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

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http://ro.uow.edu.au/theses/576

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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

Participated in Case Study

199

Table 10.5.3.1a Basic infrastructures (Organisation Structures) 201

Table 10.5.3.1b Basic Infrastructures (Management Characteristics) 201

Table 10.5.3.3 Tools and Techniques 203

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

9000 (Mangelsdorf, 1999; Payne, 1999; Rohitratanan, 2001). GMP standards define

requirements for the management and control of activities and operations involved in

the manufacture, storage and distribution of foods.

47

4.2.1 Requirements of Good Manufacturing Practices for the Thai food

processing industry

It was observed that in present practices in Thailand, that in addition to being an

essential component of quality assurance, GMP is concerned with both production and

quality control. Figure 4.2.1 presents the principal requirements of GMP as being the

following:

1. Personnel

The establishment and maintenance of competent systems of quality assurance and the

correct manufacture of the Thai food processing industrial product relies upon expert

personnel. GMP contains specific requirements for employee training that must form

the foundation of a training program (Sumner,2000). Special emphasis should be given

to the assignment of responsibility, and to written records and documentation; each of

which is helpful in improving the overall quality of any training program. Hathaway

(1993) suggested that the training must continually be updated and must focus more on

quality rather than quantity.

2. Equipment

Equipment must be located, designed, constructed, adapted, and maintained to suit the

operations that are to be carried out. The layout and design of the equipment should

minimize risks of errors, permit effective cleaning and maintenance in order to avoid

cross-contamination and any adverse effects on product quality (Ketpibun, 2000 and

Suwanpatikorn, 2000).

3. Production

Production operations must follow clearly defined procedures. Operations must comply

with the principles of GMP in order to achieve a stipulated product quality (Sirisaong,

2000)

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4. Quality Control

WHO (1992) described quality control as that part of GMP that is concerned with

sampling, specification, testing, organisation, and documentation. Quality control is not

confined to laboratory operations but is involved in all decisions concerning the quality

of the product. The difference between quality assurance and quality control is that

quality assurance concerns itself with quality audit, batch records, reviewing, process

validations, product design, and compliance with regulations. Quality assurance

programs even include audits of the quality control department. However, the function

of the quality control department is limited to inspection and testing (Sirsaong,

Semanochang and Busaywaong, 2000).

5. Documentation

A quality system needs to be documented with records kept to ensure that everyone in

the organisation is implementing the procedures. GMP is an essential part of the quality

assurance and should relate to all aspects of it (FAO/WHO, 1997). It aims at the

specification for material and manufacturing methods and control, to ensure that all

employees concerned with manufacture know what to do and when to do it.

6. Self -Inspection

Self-inspection should be conducted at regular intervals in order to monitor the

implementation of GMP and to propose necessary corrective measures. Competent

persons from the company should be made responsible for self-inspection. A quality

audit is a formal review of products, manufacturing processes, equipment facilities or

system conformity with quality standards (Ratnatunga,1995). It is the responsibility of

the management to provide the department with the tools they need to perform the

functions properly and produce a high quality product. Mossel (1995) proposed that

quality is dependent on the tools employed in managing. The quality audit plays an

important role in evaluating conformity with defined procedures, especially the

procedures specified by GMP. Quality audits may be of varying types and performed in

various ways.

However, the ultimate objective is to provide valuable information about the operation

within the company that affects the quality and items being manufactured. This need is

critical in the Thai food processing industry as the implications of unsatisfactory quality

49

production can lead to ill health. These audits are intended primarily to evaluate the

validity of the procedures and to monitor compliance.

Figure 4.2.1 GMP for the Thai Food Industry Components of Good

Manufacturing Practices Sources: Technology Promotion Association (Thailand –Japan, 2000)

and Thai Industrial Standards Institute, Ministry of Industry, 2002)

The purpose of the GMP regulations is to assure that all Thai food processing products

meet the requirements for food safety. The concept of quality assurance management in

the Thai food processing industry is not limited in scope to instruction manuals, control

charts, product inspections made during the manufacturing process and prior to

distribution, or statistical techniques utilised in these discrete operations. The concept

includes all control measures contributing to the completed market requirements

necessary to guarantee the quality of products.

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4.3 Hazard Analysis Critical Control Point (HACCP) Consumer expectations about food quality and safety have grown, prompting food

processors to seek systems and programs that will both bolster consumer confidence

and improve food safety. Formerly traditional quality assurance programs and facility

inspections focused primarily on finished product testing. The HACCP system is very

important in countries such as Australia, EU, US, Canada, South Korea, and Japan and

is now used for the Thai food processing industry because of customer expectations

(Kongton, 2001). The main goal of the HACCP performance measure is to monitor food

production and assure food safety (Soliman, 2000).

The HACCP system of food product control is a prevention system. The focus for

control is transferred from the final product testing to the manufacturing process, where

monitoring and control methods are applied to reduce or eliminate the possibility of

contamination (Ketpibun, 2002). These systems are logical and structured methods of

assessing the hazards and risks associated with the manufacture of food products,

enabling the identification of Critical Control Points (CCPs) in the manufacturing

process and the application of monitoring, control and verification requirements. CCPs

are set to measure these steps, such as temperature, time, PH levels, the monitoring and

constant adjustment of water activity. This principle identification of whether the

system is working uses CCP as a performance measure of the internal workings of

HACCP (Table4.3.1). Riswadkar (2000) suggested that HACCP augments and refines

the codes of GMP in that it concentrates efforts and priorities for control on those

requirements that are essential for safety. HACCP was previously concerned only with

the hazards of microbiological origin, but its scope has been acceptably expanded by

many proponents to include chemical and foreign body contaminants.

Hence, the HACCP system has emerged as a means to protect the Thai food processing

industry. This system has been widely implemented during the last five years to ensure

the control and safety of products and processes. It is a systematic means of controlling

microbiological, chemical or physical hazards, which may arise in any food processing

or handling operations and aims to identify and prevent problems before they occur.

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Moreover, Mayes and Mortimore (2001) advised that HACCP should reflect the

maintenance and food production incremental needs of the company. The system as

explained by Bryan (1993) is rational because it is based on historical data about

contamination and spoilage. It is comprehensive because it takes into consideration

ingredients, processes, and subsequent uses of products and is applicable to all links in

the food chain.

It is continuous because problems are detected when they occur and action is then taken

for correction, and it is systematic because it is a thorough plan covering step-by-step

operations and procedures. Like most quality systems, HACCP is based on being

proactive rather than reactive i.e. “doing it right the first time” (Amankwa, 1999 and

Soliman, 2000). It has also gained strong acceptance in the food industry, and its

performance measures have become powerful tools in the management of modern food

manufacturing.

Successful implementation of the HACCP system must have the full support of top

management, with implementation driven from within the company (Koku,1998). The

whole process, including raw materials and the suppliers, should be considered and the

staff should be made aware of the importance of quality and safety as a component of

quality.

An effective HACCP program provides a systematic approach to food safety. Because

of the dramatic increases in the variety of prepared foods, an effective food safety

program is an important element of public health protection (Ketpibun, 2002). HACCP

follows a basic risk management philosophy with an emphasis on reducing the potential

hazards inherent in food safety (Reilly, 2003). By identifying critical risk factors, a firm

can direct its risk prevention strategies and utilise its resources to maximise its risk

management efforts. HACCP principles are not limited to food safety; they can be

applied to other products and processes as well. Successful food processors understand

the importance of their reputation and "brand value" in the marketplace. This status can

be best protected through a well-implemented "total quality" system focused on

customer satisfaction.

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It can also be applied throughout the food chain from the primary producer to the final

consumer. Besides enhancing food safety, other benefits in applying HACCP include

more effective use of resources and more timely response to food safety problems.

Table 4.3.1 Principles of HACCP

Principal Subject Action

1. Hazard Analysis Identify potential hazards associated with food

production at all stages. Assess the likelihood of

occurrence of the hazards and identify preventive

measures for their control.

2. Identification of critical control point (CCP) Identify point/procedures/operation; steps that can

be controlled to eliminate the hazards or minimize

the likelihood of its occurrence.

3. Establishing critical limits Establish target values and critical limits which

must be met to ensure that CCP is under control.

4. Monitoring Establish a system to monitor control of the CCP

by scheduled testing or observations.

5. Correction Establish corrective action to be taken when

monitoring indicates that a particular CCP is out

of control.

6. Verification Establish procedures for verification to confirm

that the HACCP system is working effectively.

7. Documentation Establish documentation concerning all

procedures and records appropriate to these

principles and their applications.

Source: Based on Codex, 1993

In addition, the application of the HACCP system can aid inspection by food control

regulatory authorities and promote international trade by increasing buyer confidence in

food safety. The HACCP plan is specific to a particular food and processing application

and is capable of accommodating change, such as advances in equipment design,

processing procedures or technological developments.

The successful application of HACCP requires the full commitment and involvement of

management and the workforce. It also requires a team approach (Rayne, 1999). The

application of the HACCP system is compatible with the implementation of quality

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management systems. The potential barriers to the implementation of HACCP need to

be identified and examined as an initial step in the development of any HACCP

implementation strategy. The barriers may include lack of top management

commitment, lack of customer and business demand, absence of legal requirements,

financial constraints, human resource constraints, lack of expertise and/or technical

support, inadequate infrastructure and facilities, and inadequate communication.

Ehiri and Morris (1995) reported that food organisations have not embraced the

HACCP strategy with the enthusiasm originally anticipated. Difficulties, the authors

claim, are due to the voluntary status of the approach, coupled with a limited

understanding of the strategy itself among operators. Kirby (1994) stated that small and

medium sized enterprises may also have inefficient technique resources.

Achievement of successful HACCP implementation has several benefits. HACCP

implementation has allowed factories to achieve better product safety and quality,

reduced costs, design better products and processes, increase quality awareness among

suppliers, and improve team spirit. The benefits of HACCP for the Thai food processing

industry are as follows:

1. Benefits to consumers:

- Reduced risk of food-borne diseases,

- Increased awareness of basic hygiene,

- Increased confidence in the food supply,

- Improved quality of life (health and socio-economic).

2. Benefits to industry:

- Increased consumer and/or government confidence,

- Reduced legal and insurance costs,

- Increased market access,

- Reduction in production costs (reduced recall / wastage of food),

- Improved product consistency,

- Improved staff-management commitment to food safety, and

- Decreased business risk.

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3. Benefits to governments:

- Improved public health,

- More efficient and targeted food control,

- Reduced public health costs,

- Trade facilitation,

- Increased confidence of the community in the food supply.

HACCP implementation has led to an overall increase in productivity and production

efficiency, increased product safety and continuous manufacturing for extended periods,

without any stoppages due to process breakdown.

4.4 Total Productive Maintenance (TPM) Maintenance philosophy and technology have been changing rapidly during recent

years against a background of strong bottom-line profit orientation and escalating

maintenance costs in absolute terms, in part, due to sophisticated integration of the

machines and tightening of safety legislation (Dunn, 1987; Gharibi and Kenne, 2000;

Lofsten, 2000 and Cooke, 2003). TPM is an extremely effective strategy for increasing

industrial effectiveness. The development of TPM began in Japan and it proved to be

very successful in enhancing the effectiveness and profitability of companies. Nakajima

(1988) defined TPM as productive maintenance involving total participation that

includes the following elements:

1. Maximisation of equipment effectiveness,

2. Establishment of a thorough system of Preventive Maintenance (PM) for the

entire life span of the equipment,

3. Implementation by various departments (engineering, operations and

maintenance),

4. Involvement of every single employee, from top management to the worker

on the factory floor,

5. Promotion of PM through motivation and management of autonomous small

group activities.

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The implementation of TPM in non-Japanese companies shifts the attention from the

total involvement of every employee to the effectiveness of equipment. Hartmann

(1992) defined TPM as a practice that permanently and continuously improves the

overall effectiveness of equipment, with the active involvement of operators. From

these definitions, it is seen that there are basically two features that characterize TPM:

Equipment Management and Empowerment of Employees. The organisational link

between maintenance, production, and engineering is often a source of inefficiency,

higher cost, and lower productivity. With TPM, the operators and mechanics must

realize that they both strive for the same goal and consequently must co-operate and

share teamwork spirit.

The goals of TPM include, but are not limited to, the following:

1. Improving product quality,

2. Reducing waste,

3. Improving maintenance, and

4. Empowering employees.

Arndt (1995) suggested that responsibility for equipment maintenance should be

extended to everyone in the company, not just the maintenance specialists. The goals

are achieved through a careful implementation of the concept of employee

empowerment and sound management of equipment. Equipment is the focus of TPM.

TPM starts by identifying the major losses with regard to equipment. The following six

losses limit equipment effectiveness (Nakajima, 1988):

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.

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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

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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.

68

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

69

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.

70

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.

71

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,

72

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

74

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 ◌ ◌

- ● ● 2.4 Personnel management ● ● ◌

- ◌ 2.5 Motivation ● ● ● ● ● 2.6 Conflict management ◌ ◌

- ● ● 3. Supplier relationships 3.1 Supplier quality certification ● ● ●

- ● 3.2 Reduction of number of suppliers and Distance ◌ ◌ ●

- ● 3.3 Supplier long-term contracts ◌ ◌ ●

- ● 3.4 Total supplier evaluation ◌ ◌ ●

- ● 4. Workplace management 4.1 5S & housekeeping ● ● ● ● ● 4.2 Database and information management ◌ ◌ ● ● ● 4.3 Plant layout ● ◌ ●

- -

4.4 Daily management - - - ● ● 4.5 Facilities ● ● ◌ ●

-

(● = Direct relationship, ◌ = Indirect relationship)

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Table 4.9.1 Relationship among Element Practices of GMP, HACCP, JIT, TPM

and TQM Elements

GMP HACCP JIT TPM TQM 5. Other continuous improvement Practices

5.1 Project management ● ● - - -

5.2 Standardisation of parts, products and Processes

- ● ● - ◌

5.3 Cross functional management ◌ ◌ - ● ●

5.4 Policy deployment - - - - ● 5.5 Visible improvement management ● ● ● ●

-

5.6 Benchmarking - - - - ● 5.7 Suggestion system ● ● ● ● ● 6. Measurement 6.1 Calibration ● ●

- ◌ ◌ 6.2 Measurement equipment control ● ●

- ◌ ◌ 7. Production control 7.1 Equipment control ● ● ● ● ◌ 7.2 Preventive maintenance ◌ ◌ ● ●

-

7.3 Material control ● ● ● - ◌

7.4 Process control ● ● ● - ●

7.5 Packaging and storage ● ● ◌ - ●

7.6 Waste management ● ● - - -

7.7 Pest control ● ● - - -

7.8 Transport control ● ● ● - -

7.9 Document control ● ● - - ◌

7.10. Quality Records ● ● - - ◌

7.11. Quality audits ● ● - ● ●

7.12 Inspection and testing product ● ● ● ◌ ● 7.13 Product recall ● ● ◌

- -

7.14 Product instruction to consumer ◌ ● ◌ - -

8. Safety - - - - - 8.1 Hazard analysis ● ●

- - -

8.2 Loss control and safety management ● ● - - -

8.3 Environmental control ● ● - - -

8.4 legal requirements ● ● - - -

8.5 Poka-yoke (fail safe) ◌ - ◌ ◌ ●

8.6 Personnel Hygiene ● ● - - -

(● = Direct relationship, ◌ = Indirect relationship)

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As seen in Table 4.9.1, most of the infrastructure practices directly influence all

manufacturing performances. Common infrastructure practices are tools and techniques

which an organisation must apply in order to achieve standard performance in

manufacturing and to enable it to support the core approaches, and hence attain

improved company performance. Based on this framework, the present study identifies

49 practices based on GMP and their interaction with the other practices. They are

classified into the following common infrastructure: GMP, HACCP, TPM, JIT and

TQM. However, GMP practices are central for realising the improved Thai food

processing industry performance. The integrated model can also be classified into

problem solving, employee involvement and empowerment, supplier relationships,

workplace management and other continuous improvement measurement, production

control, document control, quality records, quality audits, safety, and products.

Therefore, the success of the integrated system model involves the following six areas:

personal, educational, systemic, structural, operational, and managerial activities.

1. Problem Solving

Problem solving is an activity associated with changing the state of what is actually

happening to what should be happening (Scheuermann,1997). The effectiveness of this

activity in the food industry depends on the number of appropriate tools and techniques

used to motivate the continuous improvement.

This is the key to a successful continuous improvement program (Evans, 1999).

Problem solving for the food industry includes seven basic tools of quality control (B7),

statistical process control (SPC), Plan-Do-Check Act wheel (PDCA), Brainstorming,

and effective meetings. Statistical Process Control (SPC) is the core of process

improvement for the food processing industry (Bower,1997). It is aimed at monitoring a

process to identify special causes and to signal the need to take corrective action, if

appropriate.

The Basic seven tools include check-sheets, cause and effect diagrams, histograms,

pareto analysis scatter diagrams, control chart, graphs and flow chart. They are very

powerful tools which enable operators to practice process improvement (Arndt 1989a

and 1989b). SPC is a common feature of quality control in most high volume

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manufacturing process, the food processing manufacturing industry is also involved in

high volume production and is one in which production quality control is paramount,

owing to the delicate and perishable nature of the product and the potentially severe

consequence of a lapse in process control (Grigg, 1998). Brainstorming is one method

for generating ideas. Participants focus on a problem or an opportunity and come up

with as many ideas as possible and push the ideas as far as possible.

2. Employee Involvement and Empowerment

The future of the Thai food processing industry excellence status will not be dependent

on technology, but will be determined more by the talent of the employees who

implement the technology. In dealing with the competitive and ever changing

environment, manufacturing has to aim at human resource policies to ensure that

employees can perform multiple tasks, improvise when necessary, and direct

themselves toward the continuous improvement of products and processes. Thus

employee involvement and empowerment are required to attain manufacturing

excellence (Giffi, 1990).

For example, these practices include training employees in specific skills required by

the products, manufacturing processes, customer expectations, training in employee

multi-skilling and the establishment of small group improvement activities (Saraph,

1989). The importance of employee involvement and empowerment for the Thai food

processing industry includes human resource development, multi-skilled employees,

small group activities, personnel management, motivation and conflict management.

3. The Supplier Relationship

In order to create a good supplier relationship it is necessary to recognise the role the

suppliers to the food processing industry have in supporting quality manufacturing

products. The quality of the supplies is a critical factor affecting the quality of food

safety. By encouraging manufacturers to promote HACCP throughout the supply chain,

suppliers can be made to implement practices based on supplier quality management

and performance (Ongsritrakyul, 1996). The importance of the manufacturer supplier

relationship in actualising JIT modes of production should lead to reduced costs,

78

improved quality, and shortened lead time (Inman,1990). The above suggests that Thai

food manufacturers have to involve their suppliers in the attainment of the

organisational goals in order to be competitive in the domestic and international market.

These include supplier quality certification, a reduction in the number of suppliers and

distances suppliers must send goods, suppliers long term contracts and total evaluation

of each supplier. Suppliers should be required to provide proof that they conform to the

terms of the registration (Hathaway, 1993). Where appropriate, suppliers of raw

materials should be assessed by a direct audit.

4. Workplace management Doing the simple and right thing is often a good starting point to achieve excellent

performance (Murata, 1991). In order to do the right thing in the food processing

industry, manufacturers have to organise the workplace effectively. Suzaki (1987)

observed the existence of a positive correlation between standards of housekeeping and

workplace organisation and general management attitudes. The 5S and Housekeeping

concept is a powerful method of managing the workplace (Milbur,1992). Workplace

management consists of 5S and Housekeeping, database information management

system, plant layout, daily management and facilities that are common infrastructure

practices for the food processing industry (GMP and HACCP).

5. Other continuous improvement There are other continuous improvement practices basic to infrastructure practices that

are not included in the above categories. These are project management, standardisation

of parts, products and processes, cross functional management, policy deployment,

visible improvement management, benchmarking and suggestion systems. As

mentioned above, Benchmarking is the process by which a company assesses its

performance either in the same aspects or in totality against that of its competitiveness

(Labib,1999). Other businesses can be also looked at for good performance practices.

Camp (1989) suggested benchmarking is not only a tool for measuring and comparing

performance with external standards of excellence, but it is also used for motivating a

firm to perform a self continuous improvement on its products and process.

79

Cross-function management is an effective tool in realising the organisational goals of

quality, cost, delivery, and flexibility. In this concept, communication barriers are

abolished and all departments involved in the attainment of an organisational goal, must

collaborate in cross-functional activities (Pike,1994). Standardisation of parts is a

method of ensuring high reliability by acquiring components with proven track records

of reliability over years of actual use.

6. Measurement The control of inspection, measuring and testing of equipment is critical to the food

manufacturer’s ability to make products which comply consistently with given

specifications. This control covers the multitude of instruments found in food factories

on the production floor and in quality control (Ralph, 1995). Each item of equipment

which measures or depends on a physical parameter should have a record indicating that

it has been calibrated and/or checked regularly according to documented procedures.

7. Production control Equipment which is technically suitable, well-sited, easy to clean and well-maintained

has a major role in ensuring the maintenance of good standards for food production.

Such standards will ensure that contamination is minimal. Cleaning equipment that

generates contamination such as particles, dust or aerosols should be avoided where and

when possible (Adams, 2001). Buildings should be located, designed, constructed and

utilised so as to ensure protection from any contamination product, to permit efficient

cleaning and maintenance, and to minimize the risk of manufacturing error.

Preventive Maintenance (PM) is absolutely vital in maintaining equipment in top

condition and includes preventive and predictive maintenance. PM is a total system for

the entire life cycle of equipment; hence it is the second meaning of TPM (Nakajima,

1988). Thus, PM decreases the number of breakdowns and inevitably increases the

equipment’s life span. In organising PM advancements, Cavalier,1996 suggested that

companies should accommodate changes in characteristics of the product and

equipment, production modality, geographical conditions, plant size, worker

backgrounds and equipment management.

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Process control is an aspect of quality assurance that aims to minimise variations in the

manufacturing process. The system should ensure that any deviation from normal

processing procedures is assessed, corrected and where necessary, documented

(Stevenson, 1995). It should include preventive action taken and any additional controls

introduced to ensure that the corrective action is effective.

Pest control is integral to the maintenance of hygiene, the achievement of quality and

the preservation of food safety. Wilbur (1990) suggested a comprehensive account of

pest control and disinfection along with other requirements for hygiene and

housekeeping in the interest of safety in the processing of food.

Document control is a requirement of GMP and HACCP systems that all documents and

data which relate to the standard are controlled (Kirby, 1996). To achieve this, food

manufacture should develop a document control system which is implemented primarily

through procedures.

Quality record is purpose designed for the recording of information and data resulting

from the manufacturing of the product and the operation of the quality management

system (Wattanasin, 2000).

Quality audits are an internal assessment to see whether a company has implemented

the procedure according to its quality manual and whether those procedures are suitable

for maintaining registration in an external quality system. Dale (1994) suggested

opportunities for improvement by pinpointing areas within the document quality

system. A significant quality audit is necessary to verify the suitability and effectiveness

of the TQM process and to highlight requirements for modification (Ralph, 1995).

Quality management is that aspect of the overall management function which

determines and implements quality policy. It requires an involvement in the aspect of

manufacturing that assures that the enterprise will always meet the stated quality

standards. Every staff member is responsible for the quality of his/her work.

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Product recall is the process of control retrieval of products from within the

manufacturing organisation from customers and depends on the extent of the error.

Production recall usually results from a non-conformance being detected in production

or a hazard being detected or suspected in the product.

8. Safety Hazard Analysis is a process by which the hazards and risks associated with the

manufacture, storage and distribution of foods are identified and assessed and

appropriate controls which either eliminate or reduce the hazard are implemented at

specific points. All staff should receive education in the rationale of GMP, HACCP,

TPM, JIT and TQM although not everyone will be actively involved in these tools and

techniques for quality management. The techniques for quality cost measurement and

analysis and corrective action should be taught to those who will be involved in their

implementation. Other tools and techniques such as SPC, problem-solving and defect

prevention methods related to routine work functions should be taught to those who use

them, as with education training methods that should be documented to ensure

consistency. It is more usual for problems to arise from the cleaning of food production

plants and equipment than from the operation of processes during production. Failures

in the food processing industry are due to inadequate adherence to the 5S and

Housekeeping systems. Criteria for the management of 5S and housekeeping should be

defined, possibly within a company’s GMP standard. Key aspects that should be

considered are cleaning and disinfecting, waste control, pest control and staff health and

hygienic conduct.

4.10 Suggested Implementation Steps for a Combined Model of GMP,

HACCP, JIT, TPM, and TQM Figure 4.10.1 shows the model which is based on the central starting point of GMP

(now compulsory in all Thai industries), with HACCP, JIT, TPM and TQM elements

being added to it. The various steps shown in (1-8) contain those techniques, and also

represent their typical implementation sequence, where the individual Technique and

Tool entries are those logically applicable in implementing the eight-step model.

Obviously, there are many overlapping areas with common tools belonging to more

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than one technique, i.e. step 2, 3, 6, 7 and 8, after which the “pure” or technique-

specific tools are introduced (step 4 and 5). The eight steps are describe as follows;

Step 1: Infrastructure practices to build up the culture for the new management approach:

1. Human resources development; education and training about leadership,

scientific methods, problem solving, teamwork, communication skill,

PDCA wheel, etc.

2. Multi-skilled employees technical training in specific jobs such as the

knowledge of hazards control, technology, machine operation, material

handling, etc.

3. Basic tools or techniques necessary to improve work: The 5S activities and

housekeeping systems, statistical process control, basic QC tools,

Poka-yoke techniques, waste elimination (muda, mura and muri),

personnel hygiene, safety, cost reduction, IE techniques, computer

programmes, statistical techniques, etc.

Figure 4.10.1 Integrated Model of GMP, HACCP, JIT, TPM and TQM

Step 1 Infrastructure practices

Step 2 GMP

Step 3 HACCP

Step 8 TQM

Step 7 JIT Step 6 TPM

Step 5 TPM &GMP Equipment

management

Thai food processing excellence

Step 4 JIT & GMP Supplier

relationship

83

Step 2: Implementation of GMP to ensure the quality system (quality assurance), control

in general hazards

1. Building, environment control and equipment management

2. Pest control

3. Personnel hygiene

4. Process control and waste elimination system

5. Packaging and storage control: chemical/ physical/ biological hazard

control

6. Transport control

7. Material control: water/ ice/ stream control

8. Personnel and training

9. Product recall

10. Inspection and testing

11. Identification and traceability of product: labeling

12. Document and record control

13. Internal audit

Step 3: Extension to HACCP system, specific control of hazards

1. Hazards analysis

2. Critical Control Point (CCP)

3. Managing of CCPs

Step 4: Setting up elements of GMP related to JIT practice, supplier relationship:

1. Suppliers evaluation

2. Material inspection and control

3 Improvement of purchasing procedure

4. Suppliers have certification of GMP

Step 5: Setting up elements of GMP related to TPM practice, equipment relationship.

1. Preventive maintenance

2. Self-maintenance

3. Breakdown maintenance

4. Maintenance scheduling

5. Cleaning and sanitizing equipment

6. Equipment design; Poka-yoke

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Step 6: Setting up TPM practices

1. To set goals for the Total Productive Maintenance (TPM) approach

with commitment from top management and TPM organisation

2. To educate and train people

3. To extend from the maintenance system based in GMP requirements

to maintenance management systems created by TPM practices

4. Autonomous maintenance (self-maintenance)

5. To emphasise the preventive maintenance over breakdown

maintenance

6. To encourage people to participate in the Total Maintenance System

7. To implement the continuous improvement of the TPM system

Step 7: Implementation of the JIT system

1. To set goals for the JIT system approach, commitment by top

management and JIT organisation

2. To educate and train people

3. To integrate the supplier relationship in GMP with JIT system

4. To setup a database and information management of suppliers

5. To use the Kanban system

6. To eliminate waste by using Kaizen tools and techniques

7. To emphasize the inventory management and focus on customer

demand.

8. To upgrade the requirement of the supplier from GMP to JIT system

Step 8: Investigation of the quality system in the organisation and development of

TQM practices.

1. To maintain the whole quality system of the organisation using GMP,

HACCP, JIT and TPM

2. To use the criteria of the Business excellence award (Malcolm

Baldridge) to develop an aspect of quality systems to TQM

3. To set goals for the Total Quality Management (TQM) approach with

commitment from top management and TQM organisation

85

4. To educate and train the people into the new culture and new

concepts of management and to encourage people to be involved in

the system

5. To investigate the lack of criteria in the TQM quality system in an

organisation in order to improve the new system

6. To extend quality programmes in the organisation such as quality,

attitude, process intent (the next step is customer), continuous

improvement, product design (QFD), customer focus (internal and

external), etc.

7. To implement the TQM system and take action to correct it.

8. To benchmark the excellence of business in the world with regard to

setting up the way to improve quality of the organisational systems

into WCM standards.

4.11 Appropriate Manufacturing Strategies Output Model (AMS output)

In this section an appropriate manufacturing strategies model is developed as a guide for

the Thai food processing industry to be effective in the implementation of the combined

basic principles of GMP, HACCP, TPM, JIT and TQM (Table 4.9.1), and adopt the

methods of performance (Figure 4.11) for achieving manufacturing excellence. AMS

output will reduce the time needed to achieve manufacturing excellence.

The development of the model in the following paragraphs follows a logic similar to

that developed by Arndt (1985) in constructing a generalized technological

improvement theory. The implementation of the integrated model can be viewed as

similar to a technology transfer. The basic premise is that the use of the practices will

lead to improved organisational performance. This integrated model can be described

by Equation (1):

Appropriate Manufacturing Strategies Output

AMS output = f (P+E+Sy+St+O+M) (1)

where

P = Person factor

E = Education factor

Sy = System

86

St = Structure

O = Operational activities

M = Management activities

Table 4.11 below shows details of the six factors which are necessary for success of the

integrated system of TQM, TPM, JIT, GMP and HACCP.

Table 4.11 Factors Necessary for Success of the Integrated System of TQM, TPM, JIT, GMP and HACCP

Person

1. Top management 1.1 Commitment 1.2 Vision 1.3 Leadership 1.4 Motivation

2. Employee 2.1 Involvement 2.2 Empowerment 2.3 Relation 3. Personnel requirement

Education

1. Management skills 1.1 Trust 1.2 Leadership 1.3 Ethics

2. Human skills 2.1 Cooperation & teamwork 2.2 Communication 2.3 Creativity thinking 2.4 Responsibility 3. Technical skills 3.1 Job qualification 3.2 Multidiscipline skill 3.3 quality-related training 3.4 equipment maintenance tasks 3.5 Personnel hygiene 3.6 Healthcare 3.7 Hazard & Safety

System

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

Structure

1. Management structure 1.1 Organisational structure (Matrix)

- Top – Down (Vertical) - Bottom – Up (Horizontal)

1.2 Cross-functional management 1.3 Project management

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;

AMS output = f(P)+f(E)+f(Sy)+f(St)+f(O)+f(M)

= (a1+a2)∆I1+ (b1+b2+b3)∆I2 + (c1+c2+c3+c4)∆I3+ (d)∆I4+ (e)∆I5

+ (f)∆I6 (2)

With the “effort factors”

Person factor (P)

a1 = Top management role, cultural change “acceleration factor”= α

a2 = Employee role

Education factor (E)

b1 = Management skill, acceleration factor = β

b2 = Human skill

b3 = Technical skill

System (Sy)

c1 = System for GMP and HACCP, QA (regulation), acceleration factor γ

c2 = System for TQM, based on every system, acceleration factor

c3 = System for JIT

c4 = System factor for TPM

Structure (St)

d = Structure

Operational activities (O)

e = Operation activities

Management activities (M)

f = Management activities

This model suggests that the speed of successful implementation depends on the top

management role, employee role, and management skill for driving the organisation to

WCM performance level. This can be adjusted by “acceleration factors” as in Equation

(3):

AMS output = α(a1+a2)∆I1 + β (b1+b2+b3)∆I2 + γ (c1+c2+c3+c4)∆I3 + (d)∆I4 +

(E)∆I5 + (F)∆I6 (3)

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This equation is represented by Figure 4.11.

Figure 4.11 Appropriate Manufacturing Strategy Model Output

Based on Arndt (1985)

Figure 4.11 shows that efficiency is varied by time. However, there are three factors

which can be used to accelerate efficiency in order to increase organizational

performance. These are Person, Education, and System.

4.12 Conclusion

It can be concluded that all the manufacturing practices examined in this chapter are

necessary and very useful for factories to improve their organisation. However, lasting

improvement requires that all practices be used in an integrated way. This integrated

model formulated for the Thai food processing industry is designed to allow the

industry to upgrade to a WCM performance level. In order to develop this model, the

factors of successful implementation must be clear. There are six factors: the personal

factor, educational factor, systemic factor, structural factors, operational activities, and

management activities. This chapter also included suggestions for implementing steps

for the integrated model (GMP, HACCP, JIT, TPM and TQM).

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Chapter 5

Research Method and Hypotheses

5.1 Introduction The purpose of this chapter is to discuss the proposed research method and development

of a hypotheses. The methodologies adopted consist of both quantitative (Balnaves and

Caputi, 2001) and qualitative (Maykut, 1994). Kirk (1986) advanced a strong case to

show that although qualitative methods are very useful for many social science

problems, quantitative methods, are probably less useful, especially when exploring an

unfamiliar situation. Moreover, quantitative studies mainly use empirical surveys while

qualitative methods deal with in-depth interviews (Mason, 1996). In fact, the prevalence

of quantitative methods may be attributed to the strong focus on theory-testing and lack

of attention to many types of problems where theory testing is not possible. However, to

test theories, the situation must be understood before formulating new theories or

applying existing theories. Hence, qualitative research is more appropriate in some

specific situations in the early stages of knowledge development.

Qualitative research provides a powerful tool for research in management and business

administration. It also has its uses in many industrial marketing research situations

where the target population is relatively small and reliable statistical analysis would

therefore be difficult. Holbert (1993) suggested that for understanding the industry, an

understanding of the major players is much more useful than the relatively shallow

quantitative measures, since a broader understanding from a widespread survey is

unlikely. This is certainly an argument for initial qualitative and quantitative research

applied to the Thai food processing industry.

Qualitative research is more often inductive, applied to exploratory work and most of

the important information is concentrated among a relatively small number of players,

reliability and validity are certainly attainable in qualitative research. Kirk (1986)

maintained that achieving good result requires a little care in, mainly, what and how

things are asked, as well as careful recording of fieldwork. Fielding (1986) pointed out

that reliability and validity depends also on what is gathered and how data are analysed.

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The quantitative study aims to:

1. Find the pattern of manufacturing strategies,

2. Test a number of hypotheses concerning manufacturing strategies, with particular

emphasis on GMP, HACCP, TPM, JIT and TQM,

3. Recommend a new model of appropriate manufacturing strategy practices.

The qualitative study involves a case study of the Thai food-processing industry. The

aim is to verify the issues first by conducting a detailed investigation on the dimensions

of an organisation, technology and management. The study also explains why and how

every manufacturing strategy is related to techniques and tools. This study should be

very useful because the results suggest a new manufacturing strategy appropriate for

the Thai food-processing industry to ensure its successful performance.

5.2 Research Method The importance of empirical research in the field of manufacturing strategies is being

increasingly recognised as a means of helping to narrow the gap between theory and

practice. In this survey, a collection of data, information and opinions of a large group

of units, is referred to as a “population” (Filippini, 1997).

An empirical theory is one that could be and must be subjected to tests using empirical

observations. In contrast, theory- building efforts should result in the development of

knowledge and general theories which could be utilised to improve the practices of

operation management across the board (Filippini, 1997). Many researchers have

highlighted the need to develop empirical research, with particular emphasis on that

which utilises a survey, in order to support theory building in the field of management.

The survey is by far the most widely utilised method of empirical data collection used

by operation management research (Trace, 1992). Survey research can have three aims:

investigation, confirmation, or description of events.

The investigation purpose refers to the determination of concepts, which are related to a

phenomenon. The confirmatory purpose involves testing the theory and establishing

relationships between variables. The description of events, opinions, and their

distribution.

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In this study, survey research is used for the purpose of investigation in order to

determine which manufacturing strategy concepts are related to the pattern of

organisation in the Thai food processing industry. It is also used to test a set of

hypotheses concerning manufacturing strategies.

The methods used here consist of formulation of hypotheses development of the survey

instrument, collection of data and analysis of variance (ANOVA).

5.3 Research Plan

Research plan Period

1. Pilot Survey June 2001 – July 2001

2. Main Survey October 2002 – December 2002

3. Case Study (Model Testing) November 2003

1. Pilot survey In the pilot survey, various types of data were collected for use in this

study. The data was selected from Thailand Diversity & Refinement Food and

Beverage, Department of Industry Promotion, 2000. Questionnaires were sent by mail

to 120 companies. The information from this pilot survey is discussed in chapter 6 and

is used as a guide for the scope necessary for creating a manufacturing strategy model

for the Thai food processing industry.

2. Main Survey The main survey differed from the pilot study by using companies

from the Thailand Diversity & Refinement Food and Beverage, Department of Industry

Promotion, 2001. Before formulating the survey, it was necessary to develop the

hypotheses in order to answer research inquiry questions and formulate an appropriate

model for the Thai food processing industry. The survey questionnaire was designed

and administered for obtaining useful data and information and included interviews

with 3 companies, A, B and C.

3. Analysis, This section analyses the results of the main survey and examines the

hypotheses.

4. Model, This section outlines the building of an appropriate Thai food processing

industry manufacturing strategy model.

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5. Case Study (Model Testing) This process selects one company from the main

survey to comment on the effectiveness of the Thai food processing industry model and

suggests alternatives. The company chosen uses GMP and HACCP and is beginning to

implement TQM and TPM.

5.4 Hypotheses Competitive advantage can be achieved through combining manufacturing strategies

such as GMP (Willbur 1992 and Zemanovic 1992), HACCP (Mayes and Mortimore,

2001), TPM (Bates, Visser and Bates, 2000), JIT (Inman, 1990) and TQM (Krasachol,

1998). The best combination is to have a balance between tools and techniques. The

purpose of this research is to identify the most suitable tools and techniques for the Thai

food processing industry. Most are provided from quality tools and techniques

introduced by famous experts (Bicheno,1994). The manufacturing strategies concerning

tools and techniques aim for continuous improvement in the product and processes. It

should provide an effective link between tools and techniques for each manufacturing

strategy. Therefore, the following hypotheses are proposed:

Hypothesis 1:

The Thai food processing industry needs elements of TQM, JIT, HACCP, GMP or TPM

practices in order to increase the efficiency of the implementation of factory practice.

Hypothesis 2:

Market requirements influence the decisions to apply TQM, JIT, HACCP, GMP and

TPM.

Hypothesis 3:

Thai food processing companies that implement at least one of TQM, JIT, HACCP,

GMP or TPM practices perform better than those without any of these technologies.

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Hypothesis 4:

Thai food processing companies that implement a combination of TQM, JIT, HACCP,

GMP and TPM or all the 5 practices perform better than those that implement only one

of them.

Hypothesis 5:

Thai food processing companies that implement a combination of HACCP, GMP, TQM

and TPM perform better than those that implement a combination of HACCP, GMP,

and TQM without TPM.

Hypothesis 6:

The limitation of HACCP and GMP practice can be overcome by putting them in the

context of TPM.

Hypothesis 7:

Various characteristics of the Thai food processing industry (size, registered capacity,

product, process strategy) influence the decision to apply TQM, HACCP, GMP and TPM.

Hypothesis 8:

The Thai food processing industry needs an infrastructure of (general ) training to

achieve GMA, HACCP, TPM, JIT, TQM and standards of World Class

Hypotheses explaining performance differentials, providing guidelines for

implementing the integrated production system, and investigating the existence of

synergy in the application of practices of the integrated system were established in

Chapter 4. These hypotheses will be investigated empirically using data collection

from the Thai food processing industry.

5.5 Survey Instrument This survey will be conducted by using the results of questionnaires sent to responsible

persons in the Thai food-processing industries and some requested interviews. The

questionnaire is designed in such a way that makes it easy to understand and provide

answers.

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The questions are open-ended, closed-ended or scaled-response questions (Frazer and

Lawley, 2000). There are six parts (Main survey): general information, manufacturing

strategies, manufacturing practices, benefits, training and education, and interest in

research findings adapted from theoretical concept to survey question (Lyberg, 1997l).

It is also translated into the Thai language to make it easy for Thai respondents to

answer any questions.

Before the main survey questionnaire was administrated five selected companies were

used in a pilot survey. Any problems resulting from the use of unclear words was

consequently resolved before the main survey was sent out. The data for the five

companies in the pilot survey are not included in the analyses.

For the selection of the sampling, Zikmund (1997) suggested to use a sampling frame of

a list of elements from which the sample may be drawn. Although the unit of analysis

was the companies, it was impossible to send a questionnaire to all companies, so those

listed on the Thailand Diversity & Refinement Food and Beverage, Department of

Industry promotion, Thailand, 2001 were used.

For the determination of the sampling method, a questionnaire was sent to each

manufacturing company in the list, based on the probability of the willingness of the

representative of the company to fill out the questionnaire and return it to the researcher.

A sampling unit is one of the total responding companies. It was possible that a

company with subsidiaries returned more than one questionnaire. These were counted

as individual companies. There was no specifically determined sample size for this

study. Hair (1995) suggested the researcher should only use samples with at least 50

observations, and preferably the sample size should be 100 or larger. The larger the

sample, the more accurate the finding of the study.

5.6 Data Collection In this study, the companies were selected randomly but all followed GMP, HACCP,

TPM and TQM practices. As the number of such available companies was 350, data

collection was conducted by purposive sampling, a form of non-probabilistic sampling

where typical cases of interest are selected by the researcher.

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This technique is appropriate when sampling frames are unavailable or when the

population is widely dispersed (Salant and Dillman, 1994). To obtain the necessary

information by purposive sampling, questionnaires were sent by mail to both domestic

and foreign owned Thai food processing companies. From the 120 questionnaires sent

for the pilot survey and 350 for the main survey, 50% responded to the pilot survey and

35.14% responded to the main survey. The distribution of response is shown later in

Chapters 6 and 7.

5.7 Data Analysis This section presents a brief outline about the data analysis which will be carried out

using statistical methods, descriptive methods, Chi-Square test, and analysis of

variance (ANOVA). Statistical analysis in this type of research study can be carried

out easily by software programmes such as Excel (Merchant, 1999) and SPSS (Corston,

2000). Graphs, charts and tables describe the characteristics of data and information

(Kumar, 1996).

Analysis of Variance (ANOVA) is a statistical procedure for testing the significance of

the differences among several independent groups by partitioning the total variance in

the dependent variable into effects due to different levels of the independent variable

for which ANOVA tests the hypothesis that group means of the dependent variable are

equal (Bower 1998, Corston, 2000 and Hutchison 2000) . One way analysis of variance

as a generalisation of the independent samples t-test designed to determine the

significance of the difference among three or more (rather than two) group means.

The performance of companies adopting different manufacturing practices can be

analysed in various stages. ANOVA tables (Norusis, 1990) are useful for studying the

relationship between a dependent variable and one or more independent variables. The

data analysis is assisted by using the SPSS program and then interpreted. This

experimental design permits the randomisation of all factors. When a process has two or

more factors affecting its capability, the relative contribution of each of these

independent factors to the total variability can be interpreted making the total statistical

variance of the process equal to the sum of the component variances.

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The advantage of this method is that where several factors are involved in a process or

in the quality of the products, it is possible to rank their effects on the total variation in

order of magnitude.

Thus, the information is useful in the determination as to where to reduce variability for

maximum improvement with a minimum expenditure of time and effort. The

interpretation of the statistics is significant if it is equal to or greater than the value

from the F-table at the level of significance selected. If the statistic is significant, the

least significance difference (LSD) is calculated to determine where the difference

among the variants lies. The LSD is the minimum when the means of any two rows or

columns differ significantly from each other. If the statistic is not significant at the

chosen level, the LSD is not calculated. If the analysis of variance reveals that the

effects of stage and type are important, it becomes meaningful to describe the nature of

the effects by comparing the mean performance. This can be done by multiple pair wise

comparison methods which should be suitable for unequal sample size such as the

observational data in this study. The results of the analysis were used to test the

development of the hypotheses.

The Chi-Square test of two qualitative variables can be dependent, meaning there is a

relationship between the variable, or independent, meaning that there is no relationship

between the variable. The Chi-Square test for proportions involves a contingency table

that had 2 rows, successes and failures, and a column for each population

(Greenwood1996. and Siegel 1996). This test can be extended to look at two qualitative

variables where each row corresponds to a different value of the first variable and each

column corresponds to a different value of the second variable.

5.8 Conclusion This chapter outlined the research methods to be used, research plan, hypotheses

development, survey instruments and data analysis. It was a useful guide to answer the

research question and to evaluated the hypotheses. While compromises in the section of

the target population and the choice of data collection methods were made due to time

and cost restrictions, it was believed that the overall activities conducted in the present

study were sufficiently reliable for scientific research.

97

In Chapters 6, 7 and 8, data analysis and results of the company survey will be

discussed. The findings of this study will be presented in Chapters 9 and 10.

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Chapter 6

Pilot survey of Thai Food Processing Industry

6.1 Introduction A pilot survey was developed and carried out with the aim of testing the proposed

manufacturing strategy model and the resulting key research issues within the proposed

framework. The aim was to gather information on the characteristics and the main

problems of the Thai food processing industry, such as company performance,

production, manufacturing strategies and technology. From the information obtained, it

was possible to see the variety of appropriate manufacturing strategies needed for the

Thai food processing industry. Details of the survey and questionnaire can be found in

Appendix C. The results of this study will be used in developing an appropriate

manufacturing strategy model aimed at improving Thai food-processing efficiency.

6.2 Analysis of Thai Food Processing Industry from Pilot Survey This section presents the results from the pilot survey mailed to small, medium and

large companies. Of the 120 questionnaires mailed, 60 were returned and classified as

valid. The first five sections of this chapter summarise the respondents’ profiles and

describe the characteristics of the Thai food-processing companies involved.

6.2.1 Company characteristics This section describes the characteristics of the respondents of the pilot survey. Figure

6.2.1 presents four main variables describing the respondents. These include number of

years of factory establishment, registered capital, type of business and type of

production. This section displays only summary figures; the complete data analysis can

be seen in Appendix C.

The registered capital (in millions of Baht), represents 55.55% of the Thai food

processing companies which had registered capital of less than 100 million baht,

26.66% had registered capital of between 100-500 million baht, and 17.79% had

registered capital of more than 500 million baht. According to the year of factory

99

establishment, the sample is spread uniformly among the categories. The companies

were established between the years 1960 to 1969 (approximately 3.36%), 1970 to 1979

(approximately 16.36%), 1980 to 1989 (approximately 50.09%) and 1990 to 1999

(approximately 30.19%). Based on type of business, the majority of the sample can be

classified into three categories: limited companies, partnership, and others. About 79%

of factories in the sample were limited companies.

In Figure 6.2.1, it is clear that the majority of 60 respondents were from the vegetable

and fruit processing industry (36%), marine-related industries (16%), and cooking

ingredients and edible plant oil industries (13%).

0

5

10

15

20

25

30

35

40

45

Frui

t/veg

etab

lepr

oces

sed

Mar

ine

Coo

king

ingr

edie

nts

Edib

le p

lant

oil

Suga

r ind

ustry

Dai

rypr

oduc

tion

Gra

inpr

oduc

tion

Perc

enta

ge o

f com

pani

es b

y in

dust

ry

Figure 6.2.1 Type of Thai Food Processing Industry

6.2.2 The Focus of manufacturing strategies It is shown in Figure 6.2.2 that 80% of companies focus on production. Approximately

66%, 41% and 21% of the sample focused on process, marketing, and service

respectively. A significant proportion of companies concentrate on manufacturing

certain products to serve a particular customer or marketing segment. Emphases on

service and other strategies can be viewed as complementary, supporting the focus on

the product.

100

0

10

20

30

40

50

60

70

80

Prec

enta

ge o

f com

pani

es

Product Process Market Service Other

Figure 6.2.2 Focus of Manufacturing Strategies

6.2.3 Implementation of manufacturing practices The manufacturing practices of 5S, HACCP, GMP, ISO9000, TQM, TPM, JIT and

Kaizen were followed in some degree by the 60 companies in the pilot survey. As

shown in Figure 6.2.3, 5S has been implemented by about 81% of the 60 participating

companies. This was followed by HACCP (51%), GMP (45%) and ISO 9000 (36%).

The use of TQM and TPM was reported by 25% of all the respondents. The minimum

implementation was recorded for Kaizen, only about 6% of factories.

0

10

20

30

40

50

60

70

80

90

Perc

enta

ge o

f com

pani

es

5s HACCP GMP ISO9000 TQM TPM JIT Kaizen

Manufacturing practice

Figure 6.2.3 Manufacturing Practice

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6.2.4 Machinery and equipment problems It is generally accepted that most of the equipment used within the Thai food-

processing industry is old, outmoded, and sometimes obsolete. The machines are

mostly imported secondhand from abroad since Thai entrepreneurs do not have

sufficient investment funds to purchase new equipment. This secondhand machinery is

not efficient, causes problems in manufacturing, including higher production costs, and

affects quality. Most Thai food processing machines in use are between 6-10 years old

(35.58%), between 11-15 years (27.88%) and more than 15 years old (approximately

14.42%). More than 50% of Thai food processing companies do not have systematic

maintenance. Figure 6.2.4 shows that most of the Thai food processing industry

experienced problems with machines. (approximately 80%).

Machine problem in Thai food processing companies

0%

20%

40%

60%

80%

100%

Small Medium Large

Type of Company

Perc

enta

ge o

f com

pani

es

NoYes

Figure 6.2.4 Machine Problem in Thai food Processing Companies

From the pilot survey, it was seen that lack of good maintenance management systems

increases the possibility of breakdown and adversely affects the manufacturing process.

Among the various maintenance problems in the Thai food processing industry, about

93% are caused by a problem with machinery (Figure 6.2.5), causing delays in about

80% of companies. This problem has an adverse effect on the quality of raw material,

because raw material loses its freshness and the customer is dissatisfied with the

product. As a result, the company has to replace the raw material for manufacturing.

In addition, the maintenance personnel get few opportunities to acquire technical

knowledge, but are nevertheless responsible for repairs. There is a lack of financial

102

support for maintenance activities and no effective system of maintenance management

because of the supposedly high costs involved. However, no thought is given to

machine effectiveness and operations costs, causing a serious problem in the Thai food-

processing industry.

Figure 6.2.6 shows that a very high percentage more than 80%, of the Thai food

processing industry must improve productivity, open new markets, improve production

processes, create new product development and invest in new machinery.

Cause of production delay in Thai food processing companies

0102030405060708090

Machine breakdown

Delay of rawmaterial

Insufficient work Bad production Other

Perc

enta

ge o

f com

pani

es

Figure 6.2.5 Cause of Production delay in Thai food Processing Companies

Future plan to improve business perormance

0%10%20%30%40%50%60%70%80%90%

100%

Impr

ovin

gpr

oduc

tivity

Ope

ning

new

mar

kets

Impr

ovin

gpr

oduc

tion

proc

esse

s

New

prod

ucts

Inve

stm

ent

in n

ewm

achi

nes

Perc

enta

ge o

f com

pani

es

NoYes

Figure 6.2.6 Future Plan to Improve Business Performance

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Summary : Thai Food Processing Industry

Based on the pilot survey, the following strengths and weaknesses of the companies

representative of small and medium-sized food processing enterprises in Thailand can

be identified:

Strengths

1. Low cost of production - Companies can benefit from lowering their cost of

production for the following reasons:

- Major raw materials are available in Thailand including medium

technology and machines that are used in the food processing industry

- Efficiency of staff utilisation, the companies do not employ too many or

over skilled staff

2. Quality control awareness - All of the selected companies are in the process

of quality assurance implementation of HACCP certificates.

3. Good leadership-Good personal characteristics of entrepreneurs such as

their skills, education and previous jobs, that strongly influence technical

efficiency and profitability of their companies.

4. High quality of product.

5. Good relationship with employees - Due to the small size of the company,

communication between the owner and the employees is good.

6. Promotion campaign strategies - Promotion campaigns give the company’s

agents extra selling points about the product and by doing so, companies

benefit from

- Building up good relationship with their agents

- Promoting new products

7. Good background in marketing

Weaknesses

1. Centralised management style- Decision-making monopolised by the owner

2. Lack of professional administrative and management systems - Most SMEs

are faced with the need to bring their efficiency up to international

standards.

3. Lack of attention to human resource management - Besides technical

training, the companies did not pay attention to human resource activities.

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For example, lack of incentive policies or reward system that can motivate

their employees.

4. Lack of personnel with engineering skills

5. Lack of maintenance

6.3 Comparison of Industry Manufacturing Practices Table 6.3.1 shows the possible manufacturing technology performance improvement in

the Thai food processing industry that may be achieved when a manufacturer follows

the principles pertaining to TPM to reduce the main problem of machine breakdown and

reduce cost of product (Pongpattanasili and Andt, 2002).

Table 6.3.1 Thai Food Processing Industry Manufacturing Practices

Principle Quality Cost Delivery Empower employment

JIT ○ ● ● ● TQM ● ● ○ ● TPM ○ ● ○ ● GMP ● ○ ○ ● HACCP ● ○ ○ ●

Note : Direct = ● Indirect = ○

6.4 Conclusion The results of this pilot survey of the Thai food-processing industry in 2001 based on 60

companies are presented. It was found that the main problem areas concern

management, human resources, quality, safety, cost and equipment. Based on the

modern engineering practices and successful manufacturing strategies, it is suggested

that 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 implementation of a new model for this industry is suggested with a

view to increasing Thailand’s competitive position in the world market. Ongoing work

involves a second survey which investigates appropriate techniques and tools to develop

this model.

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Chapter 7

Main Survey of Thai Food Processing Companies

7.1 Introduction This chapter presents the results of the main survey. The detail of the questionnaire can

be found in Appendix D. The general characteristics of respondents from the Thai food

processing companies are described. The respondents were randomly selected from 350

Thai food processing companies and of these, 123 companies provided valid answers. It

was found that 50.43% of these were in the fruit and vegetable industries, 17.88%

frozen food, 10.2% beverage, 8.13% meat processing, 6.5% dairy, 2.43% tea and coffee

and 4.43% others industries. The questionnaire focuses on the development of an

integrated model for the Thai food processing companies as a strategy for achieving

WCM performance in the competitive international market. This model combines the

best aspects of five manufacturing practices: GMP, HACCP, TPM, JIT, and TQM.

7.2 General Characteristics of Thai Food Processing Companies This section describes the general characteristics of the main survey in terms of six

given attributes of the sample. This information gives an overview of the companies.

These include the number of employees, annual turnover, product manufacturing

strategy, and proportion of technology used for value-added operation. The information

of Thai food processing companies is then summarised in Appendix E. The majority of

Thai food-processing companies (approximately 75.86%) are small to medium-sized

enterprises (SMEs), with less than 200 employees, and form the driving mechanism for

the Thai economy (Chapter 3). The distribution of the sample according to annual

turnover is quite different from employees’ categories. In terms of ranking from

smallest to largest annual turnover, it is interesting to note that the first, 13.82% have an

annual turnover of less than 50 million baht, the next, 17.88% have an annual turnover

between 50 and 100 million baht, followed by 32.52% with a turnover of between 100

and 500 million baht and the last, 35.78% have an annual turnover of over 500 million

baht. This implies that the sample by annual turnover follows approximately a normal

distribution. In terms of number of products, 17.88 % have less than 3, and 69% have

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between 4 to 10 products for both domestic and international markets. In terms of the

production system, the main focus is on the batch production approach rather than

continuous process and project work (Figure 7.2.1).

Type of production

Project, 3.74% Continuous, 20.40%

Batch, 75.86%

Figure 7.2.1 Type of Production

Based on market focus, about 66.27% of Thai food-processing companies focus on both

domestic and international markets, 22.1% focus only on the domestic market, and

11.63% on only the international market. Of the first category, (66.67%), focus mainly

on the international market, and the remainder (33.33%) on the domestic market.

(Figure7.2.2).

The company main market

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Domestic market andIntrnational market

Domestic market only International market only

Marketing focus

Prec

enta

ge o

f com

pany

Figure 7.2.2 The Company Main Market

107

In terms of manufacturing strategies, Figure 7.2.3 indicates that most Thai food

processing companies focus on process to increase their product quality (87.93%). The

second priority is to focus on the market and to satisfy customers (70.68%), followed by

company focus on production (15.51%) and service (1.72%). A significant proportion

of factories in the sample concentrate on certain manufacturing processes to serve a

particular type of customer or market segment. In about 49% of firms, the ratio of

manual operations-to-automation is 1:1; in about 38.7% the ratio is 1:3, and in the

remaining 12.3%, 3:1. (Figure7.2.4).

Manufacturing stategies

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100

Process Market Prduction Service

Perc

etag

e of

Com

pani

es

Figure 7.2.3 Focus of Manufacturing Strategies

The ratio of technology that is used for value-adding operation in Thai food processing industries

Manual:Automation 50:50, 49%

Manual:Automation 25:75, 12.3%

Manual:Automation 75:25, 38.7%

Figure 7.2.4 Ratio of Technology used for Value-adding Operation

108

7.3 Problems in Thai Food Processing Companies Problems in the Thai food processing companies can be separated into four groups:

Human Resource, Quality, Basic Infrastructure, and Competition. All these problems in

the Thai food processing factories need to be solved urgently.

7.3.1 Human resource problems (HR) These are related to such aspects as insufficiency of technical skills, lack of employee

empowerment, safety problems in the workplace, personal conflicts, continuous

improvement activity, teamwork, lack of management skills, and lack of commitment

from the top management. Figures 7.3.1a and 7.3.1b depict the frequency and the

urgency of these human resource problems, respectively. According to Chi-Square

testing, the Level of Significance of 0.002, at confidence level 95% indicates that there

is a relationship between HR problems and frequency. More than 50% of Thai food

processing companies have experienced all the HR problems above from time to time.

However, problems relating to insufficiency of technical skills, lack of employee

empowerment, safety problems in the workplace, and personal conflict, are a high

percentage (70%). The frequency of problems indicated by a lack of commitment by top

management is the most frequent (41.7%), followed by lack of management skills

(36.7%), continuous improvement activity (35.0%), and teamwork (31.1%). Some Thai

food processing companies have not experienced any HR problems in safety in the

workplace (14.3%) (Figure7.3.1b).

109

HR problems and Frequency of problems

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HR problems

Perc

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No occurrence

Frequently

Infrequently

Figure 7.3.1a Human Resource Problem and Frequency of Problems

Occurrence frequent problems

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Perc

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Figure 7.3.1b Frequency of Human Resource Problems

110

From Chi-Square testing, Level of Significance of 0.001 at confidence level 95% shows

that there is a relationship between HR problems and the urgency of problems. Figure

7.3.1c shows that all Thai food processing companies have had more than 60% of

urgency problems. The highest percentage is in personal conflict (94.6%), lack of

commitment of top management (94.1%), safety problems in the workplace (90.9%),

teamwork (86.7%), and human error (80%). Continuous improvement activity and lack

of management skills in average and not critical problems account for (30-40%).

HR problems and Urgency of problems

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Hum

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em

pow

erm

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Perc

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Not criticalAverageUrgency

Figure7.3.1c Human Resource Problem and Urgency of Problem

7.3.2 Quality problems These problems are related to waste of time, meeting customer deadline, defects,

machine breakdown, availability of material, and lack of production performance. They

are shown in Figure 7.3.2a (Frequency), and Figure 7.3.2c (Urgency) of quality

problems.

From Chi-Square testing of Level of Significance of 0.00, there is a relationship

between Quality problems and the Frequency of problems. Figure 7.3.2a shows that the

most common problems of the Thai food processing companies are waste time (76.2%),

not meeting customer deadline (73.7%), defects (72.5%), machine breakdown (68.9%),

111

and availability of material (58.2%), respectively. Frequency of problems, Figure 3.2b

indicates Non-availability of material (41.8%) and Machine breakdowns (29.5%) are

the most frequent problems in the Thai food processing companies. Moderately frequent

problems are defects (19.6%), waste time (19%), lack of production performance

(16%), and not meeting customer deadline (15.8%). However, most of these can be

improved, as will be shown in Chapters 9 and 10.

Quality problems and Frequency of problems

0

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Waste time Meetingcustomerdeadline

Defects Machinebreakdown

Availability ofmaterial

Lack ofproduction

performance(productivity)

Quality problems

Perc

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pond

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No occurrenceFrequentlyInfrequently

Figure 7.3.2a Quality Problem and Frequency of Quality Problems

Quality problems and Frequency problem

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Availability ofmaterial

Machinebreakdown

Defects Waste time Lack ofproduction

performance(productivity)

Meetingcustomerdeadline

Quality problems

Perc

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pond

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Figure 7.3.2b Frequency of Quality Problems

112

From the Chi-Square testing at level of significance of 0.774, there is no relationship

between quality problems and urgency of problems. Figure 7.3.2C shows that all quality

problems are a very high percentage of urgency (more than 80%). The less critical

quality problems in some Thai food processing companies are waste time (4.8%),

defects (4.5%), and machine breakdown (1.6%).

Quality problems and. Urgency of problems

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Availability ofmaterial

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Lack ofproduction

performance(productivity)

Defects Meetingcustomerdeadline

Waste time

Quality problems

Perc

enta

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f res

pond

ent

Not critical

Average

Urgency

Figure 7.3.2c Urgency of quality problems

7.3.3 Basic infrastructure problems These problems are related to the basic organisation infrastructure, such as overstock

and inventory, measurement of control systems, information management, budget

planning, unclear organisation structure, cost controlling and evaluating, work

standards, and production schedule. They are shown in Figures 7.3.3a, and 7.3.3b, in

terms of frequency, and urgency, respectively.

113

The correlation between basic infrastructure problems and frequency of problems is

estimated at a confidence level of 95% (Sig.= 0.0007). Figure 7.3.3a indicates that most

basic infrastructure problems occurred sometimes in a high percentage of companies

(>70%), excepted for work standard (45.5%) and production schedule (34.5%). Basic

infrastructure problems that are the most frequently occurring are production schedule

(30%), work standard (41.4%) and unclear organisation structure (40.9%). Moderately

frequent problems of basic infrastructures are cost controlling and evaluating (30%),

and measurement control system (22.2%). Most Thai food processing companies do not

experience frequent basic infrastructure problems of budget planning (13.2%),

information for management (10.5%), and overstock and inventory (4.2%).

Basic infrastructure problems and Frequency of problems

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Basic infrasturcture problems

Perc

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ge o

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pond

ent No occurrence

Frequently

Some

Figure 7.3.3a Basic Infrastructure and Frequency of Problems

The result of the Chi-Square test shows that there is a relationship between quality

problems and urgency of problems at confident level 95% (Sig. = 0.00). Figure 7.3.3b

shows that more than 60% of Thai food processing companies have urgent problems in

all basic infrastructures, with the information for management which shows a low

percentage (10.53%). In terms of respondent selected urgent problems from Production

114

schedule, Budget planning and Overstock & Inventory have a very high percentage

(more than 80%) of urgency.

Figure 7.3.3b Urgency of Basic Infrastructure Problems

7.3.4 Competition problems These problems relate to winning in the competitive market: community relationships,

marketing plans, resource planning, setting manufacturing strategies, lack of developing

product ideas, supplier relationships, and understanding customer demands. They are

shown in Figure 7.3.4a (Frequency), and Figure 7.3.4b (Urgency). From the result of

Chi-Square testing, Level of Significance of 0.0002 shows that there is a relationship

between problems with competitors and frequency of problems. Figure 7.3.4 shows that

most competition problems are encountered occasionally, except understanding

customer demand which is the most frequent. Competition problems, which should be

resolved (>30%) are not understanding customer demands (50%), supplier relationship

(37%), and lack of developing product ideas (35%). A little less frequent are problems

relating to marketing plans (5.3%).

Basic infrastructure problems and Urgency of problems

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Basic infrastructure problems

Pere

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resp

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Not criticalAverageUrgency

115

Problems to against competitors and Frequency of problems

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lopi

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oduc

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as

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Und

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andi

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erde

man

ds

Problems to against competitors

Perc

enta

ge o

f res

pond

ent

No occurrence

Frequently

Some

Figure 7.3.4a Problems with competitors and Frequency of Problems

The Ch-Square testing result demonstrates that there is no relationship between

problems with competitors and the urgency of problems at confident level 95%

(Chi-Square test, insignificance, Sig. = 0.3607). Figure 7.3.4b shows that all problems

against competitors are a very high percentage in urgent problems, particular to supplier

relationship (93.3%), setting manufacturing strategies (86.1%), understanding customer

demands (77.3%), and community relationship (76.9%).

Problems to against competitors vs. Urgency of problems

0

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Supp

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s'bu

sine

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Mar

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an

Lack

of

deve

lopi

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oduc

t ide

as

Problems to against compeitors

Perc

enta

ge o

f res

pond

ent not critical

averageurgency

Figure 7.3.4b Problems with Competitors and Urgency of Problems

Problems with competitors and Frequency of Problems

Problems with competitors vs. Urgency of Problems

116

7.4 Problem Solving Potential There are two levels of problems: easy and difficult. The easily solved problems are

lack of production performance, supplier relationship, waste time, work standards,

teamwork, marketing plans, defects, lack of commitment of top management, and

unclear organisation structures. They are shown in Figure 7.4.1 (human resource

problems), Figure 7.4.2 (quality problems), Figure 7.4.3 (basic infrastructure problems),

and Figure 7.4.4 (competition problems).

7.4.1 Human resource problems The HR problems in Thai food processing companies indicate that there is a relationship

between HR problems and the Potential of solving (Chi-Square testing Significance,

Sig.= 0.0002). Figure 7.4.1 shows that 85% of HR problems can be solved (Easy and

Average). All HR problems have difficulties in some Thai food processing companies

in particular to problems Continuous improvement activities (11.1%), and Lack of

management skill (10%) are difficult to solve.

Human resource problems and Poential of solving

0

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Safe

ty p

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t

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kill

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fto

p m

anag

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t

Team

wor

k

HR problems

Perc

enta

ge o

f res

pond

ent

Difficult

Easy

Average

Figure 7.4.1 Potential of Solving Human Resource Problems

117

Figure 7.4.2a shows that there is a relationship between Quality problems and the

Potential of solving at confident level 95% (Chi-Square testing, Sig. = 0.00;

Significance). Most quality problems (85%) can be solved (Easy and Average),

Availability of material (65.6%), Lack of production performance (86.7%) and Wasted

time (81%). Moreover, it was found that it is not difficult to solve problem of Lack of

production performance. However, in terms of Difficulty in problem solving, Figure

7.4.2b indicates that the Availability of material (34.4%), and Machine breakdown

(13.3%) are the most difficult.

Quality problems and Potential of solving

0

10

20

30

40

50

60

70

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Lack ofproduction

performance(productivity)

Waste time Defects Machinebreakdown

Availability ofmaterial

Meetingcustomerdeadline

Quality problems

Perc

enta

ge o

f res

pond

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DifficultAverageEasy

Figure 7.4.2a Potential of Solving Quality Problems

Difficulty of solving quality problems

0

5

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Availability ofmaterial

Machinebreakdown

Defects Waste time Meetingcustomerdeadline

Lack ofproduction

performance(productivity)

Quality problems

Perc

enta

ge o

f res

pond

ent

Figure 7.4.2b Difficulty of Solving Quality Problems

118

From Chi-Square testing, Level of Significance of 0.0005, it is shown that there is a

relationship between Basic infrastructure problems and Potential of solving. Figure

7.4.3a shows that most basic infrastructure problems can be solved (Easy and Average),

more than 80%. This is particularly in Work standard (71.4%) and Unclear organisation

structure (70%). Figure 7.4.3b shows that there is difficulty to solve problems in

Information for management (15.8%), Overstock & Inventory (10.5%), and Budget

planning (9.7%).

Basic infrastructure problems and Potential of solving

0

10

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Wor

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Ove

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Info

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for

man

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Basic infrastructure problems

Perc

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Difficult

Average

Easy

Figure 7.4.3a Potential of Solving Basic Infrastructure Problems

Difficulty of solving basic infrastructure problems

0

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Basic infrastructure problems

Perc

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Figure 7.4.3b Difficulty of Solving Basic Infrastructure Problems

119

Chi-Square testing, Level of Significance of 0.00 shows that there is a relationship

between problems with Competitors and the Potential of solving these. Figure7.4.4

shows that most problems with competitors can be solved (Easy and Average), more

than 85% of the time. Particularly to supplier relationships (78.6%) and marketing plans

(66.7%), most Thai food processing companies can solve these easily. However, some

cannot solve problems easily; Some problems are difficult, such as Understanding

customer demands (13.6%) and Marketing plans (13.3%). There is only one problem

easy to solve and that is Supplier relationships.

Problems to against competitors and potential of solving

0

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Problems to against competitors

Perc

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Average

Easy

Figure 7.4.4 Potential of Solving Competition Problems

7.5 Business Performance Two approaches to business performance originate from market and company

expectations. Figure 7.5.1 shows the focus of quality that the market expects, and Figure

7.5.2 shows Business Performance and Companies and the response needed by

companies to outperform competitors. The priority of the quality focus that the market

expects is related to the current quality status in three aspects: (1) Reducing costs, (2)

Decreasing defects, and (3) Quality of worker satisfaction, respectively. But some

aspects are unrelated to current quality status, particular in speeding delivery.

120

From Chi-Square testing, Level of Significance of 0.00 it is presented that there is a

relationship between Current quality status and degree of importance. Figure 7.5.1

shows that most Thai food processing companies (more than 50%) agreed that all

current quality status issues are very important. The most important issues are Reducing

cost and Decreasing defects; they are very high percentages (more than 75%). Only a

small percentage of the degree of importance from all the current quality status

categories is unimportant.

Current quality status and degree of importance

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Reducing cost Decreasingdefects

Quality of worklife of

employees

Research anddevelopment ofproduct quality

Improvingcustomer after

service

Speedingdelivery

Current quality status

Perc

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Unimportant

Important

Very important

Figure 7.5.1 Current Quality Status and Degree of Important

Thai food processing companies need to outperform their competitors, To do this, most

use a business performance measure in the area of market share, product image, overall

quality, delivery performance, productivity and manufacturing cost. Figure 7.5.2 shows

there is relationship between business performance and comparison with competitors

(Chi-Square testing Significance, Sig. = 0.00). The comparison with competitors in all

aspects of business performance show that most Thai food processing companies are

better than average (Average and Among the best). Approximately 50% of the Thai

food processing industry is among the best. The business performance in aspects of

Level of flexibility (13.6%), Level of delivery performance (8.3%), Level of company

reputation (8.0%), Level of overall quality (6.2%), Level of manufacturing cost (6.2%),

121

Level of advanced technology (2.6%), and Level of productivity (1.1%) in some Thai

food processing industry should be improved. The Level of overall quality in some Thai

food processing companies should be improved immediately (Chapters 9 and 10).

Business performance and comparison with competitors

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Among the worst

Below average

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Figure 7.5.2 Business Performance needed to Outperform Competitors

7.6 Basic Company Characteristics Tools, Techniques and Best

Practices Chi-Square testing shows that Thai food organisational structure had a relationship with

implementation (Chi-Square test, Sig. 0.00047). Figure 7.6.1a shows that although more

than 57% of Thai food processing companies partially implement all these

organisational structures, they should be improved to full implementation. Most

emphasise the Matrix structure including sales, marketing, design, and production of

new product (42.9%) rather than Cross functional groups for problem solving (34.7%),

Self controlling groups in the production area (22.4%), Matrix structure including

production and maintenance in problem solving (18.4%), compared with other

implementation Figure 7.6.1b.

122

Organisation Structure and Implementation

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Matrix structureinc. production

and maintenancein problem

solving

Self controllinggroups in the

production area

Cross functionalgroups

Matrix structureinc. sales,marketing,design, and

production innew production

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Perc

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Very much

Some

Figure 7.6.1a Organisation Structure and Implementation

Full (very much) implementation of organization structure

05

1015202530354045

Matrix structure inc.sales, marketing, design,and production in new

production

Cross functional groups Self controlling groups inthe production area

Matrix structure inc.production and

maintenance in problemsolving

organization structure

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Figure 7.6.1b Full Implementation of Organisation Structure

123

Chi-Square testing, Level of Significance of 0.00 shows that there is a relationship

between management characteristics and implementation. Figure 7.6.2a shows that most

Thai food processing companies used management characteristics by focusing on

Formal, responsibility of group (more than 50%) rather than Formal, depending on

person, and Informal category. Only a small percentage of Thai food processing

companies (less than 6%), which are focused on an informal system, have implemented

all management characteristics. The trend of Thai food processing companies which

intend implementing a Project planning system, Cost accounting, and Sales forecasting

40-50% are focused by Formal, depending on person. All of Thai food processing

industry has implemented quality assurance system by Formal, responsibility of group.

High percentage of Informal and Formal depending on person (30 - 50%) in

management characteristics, such as sales forecasting systems (49.12%), Cost

accounting (44.44%) and Project planning (41.82%), Education and training systems

(31.58%), and Strategy development (30%) should be improved Figure 7.6.2b.

Management characteristics and implementation

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Figure 7.6.2a Management Characteristics and Implementation

124

Management characteristics should be improved (focusing on Informal and Formal, depending on person)

0

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Figure 7.6.2b Management Characteristics to be Improved

The Chi-Square test indicates that there is a relationship between management activities

and implementation at Chi-Square testing, Level of Significance of 0.00. Figure 7.6.3a

shows that most Thai food processing companies have implemented these management

activities fully, but there are only two management activities which most Thai food

processing companies have implemented partially (more than 50%) such as

Encouraging the internal customer concept and Encouraging job rotation. A high

percentage of implementation of management activities (more than 70%) which Thai

food processing industry has implemented fully is Improving work environment and

safety (82.6%), Training and education of employees (81.3%), Instilling quality

consciousness in employees (78.3%), Establishing individual performance (78.3%),

Providing assistance to suppliers in problem solving (75.5%), and Communicating

common organisational goals across functions (74.7%), respectively. A small

percentage of Thai food companies has not implemented these management activities

(less than 10%).

Figure 7.6.3b shows a very high percentage of None and Some (> 50%) in management

activities, such as Encouraging job rotation (63.8%) and Encouraging the internal

customer concept (56.5%) should be improved immediately. A High percentage of

None and Some (30 - 50%) in management activities, such as Empowering of

125

employees' participation (38%), Empowering employees' decision making (36.1%), and

Development of individual performance (33.3%) needs to be improve.

Management activities and implementation

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Impr

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A lot

Figure 7.6.3a Management Activities and Implementation

Management activities should be improved

0

10

20

30

40

50

60

70

Enco

urag

ing

job

rota

tion

Enco

urag

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the

inte

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con

cept

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and

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ty

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Figure 7.6.3b Management Activities to be Improved

126

Figure 7.6.4 shows that the manufacturing strategies are developed in most companies

based on Marketing and selling, Quality systems, Research and development units,

Quality group activities, Material control, Customer relationship, and Inspection system

(more than 80%). A moderate number of companies focus on process control, employee

empowerment, maintenance system, and supplier relationships (between 50-80%). A

small number of companies focuses on Product design, Top management commitment,

Measurement control, Management information system, Advanced technology,

Equipment management, Distribution system, and Product service (less than 50%). This

is unrelated to the main problem of machine and manufacturing strategy of equipment

management.

In a small to moderate number of companies (less than 80%), the focus of

manufacturing strategy in company is insufficient, particularly in Equipment

management (TPM); Product design, Product service and Top management

commitment (TQM); they need to develop an integrated model to support this

manufacturing strategy such as TQM, TPM, JIT, HACCP and GMP.

Company quality aspects used manufacturing stategies

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Figure 7.6.4 Quality Aspects used to develop Manufacturing Strategies

127

7.7 Manufacturing Practices for Thai Food Processing Companies:

GMP, HACCP, JIT, TPM and TQM This section discusses the implementation of GMP, HACCP, JIT, TPM and TQM by

Thai food processing companies. The level of implementation of any manufacturing

practice is indicated below:

1. Number of respondents who are unfamiliar with manufacturing practices.

2. Number of respondents who are familiar with manufacturing practices.

3. Number of respondents who are familiar with and understand the manufacturing

practices.

4. Number of the companies that apply manufacturing practices.

The two practices most familiar to all Thai food processing companies are GMP and

HACCP, of the other practices, TQM is used rather than TPM and JIT (Figure 7.5.2).

According to food safety law in Thailand, every company had to obtain a certificate of

GMP practices before 31 July 2003 (Dewongpasart, 2003)

The above findings are in accordance with the introduction of GMP and HACCP in the

Thai food processing industry, implemented before the year 2000 (about 20 and 18

companies, respectively). The implementation of these two practices is increasing

dramatically every year. TQM was started before the year 2000 with about 6 companies

and 2 companies implemented TPM in the year 2000. These groups are growing every

year. However, the implementation of JIT has decreased from 5 to 3 companies from

2000 to 2001.

The Chi-Square testing indicates that there is a relationship between manufacturing

practices and familiarity of manufacturing practices (Chi-Square testing; significance,

Sig. = 0.00). Figure 7.7.1 shows that all Thai food processing companies are familiar

with GMP and HACCP. Most companies (55-70%) have only heard about JIT, TPM,

and TQM. Only 28.1%, 18.8%, and 13.2% of Thai food-processing companies have an

understanding of TQM, JIT and TPM respectively.

A very high percentage (80%) of Thai food processing companies are just familiar with

TQM, JIT, and TPM practices, but 7.5% have never heard of TPM .

128

Familiarity with manufacturing practices

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GMP HACCP TQM JIT TPMManufacturing practices

Perc

enta

ge o

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pond

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Never heard

Heard

Familiar understand

Applying it now

Figure 7.7.1 Familiarity with Manufacturing Practices

Figure 7.7.2 shows the introduction of manufacturing practices in Thai food processing

companies. There is an increase in all manufacturing practices every year, particularly

GMP, HACCP, and TQM. Most companies have introduced GMP and HACCP. TPM

and JIT have been implemented to a lesser extent than the others.

First introduce manfacturing practices

2023

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12

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0

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Earlier (state) 2000 2001 2002

Year

Num

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f com

pany GMP

HACCPJITTPMTQM

Figure 7.7.2 Introduction of Manufacturing Practices

129

The result of Chi-Square testing is significant in that it shows there is a relationship

between manufacturing practices and implementation (Chi-Square test, Sig. = 0.00).

Figure 7.7.3 shows all of Thai food processing companies had implemented GMP and

HACCP by 2002. The percentages of implementation of TQM (22.7%), TPM (16.4%),

and JIT (11.8%) are very low. However, the companies plan to implement TQM and

TPM after implementing GMP and HACCP. The results indicated 70.73% of Thai food

processing companies have future plans to implement TQM and TPM. However, 70.6%

said they do not have any plans for implementing these strategies.

In terms of future plans to implement manufacturing practices, the Chi-Square testing

found there is no relationship between manufacturing practices and years of

implementation (Chi-Square testing; Significance, Sig.= 0.89). About 50% of Thai food

processing companies had plans to implement TQM by the year 2003 and plan to

implement TPM practice by the year 2005 or later depending on the capability of the

company.

Manufacturing practices and Implementation

0

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20

30

40

50

60

70

80

90

100

GMP HACCP TQM TPM JITManufacturing practices

Perc

enta

ge o

f res

pond

ent

No, without future plan

No, but have future plan

Yes, implementing

Figure 7.7.3 Current Implementation of Practices

130

Figure 7.7.4 shows that the Thai food processing manufacturing practices implemented

GMP, HACCP and TQM (46.55%) concurrently, implements GMP and HACCP

(32.76%), implements GMP, HACCP, TPM and TQM (10,34 %), GMP, HACCP, TQM

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

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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

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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

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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

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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

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man

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mat

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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

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Top

man

agem

ent

com

mitm

ent

Lim

ited

know

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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

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com

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repu

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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%

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50%

60%

HACCP GMP TPM TQM JIT

Manufacturing practices

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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

increase their competitiveness in the market.

142

Manufacturing strategies and. Manufacturing practices

0%

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45%

Market Process Service Production

Manufacturing strategies

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HACCP

GMP

TQM

TPM

JIT

Figure 8.2.2 Manufacturing Strategies and Manufacturing Practices

8.3 Implementation of Integrated Model of Best Practice Hypothesis : 3

That those Thai food processing companies, that implement at least one of TQM, JIT,

HACCP, GMP or TPM practices, perform better than those without any of these

technologies.

Hypothesis :4

That those Thai food processing companies, that implement a combination of TQM,

JIT, HACCP, GMP and TPM or all of the 5 practices, perform better than those that

implement only one of them.

Hypothesis : 5

That those Thai food processing companies that implement a combination of HACCP,

GMP, TQM and TPM perform better than those that implement a combination of

HACCP, GMP, TQM without TPM.

143

Expected Result: The adoption of a combination of practices will reap the benefits for

the company of advantages given by the adoption of these combinations i.e. TQM

(Framework of effective QM: focus on customer satisfaction, continuous improvement,

tools and techniques of QM, and HR management & development, etc.), HACCP and

GMP (basic quality assurance for food industry), TPM (effective equipment & facility

management) and JIT (supplier management and waste elimination). In item 4, TPM is

a very important practice because the main problem of food processing is a machinery

problem, so TPM is very likely to be a real solution.

Hypothesis : 6

The limitation of HACCP and GMP practice can be overcome by putting them in the

context of TPM.

Item 6: The limitation of HACPP and GMP in context of TPM

Expected Answer: There is no limitation because there is the requirement of effective

equipment and facility management in HACCP and GMP; TPM can be implemented to

achieve this requirement reasonably well. Accordingly, the Thai food processing companies’ current quality status ( Figure 7.5.2)

is not related to the quality focus that the market expects (Figure 7.5.1), especially in

relation to speeding up deliveries. The integrated model can improve all quality aspects

and increase business performance to outperform competitors and gain more profit for

all stakeholders. These include the company, employees, the government, customers

and society in general. Hence, it can increase the market share for the company,

provide a good quality of work life for employees, comply with government

regulations, provide products of high quality for the customer, and care for the

environment (Figure 7.5.1). To the achievement of a WCM performance, the company

must get rid of all barriers.

The dominant obstacles that need to be solved are as follows: money, type of

employees, the quality and management system (Figure 7.9.2). The benefits of current

company performance are mainly in marketing and safety, but there is still a need to

take better advantage of production, financial, and human resource development

144

(See Figure 8.3.1). This integrated model can assist in achieving these benefits. Firstly,

it is necessary to build up three fundamental practices (Final inspection, GMP, and

HACCP) before extending to other best practices (TPM and TQM).

The integrated model should be utilised by companies in their efforts to achieve best

practices. These efforts are prioritised in the following order: improving work

environment and safety, instilling the need for quality consciousness to employees,

establishing individual performance goals, training and education, providing assistance

to suppliers, communicating common organisational goals across functions, developing

individual initiatives, empowering employee decision making and their participating in

problem solving, encouraging the internal customer concept, and encouraging job

rotation ( Figure 7.9.2 ).

The many frequent and urgent problems that occur in Thai food processing companies

are represented in Figure 7.3.1a, Figure 7.3.1b, Figure 7.3.2a, Figure 7.3.2b, Figure

7.3.3a, Figure 7.3.3b, Figure 7.3.4a and Figure 7.3.4b. Without any best practice, most

of them would be difficult to solve even with advanced technology or outside specialist

technical knowledge. They need to develop an appropriate model of best practices is

aimed at eliminating these problems. Just having government legislation requiring the

installation of GMP and HACCP is insufficient to gain any advantage. There are also

limitations to implementing GMP and HACCP. There needs to be a focus on quality

assurance rather than quality improvement which would result in the protection of

consumer’s health from poor quality foods. Therefore, a new integrated model should

be included in continuous quality improvement, and solving the dominant problem of

machinery breakdown (Figure 7.9.6). The four best practices (GMP, HACCP, TPM, and

TQM) are necessary to obtain WCM performance (Figure 7.9.1). However, some best

practices have the same basic infrastructure, so it is a simple matter of combining them

in order to reduce the implementation period and erase the complexity of some of the

best practices.

Figure 8.3.1 shows the relationship between manufacturing practices and their benefits

when the Chi-Square testing result has a significance of 0.00. Thai food processing

companies that focus on GMP and HACCP can gain higher profits than those that use

145

TPM, TQM and JIT. Hence, GMP and HACCP implementation brings benefits to all

areas.

Manufacturing practices and Benefits

0%

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30%

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45%

50%

GMP HACCP TPM TQM JIT

Manufacturing practices

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Financial

safety

staff

market

product

Figure 8.3.1 Manufacturing Practices and Benefits

In regard to implementing TQM, 18.5% of respondents in the study felt that they gained

benefits from the market, 18.3% felt the same about the product and 13.5% felt the

same staff while only 9% felt this way about safety and 8.1% felt this way about

financial benefits. TPM implementation has assisted companies to gain benefits from

the product (9.2%) rather than other areas (< 6.1%). Only benefits to the product could

be achieved by implementing JIT.

146

Looking at all aspects of business performance, according to the Chi-square testing

(Table 8.3.1), the significant level of every aspect of business performance is less than

0.05; this means that there are relationships between the manufacturing practices and

the business performance levels. The highest percentages among the best performing

companies are also shown to have implemented GMP, HACCP, TQM and TPM. In

relation to performance in aspects of quality and production, the companies that

implemented GMP, HACCP and TQM were more likely to be better performers than

those that implemented GMP, HACCP, TQM and JIT. It can be concluded that adding

JIT to the combination of GMP, HACCP and TQM had no effect in increasing the

business performance of the high achievers.

Accordingly, Hypotheses 2, 3, 6 and 4 can be considered in the light of the relationship

among manufacturing practices. A company’s implementation of a combination of

manufacturing practices gives rise to better performance (70% for all levels of business

performance, except for marketing 50-60%) than those that implement only one

manufacturing practice. In terms of Thai food processing, the combination of HACCP,

GMP, TQM and TPM practices produce a better performance than the implementation

of a combination of HACCP, GMP, TQM without TPM in regard to reducing

manufacturing cost, increasing company reputation and reducing hazards in processing.

It can therefore be concluded that business performance in Thai food processing

companies can be increased by the implementation of a combination of GMP,

HACCP, TPM and TQM strategies.

147

Table 8.3.1 Manufacturing Practices and Business Performance

Among the best (%)

Average (%)

Below average

(%)

Among the worst

(%)

Chi-Square test

level of quality 0 0 0 0 0.00 (sig.) GMP HACCP TQM TPM 91.67 8.33 0 0 GMP HACCP TQM JIT 87.5 2.5 0 0 GMP HACCP TQM 90.74 9.26 0 0 GMP HACCP 13.16 73.68 13.16 0 GMP 50 25 25

level of production 0.00 (sig.) GMP HACCP TQM TPM 83.33 16.67 0 0 GMP HACCP TQM JIT 75.00 25 0 0 GMP HACCP TQM 83.33 16.67 0 0 GMP HACCP 42.11 55.26 2.63 0 GMP 0 75 25 0 level of manufacturing cost 0.00 (Sig.) GMP HACCP TQM TPM 91.67 9.09 0 0 GMP HACCP TQM JIT 75 25 0 0 GMP HACCP TQM 70.37 29.63 0 0 GMP HACCP 31.58 71.43 15.79 0 GMP 50 50 0 Level of production image

0.03699 (Sig.)

GMP HACCP TQM TPM

91.67

8.33

0

0

GMP HACCP TQM JIT 75.00 25 0 0 GMP HACCP TQM 70.37 37.03 0 0 GMP HACCP 52.63 47.37 0 0 GMP 25.00 75.00 0 0 Level of marketing 0.00001 (Sig) GMP HACCP TQM TPM 58.33 41.67 0 0 GMP HACCP TQM JIT 51.85 48.15 0 0 GMP HACCP TQM 50 50 0 0 GMP HACCP 39.47 60.53 0 0 GMP 0 100 0 0

Manufacturing practices

Business performance

148

8.4 Relationship between Industrial Characteristics and

Product and Process Strategies Hypothesis : 7

Various characteristics of the Thai food processing industry (size, registered capacity,

product, process strategy) influence the decision to apply TQM, HACCP, GMP and

TPM.

Item 7: Is the integrated model related to (1) physical characteristics of the industry

(size, registered capacity) and (2) product and process strategy?

Expected Result: (1) Maybe not. Every company can apply this integrated model, and

(2) Yes, because if companies want to respond to radical market changes, they are

looking for an appropriate integrated model to use such as that which relies on process

and product strategies to succeed in competitive situations. This model can help them to

achieve this goal.

It is necessary for any Thai food processing company that is aiming for high business

performance to aim for WCM performance. Most large companies are ready to establish

this integrated model, but small and medium sized companies need to develop the basic

infrastructure aimed at achieving best practice. At the moment, there are only a few

small companies that are implementing TPM and TQM. This is because they need to

develop organisational structures to support this best practice such as cross functional

groups, self control groups and matrix structures, and typical management

characteristics. Moreover, the manufacturing strategies should focus beyond process

and marketing strategies. Production, product and service strategies are necessary to

establish the improvement of organisational performance and building up of the basic

infrastructure for an integrated model.

149

Figure 8.4.1 shows the relationship between manufacturing practices and firm size at a

confidence, (Chi-Square testing; Sig = 0.00). Thai food processing companies, of every

firm size, have focused on GMP, HACCP, and TQM, although there is a variance of

manufacturing practices according to company size. Hence GMP and HACCP are

implemented in small companies rather than medium and large companies. However,

TQM implementation is different from GMP and HACCP because it is implemented in

large rather than medium and small companies, respectively. TPM and JIT are not

implemented in small companies and JIT is not implemented in small and medium

companies. All the large firms have implemented all the manufacturing practices

because large firms are more willing to spend, for instance, on the cost of training.

Company size and Manufacturing practices

0%

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30%

40%

50%

60%

GMP HACCP TQM TPM JIT

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Small

Medium

Large

Figure 8.4.1 Company Size and Manufacturing Practices

150

Figure 8.4.2 shows the relationship between manufacturing practices and turnovers

(Chi-Square testing; Significance, Sig.=0.00) Most Thai food processing companies,

regardless of the size of their profit turnover, have focused on GMP and HACCP. It is

only if the turnover is less than 10 million Baht, that companies cannot implement

TQM. Most Thai food processing companies that have low turnovers (less than 50

million Baht) have focused on GMP rather than HACCP.

In regard to TPM, there is a low percentage of Thai food processing companies which

implement it and have a turnover of more than 50 million Baht (50-100 million Baht,

100-500 million Baht, and more than 500 million Baht). JIT implementation has been

set up in companies, which have a turnover of more than 100 million Baht. (100-500

million Baht and more than 500 million Baht). TQM is more likely to be implemented

in companies that have a turnover of more than 100 million Baht (100-500 million Baht

and more than 500 million Baht). Gilbert (1990) suggested that TPM is associated with

plant size and annual turnover. As expected, plants with a turnover of more than 500

million Baht implement TPM to maintain their expensive equipment.

Manufacturing practice and Turnover

0%

10%

20%

30%

40%

50%

60%

70%

Less than 10 millionBaht

10 - 50 million Baht 50 - 100 million Baht 100 - 500 million Baht More than 500 millionBaht

Manufacturing practices

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HACCP

GMP

TQM

TPM

JIT

Figure 8.4.2 Manufacturing Practices and Turnover

151

According to the results of the Chi-Square test presented, there is no relationship

between manufacturing practices and manufacturing processes at a level of confidence

of 95% (Sig = 0.33). Figure 8.4.3 shows all the manufacturing processes used in the

companies studied that utilise GMP and HACCP. The latter is implemented more in

Thai food processing companies that utilise the project manufacturing process while

only the batch manufacturing process can be implemented by using all of the

manufacturing practices.

In companies that use the continuous process, TPM and JIT are not implemented and

TQM, TPM and JIT are also not implemented in companies that use the project process.

It can therefore be summarised from the above discussion that some characteristics of

the plant may or may not influence the implementation of GMP, HACCP, TPM, JIT and

TQM, depending upon the contextual factors surrounding them. TPM is influenced by

the size and turnover of the company because of the differences in financial capability

to support its implementation.

Manufacturing processes and Manufacturing practices

0%

10%

20%

30%

40%

50%

60%

70%

Continuous Batch Project

Manufacturing processes

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GMP

HACCP

TQM

TPM

JIT

Figure 8.4.3 Manufacturing Process and Manufacturing Practices

152

8.5 Training

Hypothesis : 8

The Thai food processing industry needs an infrastructure of (general ) training to

achieve GMA, HACCP, TPM, JIT, TQM and standards of WCM.

Item 8: The Thai food processing industry needs an infrastructure for training to

achieve this integrated model.

Expected Result: Finding the infrastructure for HR development (training) to succeed in

the implementation of this model (tools and techniques, system, management and

operation activities, etc.). Everyone wants an appropriate variety of training courses

drawn from this integrated model in order to support the various management levels

(top management, middle management, engineers and supervisors). This is also the case

for operational levels (Front line workers) in order to develop their skills, quality

awareness and knowledge that are based on the three aspects of management, technical,

and maintenance training.

Thai food processing companies have numerous problems caused by employees,

management systems, physical organisation, machinery, finances, etc. The new

integrated model should solve these problems. A new management concept, the

provision of maintenance systems, the change of organisational culture, and a good

arrangement of basic infrastructure are needed. Every change needs a response by all

persons in the organisation including top management, middle management, engineers,

supervisors, and front-line operators. Therefore, there is a need to educate and train

employees to understand and have a solid basic technical knowledge. The demand for

training programs has increased for basic and management training more than for

technical or operation training programs. The provision of training for GMP, HACCP,

TPM, and TQM should be related to a variety of training courses of different length and

levels.

153

To achieve a level of industry excellence, basic training is very important for

employees. Figure 8.5 shows an 81% increase in benefits from management training

and 74% for technical and operational training. Basic, management, technical and

operational training are separate in GMP, HACCP , JIT, TPM and TQM. Figure 8.5.1-

8.5.5 show that each level of employees needs a different number of days for training in

each practice.

Training program for companiesthat need to achieve Thai food proceessing industry excellence

6668707274767880828486

Basic Training Management training Technical training Operation training

Perc

enta

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f tra

inin

g pr

ogra

m

Figure 8.5 Training Programs in GMP, HACCP, TPM and TQM that are

necessary for Achieving Thai Food Processing Industry Excellence

154

8.5.1 GMP training Figure 8.5.1a shows two groups with differences in the number of basic training days at

GMP for various levels of management at the following significance level (Sig. 0.05).

The first group has training courses of two to three days duration for engineers,

supervisors, middle management, and front line operators, respectively. The latter group

is made up of top management and the causes are designed for durations of less than

two days.

Figure 8.5.1b shows three groups of technical training course periods for GMP

designed for different management levels and statistically have the following

significance level (Sig. 0.05). The first group has training of more than two days for the

following management levels: supervisors (2.32±0.83), engineers (2.30±0.84), and

middle management (2.00±0.66). The second group is a homogeneous subset made up

of training course periods for middle management (2.00±0.66) and front line operators

(1.72±0.67). The third group of training course periods is for front line operators

(1.72±0.67) and top management (1.44±0.74) and does not differ significantly from the

other two groups.

Figure 8.5.1c shows that three groups of maintenance training course periods for GMP

are designed for different management levels and statistically have the following

significant level (Sig. 0.05). The first group has more than two training days for the

following levels: engineers (2.35±0.77), supervisors (2.20±0.78), and front line

operators (1.87±0.74). The second group is a homogeneous subset that is made up of

training course periods for front line operators (1.87±0.74) and middle management

(1.63±0.53). The final group of training course periods is for middle management

(1.63±0.53) and top management (1.23±0.60) and does not differ significantly.

Figure 8.5.1.d shows that there are no significant differences in management training for

GMP amongst the five management levels at Sig. 0.05. Every management level should

receive this training course for the same length of time around two to three days.

155

Figure 8.5.1 GMP Training Basic training (a)

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8.5.2 HACCP Training

Figure 8.5.2a shows that there were two groups of differences in basic training days for

HACCP for various management levels at the following significance level (Sig. 0.05).

The first group is made up of longer training periods of between two to three days for

courses for the following levels of management: supervisors (2.56±0.77), middle

management (2.31±0.94), and engineers (2.02±0.83), respectively. In the latter group,

some training course periods for management level are in a homogeneous subset with

some from the first group such as middle management and engineers. However, besides

these, there are front line operators (1.81±0.63) and top management (1.79±0.77).

Figure 8.5.2b shows the two groups of technical training course periods for HACCP are

designed for different management levels and statistically have the following

significance level (Sig. 0.05). One training course period for management level

overlapped with others. This was the engineers training course. The first group has a

higher number of training days (more than two), and this was for the following levels of

management; supervisors (2.49±0.64) and engineers (2.09±0.67). The last group is

made up of training courses for engineers, front line operators (1.85±0.69), top

management (1.81±0.65), and middle management (1.65±0.48), respectively.

Figure 8.5.2c shows two groups of maintenance training course periods for HACCP that

are designed for different management levels and statistically have the following

significance level (Sig. 0.05). Most of them are in the homogeneous subset such as

engineers (2.24±0.76), middle management (1.88±0.61), and top management

(1.87±0.77). Besides this, the outstanding training courses in the first group and the last

group are that of supervisors (2.29±0.68) and front line operators (1.87±0.74),

respectively. Figure 8.5.2d shows that there are no significant differences in

management training courses periods for HACCP amongst the five management levels

at Sig. 0.05. Every management level should receive this training course for the same

period of time, i.e. around two to three days.

157

Figure 8.5.2 HACCP Training Basic training (a)

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8.5.3 TPM Training

From figure 8.5.3a it can be concluded that there are no significant differences in basic

training course periods of TPM amongst the five management levels at Sig. 0.05. Every

management level should receive this basic training course.

In figure 8.5.3b it shows that there are no significant differences of technical training

course periods of TPM amongst the five management levels at Sig. 0.05. Every

management level should receive this technical training.

Figure 8.5.3c shows that there are no significant differences of maintenance training

courses of TPM amongst the five management levels at Sig. 0.05. Every management

level should get this maintenance training course.

In figure 8.5.3d shows that there are no significant differences in management training

courses of TPM amongst the five management levels at Sig. 0.05. Every management

level should receive this management training course.

159

Figure 8.5.3 TPM Training Basic training (a)

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8.5.4 TQM Training Figure 8.5.4a shows that there are no significant differences for management training

courses for TQM amongst the five management levels at Sig. 0.05. Every management

level should receive this basic training course.

Figure 8.5.4b shows that the outstanding group of technical training course periods of

TQM for middle management differs from the others, significance at Sig. 0.05. The last

group of training courses is designed for engineers, top management, supervisors, and

front line operators, respectively.

Figure 8.5.4c shows that the three groups of maintenance training courses for TQM are

designed for different management levels and statistically have the following

significance level (Sig. 0.05). The first group with the higher number of training days is

made up of middle management (2.76±0.53) and engineers (2.24±0.71). The

homogeneous subset overlapping the first and second groups is engineers. The second

group are engineers, supervisors (1.72±0.57), and front line operators (1.72±0.57).

There is also overlapping between the second and third groups including supervisors

and front line operators. Apart from this, the outstanding training course in the last

group is the top management course.

Figure 8.5.4d shows that the outstanding management training course for TQM for

middle management is different from the others and statistically has the following

significance level (Sig. 0.05), and is approximately of three to four days duration. The

last group of training courses is approximately between two to three days for engineers,

top management, supervisors, and front line operators, respectively.

161

Figure 8.5.4 TQM Training Basic training (a)

Basic Training of TQM

1.8

1.85

1.9

1.95

2

2.05

2.1

2.15

2.2

2.25

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Technical Training of TQM

0

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Maintenance training (c)

Maintenance Training of TQM

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Management Training of TQM

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162

8.5.5 JIT training For JIT training, there are two groups of basic training courses for various management

levels that have significant differences at Sig. 0.05. Middle management (1.87±0.82),

supervisors (1.57±0.51), and front line operators (1.57±0.51), respectively overlap the

two groups. The outstanding courses of the first and the last group are engineers

(2.10±0.72) and top management (1.40±0.55), respectively.

There are no significant differences for technical training course periods for JIT

amongst the five management levels at Sig. 0.05. Every management level should

receive this technical training course. There are also no significant differences in

maintenance training course periods for JIT amongst the five management levels at Sig.

0.05. Every management level should receive this maintenance training course. There

are no significant differences in management training courses for JIT amongst the five

management levels at Sig. 0.05. Every management level should receive this

management training course.

8.6 Conclusion The eight hypotheses that have been investigated in this chapter are all acceptable. As a

result, further investigations is necessary to relate the findings of the survey of Thai

food processing companies in Chapter 7 to the appropriate integrated Thai food

processing manufacturing strategy model developed in Chapter 4. The next chapter will

discuss this further.

163

Chapter 9

Data Analysis Supporting the Implementation of an

Appropriate Thai Food Processing Manufacturing Strategy

Model

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

trol

P es t

con

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Env i

ronm

ent c

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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

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oduc

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Sugg

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stem

5S &

hou

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SPC

Smal

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Mul

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illed

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s

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ic 7

tool

s

Bra

nist

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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

management, motivation, quality auditing, quality records, document control, effective

meetings, personnel management, and equipment management. Database and

information management are rated as being “very important” rather than “important” by

50% of the Thai food processing companies. However less than 50% of the industry

emphasised as “important” such things as cross functional management, facility

management, daily management, policy deployment, conflict management,

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

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Effe

ctiv

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g

Pers

onne

l man

agem

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agem

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Dat

abas

e &

info

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ion

man

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ent

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anag

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t

Faci

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man

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ly m

anag

emen

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Polic

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ploy

men

t

Con

flict

man

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ent

Ben

chm

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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’

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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.”

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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.

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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.

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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.

Measurement of control system

● ● Preventive maintenance, Inspection and testing product, Equipment management, 5S & housekeeping, Calibration, Facility management, Measurement equipment control, Process control.

Production schedule

● 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.

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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

management, (b) middle management, (c) engineers, (d) supervisors, and (e) front-

line operators.

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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

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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

Step one

1. Establishing the infrastructure practices,

2. Problem solving,

3. Employee involvement & empowerment improvement,

4. Workplace management (5S & housekeeping),

5. Product control,

6. Supplier relationship,

7. Measurement (calibration and equipment control),

8. Document control,

9. Quality audit, safety,

10. Production and other continuous improvement.

Step 1 GMP

Step 5 HACCP

Quality improved /Safety

Step 6 TPM

Equipment effectiveness

Step 7 TQM Quality

improvement

Step 2

Step 3

Step 4

191

Step two

1. Building the relationship between HACCP and TQM implementation,

2. Teamwork,

3. Brainstorming,

4. Conflict management,

5. Cross functional management,

6. Effective communication systems and quality policy.

Step three

1. Building the relationship between HACCP and TPM,

2. Small group activity,

3. Problem solving, 5S activity and housekeeping

4. Poka-yoke technique.

Step four

1. Building the relationship between TQM and TPM,

2. Small group activity,

3. Problem solving,

4. 5S activity and housekeeping,

5. Motivation,

6. Multi-skilled employees.

Step five

1. Extending the implementation of the HACCP system,

2. Hazards analysis,

3. Critical control point (CCP),

4. Managing of CCPs.

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Step six

1. Setting up TPM,

2. Set goals to approach TPM,

3. Commitment from top management and building TPM organisation,

4. Educate and train people,

5. Extending maintenance activities in GMP, from sole responsibility of

maintenance department into company-wide maintenance management,

6. Emphasis preventive maintenance rather than breakdown maintenance,

Encouraging people to participate in total maintenance systems,

7. Start autonomous maintenance (self-maintenance) and implement and

continue improvement of TPM system.

Step seven

1. Setting up TQM,

2 To maintain a whole quality system in an organisation: Continuous

auditing of quality management system of GMP, HACCP and TPM,

3. To use the criteria of a suggested business excellence award (e.g.Malcom

Baldrige National Quality Award),

4. To set goals to approach to TQM commitment by top management and

inform employees,

5. To educate and train everyone into the new culture and new concepts of

management and encourage people to be involved in this system,

6. To investigate quality and any deficiencies of the existing system and work

towards a new system,

7. To extend quality programs in the organisation such as quality attitude,

process intent, internal customer-supplier relationship, continuous

improvement activities, product design, QFD and customer focus (both

internal and external customers),

8. To benchmark business performance with the best companies in order to set

strategic approaches to raise organisational performance to a world-class

WCM performance.

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10.3.1 Extension of GMP Implementation of GMP is intended for the control of hazards. This implementation is

necessary for confirming each process and making sure that every product is safe and

hygienic before being sent to the consumer. This practice emphasises the technical

aspects rather than the management aspects and therefore the company should provide

technical knowledge to employees such as hazard analysis, risk control management,

and hazard control. The importance of this implementation is to educate and train

employees to understand and know about product safety, hygiene, hazard analysis and

control, cleanliness, material control, process control, etc. The frequent practice of 5S

and housekeeping activities is very useful in implementing this.

10.3.2 HACCP Building The HACCP requirement seems to be the manufacturing practice of quality assurance

of all food-processing companies since it is also enforced by government regulation. It

is necessary to implement it as a base for an integrated model. The successful keys to

this implementation should be as follows:

1. Top management commitment

2. Employee involvement

3. Workplace management (5S and housekeeping)

4. SPC and statistic program

5. Supplier relationship

6. Document control

7. Data & information management

8. Material control

9. Measurement control (Calibration & equipment control)

10. Process control

11. Production control

12. Transport control

13. Quality audit

14. Product safety and hygiene

15. Training and Education

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10.3.3 Focus on human aspects by implementing TQM Simply setting the system of quality assurance and increasing technical knowledge is

insufficient to compete in a competitive situation. The key component of the

organisation that is necessary to sustain this quality system and upgrade its potential is

to enforce the quality culture to involve everyone in the organisation. Therefore, the

next necessary program is TQM which focuses on employees with the aim to create

synergy in every sector and to make every person within the organisation participate in

a continuous quality improvement program. This program can be assisted by the

following management tools and techniques:

1. Training and education,

2. Cross function management,

3. Effective communication systems,

4. Policy deployment,

5. Conflict management,

6. Teamwork,

7. Motivation & reward system,

8. Brainstorming,

9. Problem solving,

10. Small group activity,

11. Kaizen activity.

10.3.4 Focus on effective equipment management by implementing TPM In process control, equipment is very important in producing either a quality or

defective product. It is therefore necessary to maintain a full working capacity for a

sustained length of time. The efficiency and effectiveness of equipment results from

employees taking care of machinery as part of the maintenance management system.

Hence, the TPM implementation program should focus on developing HR and installing

maintenance systems. Implementation of TQM assists in changing employee attitudes

about quality and participating in a quality culture which focuses on a continuous

improvement program. However, it is not enough to manage equipment effectively.

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There should be more focus on activities regarding maintenance aspects, such as self

maintenance, TPM activity, period maintenance, corrective maintenance, multi-skilled

employees, etc. The 5S and housekeeping activities are also very important in the

inspection and maintenance of cleanliness of equipment.

10.3.5 Selected tools and techniques to use in the model There are various useful tools and techniques available to Thai food processing

companies. They are aimed at assisting the implementation of successful manufacturing

practices. Figure 10.3.5 shows how these tools and techniques are related to

manufacturing practices in this model.

10.4 Training Courses In order to implement this model, many job levels will require training in all of

manufacturing practices such as GMP, HACCP, TPM and TQM. All Thai food-

companies need short training courses (3 days, 3 times per year). Supervisors are

expected to train for a longer period than other employees. There should be separate

basic training and maintenance training courses divided into the following four groups:

1. Basic training courses: GMP and HACCP (2-3 days, 3 times per year) and

TQM and TPM (2 days, 3 times per year);

2. Maintenance training courses: GMP, HACCP, and TPM (2–3 days, 3 times

per year), and TQM (2 days, 3 times per year );

3. Technical training course: GMP, HACCP, TQM and TPM (2-3days, 3 times

per year );

4. Management training course: GMP, HACCP, TQM and TPM (2 days, 3 times

per year ).

The design of any courses needs an appropriate period of time, focusing on one that is

appropriate to the job position. (Table 10.4.1).

196

Figure 10.3.5 Tools and Techniques for the Appropriate Thai Food Processing

Industry Manufacturing Strategy Model

GMP

HACCP Quality improved

/Safety TPM Equipment effectiveness

TQM Quality improvement

1

2

3

4

5 6

7

Teamwork, Brainstorming, Conflict management, Cross functional management, Effective communication system, Quality policy Supplier long-term contract

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

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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.

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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

A used informal management characteristics.

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Table 10.5.3.1a Basic Infrastructures (Organisation Structures)

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

A BC

Cross functional groups for problem solving A BC

Table 10.5.3.1b Basic Infrastructures (Management Characteristics)

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

system, Advanced technology, Customer relationship, Product

service, Maintenance system, Quality system, Equipment

management, Research and development units, and Marketing and

selling.

10.5.3.2 Benefits of manufacturing practices According to market manufacturing strategies that are used in Company A, they

produce only an average result with lower performance compared with Company B

which produces a good result, while Company C produces an excellent one. All

business performance levels in Company A are average, but most business performance

levels in Companies B and C are amongst the best such as, overall quality, productivity,

delivery performance, manufacturing cost, continuous improvement activities, and

human resource development. There are some business performance levels in which

Company C is amongst the best but Company B is only average in, such as flexibility,

overall company reputation, product image, market share, advanced technology, and

research and development of product. The percentage of benefits in Company C is very

high (75% – 100%) in all aspects. Company B has a very high percentage of benefits in

the aspects of staff, safety, and product but around 50 - 75% in finance and marketing.

In regard to finance and marketing, Company A achieves only 25 – 50 % in benefits.

However, it achieves 50 – 75% in aspects of staff, safety, and production.

10.5.3.3 Tools and techniques Tools and techniques that are used in every company are different. Most tools and

techniques are very powerful in all companies such as the seven basic tools, SPC,

effective meeting, small group improvement activities, motivation, 5S and

housekeeping, plant layout, facilities management, suggestion system, calibration,

measurement equipment control, production control, material control, process control,

packaging and storage, pest control, transport control, document control, quality

records, quality audit, hazard analysis, environmental control, personnel hygiene,

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

210

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

213

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.

215

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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246

Appendix A

Thai Industry clarification and Main statistic

A-1 Type of Industry in Thailand by ISIC 1.Agriculture, forestry & fishery 1110 Agriculture & Livestock 1301 Ocean & coastal fishing 1120 Agriculture services 1302 Fishing n.e.c. 1210 Forestry 2. Oil exploration & mining 2.1 2200 Oil exploration 2.2 Mining and quarrying 2301 Iron ore mining 2902 Chemical & fertilizer 2302 Non-ferrous ore mining 2909 Mining & quarrying 2901 Stone, clay &sand pits 3. Manufacturing 3.1 Processed food

3111 Meat products 3117 Bakery products 3112 Dairy products 3118 Sugar factories & refineries 3113 Canning & preserving of fruits and vegetables

3119 Confectioneries

3114 Canning & preserving of sea- food 3121 Food products 3115 Vegetable &animal oil and fats 3122 Prepared animal feeds 3116 Grain mill products 3.2 Tobacco and beverages 3131 Distilling & rectifying spirits 3140 Tobacco manufacturing 3134 Soft drink 3.3 Construction materials 3691 Structural clay products 3696 Non-metallic mineral products 3692 Cement, lime and plaster 3.4 Intermediate product I 3110 Processed agricultural products 3620 Glass & glass products 3215 Cordage, rope and twine 3710,12 Iron & steel, basic industry 3311 Sawmill, planing 3720 Non-ferrous metal 3513 Synthetic resins 3819 Fabricated metal except machinery,

n.e.c. 3530 Petroleum refineries 3839 Electrical apparatus and supplies,

n.e.c. 3540 Miscellaneous petroleum products

247

3.5 Intermediate product II 3219 Textile fabric, threads and yarn 3529 Chemical products n.e.c. 3231 Manufacturing of textiles, n.e.c. 3551 Tire and tube 3311 Sawmills, wood products 3559 Rubber products n.e.c. 3312 Wood & cane, containers 3560 Plastic products n.e.c. 3319 Wood & cork products n.e.c. 3710 Iron & steel (rolled steel) 3411 Pulp, paper & paperboard 3720 Non-ferrous metal casting 3412 Paper containers & boxes 3813 Structural metal products 3419 Paper products n.e.c. except for customer use

3819 Fabricated metal products, wire and cable

3511 Basic industrial chemicals 3512 Fertilizer & pesticides 3.6 Consumer nondurables 3212 Made-up textiles, except wearing apparel

3522 Drugs and medicines

3213 Knitting mills 3523 Soap, cosmetics & other toilet preparation

3214 Carpets and rugs 3610 Pottery & earthenware 3220 Wearing apparel, expect footwear 3811 Cutlery, hand- tools & general

hardware 3233 Leather products 3852 Optical goods 3240 Footwear 3901 Jewelry & related article 3419 Paper products, for consumer use 3902 Musical instruments 3420 Printing & publishing 3909 Manufacturing industries n.e.c. 3.7 Consumer durables 3320 Furniture & fixtures, except primarily of metal

3833 Electrical appliances & housewares

3829 Refrigerating & air condition equipment

3853 Watches and clocks

3832 Radio. Television, and communication equipment

3.8 Machinery and equipment 3821 Engines & turbines 3829 Machinery & equipment n.e.c. 3822 Agricultural machinery & housewares

3831 Electrical industrial machinery & apparatus

3824 Special industrial machinery & equipment

3851 Professional & equipment

3925 Office, computing & accounting machinery

248

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

1 Agricultural 22./242 15/140 18./230 16./121 14./45 13/.83 23./166

2 Construction 35./478 30/276 52./418 23./227 28./318 20./200 41./530

3 Food and Beverage 14./189 5./27 6./121 4./31 5./78 3./217 12./482

4 Wood and Furniture 26./409 23/355 23./254 15./127 19./194 15./697 28./327

5 Textile 5./242 1./9 4./91 1./12 4./1,587 4./325 9./2,272

6 Chemical and Plastics 6./242 4./694./24 4./200 4./38 5./124 1./14 2./65

7 Metallic and 8./81 4./69 5./38 5./77 1./9 15./246 6./84

Non Metallic Product

8 Service 42./628 31./3,510 32./2,241 21./475 16./121 25./377 28./264

9 Other Products 9./253 6./1,883 4./74 4./236 1./51 9./249 6./698

Total 167./ 2,764

119/ 6,293

148/ 3,667

93/1,343 93/2,527 105/2,408 188/4,888

Total = 913/23,891

A-2.2 Figure 2.5.1: Thailand’s Import Product Unit : Million Bath Year Total Products

Mineral &Fuel

Capital Raw Material

Automobile Other

1990 852,981.5 79,153.8 330,893.8 304,131.5 59,100.9 19,827.1

1991 959,408.0 88,679.3 379,193.3 351,410.4 51,489.7 21,458.4

1992 1,033,244.7 84,734.9 418,035.6 360,408.7 63,249.5 24,529.7

1993 1,170,846.4 87,519.0 493,535.6 380,480.0 88,884.4 28,775.0

1994 1,369,260.4 93,136.2 603,381.1 435,732.1 102,354.9 19,509.6

1995 1,763,591.3 119,077.0 787,782.3 561,190.6 131,343.0 21,658.0

1996 1,832,825.2 160,587.8 832,156.6 530,144.9 123,255.1 35,632.9

1997 1,924,263.1 178,285.3 925,832.2 552,466.5 67,319.5 39,611.1

1998 1,774,066.4 142,117.3 886,530.2 535,801.2 18,896.4 36,195.1

1999 1,907,390.6 183,433.5 901,536.4 574,307.2 50,443.4 37,957.1

2000 (Jun.-July.)

1,306,962.1 149,826.7 594,257.5 399,108.0 43,947.3 14,443.8

250

Figure 2.6.1 Net foreign Investment Flow in the Thai Electrical/Electronic Sector Classified according to Country

Country 1993 1994 1995 Japan 7.3102 7.0408 12.455 Hong Kong 4.3202 6.3638 6.3432 Taiwan 1.2394 2.2202 2.5798 USA 5.0885 3.5217 6.3321 Europe 3.5678 2.4180 3.0248 ASEAN 1.0166 1.5979 4.0936 Others 9.8363 5.6686 9.8255

Total 34.915 31.3680 47.192 A-2.4 Table 2.12.1: Trade Balance of Thai Electrical/Electronics Products

(Unit : Million Baht)

Year Export Import Net Profit

1995 433,079.9 410,316.2 22,763.7

1996 487,266.8 428,527.6 58,739.2

1997 601,151.4 518,082.2 82,024

1998 791,462.1 555,127.4 236,334.7

1999 798,780.7 548,244.6 250,536.1

A-2.5 Table 2.12.1: Trade Balance of Thai Agriculture Manufacturing Industry Products

(Unit : Million Baht)

Year Export 1995 794,880.90 1996 667,383.70 1997 806,782.30 1998 987,123.60 1999 941,752.30

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

Faculty of Engineering

1. ขอมลูทัว่ไป (General Information) ปท่ีเริ่มทาํการ :……………………………………………..

(Year of Factory Establishment) 1.1 ทุนจดทะเบียน ………………………………… บาท

(Registered capital) 1.2 รายไดเฉลี่ยตอป : ……………………………….บาท/ป

(Average Capital income) 1.3 ประเภทของธุรกิจType of Business

( ) เจาของกิจการ (Single proprietorship) ( ) หางหุนสวน (Partnership) ( ) หางหุนสวนจํากัด (Limited partnership) ( ) บริษัท (Company Limited) ( ) อ่ืนๆ (Others Identify)

1.4 ประเภทของโรงงาน (Type of products manufactured ) 1.……………………………………………………………………………… 2.………………………………………………………………………………

3.……………………………………………………………………………… 4.………………………………………………………………………………

1.5 ในระยะชวงเวลา 3 ปท่ีผานมา ผลติภัณฑอะไร คือ ผลิตภัณฑหลักของบริษัททาน

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)) ………………………………………………………………………………………

2 ขอมลูของพนกังาน (Employees) 2.1 จํานวนของพนักงาน (Number of employees) เพศชาย(Male) เพศหญิง(Female) รวมทั้งหมด(Total)

253

ไมมีทักษะ (Unskilled workers)

มีทักษะ (Skilled workers)

แรงงานชั่วคาว (Temporary worker)

ผูจัดการ (Managers)

2.2 ระดับการศึกษา (Level of education of workers) ตําแหนง (Position) ระดับการศึกษา (Education Level/ Qualification) ผูจัดการ (Manager) หัวหนาคนงาน(Chief/Forman) คนงาน (Worker) 2.3 พนังงานของทานไดรับการฝกอบรมทักษะทางเทคนิค ในชวงระยะเวลา3ปหรือไม?

(Did your employees receive technical training during the past 3 years? , If yes , Title of the training) ( ) เคย (Yes) ( ) ไมเคย (No)

ถาเคย หัวขอที่ไดรับการฝกอบรม 1. …………………………………………………………………………..…..

2. ……………………………………………………………………………… 3. ………………………………………………………………………………

4. …………………………………………………………………………….... 2.4 ทานคิดวา อะไรคือ4 ปญหาหลักของพนักงานของทาน

(Please list the 4 main problem with your employees) 1.…………………………………………………………………………….….

2…..……………………………………………………………………….…… 3…………………………………………………………………………………

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 ?)

( ) เคย (Yes) ( ) ไมเคย(No) 1…….………………………………………………………………………… 2.……………………………………………………………………………… 3.……………………………………………………………………………… 4.………………………………………………………………………………

254

3.3 บริษัท/โรงงานของทาน เคยใชระบบปฎิบัติการตอไปน้ีหรือไม ? (Does your factory practice any of the following?) ใช (Yes ) ไมใช (No) 5 S ( ) ( ) Kaizen ( ) ( ) Total Quality Management (TQM) ( ) ( ) Just In Time (JIT) ( ) ( ) Total Productive Maintenance (TPM) ( ) ( ) ISO 9000 ( ) ( ) อ่ืนๆ (Other),…………………………………………………………..…………………… 3.4 บริษัท/โรงงานของทานมีการทดสอบคุณภาพผลติภันฑขั้นสุดทายหรือไม?, ถามีกรุณาระบุ ระบบอะไรที่ทานใช (Does your factory test finished product quality, If yes, How ?) ( ) มี (Yes) ( ) ไมมี (No)

1.……………………………………………………………………………….…

2. …………………………………………………………………………………. 3. …………………………………………………………………………………. 4. …………………………………………………………………………………. 3.5 บริษัท/โรงานของทานมีปญหาเรื่องคุณภาพของสินคาหรือไม ถามีอะไรคือปญหาของทาน?

(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)

255

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

256

( ) ใชYes ,………………………………………………….. ( ) ไมใช No 4.2 อะไรคือส่ิงที่คิดวาเปนภยัคุกครามตอบริษัทของทานในระยะ3ปขางหนา? (What do you see as the major threats to your company over the next 3 years?)

1. ………………………………………………………………………………… 2. ………………………………………………………………………………… 3. ………………………………………………………………………………… 4. …………………………………………………………………………………

4.3 ทานจะพฒันาอยางไรที่จะทําใหบริษัทของทานดีขึ้นในชวงระยะเวลา3ปขางหนา? (How could your company’s performance to improved over the next 3 years ?)

1.…………………………………………………………………………………… 2. ………………………………………………………………………………… 3. …………………………………………………………………………………

Thank you for your cooperation

257

Appendix D

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

258

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

Management characteristics Management characteristics 1 2 3

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

100:0 Value-adding operations Non-Value adding operations

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

259

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)

( ) overall quality ( ) productivity ( ) delivery performance ( ) manufacturing cost ( ) flexibility ( ) overall company reputation ( ) product image ( ) market share ( ) advanced technology ( ) continuous improvement activities ( ) human resource development ( ) research & development product

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.

261

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)

Manufacturing practice/Year 2002 2001 2000 Earlier (state) GMP HACCP JIT TPM TQM

3.2b What percentage of benefit has this had on your company performance? (Please tick one for each section of benefit)

Section of benefit None 0 – 25% 25- 50% 50-75% 75-100 %

Financial Marketing

Staff Safety

Production

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

262

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)

( ) GMP ( ) HACCP ( ) JIT ( ) TPM ( ) TQM ( ) Other, specify………………….……………..( ) None

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)

1) Item no. .…., 2) Item no. …., 3) Item no. ……., 4) Item no. …..., 5) Item no. ……

263

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

264

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)

265

( ) 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)

( ) Money, …………………………………………………………………………………….. ( ) Organization (size, structure), …………………………….………………………………. ( ) Inside communication, ……………………………………………………………………. ( ) Employees, …………………………………………………………………………...……. ( ) Management system, ……………………………………………………………………… ( ) Information management, ………………………………………………………………… ( ) Management level, ……………………………………………………………………… ( ) Maintenance system, ………………………………………….………………………… ( ) Quality system, ………………………………………………………………….…… ( ) Customer contract, ………………………………………….………………………… ( ) Production system, ……………………………………………………………………. ( ) Technology, …………………………………………………………………………… ( ) Research and development unit, ……………………………………………………… ( ) Suppliers, ………………………………………………………… ………………….. ( ) From external factors, ……………………………………..…………………………… ( ) Other, specify …………………………………………….…………………………… ( ) None

4. Benefits

266

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

267

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

268

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 ********

269

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

270

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

271

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

272

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

274

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

Observed

Never heard

Heard

Familiar understand

Applying it now Total

GMP 0 0 0 120 120 HACCP 0 0 0 115 115 JIT 0 44 12 8 64 TPM 8 72 14 12 106 TQM 0 67 34 20 121

total 8 183 60 275 526

Expected Never heard Heard

Familiar understand

Applying it now

GMP 2 42 14 63 HACCP 2 40 13 60 JIT 1 22 7 33 TPM 2 37 12 55 TQM 2 42 14 63

Applying it now

Familiar understand

Heard

Never heard

GMP 100.0 0.0 0.0 0.0 HACCP 100.0 0.0 0.0 0.0 TQM 16.5 28.1 55.4 0.0 JIT 12.5 18.8 68.8 0.0 TPM 11.3 13.2 67.9 7.5

277

E1.9 Figure 7.7.3 Current implementation of practices Chi Square test (significant) = 0.00 (Significant) Relationship between manufacturing practices and implementation

Observed

Yes, implementing

No, but have future plan

No, without future plan

Total

GMP 95 0 0 95 HACCP 95 0 0 95 JIT 8 12 48 68 TPM 12 53 8 73 TQM 20 64 4 88

Total 230 129 60 419

Expected

Yes, implementing

No, but have future plan

No, without future plan

Total

GMP 52 29 14 95 HACCP 52 29 14 95 JIT 37 21 10 68 TPM 40 22 10 73 TQM 48 27 13 88

Total 230 129 60 419

Yes, implementing

No, but have future plan

No, without future plan

GMP 100.0 0.0 0.0 HACCP 100.0 0.0 0.0 TQM 22.7 72.7 4.5 TPM 16.4 72.6 11.0 JIT 11.8 17.6 70.6

Manufacturing practices which are not implemented

0

10

20

30

40

50

60

70

80

90

100

JIT TPM TQM GMP HACCP

Manufacturing practices

Perc

entage

of r

espo

nden

t

278

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

Observed 25-50% 50-75% 75-100% Total Financial 0 24 61 85 Marketing 0 10 81 91 Staff 10 50 24 84 Safety 2 7 86 95 Production 1 18 72 91

total 13 109 324 446 Expected 25-50% 50-75% 75-100% Total Financial 2 21 62 85 Marketing 3 22 66 91 Staff 2 21 61 84 Safety 3 23 69 95 Production 3 22 66 91

total 13 109 324 446

75-100% 50-75% 25-50% Safety 90.5 7.4 2.1 Marketing 89.0 11.0 0.0 Production 79.1 19.8 1.1 Financial 71.8 28.2 0.0 Staff 28.6 59.5 11.9

279

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

Customer 90.7 90.7 3.2 7.4 1.9

Market 96.3 96.3 3.4 7.9 2.0

Company policy 108.5 108.5 3.9 8.9 2.2

HACCP GMP TPM TQM JIT Government 50.0% 50.0% 0.0% 0.0% 0.0% Customer 50.0% 50.0% 0.0% 0.0% 0.0% Market 46.6% 46.6% 1.0% 5.8% 0.0% Company policy 41.4% 41.4% 5.2% 8.6% 3.4%

Note : Used Excel to Chi-square testing

282

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

Observed - Benefit & Practice GMP HACCP TPM TQM JIT Total Financial 85 85 12 16 0 198 market 91 91 12 44 0 238 staff 84 84 11 28 0 207 safety 95 95 12 20 0 222 product 91 91 24 48 8 262

Total 446 446 71 156 8 1127

Expected GMP HACCP TPM TQM JIT Financial 78.4 78.4 12.5 27.4 1.4 market 94.2 94.2 15.0 32.9 1.7

staff 81.9 81.9 13.0 28.7 1.5

safety 87.9 87.9 14.0 30.7 1.6

product 103.7 103.7 16.5 36.3 1.9

GMP HACCP TPM TQM JIT Financial 42.9% 42.9% 6.1% 8.1% 0.0% safety 42.8% 42.8% 5.4% 9.0% 0.0% staff 40.6% 40.6% 5.3% 13.5% 0.0% market 38.2% 38.2% 5.0% 18.5% 0.0% product 34.7% 34.7% 9.2% 18.3% 3.1%

284

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

Observed - Basic tools

Unimportant

Important

Very important

Total

Basic 7 tools 0 32 78 110 SPC 0 30 81 111 PDCA cycle 3 22 77 102 Brainstorming 1 33 80 114 Multi-skilled employees 3 28 77 108 Small group improvement activity 2 27 74 103 QCC 1 20 77 98 Poka-yoke 7 28 49 84 Inspection and testing product 1 26 80 107 5S & housekeeping 0 27 77 104 Suggestion system 1 24 73 98

total 19 297 823 1139

Expected Unimportant

Important

Very

important Basic 7 tools 1.8 28.7 79.5 SPC 1.9 28.9 80.2 PDCA cycle 1.7 26.6 73.7 Brainstorming 1.9 29.7 82.4 Multi-skilled employees 1.8 28.2 78.0 Small group improvement activity 1.7 26.9 74.4 QCC 1.6 25.6 70.8 Poka-yoke 1.4 21.9 60.7 Inspection and testing product 1.8 27.9 77.3 5S & housekeeping 1.7 27.1 75.1 Suggestion system 1.6 25.6 70.8

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

Observed - Management tools

Unimportant

Important

Very important

Total

Effective meeting 1 30 38 69 Human resource development 0 23 67 90 Personnel management 4 30 39 73 Motivation 1 20 58 79 Conflict management 1 30 36 67 Database & information management 5 36 37 78 Daily management 4 40 38 82 Facility management 3 40 43 86 Project management 2 44 32 78 Cross functional management 2 39 37 78 Policy deployment 4 44 40 88 Equipment management 2 40 48 90 Benchmarking 2 45 35 82 Document control 2 35 59 96 Quality records 2 31 60 93 Quality audit 2 30 62 94

Total 37 557 729 1323

Expected

Unimportant

Important

Very important

Effective meeting 1.9 29.0 37.9 Human resource development 2.5 37.8 49.5 Personnel management 2.6 30.7 40.1 Motivation 2.2 33.2 43.4 Conflict management 1.9 28.1 36.8 Database & information management 2.2 32.8 42.9 Daily management 2.3 34.4 45.1 Facility management 2.4 36.1 47.3 Project management 2.2 32.8 42.9 Cross functional management 2.2 32.8 42.9 Policy deployment 2.5 37.0 48.4 Equipment management 2.5 37.8 49.5 Benchmarking 2.3 34.4 45.1 Document control 2.7 40.3 52.8 Quality records 2.6 40.3 52.8 Quality audit 2.6 39.5 51.7

296

E3.4 Figure 9.4.4 Management tools and techniques and the degree of importance

Expected

Very important

Important

Unimportant

Human resource development 74.4 25.6 0.0 Motivation 73.4 25.3 1.3 Quality audit 66.0 31.9 2.1 Quality records 64.5 33.3 2.2 Document control 61.5 36.5 2.1 Effective meeting 55.1 43.5 1.4 Personnel management 53.4 41.1 5.5 Equipment management 53.3 44.4 2.2 Database & information management 47.4 46.2 6.4 Cross functional management 47.4 50.0 2.6 Facility management 46.5 50.0 3.5 Daily management 46.3 48.8 4.9 Policy deployment 45.5 50.0 4.5 Conflict management 44.8 53.7 1.5 Benchmarking 42.7 54.9 2.4 Project management 41.0 56.4 2.6

297

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

Observed - Management tools

Unimportant

Important

Very important

Total

Effective meeting 1 30 38 69 Human resource development 0 23 67 90 Personnel management 4 30 39 73 Motivation 1 20 58 79 Conflict management 1 30 36 67 Database & information management 5 36 37 78 Daily management 4 40 38 82 Facility management 3 40 43 86 Project management 2 44 32 78 Cross functional management 2 39 37 78 Policy deployment 4 44 40 88 Equipment management 2 40 48 90 Benchmarking 2 45 35 82 Document control 2 35 59 96 Quality records 2 31 60 93 Quality audit 2 30 62 94

total 37 557 729 1323 Expected

Unimportant

Important

Very important

Effective meeting 1.9 29.0 37.9 Human resource development 2.5 37.8 49.5 Personnel management 2.6 30.7 40.1 Motivation 2.2 33.2 43.4 Conflict management 1.9 28.1 36.8 Database & information management 2.2 32.8 42.9 Daily management 2.3 34.4 45.1 Facility management 2.4 36.1 47.3 Project management 2.2 32.8 42.9 Cross functional management 2.2 32.8 42.9 Policy deployment 2.5 37.0 48.4 Equipment management 2.5 37.8 49.5 Benchmarking 2.3 34.4 45.1 Document control 2.7 40.3 52.8 Quality records 2.6 40.3 52.8 Quality audit 2.6 39.5 51.7