© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin The Changing Business Environment Growth of the internet Just-in-Time production Total Quality Management International competition Growth of the internet Just-in-Time production Total Quality Management International competition Business environment changes in the past twenty years

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin The Changing Business Environment Just-In-Time Total Quality Management Process Reengineering Theory of Constraints New tools for managers!

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin Complete products just in time to ship customers. Complete parts just in time for assembly into products. Schedule production. Receive materials just in time for production. Receive customer orders. Just-in-Time (JIT) Systems

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin Flexible workforce Reduced setup time Zero production defects JIT Consequences Improved plant layout JIT purchasing Fewer, but more ultrareliable suppliers. Frequent JIT deliveries in small lots. Defect-free supplier deliveries. JIT purchasing Fewer, but more ultrareliable suppliers. Frequent JIT deliveries in small lots. Defect-free supplier deliveries.

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin More rapid response to customer orders Freed-up funds Reduced inventory costs Greater customer satisfaction Higher quality products Benefits of a JIT System Increased throughput

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin Do we need to change the plan? Where are we? Where do we want to go? How do we start? How are we doing? Check Plan ActDo is Total Quality Management Benchmarking Continuous Improvement

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin Process Reengineering The process is redesigned to include only those steps that make our product more valuable. Every step in the business process must be justified. A business process is diagrammed in detail. Anticipated results: Process is simplified. Process is completed in less time. Costs are reduced. Opportunities for errors are reduced. Anticipated results: Process is simplified. Process is completed in less time. Costs are reduced. Opportunities for errors are reduced.

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin A sequential process of identifying and removing constraints in a system. Restrictions or barriers that impede progress toward an objective Theory of Constraints

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin 4. Coordinate processes 1. Measure process capacity 2. Identify process constraints 3. Use bottlenecks effectively. Only actions that strengthen the weakest link in the “chain” improve the process. Theory of Constraints

© The McGraw-Hill Companies, Inc., 2003 McGraw-Hill/Irwin Theory of Constraints Process Capacity A measure of a process’s ability to transform resources into value products and services. System Constraint The point in a system that limits the overall output of the system. Often called the “bottleneck.”