
production costs. Manufacturing technology is identified as the most important area of
manufacturing process decision making, followed by quality assurance and control. It
was also found that quality is the most important competitive priority followed by
product cost. The competitive priority of the rate of innovation, despite being likely to
be influenced by manufacturing technology, was found to be much less important.
Integration of manufacturing technology was also identified as being a very important
decision area. McCalman (1998) suggested that the right manufacturing technologies
can provide an organisation with considerable operational and competitive benefits.
According to Adam (2001) these include improvements in quality, inventory control,
customer lead times, machinery use and efficiency, staff efficiency and morale, and
company image. The nature of the technological strategy will vary across industries as
well as economic regions although the important elements and practices of a
manufacturing strategy for manufacturing companies around the world are similar,
regardless of the economic region (Ettlie, 1996).
Manufacturing strategies provide a strategic link between the manufacturing process
and the business strategy. Camp (1989) observed that the capabilities of manufacturing
were not considered when formulating or implementing business strategies and
identified a number of elements of manufacturing strategies which included technology
and its management. Bicheno (1994) and Fareman (1999) argued that manufacturing
management practice is a key element in manufacturing strategies, but is rarely
evaluated by internal performance measures.
45
Gelder (1994) defined manufacturing strategies as supporting corporate objectives by
providing manufacturing objectives including costs, quality, dependability and
flexibility in order to offer a competitive advantage and focus on a consistent pattern of
decision making within key manufacturing resource categories. The objective of
manufacturing strategies is to create “operationally significant performance measures”
(Forker,1997) in which the competitive dimensions comprise of cost, quality,
dependability and flexibility. The need for some type of performance measure was also
identified by Minor. Swink (1995) defined manufacturing strategies “as the decisions
and plans affecting resources and policies directly related to the sourcing, production
and delivery of tangible products”. The elements of manufacturing strategies, such as
technological management, are most effective when their performance and function are
relative to the business-level strategy measured. Manufacturing strategies are also
important factors in determining the dependability of a supplier since supply
dependability is an important operational issue.
In this chapter, the approaches applicable to various technological practices in the Thai
food processing industry are fully described. These are GMP, HACCP, TPM, JIT and
TQM. Over the years, they have received considerable attention by researchers due to
the increasing need of companies to not only survive but also compete successfully in
the world markets.
4.2 Good Manufacturing Practice (GMP) The food processing industry is one of the most important industries in Thailand. It
covers everything from food-processing plants to its relationship with the consumer.
It is not generally known how basic this industry is to most peoples’ lives. This is why it
is so critical that the products of this industry are of the highest quality, and free from
harmful bacteria and that there are safeguards for the consumer against any ill health
consequences from the products and the company is not sued for faulty products
(Willbur 1992, Zemanovic 1992 and Goode, 1999). GMP plays a role in promising
these results.
46
GMP practice is widely used by Thai food processing producers for the control of the
manufacturing process, especially in the areas of the type of premises, equipment,
sanitation, documentation and handling. The control starts with the selection of good
quality raw material and continues through all steps of the manufacturing process.
Using GMP practices as a guideline for the Thai food processing industry would,
therefore, help build quality standards for the product from start to finish. This would
also ensure that the product is of good quality and reliability. It would also assist the
product to keep up with international market standards so that local manufacturing will
be of a high export value. Thai food processing producers operate mostly in the low
price range.
Samatha (2003) has described GMP as a part of quality assurance which ensures that
the product is consistently produced and controlled to achieve the quality of standards
appropriate to their intended use. GMP rules are directed primarily at diminishing the
risks inherent in any food production but that cannot be prevented completely through
the testing of final products (Matthew, 2003). It is essential that proper process control
is exercised and that it is adequately documented to provide reliable evidence that the
correct procedures have been followed.
Mayes (2001) observed that GMP regulations in the US which were developed by the
Food and Drug Administration and issued in the US Code of Federal Regulations,
present the minimum requirements to be met by the industry for the manufacturing,
processing, packaging and storage of human and veterinary drugs. Every aspect of food
manufacturing should be controlled according to defined managerial and technical
standards. GMP standards document management’s responsibility for the production of
foods that meet quality and safety requirements (Semanochang,2000). GMP integrates
with HACCP systems and provides a framework for the development and
implementation of quality management systems, with subsequent registration to ISO
1. Equipment failure (breakdown losses, including time losses and quantity
losses),
2. Set-up and adjustment losses when the production of one item end,
3. Minor stoppage losses through temporary malfunction,
4. Reduced speed losses, possibly through mechanical or quality problems,
5. Quality defects and revisions caused by malfunctioning production
equipment,
6. Start-up losses during the early stages of production.
56
In terms of implementing the TPM program, Hartmann (1992) suggested that non-
Japanese plants should take three distinct steps: planning and preparation, pilot projects,
and plant wide implementation. This author also advises the following sequence of
implementation steps that works best in most existing western plants:
1. Equipment management and improvement by teams,
2. Preventive maintenance,
3. Autonomous maintenance.
Equipment management and improvement by teams involve improving equipment
performance quickly and getting operators initially involved in TPM. PM involves
keeping the equipment at a high level of overall effectiveness. This includes both
preventive and predictive maintenance - it is a total system of TPM for the entire life
cycle of the equipment (Nakajima, 1988).
In order to accomplish the goals of production, a company must synchronise its
production plan with its maintenance plan because the PM activities are carried out on
equipment during the plant stoppage periods (Cavalier 1996 and Shabbir, 2002).
Companies should accommodate changes in characteristics of products and equipment,
production modality, geographical conditions, plant size, worker background, extent of
subcontracting, and equipment management. Autonomous Maintenance (AM) is a key
component of TPM. It emphasises the operator’s involvement in the care and
maintenance of their equipment. There is a transfer of tasks and responsibilities from
maintenance specialists to production operators. Every company should develop its own
approach to AM.
TPM is a concept for corporate change, and also includes a way of defining Overall
Equipment Effectiveness (OEE) (Bamber,2002). The definition of OEE includes
downtime and other production losses which reduce throughput. Three dimensions of
effectiveness are considered: availability, performance rate, and quality rate. Nakajima
(1989) suggested that OEE does not take into account all factors that reduce the
capacity utilisation, e.g. planned downtime, lack of material input, lack of labour etc.
Blake (1992) suggested that equipment efficiency for the food processing industry is
related to quality in terms of bacterial contamination. Accordingly, successful
implementation of TPM requires top management support and commitment, a great
sense of ownership and responsibility from the operators, co-operation and involvement
57
of both the operators and the maintenance workers, and most importantly, an attitude
change from everybody from “that's not my job” to “this is what I can do to help”. This
objective is stressed as important by following authors Nakajima, 1988, Yamashina
1995, Raouf 1995, Bamber 1998 and Chand 2000.
The 15 steps of TPM implementation for the Thai food processing industry, as they
appear currently in the literature, are:
1. Announcement of top management's decision to introduce TPM,
2. Creation of an organisational structure to promote TPM,
3. Education and training of TPM,
4. Establishment of basic policies and goals of TPM,
5. Formulation of master plan for developing TPM,
6. TPM kick-off,
7. Improvement of effectiveness of each piece of equipment and development of
early equipment management,
8. Creation of a set-up for autonomous maintenance which include:
a. Initial clean-up,
b. Measures against sources of outbreaks,
c. Formulation of clean-up and lubrication standards,
d. Overall check-up,
e. Autonomous check-up,
f. Orderliness and tidiness (standardisation),
g. All-out autonomous management.
9. Creation of a set-up for planned maintenance in the maintenance department.
10. Training in improved operational and maintenance skills.
11. Creation of a set-up for initial management of equipment.
12. Quality maintenance
13. Safety hygiene and working environment
14. Clean factory
15. Perfect implementation and a higher level of TPM.
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TPM is useful for the food-processing industry to improve the product and reduce the
cost. Hipkin (2000) presented TPM recommendations for reducing maintenance in food
industry and these were countered by managers quoting hygiene standards which
required that many existing maintenance tasks be retained. TPM is considered to be one
method of improving quality and as such, a supplementary method to other quality
techniques. Sasananan (2000) suggests that TPM can be an effective approach to
performance improvement for Thai manufacturing which suffers from reduced
efficiency and problems in manufacturing and product quality (Kasachol,1998). For
example, a tomato sauce plant can run more efficiently if there are fewer breakdowns.
The product must be completed within a certain time frame. The plant has to run when
chillies and tomatoes are available. A plant break down will lead to a poor quality
product. Antero (1999) advised that in the food industry, the main cause for quality
deficiency is a lack of adequate maintenance in the highly automated food processing
plant equipment.
4.5 Just- In-Time (JIT) Manufacturing The JIT concept and its main technique, the Kanban system, used for production
planning and inventory control for multi-stage production inventory systems, were
developed by the Japanese automobile manufacturer, Toyota. The JIT system consists
of the right-on-time approach and automation. (Takahashi 1998). The JIT system is the
approach in which production is pulled through the system as and when it is needed.
Automation refers to a system with built-in functions to prevent the production of
defective parts and to automatically check on damage to machinery.
Although the early concept of the JIT system focused on the production line, it has been
expanded to become the current approach called the just-in-time system, which still
suffers from a lack of consensus about its meaning, at least on the part of manufacturing
organisations. While some managers view it as a near total system of continuous
improvement, others simply regard it as only the Kanban system (Bukchin 1998 and
Hemamalini 2000).
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Among the many authors favoring the larger scope of the meaning of JIT, some regard
it as a complicated philosophy comprising of various techniques to improve
productivity, reduce waste, and achieve continuous improvement. According to Voss C
and Robinson (1988), the JIT methodology is that which aims to improve overall
productivity through the elimination of waste and that leads to improved quality. Other
opinions about JIT are listed in Table 4.5.1.
Golhar (1991) suggested that the benefits of JIT include reduced inventory, increased
productivity and higher quality of products. It should be noted that JIT has been
included in many other competitive practices such as World Class Manufacturing
(WCM) (Schonberger, 1986), lean production (Womack,1990), and Kaizen
(Imai,1986). However, JIT implementation involves additional costs due to the
required provision of new equipment and employee training programmes (Golhar,
1991).
Table 4.5.1 Definitions of JIT Manufacturing
Author Definition
Finch (198 6) A management philosophy or toolbox of techniques based on making
a significant improvement in operating efficiency through reduced
inventory level, lead time and overheads.
Lee (1989) JIT system is a concept or philosophy which employs, as tools,
production management practices such as setup time reduction level
production planning, preventive maintenance, multifunctional
workers, quality circle, kanban, etc.
Golhar & Stamm (1991) The success of JIT depends on the application of elimination waste,
employee involvement, supplier participation and total quality
management.
Ahmed (1991) JIT can be viewed from a number of different angles including people
(attitudes, motivation, education in philosophy of JIT, training in
procedures) and engineering (layout, production design for
manufacturing, setup time reduction).
Sohal (1993) JIT is essentially a philosophy more than a series of techniques, the
basic tenet of which is minimising cost by restricting the commitment
to expenditure in any form, including manufacturing, components, etc.
until the last possible moment.
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The application of JIT concepts can be advantageous for the food-processing industry:
Quality (taste), reduction of production costs and market advantage. Food quality is
measured by three factors: quality of raw materials, production process quality, and
freshness of the final product. For example, in mass-produced ice cream, milk powder
and concentrate essences are usually used. The use of these products is necessary
because the raw materials have to be stored long periods of time. Using natural
ingredients will improve the quality.
Fresh milk tastes better than preserved milk and fresh fruit tastes better than fruit
essences. Minimising the storage period of the raw materials and using fresh materials
is possible only by a switch to the JIT system, preparing the equipment for the raw
materials for a short period of time ahead and buying fruit just before their use in
production. The quality of the finished product will certainly be enhanced. Xin (2002)
presented a study that showed the effects of long storage periods of raw materials in
relation to the quality of the finished product.
4.6 Total Quality Management (TQM)
Many Thai food processing industries are active in the international market, and export
significant quantities of goods all over the world. Success in both domestic and
international markets will, in the future, increasingly be based on quality as well as cost.
Globally, increasing competition has caused standards in quality management to be
improved. The adoption of formal quality management systems and TQM are two
approaches that have been demonstrated to provide competitive levels of quality
performance. Some larger Thai manufacturers have successfully implemented TQM
(Tannock and Krasachol, 2000). Continuous quality improvement will increasingly
become important in Thailand, as companies compete in the export international
market.
TQM is a management philosophy aimed at continuously improving the quality of the
product and the process through a holistic approach that integrates the technical system
with the cultural system within an organisation to achieve customer satisfaction (Joseph.
1999). It emphasises the understanding of variation, the importance of measurement, the
role of the customer and the involvement of employees at all levels of an organisation in
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pursuit of such improvement. Terminology can be confusing with a number of
organisations adapting the acronym TQM to suit their needs or not using it at all.
Nevertheless, most have a common element. TQM is also based on the premise that the
customer is the focus of all the activities of an organisation, and all improvement in
quality must be directed toward customer satisfaction.
Shapiro (1997) stated that the main features of TQM are: customer satisfaction (both
internal and external) continuous process and product improvement, employee
involvement (usually through teamwork), and management by checking data. It is
essential to have an organisational culture, which promotes these. TQM feature also
incorporates a number of tools and techniques which are designed to permit problem
solving by groups of employees and to use data for decision making instead of
guesswork, and to utilise quality improvement teams.
The application of these tools will vary according to the type of organisation. Wilkinson
(1991) described TQM in terms of hard and soft components, where the former refers to
statistical and other quantitative based techniques of quality control, and the latter,
employee participation and teamwork. They suggest that, too often, managers focus on
the hard aspects, such as measurable outcomes in terms of cost reductions, while
neglecting the people empowerment aspect. TQM offers a variety of tangible and
intangible benefits which amount to cost savings for the employer and greater job
satisfaction for the employee including improved product quality, better service,
increased job knowledge, improved productivity, reduced waste, errors and product
recalls, and improved communication.
In order to identify the common elements of the emerging TQM Deming (1986)
reviewed them. He suggested a statistical technique and control chart for controlling the
quality, and then expanding it to his 14 principles of quality control aimed at creating an
environment in which statistical methods would be effective. Juran (1989) was
concerned in the quality planning, quality system, supplier management, teamwork
training and measuring quality costs. Crosby (1989) suggested the concepts of “doing
things right the first time” and “zero defect”. Ishikawa (1985) was concerned about
quality control circles and employee participation. Oakland (1989) proposed that the
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customer and supplier have an active relationship in the production chain, from raw
material producers to end user.
Forker (1991) stressed the economic value of reducing variation. His approach
measures quality as the variation from the target value of a design specification, and
failure to reduce this variation may cause an economic loss to the society company.
The common elements of TQM, including employee involvement, human resource
development, continuous improvement, application of statistical quality control
techniques, and focus on customers and suppliers, are critical contributors to its success.
TQM is a way of managing organisations to improve their performance, efficiency and
motivation in the long term. TQM provides a framework for systematically improving
quality operations through an organisation (Joseph,1999). This approach strives to
prevent errors and reduce costs through analysis, work and co-operation with others,
rather than identifying the errors and correcting them later.
Crosby, Deming, Juran and Ishikawa triggered an explosion in the amount of literature
related to TQM. While the literature is replete with practitioner-oriented “do everything
right first time” articles, suggestions have been made to examine TQM implementation
through empirical studies and also that a conducive organisational environment would
be essential for the effective practice of TQM. Apart from analysing the dimensions of
TQM and the effectiveness of implementation of TQM in an organisation, there have
been attempts to study the interaction of some organisational factors, organisation
performance and Human Resource Management (HRM), and TQM. Krasachol (1998)
showed associations between the quality measure of customer satisfaction, employee
satisfaction and employee service quality and organisation performance measured in
terms of short-term performance, long-term performance, productivity, cost
performance, profitability, competitiveness, sale growth, and increasing market share.
TQM implementation is based on teamwork and the philosophy of continuous
improvement. Statistics need to be used extensively to analyse and reduce the variations
in the process. In the food-processing industry, continuous improvement is vital to the
survival of a specific company or consumer (Ridge, 2000). The customer is constantly
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purchasing the products of competitors and any decline in quality will lead to a decrease
in gross profits.
There are several areas that a company may focus on for quality improvement such as
food safety, hospitality, service, cleanliness, and overall food quality. In any food-
processing industry, the employee is the single most important asset. Employees make
all the difference in the world and it is how they show their enthusiasm about what they
do and how they do it, and when they do it that makes all the difference (Willbur,
1992). Employees operate plants and employees make food products acceptable to the
customer. The employee is the most important and what is done together makes all the
difference between success and failure.
Employees need guidance, and in most cases training, to move toward (Tollinson,1992).
All employees want to do better, however the management must provide the right
environment, guide them through appropriate training and help them succeed in the
growth of the company, if the company wishes to become more successful.
Communication is very important in making employee understand the company’s
requirements. Every employee in a food processing industry needs the support of
management in the form of office administrative personnel, purchasing personnel,
production lines, warehouse personnel, marketing managers and supervisors to make
his/her job easier and more reliable.
TQM is the only answer to guiding a company through the processes of improving its
productivity and service to the level that the customer expects. The TQM programme
will result in meaningful accomplishments today and for the future. It is the right way to
achieve excellence and customer satisfaction. It will help the company to more than
meet its competition and build its own bottom line. Moreover, TQM results in
significant productivity gains, unit cost reduction, elimination of much absenteeism,
lowering of worker compensation rates, reduction of accidents, elimination of most
consumer complaints and winning the consumer over by always giving him/her what
he/she expects.
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After reviewing the elements of TQM, JIT, GMP and HACCP, the next important issue
is how these elements are integrated in such a way that they establish the basis for
achieving manufacturing excellence. The next section attempts to address this
relationship.
4.6.1 A note on the ISO 9000 concepts for Thai food processing industry The ISO 9000 quality management systems standard have become a major element in
supplier management strategy because many multinational manufacturers implement
the ISO 9000 standards with the intention of reaping the benefits. Customers, perceive
ISO 9000 registered companies as being more capable of delivering products of
consistent quality (Lamprecht, 1993 and Mehata and Wilcock, 1996). Both
manufacturers and customers have indicated that companies using quality systems such
as the ISO 9000 standards have several advantages over competitors that have not
implemented such systems. These advantages include improved product quality and
reliability, increased customer satisfaction, reduced scrap and rework, increased
manufacturing efficiency, superior delivery times, rapid systematic response to change,
and increased interdepartmental communication leading to increased teamwork (Surakn
and Simpson, 1994 and Bennet and Steed, 1999). ISO 9000 refers to a group of
standards containing clauses directed at the quality management process of an
organisation. The standards define a quality framework within which a registered
company must operate by using 20 clauses as a guideline for implementing a quality
management. ISO 9000 registration describe only the minimum criteria for a quality
management system (Oakland, 1989). ISO 9000 series standards have now been widely
accepted by the Thai industry as part of an effective strategy for competitive advantage
in the International market (Rohiratana and Sakun, 2001).
The Contents of the ISO 9000 systems have four applications as follows:
ISO 9001: This is applicable in contractual situations whereby the supplier
is capable of demonstrating its ability in design, development, production,
installation and servicing.
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ISO 9002: This is applicable for contractual usage, and product conformance
can be achieved through production and installation.
ISO 9003: This is applicable for quality assurance in final inspections and
tests with the aim of detecting and controlling the disposition of any product
nonconformity.
ISO 9004: This serves as a guideline in developing and implementing a quality
management system.
For application within Thai Food processing industry, ISO 9000 is used by companies
wishing to develop a quality management system covering product development, as
well as production, delivery, customer service and customer requirements.
4.6.1.1 The importance of ISO 9000 for Thai food processing industry
The ISO 9000 series sets out the methods that can be implemented in an organisation to
ensure customers' requirements are fully met (both internally and externally and at an
optimum cost). This is the result of efficient utilisation of the available resources both
human and technological. Accordingly, the reasons companies implement ISO 9000
are: to reduce first time failure, to reduce the costs of customer claims, to get things
right the first time, to improve service to the customer, and to increase competitiveness
(Rohiratana and Sakun, 2001).
Companies chose ISO 9000 as part of the TQM system because they wanted to move
away from the traditional role of chasing failure and move towards an attitude of
prevention and for every individual to be responsible for producing good quality
products and services. Benefits to implementing ISO 9000 are:
1. To improve awareness of quality and have the standard of Thai food
processing products.
2. To reduce the need for customer-supplier demonstrations of quality
assurance procedures by introducing a third-party quality assurance
certificate.
3. To open markets by ensuring that ISO 9000 is compatible with
International Standard (Krasachol,1998).
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Most Thai food processing companies are implementing ISO 9000 series standards,
because of their significance to export market penetration. With the advent of the ISO
9000 standards, concepts such as process orientation and improvement, which were
previously considered as part of a TQM approach, have become requirements of the
standard.
4.6.2 A note on the Six Sigma concepts for Thai food processing industry
The Six Sigma concept is a manufacturing practice and aim developed by the Motorola
company but now adopted by many others. Motorola defined Six Sigma as “a measure
of goodness- the capability of a process to produce perfect work” (Blakeslee, 1999).
The Six Sigma concept is about ideal of making all the processes in a chain of
production highly capable, that is, achieving a capability index of at least two. Greg’s
(2002) Six Sigma concept refers to the number of standard deviations from the average
setting of a process to the tolerance limit. In statistical terms, this translates as 3.4
defects per million opportunities for error (Breyfogle, 2001). This concept has been
extended to every function in the company, where everyone is considered to be both a
supplier and a customer. For such levels of quality, both design and manufacturing must
play a role.
Besides TQM implementation, the Six Sigma implementation has also been suggested
in this research as the alternative to effective manufacturing practice for every
organisation to excel in the aggressive competitive marketplace of today. It is a leading
management practice in instigating significant improvements in customer satisfaction
and bottom-line benefits. It is viewed as a strategic business initiative rather than a
quality management program. It can achieve WCM performance by using the most
powerful “soft” and “hard” skills in the organisation. Many company leaders such as
Motorola, General Electric and Kodak use it as a business strategy to compete in the
market arena.
Six Sigma can be seen as a disciplined extension of TQM because the latter approach
focuses on the organisation as a system with an emphasis on teams, processes, statistics,
continuous improvement, and delivering products and services that meet and exceed
customer demand. TQM is an excellent foundation from which to build toward the next
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level of quality management, represented by Six Sigma. In addition to this, Breyfogle
(2001) stated that it is more than just a practice based on other TQM programs. There
are five factors necessary for successful implementation of Six Sigma. These are as
follows:
1. Management support
2. Quality of the work environment
3. Quality of the Six Sigma and Quality Improvement Facilitator (QIF)
candidates
4. Consistency across quality programs
5. Effectiveness of the program instructors
These factors are the same as for TQM implementation. However, there are different
implementation methods which contain the five phases of implementation specific to
Six Sigma. They are as follows:
Phase 0: The deployment strategy phase
Phase 1: Measurement phase
Phase 2: Analysis phase
Phase 3: Improvement phase
Phase 4: Control phase
The successful implementation of Six Sigma can be obtained by a management program
rather than by a technical program and there is focus on achieving substantial goals
(Amabile, 1998; Aviation, 1998 and Blakeslee, 1999). Therefore, this manufacturing
practice may also be useful for successful implementation of the TQM program. The
Six Sigma practice for Thai food processing industry is improving various aspects of the
operational performance. The aims generate financial benefits while also increasing
awareness of variability as an issue for the organisation and enhancing the ability of
employees to improve the processes with which they work.
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4.7 A Flow Chart of the Development Appropriate to the
Manufacturing Strategy Model for the Thai Food Processing
Industry Figure 4.7.1 is a flowchart showing the development of an appropriate Thai food
processing industry model for the Thai food processing Industry. Firstly, the industry
needs to fully understand the organisation’s characteristics and the infrastructure
elements in its manufacturing practices in order to determine whether they are
implemented or not implemented. Secondly, the manufacturing practices aim to group
these elements and establish an efficient management system for developing
organisational performance. This management system is the required tools and
techniques to support its development.
Figure 4.7.1 Flow Chart of Development Appropriate to Thai Food Processing
Manufacturing Strategy Model
Elements (Infrastructure) of the organisation
Manufacturing practices
Tools and Techniques
Model of Excellence for Thai food
processing industry
Education and training
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Finally, the model of excellence for the Thai food processing industry originates from
the combination of a number of manufacturing practices including GMP, HACCP, TPM
and TQM, in order to solve various problems that arise. After the establishment of this
model, education and training should be provided to facilitate implementation of it.
4.8 Practices of an Appropriate Integrated Model of TQM, JIT,
GMP and HACCP
The appropriate model to achieve Thai food processing industry excellence must
investigate the relationship of TQM, JIT, GMP and HACCP. Hall (1987) suggested that
the new approach to manufacturing is basically a pragmatic philosophy distilled from
worldwide experience through the investigation of the best and simplest practices,
invention and given detail. The integrated model in this study is the combination of a set
of principles belonging to GMP, HACCP, JIT, TPM, and TQM and their
accompanying set of tools and technical practices for achieving it. Thai food processing
industry excellence implies continuous improvement in performance and capabilities.
The integrated model brings together the principle and practices pertaining to GMP,
HACCP, JIT, TPM and TQM. The methods of an integrated model share basic
principles, historical settings, and goal achievement in terms of a framework of
satisfying ever changing customer demand and environment objectives (see Chapter 6).
GMP, HACCP, JIT, TPM and TQM aim respectively at improving quality (Q),
delivering products (D), reducing costs through elimination of ineffective equipment
(C), and empowering employees (E).
The principle of GMP is comprised of the many general activities that are in place to
control food safety and pre-requisite programmes. There are pest control, cleaning and
disinfecting procedures, building and equipment maintenance and induction training for
personal hygiene practices. This general level of control, applicable across all areas of
the food industry, can be considered under the generic term ‘Good Hygiene Practice’
(GHP). HACCP is directed at individual product/process lines and examines specific
and significant hazards above and beyond those general hazards dealt with by GHP.
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It can be concluded here that the best outcome for safety issue is to adhere to GMP
practices with the additional safeguard to HACCP plan. Mayes (2000) advised that
GMP is the foundation of the food safety assurance system (Figure 4.8.1). HACCP is
related to GMP because its application ensures that all potential hazards have been
systematically analysed and those that are significant for the food product or process
have been identified and controlled.
Accordingly, the Thai food processing industry, in order to achieve successful
implementation of HACCP, will need to take the advice of Kongton (2001) who
maintained that a food manufacturing company has to succeed in its implementation of
GMP before going on to implement the HACCP system. These include such GMP
practices as plant layout of the factory, the meeting of essential building standards,
equipment and personal training in food hygiene (David, 1991; Norton, 2002).
Figure 4.8.1 Elements of Infrastructure Practice among GMP (Mayes, 2000)
WHO (1999) suggested that to achieve food safety assurance, three levels of hygienic
measures should be implemented (Figure4.8.2). These follow the general principles of
food hygiene, food-related hygienic requirements (GMP) and HACCP. HACCP can be
applied to achieve a greater assurance in regard to the safety of the produced, processed
or manufactured food. GMP is the foundation of HACCP system.
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Figure 4.8.2 Food Safety Assurance (WHO, 1999)
The food processing industry uses HACCP as a foundation for its quality system. It is
appropriate to incorporate the relationship between HACCP and TQM in the knowledge
based on HACCP performance methods. TQM and business excellence in the food
industry are the components of the basic legal compliance system, e.g. good
manufacturing /hygiene practice, HACCP and weight and measures control activities
(Orgden, 2003).
TQM does not just deal with product quality, but all round total quality. Another area
where quality needs to be continuously improved is health and safety. The TQM
program can help solve these problems. This system was developed to ensure zero
defects during food handling by monitoring the whole preparation process. Its purpose
is to identify and correct errors before they happen. The old method of quality assurance
was to test the final product (TechniCAL, 1996). If the product quality was not up to
the mark, it was either held and reprocessed, or ultimately destroyed (TechniCAL,
1996). This method was costly both financially and time wise.
The HACCP system monitors the food from the delivery point through storage and
preparation, then finally consumption. It analyses critical control points where extra
precautions may be needed with potentially hazardous foods. A flow chart is
established to determine which foods need to be analysed at which times. Management
and employees alike must take this system very seriously and follow all steps which
include assessing hazards, identifying critical control points, setting up procedures for
them, monitoring them, taking corrective action, setting up a record-keeping system,
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and verifying that the system is working. This system is necessary to maintain food
product quality and is a part of TQM.
According to Chaudhry (1997), an industry expert on HACCP, the foundation of TQM
and HACCP is the same: “Do it right the first time and every time, and you get a good
final product”. He also goes on to state that it is necessary to check each step along the
process to make sure the product is safe and the process is in control, instead of relying
on the end product when it is too late to correct the problem.
The food industry is one in which it is a necessity for health and safety to be given
number one priority, and with a TQM system in place, it becomes much easier to
facilitate these needs. If any food product becomes contaminated, it could mean illness
for any consumer of this product. This in turn, could bring about lawsuits resulting in
the closure of the business. The most important factors in the food-processing industry
business are safety and service. A TQM program implemented properly involves
everyone in the program. Figure 4.8.3 shows that HACCP should be considered as part
of food hygiene and a method of food safety assurance which complements the general
aspects of a TQM culture as well as specific principles of food hygiene.
Figure 4.8.3 Relationship between HACCP and TQM (WHO, 1999)
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Furthermore, it ensures that essential safety measures are implemented. Grigg (2001)
suggested a model for the quality system in the UK food and drink industry in which
GMP and HACCP form the base line compliance activities followed by ISO 9002:2000
and TQM (Business Excellence/ CI activities) (Figure 4.8.4).
Figure 4.8.4 Revised Model for Quality Systems in the UK Food and Drinks Industry
Accordingly, TPM reflects many of the ideals of TQM and has been proven to be an
effective means of encouraging personnel at all levels to be aware of their role in
monitoring equipment to remain effective and reliable (Gipson, Greenhalgh and Kerr,
1995). Moreover, TPM is the manufacturing arm of total quality management (TQM)
and is based on the following five key principles:
1. Improvement of manufacturing efficiency by the elimination of six big losses:
Breakdowns, Setup and Adjustments, Small Stops, Reduced Speed, Startup
Rejects, and Production Rejects.
2. Establishment of a system of autonomous maintenance by operators working
in small groups.
3. An effective planned maintenance system by expert engineers.
4. A Training system of increasing the skill and knowledge levels of all
permanent employees.
5. A system of maintenance prevention where engineers work closely with
suppliers to specify and design equipment which requires less maintenance.
Also TPM has previously been involved in principle 2 of GMP in regard to
equipment.
Baseline compliance activities (/GMHGMP, comprising HACCP & Weight and Measure
Industry third-party accredited standards (e.g. BRC, EFSIS)
TQM (Business Excellence/ CI activities)
Basic
Quality M
aturity
ISO 9000: 2000
Advance
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4.9 Linking Thai Infrastructures Practices to the Proposed
Integrated Model (HACCP, JIT, TPM and TQM) The main function of the proposed integrated model is to identify the practices that
should be used in the Thai food processing industry. This study classifies use of these
practices as independent variables and companies performances as the dependent
variables. Table 4.9.1 relates the use of practices in the Thai food processing industry
performance. The impact of practices on the Thai food processing industry performance
can be either a Direct Relationship (●) or an Indirect Relationship (◌).
Table 4.9.1 Relationship among Element Practices of GMP, HACCP, JIT, TPM
and TQM Elements
GMP HACCP JIT TPM TQM 1. Problem solving 1.1 Basic tools of quality control ● ● ● ● ● 1.2 Statistical Process Control ● ● ◌ ● ● 1.3 Plan-Do-Check-Act wheel ● ● ● ● ● 1.4 Brainstorming ● ● ◌ ● ● 1.5 Effective meeting ● ●
● ● 2. Employee involvement & empowerment 2.1 Human resources development ● ● ● ● ● 2.2 Multi-skilled employees (Technical training) ● ● ● ● ● 2.3 Small group improvement activities ◌ ◌
1. Quality assurance 2. Supplier relationship 3. Customer focus 4. Scientific methods 5. Continuous improvement 6. Daily management 7. Open communication 8. Performance measurement 9. Focused factory 10. Uniform workload 11. Kanban system 12. Legal requirement 13. Process control system 13.1 Material control 13.2 Equipment control 13.3 Process control 13.4 Package & storage 13.5 Pest control 13.6 Transport control 14. Measurement system 14.1 Measured equipment control 14.2 Calibration 15. Inspection and Testing 16. Product recall and instruction
2. Basic infrastructure 2.1 Technology support 2.2 Workplace environment 3. Communication structure 3.1 Formal communication
- Quality data & Reporting - Document control - Quality record - Information technology
3.2 Informal communication 4. Manufacturing structure 4.1 Flexible manufacturing 4.2 Product & Service design 4.3 Group Technology 4.4 Pull production system
Operational activities
1. Problem solving 2. PDCA cycle 3. SPC technique 4. Quality function deployment (QFD) 5. Set up time reduction 6. Visual control 7. Waste elimination 8. Reducing inventory 9. Preventive maintenance (PM) 10. Maintenance prevention (MP) 11. Maintainability improvement (MI) 12. Scheduled maintenance system 13. Autonomous maintenance 14. Small group activities 15. Suggestion 16. Reducing the six big losses 17. 5S and housekeeping 18. Poka-yoke 19. Brainstorming 20. Effective meeting 21. Value analysis and Value engineering
Management activities
1. Policy deployment (Hoshin planning) 2. Benchmarking 3. Measuring quality costs 4. Process management 5. Quality management 6. JIT scheduling 7. Strategic management 7.1 Production strategy 7.2 Vendor Strategy 7.3 Educational strategy (Educational campaign) 8. Logistic management 9. Forecasting demand patterns 10. Plant management 11. Equipment management 12. Maintenance management 13. Database and Information management 14. Waste management 15. Hazard analysis 16. Loss control and safety management 17. Environmental control 18. Facilities management
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There is time dependence which means that the functions of improvement are
formulated from each factor. This is shown in equation (2) as follows;
and JIT (6.90%) and implements GMP (3.45 %). The classification of plants into four
groups will be used to examine the hypothesis in the next section.
Implementation GMP, HACCP, TPM, JIT and TQM practices
05
101520253035404550
GMP,HACCPand TQM
GMP and HACCP
GMP HACCP TPM and TQM
GMP HACCPJITand TQM
GMP
Manufacturing practices
Perc
enta
ge o
f com
pany
Figure 7.7.4 Implementation Status of GMP, HACCP, TQM, and TPM
As shown in Figure 7.7.5, Thai food processing companies recognise all aspects of
Customer requirements, Government requirements, the Competitive market, and
Company policy as motivation to implement these practices (more than 90%). Figure
7.7.6 shows there is a relationship between Company performance and Percentage of
benefits (Chi-Square testing; Significance; Sig. =0.00). Most Thai food processing
companies obtain benefits of more than 75% from all company performances, excepted
Staff. The highest benefit from Staff (59.5%) is in the 50 to 75% category. There is
some benefits at 25 to 50% category (11.9%). Thai food processing companies focus
very much on benefits of Safety (90.5%) and Marketing (89%).
131
Mian motivatio to implementing GMP, HACCP, TPM, JIT and TQM
0
20
40
60
80
100
120
Customerrequirement
Govermentrequirement
Competitivemarket
Company policy other
Prec
enta
ge o
f com
pany
Figure 7.7.5 Main Motivation for Implementation of GMP, HACCP, TPM, JIT and TQM
Benefits of company performance
0
10
20
30
40
50
60
70
80
90
100
Safety Marketing Production Financial Staff
Company performance
perc
enta
ge o
f ben
efits
25-50%50-75%75-100%
Figure 7.7.6 Benefits of Company Performance from Manufacturing Practices
132
7.8 Best Manufacturing Practice for Thai Food Processing
Companies Figure 7.8.1 shows that few Thai food companies (12%) implement the combined
practices of GMP, HACCP, TPM, JIT and TQM. Most (62%) do not implement JIT
practices in the integrated model, 26% of companies do not combine practices, they just
implement them individually. It can be concluded that the implementation of individual
practice is not enough in order to achieve best practice. Companies should develop the
integrated models of GMP, HACCP, TPM and TQM but not necessarily JIT.
Figure 7.8.1 Adaptation of Best Practices in Thai Food Processing Companies
In figure 7.8.2, it is shown that many companies believe that money and employees are
the main barriers to achieve Thai food processing manufacturing excellence. These are
Quality system (69%), Management system (66%), Organisation characteristics (58%),
Management levels (57%), Production systems, Supplier managements (53%),
Maintenance systems (51%), and Customer contracts (49%). A small number of
companies criticise the utilisation of production and information technologies, in house
communication, product research and development and external factors (less than 45%)
as the obstacles to achieve WCM status.
Implement each practice individually 26%
Combination of GMP, HACCP, TQM and TPM without JIT
62%
Combination all of these practice GMP,
HACCP, TPM, JIT and TQM 12%
133
Barrier to achieve Thai food processing manufacturing excellence
0102030405060708090
100
Fro
m e
xter
nal f
acto
rs
Cus
tom
er c
ontra
ct
Empl
oyee
s
Info
rmat
ion
man
agem
ent
Insi
de c
omm
unic
atio
n
Mai
nten
ance
syst
em
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agem
ent s
yste
m
Man
agem
ent l
evel
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ey
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aniz
atio
n (s
ize,
stru
ctur
e
Qua
lity
syst
em
Prod
uctio
n sy
stem
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liers
Res
earc
h an
d de
velo
pmen
t uni
t
Tech
nolo
gy
Perc
enta
nge
of c
ompa
ny
Figure 7.8.2 Barriers for achieving Best Practice Manufacturing for Thai Food
Processing Companies
It was found in the main survey that the main limitations to JIT implementation are Top
management commitment, Raw material control, and Waste elimination technique
(more than 80%). It was also found that JIT is expensive to implement with regards to
supplier relationship, and employee involvement (between 53-70%). It shows there are
four limitation issues with in significant percentage, less than 50%, such as Education
and training, Inventory control, No knowledge of this system, and Production system,
respectively (Figure 7.8.3).
134
Limits of JIT implementation
0102030405060708090
100
Top
man
agem
ent c
omm
itmen
t
Raw
mat
eria
l con
trol
Was
te e
limin
atio
n te
chni
que
Expe
nsiv
e to
impl
emen
tatio
n
Subp
plie
r par
ticip
atio
n
Empl
oyee
invo
lvem
ent
Endu
catio
n an
d tra
inin
g
Inve
ntor
y co
ntro
l
No
know
ledg
e of
this
syst
em
Prod
uctio
n sy
stem
Perc
enta
ge o
f im
plem
enta
tion
Figure 7.8.3 Limitation of JIT Practice Implementing for Thai Food Processing
Companies
Figure 7.8.4 shows the limitation of TPM implementation for Thai food processing
companies. Top management commitment is the main factor of limitation of TPM, the
same as limitation of JIT (more than 85%). Education and training and knowledge of
these systems are not the main factors of limitation of JIT implementation (Less than
50%), but they are the main factor of limitation of TPM implementation (80%). Most
Thai food processing companies (90%) believe that the TPM technique does not support
GMP and HACCP.
135
Limitation of TPM practices implementation
0102030405060708090
100
Top
man
agem
ent
com
mitm
ent
Lim
ited
know
ledg
e of
this
syste
m
No
educ
atio
n an
d tra
inin
g
No
resp
onsib
ilitie
s for
empl
oyee
s to
do m
aint
enan
ceby
them
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es
Low
pot
entia
l of e
mpl
oyee
s
Lac
k of
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nten
ance
syste
m
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of e
quip
men
t man
agem
ent
No
time
to d
o m
aint
enan
ceac
tiviti
es
Obs
olet
e m
achi
nery
Bad
plan
t lay
out
Perc
enta
ge o
f lim
itatio
n
Figure 7.8.4 Limitation of TPM Practices Implementation
Figure 7.8.5 shows company expectation from TPM practice. Every expectation is a
high percentage (more than 50%). This is particularly so for Increasing company’s
reputation, Reducing maintenance cost, reducing hazard in processing, and reducing
manufacturing cost which are very high percentage (more than 80%). Thai food
processing companies (90%) believe TPM practices can support GMP practices in term
of reducing manufacturing cost and reducing hazard in the process.
Company expectation from TPM practice
0102030405060708090
100
Incr
ease
com
pany
repu
tatio
n
Red
uce
mai
nten
ance
cos
t
Red
uce
haza
rd in
pro
cess
ing
Red
uce
man
ufac
turin
g co
st
Red
uce
deliv
ery
time
Incr
ease
equ
ipm
ent p
erfo
rman
ce
Red
uce
defe
ct
Incr
ease
em
ploy
ee p
erfo
rman
ce
Red
uce
lead
tim
e
Red
uce
set u
p tim
e
Empl
oyee
em
pow
erm
ent
Con
tinuo
us im
prov
emen
t act
ivity
Perc
enta
ge o
f exp
ecta
tions
Figure 7.8.5 Company Expectations from TPM Practice
136
7.9 Conclusion
Thai food processing companies have various characteristics of organisation structure
and typical management, and each depends on the degree of implementation. Not all
companies select any organisational structure to implement fully, but select ideas from
each one. The outstanding organisation structure is focused on the matrix structure of
department in new production as well as cross functional groups for problem solving.
However, the self control groups in production areas and the establishment of an
organisation structure which cooperated between production and maintenance should be
recognised in order to improve productivity and manage equipment effectively. The
focal characteristics of typical management are different in each firm and also vary at
the implementation level. Most companies implement them formally and with the
responsibility of the group rather than depending on a person or informally. The quality
of food is very important for the safety and health of consumers, thus the quality
assurance system is settled on as basic management in every company, in order to
respond to the government’s regulations and to develop quality management systems
for the acceptance by the international market. Furthermore, this can be seen as the first
priority of a typical management group which is composed of strategic planning
systems, performance evaluations, and maintenance systems, respectively. However, of
the education and training system and strategy development, approximately 70% of
companies also considered them as key management issues.
In order to support the development of quality management systems in the organisation,
the following effective activities are carried out. The level of implementation is related
to the basic activities in every company. There are nine activities which are most
important as follows: (1) improving work environment and safety, (2) instilling quality
consciousness in employees, (3) establishing individual performance, (4) training and
education of employees, (5) providing assistance to suppliers in problem solving, (6)
communicating common organisational goals across functions, (7) development of
individual initiatives, (8) empowering employee decision making, and (9) empowering
of employee participation in problem solving, respectively.
137
The manufacturing strategies of Thai food processing companies are focused on market
rather than production, process or service. The market is both domestic and
international. Most manufacturing strategies are of an average standard when compared
with the competitive companies. It seems that the external benchmark is not used to
develop their manufacturing strategies companies. The current quality status of
companies emphasise reducing cost, decreasing defects, quality of worker satisfaction,
and research and development of product quality rather than improving customer after
sales service or speeding delivery. Some issue of quality status are unrelated to market
expectation, particularly to speeding delivery, which should be recognised as a means of
improving response to market demands. Due to setting manufacturing strategies, the
three groups of quality aspect are divided by percentage of company focused. The first
group is more than 80% of most companies which are based on marketing and selling,
quality system, research and development units, quality group activities, material
control, customer relationship, and inspection system. Most of these activities are
related to highlighting the marketing strategies of companies. The second group is
between 50-80%, and are as follows: process control, employee empowerment,
maintenance system, and supplier relationship. The last group, less than 50%,
emphasies product design, top management commitment, measurement control,
management information system, advanced technology, equipment management,
distribution system and product service. The key quality aspect is the equipment
management which is related to the main problems of machines in the Thai food
processing industries. It should be improved as well as other aspects, for example,
product design, product service, top management commitment, employee focus, and
supplier relationship, in order to develop the integrated model of world class
manufacturing.
Many of the levels of business performance in these companies when compared with
competitors, are between the best and average performance, particularly as to product
image, human resource development, market share, productivity, and continuous
improvement activities. In addition, when compared with other competitors, companies
should consider upgrading delivery performance and manufacturing cost. The fact is
that most companies believe that the level of flexibility is not useful to outperform
competitors.
138
Chapter 8
Hypotheses Test and Analysis
8.1 Introduction The purpose of this chapter is to examine the eight hypotheses developed in Chapter 4.
Section 8.2 explains how two hypotheses influence the way companies implement
GMP, HACCP, JIT, TPM and TQM. Section 8.3 investigates four hypotheses relating
to differences in performance among companies implementing GMP, HACCP, JIT and
TQM, and those that have no implementation at all. Section 8.4 and Section 8.5
investigate guidelines for implementing the integrated model.
8.2 Need for Development of an Integrated Model of Best Practice and Market Requirements The primary hypotheses that investigates the manufacturing practices necessary for
supporting an integrated model, as stated earlier Chapter 5, is examined in this section.
Hypothesis: 1
The Thai food processing industry needs to adapt elements of TQM, JIT, HACCP, GMP
or TPM practices in order to increase the efficiency of the implementation of factory
practice.
Item 1: The need for companies to develop the integrated model for best practice
Expected Result: The adoption of practices by companies that facilitate development
according to this integrated model.
Hypothesis : 2
Market requirements influence the decisions to apply TQM, JIT, HACCP, GMP and
TPM.
139
Item 2: The importance of market requirements in developing this best practice
Expected Result: Adoption due to dynamic market requirements. The traditional
concept of the market is inappropriate for solving this problem. It is necessary to
develop an integrated model to support rapid market change at any one time.
Due to aggressive competition, food processing companies need to upgrade their
organisational performance to outperform competitors. The main target is the
international rather than domestic market (Figure 7.2.2), therefore, products need to be
upgraded to a higher quality in order to satisfy higher customer expectations (Porter,
1985). Furthermore, most companies try to set manufacturing strategies by focusing on
process and marketing strategies rather than on production or service strategies ( Figure
7.2.3). It seems that companies need other manufacturing strategies that are aimed at
improving processing capacity as well as penetrating the market. However, companies
should adjust themselves and improve their business performance by developing the
proposed integrated model of excellence for Thai food processing companies. The
implementation of selected individual practices can not cope with all manufacturing
strategies.
The new integrated model must contain manufacturing strategies which respond to a
dynamic market and lead to realising the high potential of organisational
performance. Hence, this model is an installation of all manufacturing strategies
such as process, marketing, production, and service strategies as a mean of
responding to market change. The need for the development of this model is not
only enforced by government regulations, but it is also a response to customer
requirements, the competitive market and individual company policy (Figure 7.7.5).
[Thai food processing companies have been required inevitably to implement GMP
and HACCP for food safety and hygiene (Pongpattanasili and Arndt, 2002)].
140
The Chi-Square test for independence is the appropriate method for examining the
relationship between two sets of characteristics of manufacturing practices and main
motivation respectively. The Chi-Square testing level of significance of 0.00 indicates a
relationship between manufacturing practices and motivation. The government, the
customers, the market, and the company policy have all influenced the implementation
of GMP, HACCP, TPM and TQM. Figure 8.2.1 presents all motivating factors such as
the government, customers, market and company policy in the implementation of GMP
and HACCP. In regard to other manufacturing practices, the Thai food processing
companies are not motivated by government and customer requirements. The
percentage of Thai food processing companies that implement TPM and TQM due to
motivation by the market and company policy is low (less than 10%). However,
motivation by company policy is more effective than motivation by the market. For
example JIT implementation can only be motivated by company policy.
Manufacturing practices and Motivation
0%
10%
20%
30%
40%
50%
60%
HACCP GMP TPM TQM JIT
Manufacturing practices
Perc
enta
ge o
f res
pond
ent
Government
Customer
Market
Company policy
Figure 8.2.1 Manufacturing Practices and Motivation
Further to these practices, in establishing this new appropriate model, it is also
necessary to examine the most popular best practices for manufacturing to complete
a list of coping manufacturing strategies. These best practices (Figure 7.7.1) are
GMP, HACCP, TPM, JIT and TQM and have been made familiar because they have
been supported by many experts and implemented by most successful companies
141
worldwide. Although there are many benefits from the JIT system, it is not
appropriate to implement it in the Thai food processing industries because of
limitations on material control, waste elimination techniques and high investment
charges. In terms of material control, Pongpattansili and Arndt (2002) have shown
that JIT is not thought to be suitable for the Thai food processing companies because
of its peculiar nature in terms of delivery of weather-dependent raw materials.
Since most Thai companies cannot apply JIT practice and do not plan to implement it
(Figure 7.7.3), the appropriate integrated model emphasises four main best practices for
installing a basic infrastructure. These are as follows: GMP, HACCP, TPM and TQM.
From Chi-Square testing, Level of Significance of 0.0253, it is shown that there is a
relationship between manufacturing strategies and manufacturing practices. Figure 8.2.2
shows companies from the study focus on market and service strategies and do not need
TPM and JIT implementation, nor is JIT needed for companies which focus on
production strategy. Only those companies that focus on process strategies, need all the
above mentioned manufacturing practices. In regard to market and process strategies,
companies in the study used GMP and HACCP rather than TQM. However, the
percentage of TQM implementation in companies which focused on service and
production strategies is equal to GMP and HACCP implementation (33.3%). It is
therefore necessary for the Thai food processing companies to, at least, implement GMP
and HACCP manufacturing practices in order to meet customer requirements and
9.1 Introduction In order to achieve best practice, the Thai food processing industry needs to develop a
new appropriate model that integrates the various manufacturing practices including
GMP, HACCP, TPM, and TQM. However, each manufacturing practice has particular
individual characteristics so that when they are being combined, it is necessary to
understand their basic infrastructure in the early stages of implementation. Therefore,
one should study the elements of the basic infrastructure of each of the practices before
setting them up as the base for the development of the model.
This study focuses on analysing the implementation of the various manufacturing
practices before developing an appropriate model and before developing an appropriate
model and education and training of the workforce by Thai food processing companies
throughout their organisations (Chapter 10). The data analysis is based on grouping the
percentage of respondents according to the focus of each of the items in each question.
Furthermore, it separates the various items into four groups according to how they are
implemented in these companies. If there are more than 50% of respondents
implementing the practice, it means that status of the implementation of this item in
Thai food processing companies is important.
9.2 Elements or Basic Infrastructure of an Organisation Table 9.1 shows that the percentage of the 123 Thai food processing companies
investigated in Chapter 7, were the best when their business performance was compared
with their competitors.
164
However, some elements in the majority of these companies could be improved, in
regard to overall quality, manufacturing cost, flexibility, overall company reputation,
and research & development of products. These business performances were affected by
the elements of their organisations that are shown in Table 9.2 (Organisational
structure), Table 9.3 (Management system), Table 9.4 (Management activities), and
Table 9.5 (Potential of problem solving)
Table 9.1 Competitive Business Performance
Percentage of respondent Indicators of Business performance
for high performing companies Need for
Improvement
Improved Good Best
0%-20% 20%-50% 50%-80% 80%-100% Level of product image X Level of delivery performance X Level of productivity X Level of human resource development X Level of market share X Level of continuous improvement activities
X
Level of advanced technology X Level of overall quality X Level of manufacturing cost X Level of flexibility X Level of overall company reputation X Level of research & development of products
X
9.2.1 Organisational structure Most of companies surveyed had not fully implemented the organisational structures
represented in Table 9.2.1. These structures are needed for co-operation amongst units
or departments and for decentralising the authority of decision making by the various
groups of employees in order to manage and control by themselves. They need to
improve, particularly the matrix structure, includes production and maintenance in
problem solving. Consequently, the table shows a very low percentage of
implementation rates from respondents.
165
Table 9.2.1 Organisational Structure
Percentage of respondents Need for
Improvement
Improved Good Best
Full implementation 0%-20% 20%-50% 50%-80% 80%-100% Matrix structures inc. sales, marketing, design, and production in new product
X
Cross functional groups X Self controlling groups in the production area
X
Matrix structures inc. production and maintenance in problem solving
X
9.2.2 Management Systems Most of the Thai food processing companies are very strong in quality assurance
systems and strategic planning which were implemented formally and was the
responsibility of groups. Moreover, other management systems were quite good in areas
such as performance evaluation systems, maintenance systems, strategy development,
education and training, project planning, and cost accounting systems. (Table 9.2.2)
Table 9.2.2 Management Systems
Percentage of respondents Need for
Improvement
Improved Good Best
Formal implementation, responsibility of groups
0%-20% 20%-50% 50%-80% 80%-100%
Quality assurance systems X Strategic planning X Performance evaluation systems X Maintenance systems X Strategy development X Education and training X Project planning X Cost accounting systems X Sales forecasting systems X
166
9.2.3 Management Activities Table 9.2.3 shows that there are some management activities that need improvement in
most Thai food-processing companies, particularly in encouraging the internal customer
concept and job rotation. Moreover, there is a strong need for improving work
environment and safety, training and education of employees, and instilling quality
consciousness.
Table 9.2.3 Management activities
Percentage of respondents Need for
Improvement
Improved Good Best
Full implementation 0%-20% 20%-50% 50%-80% 80%-100% Improving work environment and safety
X
Training and education of employees X Instilling quality consciousness in employees
X
Establishing individual performance X Providing assistance to suppliers in problem solving
X
Communicating common organisational goals across functions
X
Development of individual initiatives X Empowering employees’ decision making
X
Empowering employees’ participation X Encouraging the internal customer concept
X
Encouraging job rotation X 9.2.4 Potential of problem solving Tables 9.2.4a – 9.2.4d show the potential of problem solving which occurred in the
companies that were investigated. Some problems in most businesses were easy to
solve, such as, lack of production performance and time wasting. However, some were
not, such as lack of commitment by top management, teamwork, machinery
breakdowns, availability of material, meeting customer deadlines, production schedules,
measurement of control systems, budget planning, cost controlling & evaluation,
overstocking & inventory evaluation, information management, lack of product ideas
development, understanding customer demands, community relationships, resource
planning, understanding competitors’ business, and setting manufacturing strategies.
167
Table 9.2.4 a Potential of Solving Human Resource Problems
Percentage of respondents Need for
Improvement
Improved Good Best
Simple Problems 0%-20% 20%-50% 50%-80% 80%-100% Safety problems in the workplace X Insufficiency of technical skill X Personal conflict X Lack of employee empowerment X Continuous improvement activity X Lack of management skill X Lack of commitment of top management
X
Teamwork X
Table 9.2.4 b Potential of Solving Quality Problems
Percentage of respondents Need for
Improvement
Improved Good Best
Simple Problems 0%-20% 20%-50% 50%-80% 80%-100% Lack of production performance X Time wasting X Defects X Machinery breakdown X Availability of material X Meeting customer deadlines X
Table 9.2.4 c Potential of Solving Basic Infrastructure Problems
Percentage of respondents Need for
Improvement Improved Good Best
Simple Problems 0%-20% 20%-50% 50%-80% 80%-100% Work standards X Unclear organisational structure X Production schedules X Measurement control systems X Budget planning X Cost control & evaluation X Overstocking & inventory evaluation X Information management X
168
Table 9.2.4d Potential of Solving Problems Regarding Competitors
Percentage of respondent Need for
Improvement Improved Good Best
Simple Problems 0%-20% 20%-50% 50%-80% 80%-100% Supplier relationships X Marketing plan X Lack of product idea development X Understanding customer demands X Community relationship X Resource planning X Understanding competitors’ businesses X Setting manufacturing strategies X
9.2.5 The relationship between organisational characteristics There is a relationship among the various elements of business performance,
organisational structure, management systems, management activities and the potential
of problem solving. The following relationships are grouped and shown in Table 9.2.5:
a. Safety
b. Maintenance
c. Production
d. Supplier
e. Strategic management
f. Financial management
g. Development of new product
h. Sales and marketing
i. Performance management
j. Education and training
k. Co-operation
l. Quality management
m. Continuous improvement
n. Organisation aspects
These items are also rated in the following way:
B = Best, G = Good, I = Need for improvement, and
II = Need for Immediate Improvement.
169
Table 9.2.5a Group (a) - Safety Elements
Items Details Management activities Improving the work environment and safety B Potential of solving problems Safety problems in the workplace G
Table 9.2.5b Group (b) - Maintenance Elements
Items Details Organisation structure Matrix structure including production and maintenance in
problem solving I
Management system Maintenance systems G Potential of problem solving Machinery breakdown I
Table 9.2.5c Group (c) - Production Elements
Items Details Business performance Level of productivity G Business performance Level of advanced technology G Business performance Level of flexibility I Potential of problem solving Lack of production performance B Potential of problem solving Production schedule I Potential of problem solving Overstocking & inventory evaluation II
Table 9.2.5d Group (d) - Supplier Elements
Items Details Management activities Providing assistance to suppliers in problem solving G Potential of problem solving Availability of material II Potential of problem solving Supplier relationship G
Table 9.2.4e Group (e) - Strategic Management Elements
Items Details Management system Strategic planning B Management system Strategy development G Potential of problem solving Understanding competitors’ business I Potential of problem solving Setting manufacturing strategies II
Table 9.2.5f Group (f) - Financial Management Elements
Items Details Business performance Level of manufacturing cost I Management system Cost accounting system G Potential of problem solving Budget planning I Potential of problem solving Cost control & evaluation II
170
Table 9.2.5g Group (g) - Development of New Product Elements
Items Details Business performance Level of research & development of new products I Organisational structure Matrix structure inc. sales, marketing, design, and
production in new product I
Potential of problem solving Lack of product idea development I
Table 9.2.5h Group (h) - Sales and Marketing Elements
Items Details Business performance Level of market share G Business performance Level of product image G Business performance Level of overall company reputation I Management system Sales forecasting system G Potential of problem solving Marketing planning G Potential of problem solving Understanding customer demands I Potential of problem solving Community relationships I
Table 9.2.5i Group (i) - Performance of Management Elements
Items Details
Management system Performance of evaluation system G Management activities Establishment of individual performance G
Table 9.2.5j Group (j) - Education and Training Elements
Items Details Business performance Level of human resource development G Management system Education and training G Management activities Training and education of employees B Management activities Promotion of quality consciousness in employees B Management activities Encouragement of job rotation I Potential of problem solving Insufficiency of technical skill I Potential of problem solving Lack of management skill I
Table 9.2.5k Group (k) – Co-operative Elements
Items Details Organisational structure Matrix structure inc. sales, marketing, design, and
production in new product I
Organisational structure Cross functional groups I Organisational structure Matrix structure inc. production and maintenance in
problem solving II
Management systems Project planning G Management activities Communicating common organisational goals across
functions G
Potential of problem solving Personal conflict G Potential of problem solving Teamwork I Potential of problem solving Resource planning I
171
Table 9.2.5l Group (l) - Quality Management Elements
Items Details Business performance Level of delivery performance G Business performance Level of overall quality I Management system Quality assurance B Potential of problem solving Time wasting B Potential of problem solving Defects G Potential of problem solving Meeting customer deadlines II
Table 9.2.5m Group (m) - Continuous Improvement Activities
Items Details Business performance Level of continuous improvement activities G Organisation structure Self controlling groups in the production area I Management activities Development of individual initiatives G Management activities Empowering employees’ decision making G Management activities Empowering employees’ participation G Management activities Encouraging the internal customer concept I Potential of problem solving Lack of employee empowerment I Potential of problem solving Continuous improvement activities G Potential of problem solving Lack of commitment by top management I
Table 9.2.5n Group (n) - Organisational Aspects
Items Details Potential of problem solving Unclear organisation structure G Potential of problem solving Work standard G Potential of problem solving Information management II
Therefore Table 9.2.5a – Table 9.2.5n emphasise the following points:
1. Management activities used to improve work environment and safety issues in
most companies are excellent and able to solve the safety problems in
workplace easily.
2. The established maintenance systems in most companies do not co-operate with
the production systems and therefore cannot solve problems successfully.
3. The level of productivity and level of advanced technology in most companies
rival that of the competitors, but it has a weak level of flexibility. Problems of
production schedules and overstocking and inventory evaluation occur in most
companies and cannot be solved easily. However, the problem of production
schedules is easy to solve.
4. There are management activities to provide assistance to suppliers in problem
solving and supplier relationship in most companies, but most companies still
have problems of availability of material which is not easily solved.
172
5. The strategic management in most companies is well established. However, it is
not related to problem solving, understanding of competitors’ business and
setting manufacturing strategies that occur. It should be improved to solve
simple problems.
6. Again, the cost accounting system in most companies is well established, but it
cannot be used for budget planning, and cost controlling and evaluation while
the level of manufacturing cost is still uncontrollable.
7. The development of new products should be improved for upgrading business
performance. The matrix structure including sales, marketing, design and
productions in new products is well established only in some companies, but
most other companies are unable to solve the problem of lack of product idea
development.
8. The level of market share and product image of most companies pose no
problems when compared with their competitors, but they should increase the
level of overall company reputation. There is an established sales forecasting
systems in most companies and they have the potential for solving problems of
marketing plans easily. However, they should improve the solving of problems
involving customer demands and community relationships.
9. Performance management is provided in most companies in terms of
performance systems and the assessment of individual performance.
10. The management system and management activities for supporting education
and training in order to raise the level of human resource development are
excellent with the exception of encouraging job rotation. These can support easy
solutions for problems of insufficiency of technical skill and lack of
management skill.
11. The organisation structures, matrix structure and cross-functional groups that
support co-operation amongst units in most companies should be improved.
Project planning and communication of common organisational goals exist
across functions in order to provide assistance for arrangement of work and
work co-operation. Most companies can solve problems of personal conflict
easily, but the potential for solving problems of teamwork and resource
planning should be improved.
173
12. Although there is a quality assurance system in most companies, the level of
overall quality is still not good when compared with the competitors. However,
the level of delivery performance is good. The potential for solving problems of
time wasting and defects in most companies is excellent, but improvements
could be made regarding meeting customer deadline.
13. The level of continuous improvement activities in most companies is good;
however, there has not been sufficient establishment of self-control groups in
the production area. There is also no encouragement of the internal customer
concept which could be improved. Most companies should focus on solutions
for the lack of commitment of top management.
14. There is the ability to solve unclear organization structure and work standards in
most companies, but there is a problem of information management. Again, the
potential for solving this problem needs to be improved.
9.3 Manufacturing Practices This model is developed from the real database of respondents drawn from an existing
group of Thai food processing companies. The models has also originated from GMP
and HACCP practices and have developed their quality assurance to the level of WCM
practice by integrating other manufacturing practices such as TPM and TQM. It
proposes the implementation of the following manufacturing practices in Thai food
processing companies at present:
1. GMP and HACCP should be established through enforcement of government
regulations in order to assure food safety for consumers. Hence, all Thai food
processing companies should implement them.
2. TPM implementation has been added to this model. It aims to assist optimising
and solving problems of machinery and equipment.
3. TQM should be implemented in order to improve quality rather than simply
assure quality management systems. It needs to involve every employee and
member of management in order to increase organisational performance by their
contribution to the process. This management process should include all
resources and cover all manufacturing practices.
174
All the Thai food processing companies mentioned in Chapter 7 have already
implemented GMP and HACCP, but TQM and TPM were only applied by a small
number of them. More than 80% of these companies did not implement TPM and TQM.
However, most of them have future plans for doing so.
9.4 Application of Tools and Techniques This section is concerned with tools and technique for supporting a Thai food
processing industry model. They are explained in detail in Chapter 4 and constitute
the core of the integrated model. The 42 tools and techniques that are investigated in
this study can be classified into four groups. These are:
1. Tools that are related to GMP and HACCP (Figure 9.4.1, Table 9.4.1),
2. Basic tools (Figure 9.4.2, Table 9.4.2),
3. Tools related to supplier management (Figure 9.4.3, Table 9.4.3),
4. Management tools (Figure 9.4.4, Table 9.4.4).
9.4.1 Tools and Techniques related to GMP and HACCP According to Chi-Square testing Level of Significance of 0.00, it indicates that there is a
relationship between tools and techniques related to GMP and HACCP. Figure 9.4.1
indicates that there are two groups drawn from the surveyed companies focusing on
their degree of importance (Appendix F). They are classed as “very important” and
“important”. The first group expected tools and techniques related to GMP and HACCP
to solve more than 80% of their problems. These are in the area of hazard analysis,
transport control, pest control, environment control, personal hygiene, product recall,
product instructions to customers, loss control and safety management.
175
Tools and techniques related with GMP and HACCP and their degree of importance
0
10
20
30
40
50
60
70
80
90
100
Haz
ard
anal
ysis
Tran
spor
t con
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P es t
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Env i
ronm
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Pers
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eria
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out
Cal
ibra
tion
Tools and techniques related to GMP and HACCP
Perc
enta
ge o
f res
pond
ent
Unimportant
Important
Very important
Figure 9.4.1 Tools and Techniques Related to GMP and HACCP and Degree of
Importance
The last group regarded the tools and techniques as only important in the following
areas: process control, packaging and storage, material control, preventive maintenance,
standardization of parts, products and processes, production control, waste management,
measurement equipment control, plant layout, and calibration. The degrees of
unimportance of all tools and techniques are very low (less than 10%). This can be
concluded from the information in Table 9.4.1.
176
Table 9.4.1 Degree of Importance of Tools and Techniques Related to GMP and
HACCP Tools and techniques Degree of importance Percentage of respondents
Hazard analysis Very important 91.8%
Transport control Very important 89.9%
Pest control Very important 89.4%
Environment control Very important 89.1%
Personal hygiene Very important 89.0%
Product recall Very important 88.9%
Product instruction to customer Very important 87.4%
Loss control and safety management Very important 82.8%
Plant layout Important 69.8%
Measurement equipment control Important 69.4%
Calibration Important 69.3%
Standardisation of parts, products, and
processes
Important 67.4%
Waste management Important 67.0%
Preventive maintenance Important 65.9%
Material control Important 65.6%
Packaging and storage Important 65.2%
Production control Important 65.2%
Process control Important 64.0%
9.4.2 Basic tools and techniques Chi-Square testing, Level of Significance of 0.0069, shows that there is a relationship
between basic tools and techniques. Figure 9.4.2 shows that there is a high expectation
of every basic tool and technique in most of the surveyed companies (more than 50%)
in regard to problem solving. However, the basic tool of poka-yoke is not so high
(58.3%) when compared with other tools and techniques (more than 70%). This is
shown in Table 9.4.2.
177
Basic toos and tehniques and degree of importance
0%
20%
40%
60%
80%
100%
QC
C
PDC
A c
ycle
Insp
ectio
n an
dte
stin
g pr
oduc
t
Sugg
estio
n sy
stem
5S &
hou
seke
epin
g
SPC
Smal
l gro
upim
prov
emen
tac
tivity
Mul
ti-sk
illed
empl
oyee
s
Bas
ic 7
tool
s
Bra
nist
orm
ing
Poka
-yok
e
Basic tools and techniques
Perc
enta
ge o
f res
pord
ents
Unimportant
Important
Very important
Figure 9.4.2 Basic Tools and Techniques and Degree of Importance
Table 9.4.2 Degree of Importance of Basic Tools and Techniques
Tools Degree of importance Percentage of respondents
QCC Very important 78.6%
PDCA cycle Very important 75.5%
Inspection and testing product Very important 74.8%
Suggestion system Very important 74.5%
5S and housekeeping Very important 74.0%
SPC Very important 73.0%
Small group improvement activity Very important 71.8%
Multi-skilled employees Very important 71.3%
Basic 7 tools Very important 70.9%
Brainstorming Very important 70.2%
Poka-yoke Very important 58.3%
178
9.4.3 Tools and techniques related to supplier management
Figure 9.4.3 shows that there is a relationship between tools and techniques related to
supplier management (Chi-Square testing at Significance, 0.0008). All tools and
techniques are very important for the Thai food processing companies (more than 60%).
There are degrees of unimportance in the rating of all tools in some companies, but they
make up a low percentage (less than 5%). This can be concluded from information
given in Table 9.4.3.
Tools and techniques relate to supplier management and degree of importance
0
10
20
30
40
50
60
70
80
90
100
Supplier qualitycertification
Reduction of number ofsuppliers and distance
Total supplier evaluation Supplier long-term contract
Tools and techniques relate to supplier management
Perc
enta
ge o
f res
pond
ents
Unimportant
Important
Very important
Figure 9.4.3 Tools and Techniques related to Supplier Management and Degree of
Importance
Table 9.4.3 Degree of Importance of Tools and Techniques related to Supplier
Management
Tools and techniques Degree of importance Percentage of respondents
Supplier quality certification Very important 85.7%
Reduction of number of suppliers and
distance
Very important 80.3%
Total supplier evaluation Very important 64.0%
Supplier long-term contract Very important 62.5%
179
9.4.4 Management tools and techniques Figure 9.4.4 shows the relationship between management tools and techniques and
degree of importance at a level of confidence of 95% (Chi-Square testing at
Significance, 0.0003). There are eight tools and techniques (more than 50%) which are
rated as very important for solving the following problems: human resource
benchmarking and project management. Again, the differences between the “important”
and the “very important” groups varied only less than 7%. There are degrees of
unimportance in the rating of all tools in some companies, but they show low
percentages (less than 7%). This can be concluded from the information given in Table
9.4.4.
Management tools and techniques and degree of importance
0
10
20
30
40
50
60
70
80
90
100
Hum
an re
sour
ce d
evel
opm
ent
Mot
ivat
ion
Qua
lity
audi
t
Qua
lity
reco
rds
Doc
umen
t con
trol
Effe
ctiv
e m
eetin
g
Pers
onne
l man
agem
ent
Equi
pmen
t man
agem
ent
Dat
abas
e &
info
rmat
ion
man
agem
ent
Cro
ss fu
nctio
nal m
anag
emen
t
Faci
lity
man
agem
ent
Dai
ly m
anag
emen
t
Polic
y de
ploy
men
t
Con
flict
man
agem
ent
Ben
chm
arki
ng
Proj
ect m
anag
emen
t
Management tools and techniques
Perc
enta
ge o
f res
pond
ents
Unimportant
Important
Very important
Figure 9.4.4 Management Tools and Techniques and Degree of Importance
180
Table 9.4.4 Degree of Importance of Management Tools and Techniques Tools and techniques Degree of importance Percentage of respondents
Human resource management Very important 74.4%
Motivation Very important 73.4%
Quality auditing Very important 66.0%
Quality records Very important 64.5%
Document control Very important 61.5%
Effective meeting Very important 55.1%
Personnel management Very important 53.4%
Equipment management Very important 53.3%
Database and information management Very important 47.4%
Cross functional management Important 47.4%
Facility management Important 46.5%
Daily management Important 46.3%
Policy management Important 45.5%
Conflict management Important 45.5%
Policy management Important 44.8%
Benchmarking Important 42.7%
Project management Important 41.0%
9.5 Conclusion In this data analysis, the data is grouped into three important elements. These are basic
infrastructure, manufacturing practice and tools and techniques. Furthermore, less than
fifty percent of respondent companies were not operating at their full capacity and some
aspects of their business performance needed to be improved. They included such things
as level of overall quality, manufacturing costs, level of flexibility, level of overall
company reputation, and level of research & development of products.
Moreover, most Thai food processing companies had problems that related to
organisational structure and weakness on some management activities such as
encouragement of the internal customer concept and encouragement of job rotation. In
aspects regarding the potential of problem solving, there were some aspects that should
be improved such as lack of commitment by top management, poor teamwork,
machinery breakdowns, production schedules, measurement control systems, budget
planning, lack of product idea development, lack of understanding of customer
demands, community relationships, resource planning, and understanding competitors’
181
businesses. Certain aspects needed to be improved immediately. These were such
matters as availability of material, meeting customer deadlines, cost controlling &
evaluating, overstocking & inventory evaluation, information management, and the
setting up of manufacturing strategies.
Secondly, the model has been developed from extensions of both GMP and HACCP
which are practices that are enforced by government regulation in order to develop
potential competitiveness by adding quality to existing products and process practices
(TQM) and optimising machinery and equipment (TPM). Finally, it is concluded that
all tools and techniques used in the respondent companies can be classed as “important”
or “very important.”
182
Chapter 10
A new Manufacturing Strategy Model
For the Thai Food Processing Industry
10.1 Introduction This model has been developed for Thai food processing companies in order to achieve
high organisational performance and as a business strategy to compete in the market
arena. There are many tools and techniques used in this research that are necessary for
the development of an appropriate model and for solving most problems which occur in
Thai food processing companies. There are also some suggestion on using them and
developing the necessary steps to achieve successful implementation. Training courses
can assist workers at each of the various job levels to improve their skills and upgrade
organisational performance to gain an advantage in competitive situations. The
recommendations of the survey, in regard to the implementation of this model in the
Thai food processing industry, should be of practical value for organisations seeking a
better business strategy.
10.2 Suggested Tools and Techniques for Problem Solving In the companies that were investigated (Chapter 7), there were many problems that
occurred frequently and urgently needed manufacturing practices and tools and
techniques to eliminate them. Table 10.2 shows the relationship between
manufacturing practices and suggested tools and techniques suitable for solving
these problems.
183
Table 10.2 Relationship between Problems and Manufacturing Practices and
Suggested Tools and Techniques
Manufacturing practices Problems Infrastruc
ture GMP HACCP TPM TQM
Suggested Tools and Technique
Lack of production performance
● ● Process control, Production control , Quality audit, Standardisation of parts, products and process, SPC, Human resource development, Daily management, 7 Basic tools.
Marketing plan
● Database and information management, Brainstorming, Policy deployment, PDCA cycle, Cross function management, Benchmarking.
Overstocking & inventory Evaluation
● ● ● Process control, Production control, Database and information management, Material control, Packaging and storage, 5S & housekeeping, Supplier long-term contract.
Safety problems in workplace
● ● ● ● Small group improvement activities, Hazard analysis, Plant layout, Daily management, Packing and storage, Environmental control, Preventive maintenance, Document control, 5S & housekeeping , Personal hygiene, Human resources development, Suggestion system, Personnel management, Poka-yoke, Loss control and safety management.
Information for management
● Database and information management, Document control, Quality Records, 5S & housekeeping.
Budget planning
● Database and information management, Effective meeting, Brainstorming, PDCA cycle, Cross functional management.
Resource planning
● ● ● Brainstorming, Database and information management, Effective meeting, PDCA cycle, Process control, Production control, Material control, Equipment management, Project management, Facility management, Cross functional management.
Setting manufacturing strategies
● ● Database and information management, Effective meeting, Brainstorming, Policy deployment, PDCA cycle, Human resources development, Facility management, Benchmarking.
184
Manufacturing practices Problems Infrastruc
ture GMP HACCP TPM TQM
Suggested Tools and Technique
Time wasting
● ● Small group improvement activities, Database and information management, SPC, Process control, Standardisation of parts, products and processes, Human resources development, 5S & housekeeping, Production control, Material control
Meeting customer deadlines
● Database and information management, Reduction of number of suppliers and distance, Process control, Transport control, Material control, Preventive maintenance, Production control, Human resources development, Project management, Cross functional management.
Community relationship
● Transport control, Environmental control, Personnel hygiene, Product recall, Product instruction to consumer.
Lack of employee empowerment
● ● ● Small group improvement activities ,Database and information management, Brainstorming, Motivation, Preventive maintenance, Human resources development, 5S & housekeeping, Cross functional management, QCC, Personnel management, Multi-skill employees.
Defects
● Small group improvement activities, Brainstorming, Pest control, Hazard analysis, SPC, Daily management, Production control, Basic 7 tools, Standardisation of parts, products and processes, Material control, Packaging and storage, Preventive maintenance Document control, Quality Records, Inspection and testing product, Process control, Waste management, Quality audit, Personnel hygiene, Human resources development, QCC, 5S & housekeeping, Poka-yoke, Supplier quality certification, Loss control and safety management
Insufficiency of technical skill
● Motivation, Human resources development, Personnel management, Multi-skilled employees.
Machinery breakdown
● Small group improvement activities, Database and information management, Effective meetings, Brainstorming, Basic 7 tools, Preventive maintenance, Human resources development, 5S & housekeeping, Suggestion system, QCC, Poka-yoke.
185
Manufacturing practices Problems Infrastruc
ture GMP HACCP TPM TQM
Suggested of Tools and Technique
Cost control & evaluation
● Database and information management, Reduction of number of suppliers and distance, Standardisation of parts, products and processes, Total supplier evaluation, Supplier long-term contract.
● Process control, Document control, Production control, Database and information management, Reduction of number of suppliers and distance, Standardisation of parts, products and processes, Material control.
Personal conflict
● Small group improvement activities, Conflict management, Personnel management, Motivation, QCC, Human resource development, Cross functional management.
Teamwork
● Small group improvement activities, Motivation, Database and information management, QCC, Effective meetings, Brainstorming, Conflict management, Policy deployment, Human resource development, Project management, Personnel management, Suggestion system, Cross functional management.
Human error
● Small group improvement activities, Effective meetings, Brainstorming, Motivation, QCC, Cross functional management, Suggestion system, Loss control and safety management
Lack of product ideas development
● Small group improvement activities, QCC, Database and information management, Effective meetings, Brainstorming, Motivation, Project management, Suggestion system, Cross functional management, Benchmarking.
Work standards
● Process control, Production control, Quality audit, Database and information management, Document control, Human resource development
Unclear organisational Structure
● Personnel management.
Lack of management skill
● ● Motivation, Multi-skill employees, Personnel management, Human resource management.
186
Manufacturing practices Problems Infrastructure
GMP HACCP TPM TQM Suggested Tools and Technique
Understanding competitors’ businesses
● ● Database and information management, Effective meetings, Brainstorming, Cross functional management, Benchmarking.
Lack of commitment of top management
● Motivation, Policy deployment
Supplier relationship
● ● ● ● Database and information management, Reduction of number of suppliers and distance, Total supplier evaluation, Supplier quality certification Supplier long-term contracts.
Continuous improvement activity
● ● Small group improvement activities, Database and information management, Effective meetings, Brainstorming, SPC, Basic 7 tools, Motivation, Preventive maintenance, PDCA cycle, Waste management, Human resources development, 5S & housekeeping, Cross functional management, Benchmarking, Suggestion system, QCC
Availability of material
● ● Database and information management, Reduction of number of suppliers and distance, Standardisation of parts, Policy deployment, products and processes, Material control, Total supplier evaluation, Supplier quality certification, Supplier long-term contracts.
Understanding customer demands
● Database and information management, Effective meetings, Brainstorming, Policy deployment, Product recall, Cross functional management, Benchmarking, Product instruction to consumer.
Different levels of employees need different levels of education and training tools
and techniques. For example, top management and middle management need training
in management tools and techniques more than engineering staff and supervisors,
whereas front-line operators need training in technical skills more than middle
management. Tables 10.2a-10.2e show the tools and techniques needed for (a) top
Table 10.2a Tools and Techniques used by Top Management
Tools and Techniques Job position
Tools Techniques
Top Management Cross functional management PDCA cycle Benchmarking
Policy development Human resource management Motivation Personal management Cross functional management Database and information management Total supplier relation
Table 10.2b Tools and Techniques used by Middle Management
Tools and Techniques Job position
Tools Techniques
Middle Management
Cross function management PDCA cycle Inspection and testing system Supplier contract Brain storming QCC SPC
Policy deployment Human resource management Motivation Personal management Cross functional management Conflict management Quality audit Quality record Database and information management Product recall Package and storage system Transport control Material control Process control Reduction of number of Supplier & distance Supplier quality certification Equipment management Suggestion system
188
Table 10.2c Tools and Techniques used by Engineers
Tools and Techniques Job position
Tools Techniques
Engineer Cross function management PDCA cycle Brain storming QCC Poka-yoke 7 Basic tools SPC Inspection and testing system Critical control point (CCP)
Policy deployment Human resource management Cross functional management Motivation Personal management Personal Hygiene Conflict management Plant layout Preventive maintenance Database and information management Transport control Material control Process control Equipment management Quality audit Quality record Document control Suggestion system Safety management Packaging and storage Waste management Pest control
Table 10.2(d) Tools and Techniques used by Supervisor
Tools and Techniques Job position
Tools Techniques
Supervisor Cross function management PDCA cycle Brain storming QCC 5S and housekeeping Multi skill employee development Poka-yoke 7 Basic tools SPC Inspection and testing system Critical control point (CCP)
Cross function management Conflict management Motivation Preventive maintenance Database and information management Material control Process control Equipment management Personal Hygiene Quality record Document control Suggestion system Safety management Packaging and storage Waste management Pest control
189
Table 10.2e Tools and Techniques used by Front-Line Operator
Tools and Techniques Job position
Tools Techniques
Front-line operator
Brain storming QCC 5S and housekeeping Multi skill employee development Poka-yoke 7 Basic tools Inspection and testing product Critical control point (CCP)
Personal Hygiene Preventive maintenance Equipment management Material control Process control Document control Suggestion system Packaging and storage Pest control
10.3 Model of Excellence for the Thai Food Processing Industry In the present study, an integrated model combining GMP, HACCP, TPM and TQM has
been developed. The main survey investigated problems in the Thai food processing
companies and found techniques and tools to reduce these problems by using this
model. The model is comprised of seven elements: infrastructure, subsets of HACCP
and TQM, subsets of HACCP and TPM, and subsets of TQM and TPM.
The infrastructure practices are tools and techniques which support the effectiveness of
the main practices: GMP, HACCP, TPM and TQM. The implementation of
infrastructure practices is aimed directly at improving all measures of a company’s
performance. They attempt to improve quality performance, reduced cost, improve
delivery and improve safety.
The model is based on the central starting point of GMP (now compulsory in Thai
food processing industries), with HACCP, TPM and TQM elements being added to
it. There are apparently many overlapping areas of GMP, HACCP, TPM and TQM
belonging to more than one practices, i.e. areas 1, 2, 3, and 4, after which the “pure”
practices are introduced in areas 5, 6, 7 (Figure 10.3). The various areas shown in
areas 1-7 contain those techniques, and also represent their typical implementation
sequence, where the seven steps correspond to the numbering in the tool and
technique entries and therefore are logically applicable in implementing the seven-
step model. The results of this survey indicate that techniques and tools are needed in
190
order to implement and develop a model. The steps to build this model are as
follows:
Figure 10.3 New Manufacturing Strategy Model for Thai Food Processing Industry
Small group activity, Problem solving, 5S activity and housekeeping, Motivation, Multi-skilled employees
Small group activity, Problem solving, 5S activity and housekeeping Poka-yoke technique
Problem solving, SPC Top management commitment Employee involvement & empowerment, Motivation Workplace management (5S & housekeeping), Material control, Product control, Process control Transport control Product recall Supplier relationship, Supplier quality certification Measurement (calibration and equipment control) Document control, Quality audit, Safety of Product Plant layout PDCA cycle Quality control circle
197
Table 10.4.1 Training Courses for Particular Job Positions
Job position Basic Training (3 times per
year)
Maintenance Training
(3 times per year)
Technical Training
(3 times per year)
Management Training
(3 times per year)
Top management
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
2 days 2 days 2 days 2-3 days Middle management
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
2 days Less than 2 days Less than 2 days Less than 2 days Engineer GMP, HACCP,
TQM and TPM
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
2 – 3 days 2 – 3 days 2 – 3 days 2 – 3 days Supervisor GMP and
HACCP
GMP, HACCP, and TPM
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
2 – 3 days 2 – 3 days 2 – 3 days 2 days TQM and TPM
TQM - -
2 days 2 days - - Front-line operator
GMP and HACCP
GMP, HACCP, TPM and TQM
GMP, HACCP, TQM and TPM
GMP, HACCP, TQM and TPM
2 days 2 days 2 days 2 days TQM and TPM
- - -
2 days - - - Table 10.4.2 shows the design of training courses for each particular level. These
include top management, middle management, engineer, supervisor, and front-line
operator. Correspondingly, there are four training courses for each of these levels and
they include (a) Basic training, (b) Management training, (c) Technical training, and (d)
Maintenance training.
Table 10.4.2a Basic Training for each Particular Levels
Job position Training days (3 times/year) GMP HACCP TPM TQM
Top management < 2 days < 2 days < 2 days < 2 days Middle management 2-3 days 2-3 days 2-3 days < 2 days Engineer 2-3 days 2-3 days 2-3 days 2-3 days Supervisor 2-3 days 2-3 days < 2 days < 2 days Front-line operator 2-3 days < 2 days < 2 days < 2 days
198
Table 10.4.2b Management Training for each Particular Levels
Job position Training days (3times/year) GMP HACCP TPM TQM
Top management 2-3 days 2-3 days 2-3 days < 2 days Middle management 2-3 days 2-3 days 3-4 days 2-3 days Engineer 2-3 days 2-3 days 2-3 days 2-3 days Supervisor 2-3 days 2-3 days < 2 days < 2 days Front-line operator 2-3 days < 2 days < 2 days 2-3 days
Table 10.4.2c Technical Training for each Particular Levels
Job position Training days (3 days/year) GMP HACCP TPM TQM
Top management < 2 days < 2 days < 2 days < 2 days Middle management 2-3 days < 2 days 3-4 days 2-3 days Engineer 2-3 days 2-3 days 2-3 days 2-3 days Supervisor 2-3 days 2-3 days < 2 days 2-3 days Front-line operator < 2 days < 2 days < 2 days < 2 days
Table 10.4.2d Maintenance Training for each Particular Levels
Job position Training days (3 times/year) GMP HACCP TPM TQM
Top management < 2 days < 2 days < 2 days < 2 days Middle management < 2 days < 2 days 2-3 days 2-3 days Engineer 2-3 days 2-3 days 2-3 days 2-3 days Supervisor 2-3 days 2-3 days < 2 days < 2 days Front-line operator < 2 days < 2 days < 2 days < 2 days
10.5 Preliminary Test of New Model: Result from 3 Case Studies This section discusses the result of the case study. Three Thai food processing
companies A, B and C are used.
10.5.1 Characteristics of participation Thai food processing companies (Company
A, B, and C) Table 10.5 presents the characteristics of the Thai food processing companies in the
case study based on the number of employees; they consist of one large and two
medium companies.
199
Table 10.5 Characteristics of the Thai Food Processing Companies Participated in
the Case Study
Thai food processing
companies
A B C
Number of employees 140 190 1,000
Annual turnover
(million Baht)
30 100 1,400
Established 1980 1985 1987
Finished product Canned fruit and
vegetable
Canned Tuna Canned fruit and
vegetable
Manufacturing
operation
Continuous Continuous Continuous and project
Manufacturing practices GMP, HACCP and 5s GMP, HACCP and
TQM
GMP, HACCP, TPM
and TQM
Production approach Make to stock (66%)
and order (34%)
Make to stock (60%)
and order (40%)
Make to stock (70%)
and order (30%)
10.5.2 Implementation of manufacturing practice models in Company A,
B, and C This section investigates the adoption of GMP, HACCP, TPM and TQM by the
companies participating.
10.5.2.1 Company A Company A is apparently aware of recent development in new approaches to
manufacturing. External and internal pressures have driven this company to
implementing GMP and HACCP in order to achieve quality assurance. This can be
proved by results of Hypothesis 2 testing that External (market requirement) influence
the implementation of GMP and HACCP. This company has enough resources to use
GMP and HACCP. Although the production line is in an advantageous position to adopt
TPM and JIT compared with other types of manufacturing operation, this plant does not
attempt it formally due to the difficulty in seeking local manufacturers. However, some
TPM practices are applied.
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10.5.2.2 Company B Company B, by adopting GMP and HACCP, is motivated by its need to comply with
the requirement of the Food and Drug Administration, Department of Medical Science.
The main motivation to implement TQM for this company is to obtain external
recognition besides seeking internal efficiency. This can be proved by results of
Hypothesis 6 testing that large companies based on the number of employees, prefer to
implement TQM compared with smaller companies. Smaller companies, based on
annual turnover do not use TPM as much as large companies do. However, this
particular company plans to implement TPM in the future.
10.5.2.3 Company C Company C has adopted GMP, HACCP, TPM and TQM. Its motivation to implement
TQM is in order to seek internal efficiency and develop relationships with customers. It
also implements TPM in its effort to control critical equipment. Equipment breakdown
leads to huge production losses and start up costs. Employees are encouraged to be
multi skilled in order to obtain better benefits. The management of quality and
equipment in this company is dependent on a small number of trade persons instead of
the participation of all employees. The main method of controlling employees to do
their job safely, properly, and productively is various designs throughout the company.
However, this company has not attempted to implement JIT practice because some
processes are not under its control. For example, suppliers of raw materials depend on
the weather and the company relies on a buffer stock in order to be responsive to
customer demands.
10.5.3 Comparison of Company A, B and C Company A, B and C have different forms of implementing the manufacturing practice
model, as stated in the previous section. They also have various basic infrastructures,
benefits and tools, and techniques which they use in their. Table 10.5.3.1a–Table
10.5.3.1b shows organisation structure and typical management characteristics:
Company A has only partially implemented these organisational structures compared
with Company B and C which have both fully implemented them. Moreover, Company
Organisation structures Some Very much Self controlling groups in the production area A BC Matrix structure including sales, marketing, design and production development in new production
A BC
Matrix structure including production and maintenance in problem solving
Management characteristics Implemented Informal Formal, depending on
person Formal, depending
responsibility of group Strategic planning system A BC Strategy development A BC Quality assurance system A BC Education and training system A BC Sales forecasting system A BC Cost accounting system A BC Maintenance system A BC
Company B and C have completely implemented formal management characteristics
and assigned responsibility to the group. The benchmarking method is only used in
Company B and C for developing manufacturing strategies. However, they use
benchmarking methods in different ways. Company B uses competitors but Company C
uses an excellent Company in Thailand for benchmarking. The quality focuses of
Company B and C are very important in all aspects, but Company A is only focused on
decreasing defects, speeding delivery, and reducing costs. Research and development of
product quality, quality of working life for employees, and improvement of customer
service are also important. The quality aspects used to develop the manufacturing
strategies in any company are different as follows:
1. Company A: Process control, Inspection system, Product service,
and Quality system.
2. Company B: Supplier relationship, Process control, Inspection
system, Customer relationship, Product service, Quality system, and
Marketing and selling.
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3. Company C: Supplier relationship, Process control, Inspection
inspection and testing product and product recall. Some tools and techniques are not
expected to be used in Company A but are very powerfully applied in Company B and
C ,such as PDCA cycle, Conflict management, Database and information management,
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and waste management. Accordingly, personnel management, project management,
cross functional management, and poka-yoke, are not expected to be used in Company
A, but they are powerfully used in Company B and very powerfully used in Company
C. Table 10.5.4.4 shows how powerful any remaining tools and techniques are when
applied in any company.
Table 10.5.3.3 Tools and Techniques
Items Company A B C Brainstorming Powerful* Very powerful Very powerful Human resources development Moderate* Very powerful Very powerful Multi-skilled employees Moderate* Very powerful Very powerful Supplier quality certification Powerful* Very powerful Very powerful Reduction of number of suppliers and distance Powerful* Powerful* Very powerful Supplier long-term contracts Powerful* Very powerful Very powerful Total supplier evaluation Powerful* Powerful* Very powerful Daily management Powerful* Very powerful Very powerful Standardization of parts, products and processes Powerful* Very powerful Very powerful Policy deployment Powerful* Very powerful Very powerful Benchmarking Powerful* Very powerful Very powerful Equipment management Powerful* Very powerful Very powerful Preventive maintenance Powerful* Very powerful Very powerful Loss control and safety management Powerful* Very powerful Very powerful Product instruction to consumer Powerful* Very powerful Very powerful QCC Powerful* Very powerful Very powerful
10.6 Survey of Implementation of Integrated Model This integrated model was shown to the companies surveyed in this chapter for their
comments. For this, a different Company D was surveyed. This company has already
implemented GMP, HACCP, and ISO9000. It also has experience with implementing
other practices such as TPM and TQM. In accordance with increasing business
performance, the company needs to implement an integrated model of GMP, HACCP,
TPM and TQM. This company agreed with the suggestion of this integrated model and
the tools and techniques that are used in conjunction with it. Table 10.6 contains five
sub tables labeled (a-e) , that show which tools and techniques of the suggested
integrated model can be used with the various levels of job position such as:
1. Top management,
2. Middle management,
3. Engineer,
4. Supervisor,
5. Front-line operator.
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Table 10.6a Tools and Techniques of the Suggested Integrated Model suitable for
Top Management in Company D
Job position Tools Techniques
Top management Cross functional management
PDCA cycle
Benchmarking
5S and housekeeping
Human resource management
Motivation
Personal management
Cross functional management
Conflict management
Database & information management
Total supplier relation
Recommendation
- The top management should clearly understand and explain all policies to every employee and know
why the company needs to implement them.
- The top management should be open-minded and get opinions and suggestions from employees in
order to understand problems thoroughly and solve them.
Table 10.6b Tools and Techniques of the Suggested Integrated Model suitable for
Middle Management in Company D
Job position Tools Techniques
Middle management - Cross functional management
- PDCA cycle
- Inspection and testing system
- Supplier contract
- Brainstorming
- 5S and housekeeping
- QCC
- SPC
- Human resource management
- Personal management
- Cross functional management
- Conflict management
- Quality audit
- Database & information management
- Product recall
- Packaging and storage system
- Transport control
- Material control
- Process control
- Reduction of number of supplier
and distance
- Supplier quality certification
- Equipment management
Recommendation - Middle management should assist top management to keep close contact with every
employee and help deploy company policies.
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Table 10.6c Tools and Techniques of the Suggested Integrated Model suitable for
Engineers in Company D Job position Tools Techniques
Engineer - Cross functional management
- PDCA cycle
- Poka-yoke
- 7 basic tools
- Brainstorming
- 5S and housekeeping
- QCC
- SPC
- Inspection and testing system
- Motivation
- Cross functional management
- Conflict management
- Plant layout
- Database & information management
- Preventive maintenance
- Packaging and storage system
- Quality audit
- Equipment management
- Transport control
- Material control
- Process control
Recommendation- The engineer should help the company establish quality assurance systems and
focus on implementation of GMP and HACCP.
Table 10.6d Tools and Techniques of the Suggested Integrated Model suitable for
Supervisors in Company D
Job position Tools Techniques
Supervisor - Cross functional management
- PDCA cycle
- Poka-yoke
- 7 basic tools
- Multi-skilled employee
development
- 5S and housekeeping
- QCC
- SPC
- Inspection and testing system
- Motivation
- Cross functional management
- Conflict management
- Database & information management
- Preventive maintenance
- Equipment management
- Material control
- Process control
Recommendation
- The supervisor should help the company establish quality assurance systems, control documents,
write work instructions and focus on implementation of GMP and HACCP.
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Table 10.6e Tools and Techniques of the suggested Integrated Model for Front-
Line Operator in Company D
Job position Tools Techniques
Front-line operator - Brainstorming
- PDCA cycle
- Poka-yoke
- 7 basic tools
- Multi-skilled employee
development
- 5S and housekeeping
- QCC
- Preventive maintenance
- Equipment management
- Material control
- Process control
Recommendation
- Employee participation is the key factor for successful implementation of the suggested integrated
model. Every employee should co-operate with management and focus on GMP and HACCP.
10.7 Recommendation of Six Sigma as an Appropriate
Manufacturing strategy Model for the Thai Food Processing
Industry The success factors for Six Sigma are similar to key factors in appropriate
manufacturing strategy model for the Thai food processing industry. These share 11
keys. They have 11 keys for success in common. These are as follows:
1. Management involvement and commitment. Most people who have undertaken
this kind of project agree that the most important factor is the ongoing support
and commitment of top/senior management. Behind most of the major Six
Sigma and appropriate manufacturing strategy model success’s are enthusiastic
top/senior management who have made it all possible.
2. Cultural change. One of the reasons Six Sigma and appropriate manufacturing
strategy models are considered a breakthrough strategy is because they involve
adjustments to the company’s values and culture from the outset. In part, this
change leads to conflict. The best way to tackle this problem is through
increased communication, motivation and education.
3. Communication. A communication plan is an integral part of involving
employees, showing them how Six Sigma and appropriate manufacturing
strategy model works and how they can benefit from these initiatives.
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4. Organisation infrastructure. Before considering a Six Sigma and appropriate
manufacturing strategy model program, certain characteristics must already be
in place. The company must have a long-term strategy, at least the beginning of
a communication plan and there should be enough resources and investments
available to sustain the program over a considerable period of time.
5. Training. Training also creates a sense of ownership for everyone in the
organisation, whatever their level of involvement.
6. Linking Six Sigma and appropriate manufacturing strategy model to business
strategy. These cannot be treated as stand-alone activities. The projects must
have a direct impact on both financial and operational goals. These have more of
a philosophy than just a few tools and techniques.
7. Linking Six Sigma and appropriate manufacturing strategy model to customer.
These should begin and end with the customer.
8. Linking Six Sigma and appropriate manufacturing strategy model to human
resources.
9. Linking Six Sigma and appropriate manufacturing strategy model to suppliers.
Suppliers must also participate in this drive for quality.
10. Understanding tools and techniques within Six Sigma and appropriate
manufacturing strategy model. During the Six Sigma training employees learn
three main groups of tools and techniques which are divided into team tools,
process tools, and leadership tools. They also need to have a basic understanding
of statistics as it forms a major part of the measurement process.
11. Project management skills. Project managers should consider the key elements
of project management, time, cost and quality. Defining them will provide
teams with the scope, aims and resources needed to deliver improvements in a
short time, at the lowest cost and meeting requirements.
According to tools and techniques for Six Sigma and appropriate manufacturing
strategy model they are similar as shown here: cause and effect analysis, Pareto
analysis, control charts and run charts. It was found that many companies are not using
more powerful techniques such as design of experiments, Taguchi methods, quality
function deployment, failure mode effect and criticality analysis, 5S and housekeeping,
Poka-Yoke and SPC.
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Six Sigma could be implemented at the same time as the Thai food processing
companies used appropriate manufacturing strategy model. Companies will reduce time
and costs by implementing Six Sigma and appropriate manufacturing strategy model
because some elements shown above use the same tools and techniques. Kim and
James, 2002 and Graeme, Martin and Steve, 2004 showed in there research that the
implementation of Six Sigma gave 75% of the companies financial benefits. It is
recommended that after implementing of the appropriate manufacturing strategy model
for Thai food processing industry propose here, Thai food processing companies should
concern Six Sigma to achieve even greater benefit.
10.8 Recommendation ISO 9000 as an Appropriate Manufacturing
Strategy Model for the Thai Food Processing Industry
ISO 9000 is a route to TQM. They are complementary. For companies which already
using TQM, installing ISO 9000 is relatively straightforward. ISO 9000 can be used as a
means of advancing toward the use of TQM. From the above discussion, there are a
number of important points which need to be followed in order to implement TQM and
ISO 9000 successfully.
These are a knowledge of TQM principles, Practice TQM principles, Create your own
TQM model (ISO 9000 as a structural framework for the implementation of TQM),
Customer satisfaction and continuous improvement, use of ISO 9000 as a route to TQM
(develop a Quality Manual for ISO 9000 that is suitable for your company and its
customers), ISO 9000 needs TQM (Even with ISO 9000 certification in hand, it would
not guarantee that the products and services are of high quality. In order to produce
quality products and services, the system needs TQM to lift it up to expectations),
knowledge-base conscious (Everybody needs to be educated and trained to do a better
job), and use tools, knowledge and skills. All this evidence supports the theme “ISO
9000 and TQM are the passports to success”.
10.8.1 Relationship of ISO 9000, GMP and HACCP
The concepts of systems and product standards are related in principles to the quality
management systems required for the effective functioning of the management systems,
and in most cases do not concern themselves with the correctness of product
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specifications. However in the manufacture of good quality products, some form of
assessment of the product specifications are required to ensure that these meet the
regulatory and customer requirements. The requirements in ISO 9000 and GMP should
be considered as complementary as the two standards have common grounds, and that
the implementation of both standards will provide a good balance between management
systems and specific system requirements relating to food processing industry which are
essential for the control processes. Even though both documents make indirect reference
to product requirements and standards, the two are ,in effect, system standards which do
not mention any specific details of product quality control elements of the products
being manufactured. The ISO 9000 Quality Management Systems series of standards
are a series of standards which have been developed for the control of management
processes in a broad range of industries. The requirements of ISO9000 cover the
requirements of GMP, therefore an essential element to further clarify acceptable
practices and standards for the Thai food processing industry would be considered as an
important element for the implementation of ISO 9000 and development of the systems.
Both HACCP and ISO 9000 systems are management philosophies that rely on
disciplined operator control and teamwork. Both focus on prevention rather than
retrospective inspection. However, the major difference between the two systems is the
scope. HACCP is process and product oriented. HACCP is totally focused on food
safety therefore quality factors should not be part of a HACCP program. In contrast,
ISO 9000 is more systems-oriented and designed to manage quality. ISO 9000 provides
confidence that a supplier's quality system is capable of providing a stated product or
service. HACCP puts control mechanisms in place to ensure that the product is safe and
manufactured to standards that are formulated internationally, whereas ISO 9000
requires that an organisation defines their own system and demonstrates that it can
comply with it. HACCP and ISO focus on prevention. HACCP assures food safety by
controlling the process. ISO 9000 ensures system conformance to the standards. These
two programs have complimentary systems that reinforce and strengthen an
organisation's overall quality system. To be maximally effective, these companies must
be tailored to the manufacturing facility, requiring management leadership and
commitment, expert knowledge in program development, employee training and
operator control. In the competitive arena of the Thai food processing industry,
consumers demand high quality, safe products, and value-added pricing. Food
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companies can meet these demands and maintain profitability by implementing systems
which focus on doing things right the first time.
Both HACCP and an ISO 9000 system are beneficial. HACCP was used to manage the
food safety element of the quality system while ISO 9000 was used as a framework to
manage quality. In these facilities, ISO 9000 implementation forced changes in their
pre-existent HACCP systems, primarily document and data control. An additional
advantage to having HACCP before ISO 9000 is that the former creates a
framework/foundation for a formal quality management system. Other than having
gained an improved understanding of the requirements of a formally documented
system from having gone through the HACCP recognition process, one respondent to
the case study, company D indicated that it gave company credibility and confidence to
proceed with ISO 9000. The learning and training involved in formulating a HACCP
plan can be transferred to ISO 9000 implementation. HACCP is easier to implement
since there is less interpretation, whereas ISO 9000 is a quality management tool. The
principle of ISO 9000 is similar to some tools and techniques to propose model for an
appropriate manufacturing strategy for the Thai food processing industry, especially
document control for GMP and HACCP systems. If companies have already
implemented the proposed model followed by ISO 9000, they should achieve maximum
benefits.
10.9 Conclusion The use of this integrated model is necessary for Thai food processing companies to
upgrade their business performance. It combines the manufacturing practices of GMP,
HACCP, TPM, and TQM. GMP and HACCP are quality assurance systems for food
safety enforced by present government regulation. TPM and TQM implementation help
an organisation to achieve WCM performance. TPM is necessary for optimising
machine and equipment efficiency while TQM establishes a high level of quality
assurance in order to build a work culture of quality standards that involves all
employees. This ensures improvements to quality are continuous, and in turn, satisfies
the customer. Its success is dependent on implementing all the necessary tools and
techniques. It is also sufficiently flexible to be applied usefully in any Thai food
211
processing company. Chapter 11, which follows, gives the conclusion of this research
and recommendation for its future use.
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Chapter 11
Conclusion
The Thai food manufacturing industry plays a major role in the Thai economy as shown
in Chapter 2. The food processing industry discussed here is its most important sector. It
uses the raw materials or ingredients from agricultural products and processes them in
order to produce new food products (semi-products or finished products). Typical
examples are the canning and the preservation of meat, fruit, vegetables, fish and other
sea products, noodles and other flour based products, sugar products, coffee and tea
processing, soft drinks and carbonated beverages. Because of its relationship to the
rural industries, the Thai food processing industry offers economic advantages, such as
adding value to agricultural products, reducing the number of imported products,
providing employment in local areas, and gaining income from export products.
Most of the food processing industry needs to implement basic manufacturing practices
which conform to international standards and practices and relate to food safety for
consumers. These basic manufacturing practices are enforced by the government. They
include GMP and HACCP. They are seen along with ISO 9000 and other quality
assurances such as quality systems. However, quality assurance system is not good
enough for succeeding in the face of aggressive competition and the dynamic changing
marketplace. In order to survive and flourish amongst its many competitors, it is
necessary for it to upgrade its business performance to manufacturing excellence.
Drawing from the study of problems found in the Thai food processing companies in
the pilot survey, it has been shown that these are mostly machinery breakdown,
preparation of raw materials from suppliers, and process management. There is a need
to improve maintenance systems, supplier management and quality management
systems to achieve manufacturing excellence. The TPM, the JIT, and TQM are
solutions for eliminating or reducing these problems. These manufacturing practices are
explained in detail in Chapter 4.
The study also showed that JIT systems cannot be easily implemented in the Thai food
processing companies because the provision of raw materials from suppliers are not
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constant nor controllable due to seasonal changes and undeveloped inventory control
processes. Most of the companies do not agree on a method of application for JIT.
Although it can be implemented in the integrated model, it has been shown that business
performance decreases when it is not. Therefore, this research focuses on the integrated
model which combines the manufacturing practices of GMP, HACCP, TPM, and TQM.
Before testing the hypotheses, Chapter 7 presented the findings of the results of the
questionnaire. There were eight hypotheses in this research that related to the
development of best practice for the Thai food processing industry. These hypotheses
could be classed into four groups. The first group examined the necessary elements of
various manufacturing practices and market requirements. The second group dealt with
the implementation of the integrated model necessary for the Thai food processing in
contrast to individual manufacturing practices. It focused on a few integrated models as
a means of examining which can perform the best. The third group emphasised the
relationship between the implementation of these manufacturing practices, industrial
characteristics and product and process strategies. The fourth group looked at the design
of training courses and how they assisted successful implementation of this integrated
model. It is concluded that:
1. There are many urgent problems that occur frequently in companies as
well as the market requirements demanding an upgrade in the quality of
products. Therefore any elements of TQM, JIT, HACCP, GMP, and TPM
that are utilised are very useful for solving these problems and assisting
the improvement of business performance.
2. Companies, which implement any manufacturing practices of GMP,
HACCP, TPM, JIT and TQM perform better than those that do not
utilise any of these practices or those that implement only one of them.
The combination of GMP, HACCP, TQM and TPM implementation
gives a better performance for this model than implementation without
TPM because the latter is necessary for solving the main problems of
machinery breakdown and optimising machinery/equipment or facility
efficiency and effectiveness.
3. There is a relationship between the implementation of these
manufacturing practices and industrial characteristics and products and
process strategies.
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4. Companies need the infrastructure of training in order to achieve this
integrated model. This training can be separated into four courses of
GMP, HACCP, TPM, and TQM and are as follows: (1) Basic training
courses, (2) Management training courses, (3) Technical training
courses, and (4) Maintenance training courses. These courses should be
designed specifically for each particular job position including top
management, middle management, engineers, supervisors, and front-line
operators. The data shows that they need periods of training courses that
differ in duration of approximately 2-3 days, 3 time per year.
The integrated model was developed and shown in Chapter 9. The elements of
organisation are extremely necessary for building up manufacturing practices such as
organisational structure, management systems, management activities, and the solution
of potential of solving problems. Thai food processing industries should understand
clearly each of the manufacturing practices of GMP, HACCP, TPM, and TQM before
combining them. This also applies to the tools and techniques that are required for
assisting companies to achieve success in implementation of this model. Companies
should build up strong infrastructures and relationships amongst the various subsets of
manufacturing practices; e.g. the subset of HACCP and TQM, the subset of HACCP
and TPM, and the subset of TQM and TPM, and follow the seven steps of implementing
the model. The successful implementation of the model is reliant on human resources,
so the company’s employee should understand it clearly and know how to implement it.
This can be achieved by training courses that are provided for each particular employee
level.
This study proposed an appropriate manufacturing strategy model to reduce the
main problem areas in The Thai food processing companies concerning management,
human resources, quality, safety, cost, and equipment. These problems can be
reduced by integrating the combined techniques and practices of GMP, HACCP,
TPM and TQM into one approach suitable for application in the Thai food
processing industry. Accordingly, an appropriate manufacturing strategy based on a
seven-step implementation model for this industry is suggested with a view to
increasing Thailand’s competitive position in the international market.
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There are limitation as shown in Chapter 7 to this research caused by restructuring of
time and resources. The findings were necessarily limited therefore to the Thai food
processing industry and were not able to be generalised without consideration of larger
sample. It was also found that the classification for Thai food processing industry is not
clear. Some government departments uses different classification regarding size. It
reveals that it is a useful application for all companies in the Thai food processing
industry. It should be used as a basis for further large scale research.
216
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3.9 Transport equipment and parts 3841 Ship building & repairing 3844 Motorcycles & bicycles 3843 Motor vehicles & parts 4. Construction 5000 Construction 5. Trade 6100 & 6200 Wholesale & retail trade 6. Services 6.1 Transportation and travel 7112-7113 Land, water, and air transportation
7192 Storage & warehousing
7191 Service incidental to transportation 7200 Communication services 6.2 8310 Housing & real estate 6.3 Hotel and restaurant 6310 Restaurant 6320 Hotel 6.4 Other services 8310-29 Business services, except machinery rentals
9200-9599 Other
8330 Machinery and equipment rental and leasing
7. Financial Institute 8101 Commercial bank 8103 Financial 8102 Other financial institutes 8200 Insurance Note : ISCI = International Standard Industrial Classification. n.e.c = Not elsewhere classified.
249
A-2 Main statistic A-2.1 Figure 2.2.1: The number of factories closed in Thailand during 1998 Factory/Labor
Sector June July August September October November December
A-2.6 Table 2.11.1 Comparison of Trade Balance Figures for Thai Export
Products (Unit : Million Baht)
Year Farm Agriculture Manufacturing
Industrial
Electrical/ Electronic Industry
1995 231,416.7 794,880.90 433,079.9
1996 230,658.8 667,383.70 487,266.8
1997 257,562.2 806,782.30 601,151.4
1998 304,424.5 987,123.60 791,462.1
1999 266,644.8 941,752.30 798,780.7
251
Appendix B
Output and Value Added by Thai Manufacturing Industry
B-1. Table Gross Output and Value Added by Industry Sector
Source : Report of The 1997 Industrial census whole Kingdom, National statistical office Total Value added = Value of gross output – Intermediate consumption Value of gross out put = Sale of goods produced, Receipts of good of resale, Receipts from contract and commission work, Receipts from sales of repair and maintenance, Receipts from rent on building vehicle machinery and equipment, other and Change in value of stock of work in progress, finished goods and goods for Resale.
252
Appendix C
Pilot Questionnaire
Survey on Thai Food Processing Industry University of Wollongong
จํานนวนกี่เปอรเซ็นต? (What have been your company’s main products during the past 3 years in terms of production volume? ( % if possible )) …………………………………………………………………………………………………………………………………………………………………………………………………….
1.6 ผลิตภัณฑ อะไร ที่เปนผลติภัณฑท่ีใหผลกําไรแกบริษัททานมากที่สุดในชวงระยะเวลา 3 ป ? (What have been your company ‘s main products during the past 3 years in terms of profits? ( % if possible)) ………………………………………………………………………………………
4.……………………………………………………………………………….. 3. การผลติ (Production) 3.1 อะไรคือกลยุทธของบริษัท/โรงงานของทาน ทานสามารถใหคําตอบมากกวาหนึ่งคําตอบ (What is the focus of the manufacturing strategy of this plant ?) ( ) ผลติภันฑ (Product) ( ) กระบวนการผลิต (Process) ( ) การตลาด (Market) ( ) การบริการ (Service) ( ) อ่ืนๆ (Others):……………………………………………..…………………. 3.2 บริษัท/โรงงานของทานมีปญหาเกี่ยวกับวัตถุดิบหรอืไม,ถาเคยโปรดระบุอะไรคือปญหาของ ทาน? (Do you have any problem related to raw material ?)
(Do you have any problems with product quality?, If yes, What is the Major problem)
( ) มี (Yes) , ………………………………. ( ) ไมมี (No)
3.6 ทานมีโครงการที่จะปรับปรุงคุณภาพของสินคาหรือไม ถามีอะไรคือส่ิงที่ทาจะปรับปรุง (Do you have any plans to improve product quality?, If yes, How?) ( ) มี (Yes) ( ) ไมมี (No) ( ) เทคโนโลยีการผลิต (production techniques), ( ) เครื่องจักรและอุปกรณ(machine or equipment) ( ) การออกแบบ (design) ( ) อ่ืนๆ (Others) : …………………………………………………….……. 3.7 เครื่องจักรที่สําคัญท่ีใชในกระบวนการผลติในโรงงานของทาน (Main production machinery) ประเภทของเครื่องจักร(Type of
machine)
จํานวน (Number
of machines)
ซื้อเครื่องใหม(Bought new)
ซื้อเครื่องท่ีใชแลว(Bought Second hand)
อายุการใชงาน(ป)
(Present age of
machine)
กําลังการผลิต (Size of
machine)
ประเทศผูผลิต (Country of
origin)
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3.7 ทานมีปญหาเก่ียวกับเครื่องจักรและอุปกรณหรือไม ถามีอะไรคือปญหาของทาน (Do you have any problems with your machines or equipment, If yes, What kind of problem?) ( ) มี (Yes) ………………………………….. ( ) ไมมี (No) 3.8 ทานมีระบบงานบํารุงรกัษาหรือไม ถามีระบบอะไรที่ทานใช? (Do you have a maintenance system, If yes, What is the maintenance system ? ) ( ) มี (Yes),…………………………….. ( ) ไมมี (No) 3.9 ทานเคยมีประสพการณในการสงสินคาของทานไมตรงเวลาหรือไม ? (Do you experience delays in delivery of your products ?) ( ) บอย (Often) ( ) บางครั้ง (Sometime) ( ) เล็กนอย (A little) ( ) ไมเคย (Never) ( ) อ่ืนๆ (Other, identify) : ……………………………….. 3.10 อะไรคือปญหาทําใหทานไมทันเวลา? (Cause of delay?) ( ) สินคาไมไดคุณภาพ/บกพรอง (Bad production) ( ) ไดวัตถดุิบไมตรงเวลา (Delay of raw material) ( ) เครื่องจักรหยุดทํางาน/ชํารุด (Machine break drown) ( ) การขาดแคลนแรงงาน (Insufficient workers) ( ) อ่ืนๆ Others identify : ……………………….. 4. แผนในอนาคต (Future Plans) ในระยะ3 ปขางหนา ทานมีแผน/โครงการที่จะพัฒนาปรับปรุง บริษัทของทานในดานใดบาง? (For the next 3 years, do you have development plans for you company in any of the following areas?) 4.1.1 ออกสินคาตัวใหม ถามีอะไรที่ทานคิดจะทํา ? (New products?, If yes, Please explain) ( ) มี (Yes) ,…………………………………………….. ( ) ไมมี (No) 4.1.2 จัดซื้อเครื่องจักรใหม ถามีเครื่องจักรอะไรที่ทานจะจัดซื้อ ? (Investment in new machines?, If yes, Please explain) ( ) ใช(Yes) ,……………………………………………….. ( ) ไมใช (No) 4.1.3 การพฒันาปรับปรุงประสิทธ์ิภาพการผลิต ถามดีานไหนที่ทานจะปรับปรุง? (Improving productivity and efficiency?, If yes, Please explain) ( ) ใช (Yes) ,……………………………………………… ( ) No (ไมใช) 4.1.4 การพฒันาปรับปรุงประสิทธิภาพกระบวนการผลิต ถาดานไหนที่จะปรับปรุง? (Improving production processes?, If yes, Please explain) ( ) ใช (Yes) ,…………………………………………… ( ) ไมใช (No) 4.1.5 การหาตลาดใหม Opening new market ? If yes, Please explain
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( ) ใชYes ,………………………………………………….. ( ) ไมใช No 4.2 อะไรคือส่ิงที่คิดวาเปนภยัคุกครามตอบริษัทของทานในระยะ3ปขางหนา? (What do you see as the major threats to your company over the next 3 years?)
Main Thai food processing industry Survey University of Wollongong
Faculty of Engineering
1. General information This section attempts to position your company with respect to number of employees, turnover, production and characteristic of management system etc.
1.1 How many employees do you have in this company? (Please tick one)
( ) Less than 20 ( ) Between 20-49 ( ) Between 50-99 ( ) Between 100-199 ( ) Between 200-499 ( ) Greater than 500
1.2 What is the approximate annual turnover of this company? (Please tick one) ( ) Less than 10 million Baht ( ) Between 10-50 million Baht ( ) Between 50-100 million Baht ( ) 100-500 million Baht ( ) Over 500 million Baht
1.3 How many products are produced in this company? (Please tick one) ( ) 3 or less products ( ) 4-10 products ( ) 11-30 products ( ) more than 30 products
1.4 What are the characteristics of the organization structure in your company? (Please tick box)
Organization structures Some Very much 1. Are there any self controlling groups in the
production area
2. Is there any matrix structure including sales, marketing, design and production development in new production
3. Is there any matrix structure including production and maintenance in problem solving
4. Are there any cross functional groups for problem solving
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1.5 Listed below are some typical management characteristics, which of these apply to your company? If yes indicate, how they are implemented. (Please tick box)
1 = informal 2 = formal, depending on person 3 = formal, responsibility of group
strategic planning system Strategy development quality assurance system education and training system sales forecasting system cost accounting system performance evaluation system project planning system maintenance system
1.6 What are the efforts in carrying out the following activities? (Please tick one box per activity)
Activities None Some A lot training and education of employees development of individual initiatives empowering of employees participation in problem solving empowering employees decision making instilling quality consciousness in employees encouraging the internal customer concept improving work environment and safety encouraging job rotation establishing individual performance communicating common organizational goals across functions
providing assistance to suppliers in problem solving
1.7 This question aims to establish the degree of automation used in your factory now, ie the proportion of activities carried out by machines as against people. Please estimate the ratio of automatic operations to manual operations in your factory for both "value-adding" (eg cutting up fruit or meat) and "non-value-adding" (eg transport, which does not add value to the product) activities:
All manual 0 :100 25:75 50:50 75:25 All automation
2. Manufacturing strategies This section evaluates your manufacturing strategy in terms of company strategy, quality improvement, marketing, production, human resource and supplier relationship etc. 2.1 What is the type of production approach of this company? (Please tick one)
( ) Project ( ) Batch ( ) Continuous
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2.2 What is the main market for this company? (Please tick one) ( ) Domestic market only ( ) International market only ( ) Both, percentage of your market (Domestic market : International market) = ……….. : …………. (approximately) Domestic >International = International >=Domestic
2.3 What is the focus of the manufacturing strategies for this company? (Please tick one or more) ( ) Production ( ) Process ( ) Market ( ) Service ( ) Other, specify …………………………………………………………………………………………
2.4 What is the focus of current quality status in this company to win against competitors and what is the priority of its importance? (Please tick box)
Degree of importance: 1 = unimportant 2 = important 3 = very important
Quality status Degree of importance 1 2 3
1. Decreasing defects 2. Research and development of product quality
3. Speeding delivery 4. Reducing cost 5. Quality of work life of employee 6. Improving customer after service
2.5 What is the quality focus that the market expects? (Please tick one or more)
( ) Decreasing defects ( ) Research and developing quality in products ( ) Speeding delivery ( ) Improving customer after service ( ) Quality of work life of employee ( ) Reducing cost ( ) Other, specify………………………………………………………………………………………………
2.6 What quality aspects in this company are used to develop the manufacturing strategies? (Please tick one or more)
( ) Supplier relationship ( ) Process control ( ) Advanced technology ( ) Employee empowerment ( ) Measurement control ( ) Inspection system ( ) Customer relationship ( ) Distribution system ( ) Product service ( ) Maintenance system ( ) Quality system ( ) Quality group activities ( ) Product design ( ) Material control ( ) Equipment management ( ) Research and development units ( ) Management information system ( ) Marketing and selling ( ) Top management commitment ( ) Other, specify ……………………………………………………………………………….
2.7 According to market, how do your manufacturing strategies stand in the competitive environment? (Please tick one)
( ) Excellent ( ) Good ( ) Average ( ) Bad ( ) Worst
2.8 Does this company use other companies as a benchmark for developing the manufacturing strategies? (Please tick one)
( ) No, go to 2.10 ( ) Benchmark, but no use for developing manufacturing strategies. ( ) Benchmark, and use for developing manufacturing strategies.
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2.9 If your company uses an external benchmark, which type of companies? (Please tick one or more)
( ) Competitors ( ) Excellent company in Thailand ( ) World class manufacturing company ( ) Subsidiary company ( ) Other, pecify ………………………………………………………………………………
2.10 Please estimate the level of business performance of this company compared with competitors for the last 3 years? (Please tick one box for each business performance aspect)
1 = Among the best 2 = Average 3 = Below average 4 = Among the worst 5= Not applicable
Business performance Level
1 2 3 4 5
1) Level of overall quality
2) Level of productivity
3) Level of delivery performance
4) Level of manufacturing cost
5) Level of flexibility
6) Level of overall company reputation
7) Level of product image
8) Level of market share
9) Level of advanced technology
10) Level of continuous improvement activities
11) Level of research & development product
12) Level of human resource development
2.11 In which areas from 2.10 does your company expect to outperform competitors? (Please tick one or more)
3. Manufacturing practices This section identifies the manufacturing practices in your company by referring to HACCP (Hazard critical control point), GMP (Good manufacturing practices), JIT (Just in time), TPM (Total productive maintenance) and TQM (Total quality management) practices used to achieve World Class Manufacturing.
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3.1 How familiar are you with these 5 manufacturing practices? (Please tick box)
Manufacturing practice Never heard of
Heard of Familiar understand
Applying it now
GMP: HACCP: JIT: TPM: TQM:
3.2a If your company is using any of these practices NOW, when did you first introduce them? (Please tick box)
3.3 What practice needs immediate or future implementation in your company? (Please tick in box)
1 Yes, implementing 2= No, but have future plan 3 = No, without future plan If you have a future plan, please indicate when it will be implementation
Factory practice Current implementation
Future plan
1 2 3 Next year
Next 2 years
More than 2 year
GMP
HACCP
JIT
TPM
TQM
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3.4 Which of these manufacturing practices will help your company to achieve business excellence system? (Please rank in order of importance: 1-5, 1-hignest)
3.5 This question ranks your company’s problem solving capacity. Please estimate the frequency of problems, urgency of solution and potential of solution in your company (Please tick as many boxes as necessary)88
Frequency of problem: 1 = frequently 2 = infrequent 3 = no occurrence Urgency of solution: 1 = urgently 2 = average 3 = not critical Potential of solution: 1 = easy 2 = average 3 = difficult
Cause of Problem Frequency of problem
Urgency of solution Potential of solution
1 2 3 1 2 3 1 2 3 1) machine breakdown 2) personal conflict 3) availability material 4) defects 5) waste time 6) insufficiency of technical skill 7) lack of management skill 8) overstock & inventory 9) meeting customer deadline 10) lack of developing product ideas 11) understanding customer demands 12) work standard 13) lack of production performance 14) lack of commitment of top management
15) supplier relationship 16) information for management 17) teamwork 18) continuous improvement activity 19) unclear organizational structure 20) measurement control system 21) production schedule 22) cost controlling & evaluating 23) budget planning 24) marketing plan 25) community relationship 26) resource planning 27) setting manufacturing strategies 28) safety problems in workplace 29) lack of employee empowerment 30) human error 31) understanding competitors business
3.6.In 3.5, which items are critical and should be solve immediately?80 (Please prioritize critical problems of 5 items, 1 : highest, 5 lowest)
3.7 Which improvement tools does your company expect to use to solve your problems? (Please indicate degree of importance for those to be used, tick as many boxes as necessary) Degree of importance: 1 = Unimportant 2 = important 3 = very important
Items Degree of importance
1 2 3 Basic 7 tools SPC PDCP cycle Brainstorming Effective meeting Human resources development Multi-skilled employees Small group improvement activities Personnel management Motivation Conflict management Supplier quality certification Reduction of number of suppliers and distance Supplier long-term contracts Total supplier evaluation 5S & housekeeping Database and information management Plant layout Daily management Facilities Project management Standardization of parts, products and processes Cross functional management Policy deployment Benchmarking Suggestion system Calibration Measurement equipment control Production control Equipment management Preventive maintenance Material control Process control Packaging and storage Waste management Pest control Transport control Document control Quality Records Quality audit Hazard analysis
Items Degree of
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importance 1 2 3 Loss control and safety management Environmental control Poka-yoke Personnel Hygiene Inspection and testing product Product recall Product instruction to consumer QCC
3.8 In order to achieve best practice, companies may need to use the practices in 3.1. How would your company adapt GMP, HACCP, TPM, JIT and TQM practices? (Please tick one)
( ) Implement each practice individually ( ) Combination of GMP,HACCP,TQM and TPM without JIT (GO TO 3.9) ( ) Integrated all of these practice GMP HACCP, TPM, JIT, and TQM ( ) Other, specify…………………………………………………………………………………………
3.9 If you should combination of GMP, HACCP, TQM and TPM with out JIT, Do you think If take TPM out from the model will get for the model?
( ) yes ( ) No
3.10f you are implementing GMP, HACCP, JIT, TQM and TPM, what is the main motivation for this? (Please tick one or more)
( ) Customer requirement ( ) Company policy ( ) Government requirement ( ) Competitive market ( ) Not applicable ( ) Other ,specify… ……………
3.11 What are the practices that your customers expect in your company? (Please tick one or more) ( ) Final inspection before delivery to customer ( ) Quality assurance, GM ( ) Quality assurance, HACCP ( ) Just-In-Time system, JIT ( ) Total productive maintenance, TPM ( ) Total quality management, TQM ( ) Other, specify…………………………………………………………………………
3.12 Is your company implement JIT, If Yes go to Question 3.13, If No please indicate, what limits its implementation ? (Please tick one or more)
( ) No knowledge of this system( ) Production system( ) Top management commitment ( ) Employee involvement( ) Inventory control ( ) Forecasting customer demand ( ) Waste elimination technique ( ) Small lot size focus ( ) Supplier participation ( ) Education and training ( ) Advanced technology ( ) Expensive to implementation ( ) Other, specify………………………………………………… ( ) None
3.13 your company implement TPM, If YES go to Question 3.14, If NO please indicate, what factors limit TPM in your company? (Please tick one or more)
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( ) No knowledge of this system ( ) Low potential of employees ( ) Lack of equipment management ( ) Lack of maintenance system ( ) No time to do maintenance activities ( ) Obsolete machinery ( ) No education and training ( ) Bad plant layout ( ) None ( ) No responsibilities for employees to do maintenance by themselves ( ) Other, specify……………………………………………………………………. ( ) None
3.14a What does your company expect from TPM practice? (Please tick one or more)
( ) Reduce hazards in processing ( ) Reduce manufacturing cost ( ) Reduce maintenance cost ( ) Reduce defects ( ) Reduce lead time ( ) Reduce set up time ( ) Reduce delivery time ( ) Increase equipment performance ( ) Continuous improvement activity ( ) Increase employee performance ( ) Employee empowerment ( ) Increase company reputation ( ) Other, specify…………………………………………………………………………… ( ) None
3.14 b Do you think TPM technique from 3.14a support HACCP and GMP practice? ( ) Yes ( ) NO
3.15 In your company, do any of the “barriers” listed below prevent you to achieve world class manufacturing? (Please tick one or more and describe the nature of the barriers)
4.1 To what extent is your company prepared to invest overall to achieve world class manufacturing (eg staff training, practical training, etc.)? (Please tick one)
( ) Zero ( ) less than 500,000 Baht. ( ) about 500,000 - 1 million Baht. ( ) about 1 – 3 million Baht. ( ) about 3 – 5 million Baht. ( ) Yes, more than 5 million Baht.
4.2 If you are interested in investing capital for developing your company to achieve world class manufacturing, what are three
main benefits that you expect? (Please tick three) ( ) Company reputation ( ) Margin profits ( ) Improve quality system ( ) Maximize equipment performance ( ) Improve supplier relationship ( ) More market share ( ) Improve employee empowerment ( ) Improve skill of employee ( ) Reduce cost ( ) Control inventory system ( ) Improve production system ( ) Develop quality culture ( ) Improve customer contract ( ) Eliminate waste ( ) Other, specify……………………………………………………………………………...
5. Training and Education 5.1 What training programs will help your company to achieve world class manufacturing in the next 5 years? (Please tick one or more)
( ) Basic training (Problem-solving technique, 7 basic tools etc..) ( ) Management training (Management course, leader ship, team work, etc…) ( ) Technical training (statistic methods, QCC, etc…) ( ) Maintenance training ( ) Operator training
5.2a (If you can not complete this section go directly to section 6), In your company, how much training should each management level receive for implementing for best practices (GMP, HACCP, TQM, JIT and TPM)? (Please tick box for estimated training days per month 5.2b Please also indicate your estimate of overall time required for training?
Top management 5.2a Day/month GMP HACCP TQM TPM JIT
Training Program
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Basic training Management training Technical training Maintenance training
5.2b. Overall length of training
month/year
Other, Number of Day/Year………………
Middle management 5.2a Day/month GMP HACCP TQM TPM JIT Training Program
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
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Basic training Management training Technical training Maintenance training
5.2b. Overall length of training month/year
Other, Number of Day/Year………………
Engineers 5.2a Day/month GMP HACCP TQM TPM JIT Training Program
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Basic training Management training Technical training Maintenance training
5.2b Overall length of training month/year
Other, Number of Day/Year………………
Supervisors 5.2a Day/month GMP HACCP TQM TPM JIT Training Program
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Basic training Management training Technical training Maintenance training
5.2b Overall length of training month/year
Other, Number of Day/Year………………
Front line operators 5.2a Day/month GMP HACCP TQM TPM JIT Training Program
1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5 1 2 3 4 5
Basic training
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Management training Technical training Maintenance training
5.2b Overall length of training month/year
Other, Number of Day/Year………………
6. Interest in research findings 6.1 Are you interested in obtaining the results of the study? (Please tick one)
( ) Yes ( ) No
6.2 Would your company be prepared to be included in the case study by personal visit/interview in your company? (Please tick one)
( ) Yes ( ) No
6.3 How much time did you take to complete this questionnaire? (Please tick one) ( ) 30 minutes ( ) 30 - 60 minutes ( ) 60- 120 minutes ( ) more than 120 minutes
Please return this survey by 1 November 2003 To Chaitamlong Pongpattanasili Department of Industrial Engineering,
Faculty of Engineering, Naresuan University Phitsanulok, 65000, Thailand Phone : Fax :
******** Thank you for your cooperation ********
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Appendix E
Statistical Analysis E1 Main Survey E 1.1 Figure 7.3.1(a) Human resource problem and frequency of problems Chi-Square test (Significant) = 0.002 Significant Relationship between HR problems and frequency of problems
Observed - HR problems - related to training
Frequently
Infrequently
No occurrence
Total
Personal conflict 17 55 2 74 Insufficiency of technical skill 8 45 1 54 Lack of management skill 22 36 2 60 Lack of commitment of top management 30 38 4 72 Teamwork 14 28 3 45 Continuous improvement activity 7 13 0 20 Safety problems in workplace 2 22 4 28 Lack of employee empowerment 4 24 2 30
Total 104 261 18 383 Expected - HR problems - related to training Frequently Infrequently
No occurrence
Figure 7.3.2flict 20.1 50.4 3.5 Insufficiency of technical skill 14.7 36.8 2.5 Lack of management skill 16.3 40.9 2.8 Lack of commitment of top management 19.6 49.1 3.4 Teamwork 12.2 30.7 2.1 Continuous improvement activity 5.4 13.6 0.9 Safety problems in workplace 7.6 19.1 1.3 Lack of employee empowerment 8.1 20.4 1.4
Infrequently
Frequently
No occurrence
Insufficiency of technical skill 83.3 14.8 1.9 Lack of employee empowerment 80.0 13.3 6.7 Safety problems in workplace 78.6 7.1 14.3 Personal conflict 74.3 23.0 2.7 Continuous improvement activity 65.0 35.0 0.0 Teamwork 62.2 31.1 6.7 Lack of management skill 60.0 36.7 3.3 Lack of commitment of top management 52.8 41.7 5.6
Note : Used Excel for Chi-square testing
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E1.2 Figure 7.3.2 Human resource problems and urgency of problems Chi-Square test (Significant) = 0.0001 Significant Relationship between HR problems and urgency of problems
Observed - HR problems - related to training
Urgency
Average
Not critical
Total
Personal conflict 70 2 2 74 Insufficiency of technical skill 42 11 1 54 Lack of management skill 36 22 2 60 Lack of commitment of top management 64 4 0 68 Teamwork 26 4 0 30 Continuous improvement activity 12 6 0 18 Safety problems in workplace 20 2 0 22 Lack of employee empowerment 18 5 0 23 Human error 24 6 0 30
total 312 62 5 379
Expected - HR problems - related to training
Urgency
Average
Not critical
Personal conflict 60.9 12.1 1.0 Insufficiency of technical skill 44.5 8.8 0.7 Lack of management skill 49.4 9.8 0.8 Lack of commitment of top management 56.0 11.1 0.9 Teamwork 24.7 4.9 0.4 Continuous improvement activity 14.8 2.9 0.2 Safety problems in workplace 18.1 3.6 0.3 Lack of employee empowerment 18.9 3.8 0.3 Human error 25 5 0.4
Urgency Average Not critical Personal conflict 94.6 2.7 2.7 Lack of commitment of top management 94.1 5.9 0.0 Safety problems in workplace 90.9 9.1 0.0 Teamwork 86.7 13.3 0.0 Human error 80.0 20.0 0.0 Lack of employee empowerment 78.3 21.7 0.0 Insufficiency of technical skill 77.8 20.4 1.9 Continuous improvement activity 66.7 33.3 0.0 Lack of management skill 60.0 36.7 3.3
E1.3 Figure 7.3.2(a) Quality problem and frequency of quality problem
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Chi-Square test (Significant) = 0.000 Significant Relationship between quality problems and frequency of problems
Observed - Quality problems Frequently
Infrequently
No occurrence
Total
Defects 10 37 4 51 Machine breakdown 18 42 1 61 Availability of material 28 39 0 67 Meeting customer deadline 6 28 4 38 Waste time 8 32 2 42 Lack of production performance (productivity) 4 12 9 25
total 74 190 20 284
Expected - Quality problems Frequently
Infrequently
No occurrence
Defects 13.3 34.1 3.6 Machine breakdown 15.9 40.8 4.3 Availability of material 17.5 44.8 4.7 Meeting customer deadline 9.9 25.4 2.7 Waste time 10.9 28.1 3.0 Lack of production performance (productivity) 6.5 16.7 1.8
Infrequently
Frequently
No occurrence
Waste time 76.2 19.0 4.8 Meeting customer deadline 73.7 15.8 10.5 Defects 72.5 19.6 7.8 Machine breakdown 68.9 29.5 1.6 Availability of material 58.2 41.8 0.0 Lack of production performance (productivity) 48.0 16.0 36.0
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E1.4 Figure 7.3.2(b) Quality problem and urgency of problems Chi-Square test (Significant) = 0.000 Significant Relationship between quality problems and frequency of problems
Observed - Quality problems
Frequently
Infrequently
No occurrence
Total
Defects 10 37 4 51 Machine breakdown 18 42 1 61 Availability of material 28 39 0 67 Meeting customer deadline 6 28 4 38 Waste time 8 32 2 42 Lack of production performance (productivity) 4 12 9 25
Total 74 190 20 284 Expected - Quality problems
Frequently
Infrequently
No occurrence
Defects 13.3 34.1 3.6 Machine breakdown 15.9 40.8 4.3 Availability of material 17.5 44.8 4.7 Meeting customer deadline 9.9 25.4 2.7 Waste time 10.9 28.1 3.0 Lack of production performance (productivity) 6.5 16.7 1.8
Infrequently Frequently No occurrence Waste time 76.2 19.0 4.8 Meeting customer deadline 73.7 15.8 10.5 Defects 72.5 19.6 7.8 Machine breakdown 68.9 29.5 1.6 Availability of material 58.2 41.8 0.0 Lack of production performance (productivity) 48.0 16.0 36.0
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E1.5 Figure 7.3.2(c) Quality problems Chi-Square test (Significant) = 0.774 (Insignificant) No relationship between quality problems and urgency of problems
Observed - Quality problems
Urgency
Average
Not critical
Total
Defects 38 4 2 44 Machine breakdown 56 4 1 61 Availability of material 64 3 0 67 Meeting customer deadline 20 4 0 24 Waste time 34 6 2 42 Lack of production performance (productivity) 13 2 0 15
total 225 23 5 253
Expected - Quality problems Urgency Average Not
critical Defects 37.0 5.6 1.4 Machine breakdown 54.2 5.5 1.2 Availability of material 59.6 6.1 1.3 Meeting customer deadline 20.2 3.1 0.8 Waste time 35.3 5.4 1.3 Lack of production performance (productivity) 12.6 1.9 0.5
Urgency Average Not critical Availability of material 95.5 4.5 0.0 Machine breakdown 91.8 6.6 1.6 Lack of production performance (productivity) 86.7 13.3 0.0 Defects 86.4 9.1 4.5 Meeting customer deadline 83.3 16.7 0.0 Waste time 81.0 14.3 4.8
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E1.6 Figure 7.3.3(a) Basic infrastructure and frequency of problems Chi-Square test (Significant) = 0.0007 Significant Relationship between basic infrastructure problems and frequency of problems
Observed - Basic infrastructure problems
Frequently
Some
No occurrence
Total
Work standard 9 10 3 22 Overstock & inventory 2 40 6 48 Production schedule 12 10 7 29 Cost controlling & evaluating 6 18 2 26 Budget planning 5 27 6 38 Measurement control system 4 14 0 18 Information for management 2 14 3 19 Unclear organization structure 6 14 0 20
total 46 147 27 220
Expected - Basic infrastructure problems
Frequently
Some
No occurrence
Work standard 4.6 14.7 2.7 Overstock & inventory 10.0 32.1 5.9 Production schedule 6.1 19.4 3.6 Cost controlling & evaluating 5.4 17.4 3.2 Budget planning 7.9 25.4 4.7 Measurement control system 3.8 12.0 2.2 Information for management 4.0 12.7 2.3 Unclear organization structure 4.2 13.4 2.5
Some
Frequently
No occurrence
Overstock & inventory 83.3 4.2 12.5 Measurement control system 77.8 22.2 0.0 Information for management 73.7 10.5 15.8 Budget planning 71.1 13.2 15.8 Unclear organization structure 70.0 30.0 0.0 Cost controlling & evaluating 69.2 23.1 7.7 Work standard 45.5 40.9 13.6 Production schedule 34.5 41.4 24.1
275
E1.7 Figure 7.3.3(c) Urgency of basic infrastructure problems Chi-Square test (Significant) = 0.000 Significant Relationship between basic infrastructure problems and urgency of problems
Observed - Basic infrastructure problems Urgency Average Not critical Total Work standard 10 4 0 14 Overstock & inventory 34 6 1 41 Production schedule 29 4 0 33 Cost controlling & evaluating 16 5 0 21 Budget planning 26 5 0 31 Measurement control system 10 6 0 16 Information for management 2 14 3 19 Unclear organization structure 14 6 0 20
total 141 50 4 195 Expected - Basic infrastructure problems Urgency Average Not critical Work standard 10.1 3.6 0.3 Overstock & inventory 29.6 10.5 0.8 Production schedule 23.9 8.5 0.7 Cost controlling & evaluating 15.2 5.4 0.4 Budget planning 22.4 7.9 0.6 Measurement control system 11.6 4.1 0.3 Information for management 13.7 4.9 0.4 Unclear organization structure 14.5 5.1 0.4
Urgency Average Not critical
Production schedule 87.88 12.12 0.00 Budget planning 83.87 16.13 0.00 Overstock & inventory 82.93 14.63 2.44 Cost controlling & evaluating 76.19 23.81 0.00 Work standard 71.43 28.57 0.00 Unclear organization structure 70.00 30.00 0.00 Measurement control system 62.50 37.50 0.00 Information for management 10.53 73.68 15.79
276
E1.8 Figure 7.7.1 Familiarity with manufacturing practices Chi-Square test (Significant) = 0.000 Significant Relationship between best practices and familiar
E1.9 Figure 7.7.3 Current implementation of practices Chi Square test (significant) = 0.00 (Significant) Relationship between manufacturing practices and implementation
Future plan to implementation manufacturing practices Chi-Square test (Significant) = 0.089 (Insignificant) No relationship between manufacturing practices and year of implementation
Observed Next year Next 2 year More than 2 years Total JIT 7 5 0 12 TPM 22 17 14 53 TQM 38 18 8 64
total 67 40 22 129
Expected Next year Next 2 years More than 2 years JIT 6 4 2 TPM 28 16 9 TQM 33 20 11
E1.10 Figure 7.7.6 Benefits of company performance from manufacturing practices Chi-Square test (Significant) = 0.00 Significant Relationship between company performance and percentage of benefits
E1.11Figure 7.4.1 Potential of solving human resource problems Chi-Square test (Significant) = 0.000 Significant Relationship between HR problems and potential of solving
Observed - HR problems - related to training
Easy
Average
Difficult
Total
Personal conflict 18 48 6 72 Insufficiency of technical skill 11 38 4 53 Lack of management skill 20 34 6 60 Lack of commitment of top management 32 29 1 62 Teamwork 20 5 2 27 Continuous improvement activity 5 11 2 18 Safety problems in workplace 4 16 1 21 Lack of employee empowerment 6 15 2 23
total 116 196 24 336
Expected - HR problems - related to training
Easy
Average
Difficult
Personal conflict 24.9 42.0 5.1 Insufficiency of technical skill 18.3 30.9 3.8 Lack of management skill 20.7 35.0 4.3 Lack of commitment of top management 21.4 36.2 4.4 Teamwork 9.3 15.8 1.9 Continuous improvement activity 6.2 10.5 1.3 Safety problems in workplace 7.3 12.3 1.5 Lack of employee empowerment 7.9 13.4 1.6
Urgency
Average
Not
critical Personal conflict 94.6 2.7 2.7 Lack of commitment of top management 94.1 5.9 0.0 Safety problems in workplace 90.9 9.1 0.0 Teamwork 86.7 13.3 0.0 Human error 80.0 20.0 0.0 Lack of employee empowerment 78.3 21.7 0.0 Insufficiency of technical skill 77.8 20.4 1.9 Continuous improvement activity 66.7 33.3 0.0 Lack of management skill 60.0 36.7 3.3
280
Difficulty of solving human resource problems
0
2
4
6
8
10
12
Continuousimprovement
activity
Lack ofmanagement
skill
Lack ofemployee
empowerment
Personalconflict
Insufficiencyof technical
skill
Teamwork Safetyproblems inworkplace
Lack ofcommitment
of topmanagement
HR problems
Perc
enta
ge o
f res
pond
ent
E1.12 Figure 7.4.2 Potential of solving quality problems Chi-Square test (Significant) = 0.000 Significant Relationship between quality problems and potential of solving
Observed - Quality problems Easy Average Difficult Total Defects 24 16 2 42 Machine breakdown 20 32 8 60 Availability of material 10 32 22 64 Meeting customer deadline 3 20 1 24 Waste time 34 6 2 42 Lack of production performance (productivity) 13 2 0 15
Total 104 108 35 247 Expected - Quality problems Easy Average Difficult Defects 17.7 18.4 6.0 Machine breakdown 25.3 26.2 8.5 Availability of material 26.9 28.0 9.1 Meeting customer deadline 10.1 10.5 3.4 Waste time 17.7 18.4 6.0 Lack of production performance (productivity) 6.3 6.6 2.1
Infrequently
Frequently
No
occurrence Waste time 76.2 19.0 4.8 Meeting customer deadline 73.7 15.8 10.5 Defects 72.5 19.6 7.8 Machine breakdown 68.9 29.5 1.6 Availability of material 58.2 41.8 0.0 Lack of production performance (productivity) 48.0 16.0 36.0
281
E 2.1 Hypotheses Testing E2.1.1 Figure 8.2.1 Manufacturing practices and motivation Chi-Square test (Significant) = 0.000 Relationship between manufacturing strategies and manufacturing practices
Observed - Motivation & Practice HACCP GMP TPM TQM JIT Government 102 102 0 0 0
Customer 97 97 0 0 0
Market 96 96 2 12 0
Company policy 96 96 12 20 8
Total 391 391 14 32 8 Expected HACCP GMP TPM TQM JIT Government 95.4 95.4 3.4 7.8 2.0
E2.2 Figure 8.2.2 Manufacturing strategies and manufacturing practices Chi-Square test (Significant) = 0.0253 Significant Relationship between manufacturing strategies and manufacturing practices
Observed - Manufacturing strategy & Practice
HACCP
GMP
TPM
JIT
TQM
Total
Production 18 18 2 0 18 56 Process 102 102 10 8 46 268 Market 82 82 0 0 38 202 Service 2 2 0 0 2 6
Total 204 204 12 8 104 532
Expected HACCP GMP TPM JIT TQM Production 21.5 21.5 1.3 0.8 10.9 Process 102.8 102.8 6.0 4.0 52.4 Market 77.5 77.5 4.6 3.0 39.5 Service 2.3 2.3 0.1 0.1 1.2
HACCP GMP TQM TPM JIT
Market 40.6% 40.6% 18.8% 0.0% 0.0% Process 38.1% 38.1% 17.2% 3.7% 3.0% Service 33.3% 33.3% 33.3% 0.0% 0.0% Production 32.1% 32.1% 32.1% 3.6% 0.0%
283
E2.3 Figure 8.3.1 Manufacturing practices and benefit Chi-Square test (Significant) = 0.00 Significant Relationship between benefits and manufacturing practices
E2.4 Figure 8.4.1 Company size and manufacturing practices Chi-Square test (Significant) = 0.00 Significant Relationship between firm sizes and manufacturing practices
Observed - Size & Practice HACCP GMP TPM JIT TQM Total Small 18 22 0 0 2 42 Medium 66 66 3 0 24 159 Large 28 28 9 8 28 101
Total 112 116 12 8 54 302
Expected HACCP GMP TPM JIT TQM Small 15.6 16.1 1.7 1.1 7.5 Medium 59.0 61.1 6.3 4.2 28.4 Large 37.5 38.8 4.0 2.7 18.1
GMP HACCP TQM TPM JIT Small 52.4% 42.9% 4.8% 0.0% 0.0% Medium 41.5% 41.5% 15.1% 1.9% 0.0% Large 27.7% 27.7% 27.7% 8.9% 7.9%
E2.5 Figure 8.4.2 Manufacturing practices and turns over Chi-Square test (Significant) = 0.00 Significant Relationship between turnovers and manufacturing practices
Observed Turnover & Practice
HACCP
GMP
TPM
JIT
TQM
Total
Less than 10 million Baht 2 4 0 0 0 6 10 - 50 million Baht 11 13 0 0 2 26 50 - 100 million Baht 22 22 2 0 9 55 100 - 500 million Baht 40 40 3 1 28 112 More than 500 million Baht 37 37 7 7 30 118
total 112 116 12 8 69 317
Expected HACCP GMP TPM JIT TQM Less than 10 million Baht 2.1 2.2 0.2 0.2 1.3 10 - 50 million Baht 9.2 9.5 1.0 0.7 5.7 50 - 100 million Baht 19.4 2.1 2.1 1.4 12.0 100 - 500 million Baht 39.6 41.0 4.2 2.8 24.4 More than 500 million Baht 41.7 43.2 4.5 3.0 25.7
HACCP GMP TQM TPM JIT Less than 10 million Baht 33.3% 66.7% 0.0% 0.0% 0.0% 10 - 50 million Baht 42.3% 50.0% 7.7% 0.0% 0.0% 50 - 100 million Baht 40.0% 40.0% 16.4% 3.6% 0.0% 100 - 500 million Baht 35.7% 35.7% 25.0% 2.7% 0.9% More than 500 million Baht 31.4% 31.4% 25.4% 5.9% 5.9%
285
E2.6 Figure 8.4.3 Manufacturing process and Manufacturing practices Chi-Square test (Significant) = 0.0253 Significant Relationship between manufacturing strategies and manufacturing practices
Observed - Manufacturing strategy & Practice
HACCP
GMP
TPM
JIT
TQM
Total
Production 18 18 2 0 18 56 Process 102 102 10 8 46 268 Market 82 82 0 0 38 202 Service 2 2 0 0 2 6
Total 204 204 12 8 104 532
Expected HACCP GMP TPM JIT TQM Production 21.5 21.5 1.3 0.8 10.9 Process 102.8 102.8 6.0 4.0 52.4 Market 77.5 77.5 4.6 3.0 39.5 Service 2.3 2.3 0.1 0.1 1.2
HACCP GMP TQM TPM JIT Market 40.6% 40.6% 18.8% 0.0% 0.0% Process 38.1% 38.1% 17.2% 3.7% 3.0% Service 33.3% 33.3% 33.3% 0.0% 0.0% Production 32.1% 32.1% 32.1% 3.6% 0.0%
286
E2.7 Figure 8.5.1 training of GMP Basic training of GMP
ANOVA
45.260 4 11.315 13.359 .000
200.740 237 .847
246.000 241
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofGMP
Sum ofSquares df
MeanSquare F Sig.
Techniques training
ANOVA
31.496 4 7.874 13.501 .000
143.468 246 .583
174.964 250
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofGMP
Sum ofSquares df
MeanSquare F Sig.
Maintenance training
ANOVA
40.259 4 10.065 22.020 .000
94.158 206 .457
134.417 210
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofGMP
Sum ofSquares df
MeanSquare F Sig.
Management training of GMP
287
ANOVA
7.409 4 1.852 2.480 .045
183.007 245 .747
190.416 249
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofGMP
Sum ofSquares df
MeanSquare F Sig.
E2.8 Figure 8.5.2 training HACCP Basic training HACCP
ANOVA
21.792 4 5.448 8.085 .000
169.145 251 .674
190.938 255
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofHACCP
Sum ofSquares df
MeanSquare F Sig.
Technical training
ANOVA
20.925 4 5.231 13.800 .000
75.055 198 .379
95.980 202
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofHACCP
Sum ofSquares df
MeanSquare F Sig.
Maintenance training of HCCP
ANOVA
7.696 4 1.924 3.890 .005
77.149 156 .495
84.845 160
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofHACCP
Sum ofSquares df
MeanSquare F Sig.
Management training HACCP
288
ANOVA
10.148 4 2.537 2.543 .041
210.477 211 .998
220.625 215
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofHACCP
Sum ofSquares df
MeanSquare F Sig.
E2.9 Figure 8.5.3 training of TPM Basic training of TPM
ANOVA
5.930 4 1.483 2.555 .041
94.588 163 .580
100.518 167
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofTPM
Sum ofSquares df
MeanSquare F Sig.
Technical training of TPM
ANOVA
2.674 4 .668 1.018 .400
112.275 171 .657
114.949 175
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofTPM
Sum ofSquares df
MeanSquare F Sig.
Maintenance training of TPM
ANOVA
9.423 4 2.356 3.293 .014
76.541 107 .715
85.964 111
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofTPM
Sum ofSquares df
MeanSquare F Sig.
289
Management training of TPM
ANOVA
2.225 4 .556 .936 .445
106.997 180 .594
109.222 184
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofTPM
Sum ofSquares df
MeanSquare F Sig.
E2.10 Figure 8.5.4 training of TQM Basic training of TQM
ANOVA
3.036 4 .759 1.156 .331
139.186 212 .657
142.221 216
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofTQM
Sum ofSquares df
MeanSquare F Sig.
Technical training of TQM
ANOVA
32.123 4 8.031 14.776 .000
109.790 202 .544
141.913 206
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofTQM
Sum ofSquares df
MeanSquare F Sig.
Maintenance training of TQM
ANOVA
38.436 4 9.609 20.361 .000
68.902 146 .472
107.338 150
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofTQM
Sum ofSquares df
MeanSquare F Sig.
290
Management training of TQM
ANOVA
72.433 4 18.108 23.538 .000
156.945 204 .769
229.378 208
BetweenGroupsWithinGroupsTotal
5.2aTrainingday ofTQM
Sum ofSquares df
MeanSquare F Sig.
E2.11 JIT training Basic training of JIT
ANOVA
7.635 4 1.909 4.431 .002
46.524 108 .431
54.159 112
BetweenGroupsWithinGroupsTotal
5.2aTrainingday of JIT
Sum ofSquares df
MeanSquare F Sig.
Technical training of JIT
ANOVA
.631 4 .158 .441 .778
21.431 60 .357
22.062 64
BetweenGroupsWithinGroupsTotal
5.2aTrainingday of JIT
Sum ofSquares df
MeanSquare F Sig.
Maintenance training of JIT
ANOVA
5.147 3 1.716 3.593 .019
27.692 58 .477
32.839 61
BetweenGroupsWithinGroupsTotal
5.2aTrainingday of JIT
Sum ofSquares df
MeanSquare F Sig.
Management training of JIT
291
ANOVA
.260 4 6.504E-02 .122 .974
52.624 99 .532
52.885 103
BetweenGroupsWithinGroupsTotal
5.2aTrainingday of JIT
Sum ofSquares df
MeanSquare F Sig.
291
Appendix F
Tools and Techniques Figure 9.4.1 Tools and techniques related to GMP and HACCP and their degree of importance
Observed - tools related with GMP and HACCP
Unimportant
Important
Very important
Total
Waste management 2 59 27 88 Pest control 0 10 84 94 Transport control 0 9 80 89 Hazard analysis 0 8 90 98 Loss control and safety management 1 15 77 93 Environment control 1 9 82 92 Personal Hygiene 0 10 81 91 Product recall 3 7 80 90 Product instruction to customer 3 8 76 87 Plant layout 3 60 23 86 Standardization of parts, products and processes 1 60 28 89 Calibration 4 61 23 88 Measurement equipment control 3 59 23 85 Production control 3 58 28 89 Preventive maintenance 2 60 29 91 Material control 2 61 30 93 Process control 2 64 34 100 Packaging and storage 2 60 30 92
Total 32 678 925 1635 Expected
Unimportant
Important
Very
important Waste management 1.7 36.5 49.8 Pest control 1.8 39.0 53.2 Transport control 1.7 36.9 50.4 Hazard analysis 1.9 40.6 55.4 Loss control and safety management 1.8 38.6 52.6 Environment control 1.8 38.2 52.0 Personal Hygiene 1.8 37.7 51.5 Product recall 1.7 37.3 50.9 Product instruction to customer 1.7 36.1 49.2 Plant layout 1.7 35.7 48.7 Standardization of parts, products and processes 1.7 36.9 50.4 Calibration 1.7 36.5 49.8 Measurement equipment control 1.7 35.2 48.1 Production control 1.7 36.9 50.4 Preventive maintenance 1.8 37.7 51.5 Material control 1.8 38.6 52.6 Process control 2.0 41.5 56.6 Packaging and storage 1.8 38.2 52.0
292
Figure 9.4.1 Tools and techniques related to GMP and HACCP and their degree of importance
Very important
Important
Unimportant
Hazard analysis 91.8 8.2 0.0 Transport control 89.9 10.1 0.0 Pest control 89.4 10.6 0.0 Environment control 89.1 9.8 1.1 Personal Hygiene 89.0 11.0 0.0 Product recall 88.9 7.8 3.3 Product instruction to customer 87.4 9.2 3.4 Loss control and safety management 82.8 16.1 1.1 Process control 34.0 64.0 2.0 Packaging and storage 32.6 65.2 2.2 Material control 32.3 65.6 2.2 Preventive maintenance 31.9 65.9 2.2 Standardization of parts, products and processes 31.5 67.4 1.1 Production control 31.5 65.2 3.4 Waste management 30.7 67.0 2.3 Measurement equipment control 27.1 69.4 3.5 Plant layout 26.7 69.8 3.5 Calibration 26.1 69.3 4.5
Chi-Square test (Significant) = 0.00 Significant Relationship between tools related with GMP and HACCP and degree of importance
293
E3.2 Figure 9.4.2 Basic tools and techniques and their degree of importance Chi-Square test (Significant) = 0.0069 Significant Relationship between basic tools and degree of importance
Very important Important Unimportant QCC 78.6 20.4 1.0 PDCA cycle 75.5 21.6 2.9 Inspection and testing product 74.8 24.3 1 Suggestion system 74.5 24.5 1 5S & housekeeping 74.0 26.0 0.0 SPC 73.0 27.0 0.0 Small group improvement activity 71.8 26.2 1.9 Multi-skilled employees 71.3 25.9 2.8 Basic 7 tools 70.9 29.1 0 Brainstorming 70.2 28.9 0.9 Poka-yoke 58.3 33.3 8.3
294
E3.3 Figure 9.4.3 Tools and techniques related to supplier management and degree of important Chi-Square test (Significant) = 0.0008 Significant Relationship between tools related with supplier management and degree of importance
Observed - tools related with supplier management
Unimportant
Important
Very important
Total
Supplier quality certification 1 10 66 77 Reduction of number of suppliers and distance 1 13 57 71 Supplier long-term contract 1 29 50 80 Total supplier evaluation 6 21 48 75
total 9 73 221 303 Expected
Unimportant
Important
Very important
Supplier quality certification 2.3 18.6 56.2 Reduction of number of suppliers and distance 2.1 17.1 51.8 Supplier long-term contract 2.4 19.3 58.3 Total supplier evaluation 2.2 18.1 54.7
Very important Important Unimportant Supplier quality certification 85.7 13.0 1.3 Reduction of number of suppliers and distance 80.3 18.3 4.2 Total supplier evaluation 64.0 28.0 8.0 Supplier long-term contract 62.5 36.3 1.3
295
E3.4 Figure 9.4.4 Management tools and techniques and the degree of importance Chi-Square test (Significant) = 0.0003 Significant Relationship between management tools and degree of importance
E3.5 Figure 9.4.4 Management tools and techniques and the degree of importance Chi-Square test (Significant) = 0.0003 Significant Relationship between management tools and degree of importance