Tqm final case

TQM Final CaseChua, Dolojan, Lopez, Ramos, Templonuevo,

Zabarte

Conflict

1.The Question of Efficiency

2.Why is it that the company is losing

money during their Peak Season?

Objectives

• To know the manufacturing and non-manufacturing cost

• Use DMAIC in the Case

• Use Activity Cost Drivers to quantify the cost of activities in manufacturing and distribution of cakes

• Use Slotting as tool in the manufacturing process

Facts

• They get the help from the Cold Chain Association during peak season

• They Rent out trucks and chillers to meet demands

• Triple the workforce to be able to meet the demand

• A great deal of the losses comes from shipping or logistics.

• Prices are constant

• Cake quality is maintained even though freezed

• Production is based in the commissary

Facts

• Cakes are shipped to the port area

• The point of dispatch in the C5 area is a choke point due to the narrow driveway which limits the movement of trucks

• Labor increases by 3 times but production increases by 5 times

• Cakes are Semi-Assembled

• Cakes are frozen for 15-21 days

• Multiple delivery runs during peak season

Basic Manufacturing Process of a Cake

Pre Mixing, Ingredients

Addition, Sugar and Milk Solution,

Preparation of Flour and Additives

Mixing, Mixing Time, Water,

Creaming, Dough Consistency

Forming, Molders

Baking Time, Temperatures, Burners, Oven

Output

Cooling and Shipping to

Manila Port Area

Storing of Cakes till ready for final

Assembly

Final Assembly in the Commissary

includes packaging

Distribution to all the stores

MeasureActivity Cost Drives

Measure

• In This part we want to quantify the cost per activity

• We want to know the cause-and-effect relationship between a change in the level of activity or volume and change in the level of total costs of that cost object.

• Thus we want to know the cost drivers signify factors, forces or events that determine the costs of activities in creating and distributing of cakes to the different branches and kiosk

Cost Drivers

Function Activity Suitable Cost Drivers

Store Management Storing of Materials Storage Rent / Holding Fee

Servicing of requisitions Number of Requisitions

Stock Taking Value of Inventory

Logistics Dispatches Number of orders

Personnel Management Recruitment of Employees Number of Employeees

Analysis

Slotting

Why use slotting?• We want to rearrange the current

warehouse layout

• The possibility of building a new facility

• We are attempting to reduce your warehouse operational costs

• We operate in a seasonal industry which drive different product demand cycles during the year

• We want to decrease the movement of warehouse staff around the warehouse

Benefits• Improved order picking

efficiency

• Reduce product damage

• Increase replenishment and put-away efficiency

• “Health Check” of the design of the pick fac

Implement

• Tap into the Cold Chain Association of the Philippines acquire their assistance with the use of their Cold storages

• Tap into the connections of the owners of Red Ribbon and get connections of indirect competitors to use their facilities.

• We’ll use the facilities of the indirect competitors at night to produce cakes and we’ll use Red Ribbon Employees.

• We’ll rearrange the flow of trucks in the warehouse so that we could maximize the visit of trucks and reduce the movement inside the compound

Implement

• The reason why we have a significant increase in productivity during the peak season is that we hire more staff that can do the icing on the cake since the final production takes the most amount of time compared to other part of the manufacturing process.

• We can also use the Pareto Principle in this case in terms of Human Resources. (80:20 principle)

• In terms of using the trucks, We’ll assign trucks to the stores according to their sales performance.

Implement

• We can also create a lean six sigma by using the Priority Matrix. With this tool, We can already asses what activities do we concentrate on. From there we create a plan of approach in term of how do we make the flow of products more efficient.

• Focus on core competency

How do we Control?

•  Senior Management Involvement

• Top management team members must show their support for the deployment. they must take the responsibility of leading from the front, through involvement in the following areas:• Reviewing project milestones

• Approving improvement ideas

• Resolving conflicts

• Recognizing teams

• Inclusion of Six Sigma Projects in Performance Appraisals

• Another significant success factor is the inclusion of project efforts in the performance objectives of all team members working on a project. The objectives should be measurable and have clear deadlines. Communicating these objectives to all the team members and their managers at the beginning of the project will bring accountability and apply positive pressure on the team to deliver as planned.

Control

•  Take the Right Measurements

• What cannot be measured cannot be improved. By creating a measurement system, practitioners can determine baseline performance and use the data in objective decision making and analysis of variation.

• Organizations also must find a way to measure process performance to ensure they receive data at a fast pace. Having too many items on a scorecard may shift practitioners’ attention from the critical few metrics. They need to identify and measure the key leading indicators instead of measuring the many lagging indicators.