Process Management and TQM

							HUMAN RESOURCES – YEAR 2
TQM – YEAR 4
Human Resources
Production Staffing
Human Resources Module

   Complement
       The number of workers required to fill the production schedule without
        Overtime.
   Caliber
       Talent of the workforce; recruiting a higher caliber of worker, results in
        higher Productivity and lower Turnover.
       Up to an additional $5,000 per worker can be spent.
           If nothing extra is spent, the recruitment cost per worker remains at $1,000 and they
            get an average person off the street.
           The more spent, the higher the caliber of the worker.
   Training
       Training leads to higher Productivity and lower Turnover, but takes
        people off the job while they are in the classroom. Each training hour
        costs $20 per worker.
Recruiting & Separation Costs

   Recruiting costs
       incurred when new workers are hired. Recruiting costs average
        $1,000 per worker.
   Decreasing Production
       schedules, whether it is because capacity has been sold, or
        production curtailed to sell excess inventory, will result in lay-
        offs.
   Separation Costs
       are generated when workers are laid-off. Separation costs
        average $5,000 per worker.
   Recruitment
      $2,000 has been entered in Recruiting Spend, the amount of
       money spent — per worker — to attract a higher caliber
       worker.




Note: In this example the Productivity Index remains at 100%. As the rounds progress,
Recruiting Spend and Training Hours expenditures will increase the Productivity Index.
Training

   20 Training Hours per worker per
    year have been added. Training
    Hours pull workers off the assembly
    line, therefore the Needed
    Complement rises to 301.
   The Turnover Rate drops to 9.2% —
    workers are happier because of the
    training.
   Training will cost $120,000.
2nd Shift and Overtime

    Your plant has one production line for each product.
        Each line contains workstations, and a worker staffs each station.
        Each line has a capacity, which is defined as the number of units that
         can be produced per year with a single shift.
    The plant can work into the night by adding workers to a
     2nd shift.
        2nd shift labor costs are 50% more than 1st shift labor costs. If you
         schedule a production run in excess of your 1st shift capacity, a 2nd
         shift or overtime will be required.
    Increasing capacity will reduce the number of workers on
     the 2nd Shift, and therefore decrease labor costs.
        Increasing capacity will not decrease the overall Needed
         Complement, it will simply move 2nd Shift workers to the 1st Shift.
2nd Shift and Overtime

            Production schedule set to 1550.
            The Staffing area reflects the information
             that has been entered on the Production
             schedule.
                The Needed Complement is now 298, but the
                 Complement has held steady at 248.
                Overtime has jumped to 32.6%.
                The Turnover Rate has gone to 13.3% — workers
                 are leaving because they are disgruntled about the
                 Overtime.
Total Quality Management
      Yearly investments of <
    $250,000 will create little
   improvement
     Yearly investments above
    $1,000,000 push well into
    diminishing returns
     Investing more than
    $2,500,000 in the same
    initiative over 2- 3 year
    period creates little or no
    additional improvement
Process Management Initiatives

    These initiatives improve business procedures, resulting in
     improved efficiencies and cost structures
        CPI (Continuous Process Improvement) Systems -Reduces Material
         cost and to a lesser degree Labor costs
        Vendor/JIT (Just in Time [Inventory]) - Reduces Material costs and
         Administrative overhead
        QIT (Quality Initiative Training) - Reduces Labor costs
        Channel Support Systems Increases the effectiveness of the Sales
         Budget, and therefore demand
        Concurrent Engineering - Reduces R&D cycle time, the time needed
         to move products on the Perceptual Map and to change MTBF
         specifications.
Continuous Process Improvement

    A process is a series of progressive and interdependent
     steps by which an end is attained.
    Continuous Process Improvement (CPI) is a strategic
     approach for developing a culture of continuous
     improvement in the areas of:
        reliability
        process cycle times
        costs in terms of less total resource consumption
        quality, and productivity.
    Deployed effectively, it increases quality and productivity,
     while reducing waste and cycle time.
Just in Time Inventory

     Just-in-Time inventory system is designed to ensure that
      materials or supplies arrive at a facility just when they
      are needed so that storage and holding costs are
      minimized.
     The Just-in-Time system requires considerable cooperation
      between the supplier and the customer.
         The customer must specify what will be needed, when, and in
          what amounts.
         The supplier must be sure that the right supplies arrive at the
          agreed-on time and location.
Quality Initiative Training

     Leaders of quality initiatives (project managers, managers,
      and senior leaders) develop useful and relevant knowledge
      and skills to ensure that company resources and efforts are
      utilized in the most effective manner.
     Leaders gain useful and skill based learning in these core
      quality leadership areas:
         Leading Teams Through Quality Initiatives
         Quality Philosophies and Approaches and Lessons Learned at Other
          Firms
         Customer Needs and Expectations
         Quality Improvement Management Systems
         Ethical Decision Making
Channel Support Systems
    Support system to facilitate information sharing that
     increases productivity and profitability, untangling the web
     that once blocked the transfer of information.
        Predictive modeling. Determine how to market the right product to
         the right person at the right price and the right time.
        Customer, product and business line profitability. Identify the
         customer, product, organization and business line profitability bottom
         line.
        Product development and creation. Determine what products will
         sell; define the distinctive product characteristics and pricing.
        Target marketing. Sell the right product to the right person at the
         right time at the appropriate return.
        Sales execution and tracking. Collect information pertaining to who
         sells what product to whom, when and where.
Concurrent Engineering

   Concurrent engineering is a business strategy
       replaces the traditional product development process with one in which tasks
        are done in parallel
       there is an early consideration for every aspect of a product's development
        process.
   Concurrent engineering provides a collaborative, co-
    operative, collective and simultaneous engineering working
    environment.
   The concurrent engineering approach is based on five key
    elements:
       a process
       a multidisciplinary team
       an integrated design model
       a facility
       a software infrastructure
TQM Initiatives

     These initiatives improve product quality while reducing
      the time and resources required to design, manufacture,
      warehouse and ship products.
         Benchmarking - Reduces Administrative overhead

         Quality Function Deployment Effort - Reduces R&D cycle time
          and enhances the effectiveness of the Promo and Sales Budgets

         CCE (Concurrent Engineering)/6 Sigma Training - Reduces
          Material costs and Labor costs.

         GEMI TQEM Sustainability Initiatives - Reduces Material costs
          and Labor costs.
Benchmarking

   A process in which organizations evaluate various aspects of
    their processes in relation to best practice, usually within their
    own sector.
   This allows organizations to develop plans on how to adopt
    such best practice, usually with the aim of increasing some
    aspect of performance.
   Benchmarking may be a one-off event, but is often treated as
    a continuous process in which organizations continually seek to
    challenge their practices.
Benchmarking Procedure
   Identify your problem areas

   Identify other industries that have similar

   Identify organizations that are leaders in these areas

   Survey companies for measures and

   Visit the "best practice" companies to identify leading edge
    practices

   Implement new and improved business practices
Quality Function Deployment Effort

   Flexible and comprehensive group decision making technique
    used in product or service development, brand marketing,
    and product management.
       QFD transforms customer needs into engineering characteristics of a
        product or service, prioritizing each product/service characteristic
        while simultaneously setting development targets for product or service
        development.

       QFD can strongly help an organization focus on the critical
        characteristics of a new or existing product or service from the
        separate viewpoints of the customer market segments, company, or
        technology-development needs.
Six Sigma Training

   Six Sigma is a management technique that aims to develop
    and deliver near perfect products and services.
   "Six Sigma" refers to statistical constructs that measure how far
    a given process deviates from perfection.
   Processes are designed from the perspective of the customer
    and are enabled by a commitment to thinking in terms of
    processes across the organization.
   Metrics such as performance, reliability, price, on-time delivery,
    service and accuracy provide the targets.