PROJECT REPORT TOTAL QUALITY M ANAGEMENT SECTION B

SUBMITTED TO:

SIR ARSALAN ZAHID

SUBMITTED BY:

ARSHIA ANJUM M. WAQAS ZAKI MALIK M. JAHANZAIB SHAIKH M. ZUBAIR SHEIKH FAROOQ JAMIL SUFYAN ALI

SP08-BB-0025 SP08-BB-0056 SP08-BB-0059 SP08-BB-0107 FA08-BB-0071 SP08-BB-0116

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ACKNOWLEDGEMENT

First of all, we as a group would like to thanks Allah Almighty whom mercies are always be there on us in every deed and every step, Our Parents whom supports were very encouraging for us throughout this project.

Through this acknowledgement we want to have the opportunity to thank the following personalities, because without their help or guide we wont be able to complete the project in such an emphatic manner;

y

Mr. Arsalan Zahid, Our Course In-charge, for his help and support to us he provided in the hard times.

y

Mr. Adeel Siddiqui, Deputy Manager Quality Control Department in Indus Motor Company, whom support enables us to get information regarding our project.

All the staff member of the Indus Motor, who helped us directly and indirectly in completion of the project.

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Table of ContentsEXECUTIVE SUMMARY ................................................................................................. 5 PRINCIPLE 3 ................................................................................................................... 7 USE PULL SYSTEMS TO AVOID OVERPRODUCTION .......................................... 7 SUMMARY ................................................................................................................ 7 PRINCIPLE 4 ................................................................................................................... 8 LEVEL OUT THE WORKLOAD (HEIJUNKA) ............................................................ 8 SUMMARY ................................................................................................................ 8 INTRODUCTION ........................................................................................................... 10 INDUS MOTOR COMPANY ....................................................................................... 10 VISION STATEMENT ............................................................................................. 10 CONCERN BEYOND CARS ...................................................................................... 11 CORPORATE SOCIAL RESPONSIBILITY ............................................................. 11 CSR INITIATIVES ................................................................................................... 12 PRODUCTS ............................................................................................................... 12 SWOT ANALYSIS ......................................................................................................... 13 IMPORTANCE OF KANBAN SYSTEM IN THE ORGANIZATION ................................ 14 ADVANTAGES ........................................................................................................... 14 IMPORTANCE OF LEVELOUT WORKLOAD IN THE ORGANIZATION ...................... 15 KANBAN SYSTEM IN INDUS MOTOR ......................................................................... 16 ORDER ...................................................................................................................... 16 PLANNING OF ORDER PROCESSING .................................................................... 16 CHECKING THE SPECIFICATION IN THE WAREHOUSE: ...................................... 17 SUPPLIERS ............................................................................................................... 18 QUARANTINNE AREA .............................................................................................. 19 ASSEMBLING ............................................................................................................ 20 CUSTOMER ............................................................................................................... 20 HEIJUNKA IN INDUS MOTOR COMPANY ................................................................... 21 MUDA ......................................................................................................................... 21 MURI (OVERBURDENING PEOPLE OR EQUIPMENT) ........................................... 23 MURA (UNEVENNESS) ............................................................................................. 23

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RECOMMENDATION .................................................................................................... 24 REFERENCE ................................................................................................................ 25 QUESTIONNAIRE ......................................................................................................... 26

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EXECUTIVE SUMMARYThe report is basically divided into two parts: the first part is about the Kanban system in Indus motors. The second part focuses on the elimination of the 3 Ms in Indus Motors. The research activity is about the detail system of Kanban technique in Indus Motor Company. The Kanban leads to dramatically reduced inventory as you only make product when required. It highlights other issues in your manufacturing process as the work in progress levels are reduced. It makes you more responsive to your customers internal and external and ultimately will reduce your costs. The customer gives the order to the dealers that what is required by him. The order is put into operational form after the two weeks of getting the order i.e. one week for getting the material from the suppliers as they are purely dealing with customers demand and the other week is for the assembling the product. The company then identify what is needed for the assembling the product. They collaborate wit their suppliers, they have good relation with the suppliers and they give 6 days to complete the orders and get the material on the time. The received material is then put in the quarantine area where they check the specification and the quality material required. If the material is up to the mark then it will then send to the respective warehouse as they have different warehouse for different materials. If the material is not up to the mark then there are two ways to deal with it: the first one is that if the material is rework able then the employees rework on it and then that material can be used afterwards and if the material is not rework able then it will be send back to the suppliers. They do no run the order if there is less than 80% material available. The raw material is present in that assembly line to be able to make product without any stoppages. All the assembly line employees know what to make and in what quantity it should be made. The car begin to assemble will be ended up when the whole car is ready. They do not stop or wait to assemble the car all at the same time. The production has been done in the 2nd week of the 2 weeks planning. They try to finish the production in less than 1 week so that they can overcome any situational factors of the city. Then the products transfer to the customer.

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The second research activity is to study the Heijunka in Indus Motor Company. The 3 Ms: Muda is the non value added activities. The advantages include: no over production, low defects, inventory, waiting, unnecessary motion and transportation. Muri is the overburdening people and equipment. The advantages include: no over utilization of equipments, can get the material made from the full potential of the human and machineries. Mura is like unevenness of production schedule due to internal problems like downtime. There are tracks allotted that decreases the unnecessary motion of the employees that decreases the process time.

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CASE STUDY

PRINCIPLE 3USE PULL SYSTEMS TO AVOID OVERPRODUCTION SUMMARYThe inventory push system is an inventory management system in which the company does not know that the retailer needs the product in a specified quantity identified through the buying pattern of the customer. In this way, the retailer has to hold the bulk of inventory. The inventory pull system is a system in which actual demand is seen and then based on that data; the retailer will tell company to give the specified quantity. In this way, the retailer does not have the burden of bulk inventory. Toyota has started thinking in terms of pulling inventory based on immediate customer demand, rather than using a push system that anticipates customer demands. Pull means that giving customer the authority what he wants, when he wants it and the amount he wants. The Toyota is not a zero inventory system. It relies on stores of materials that are replenished using pull system. Taiichi Ohno recognized that inventory is necessary for smooth flow but it can ultimately create pile of inventory. Push system runs on the projected customer demand. But if the demand changes then schedule will be of no use. He decided to create a signal that the assembly line had used the parts and needed more. He used Kanban i.e. signal of some kind (in the form of sign, signboard, posters etc.). Sending back an empty bin is basically a signal to refill it with specified quantity and send back with detailed information regarding the part and its location. Not only Toyota but throughout the world companies are using Kanban system. Not everything can be replenished based on a pull system; something must be scheduled like high end products. In Toyota, a material handler will come on a timed route and pick it up and go back to a store to replenish what is used. The process of internal and external pull is that factory sends the empty containers to the supplier to get refill. The store is using a Kanban system, when the parts are replenish by sending a Kanban and an empty container back to the production cell. Materials then send to the customer and information is backward in nature.

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Kanban is easy to use it to force improvement in production system. Toyota used push system in some way like scheduling of order everyday instead of ordering once in a month. But in this scheduling, Toyota works to make lead times as short as possible. Pull system can effectively be used in the office to save money and help avoid shortage of supplies.

CASE STUDY

PRINCIPLE 4LEVEL OUT THE WORKLOAD (HEIJUNKA) SUMMARYCustomers are not predictable and actual orders vary significantly. If the company build product as it is ordered, this will lead to building huge quantities one week, using labor on overtime basis, over utilizing the machineries but next time if orders are light, those labor will have little to do and machines will be underutilized. In this situation, accumulate orders and level the schedule, it will lessen the production lead time, cut the parts inventories, shorter lead time to customers and ultimately satisfaction of customers. Toyota refers to the elimination of the 3 Ms: Muda, Muri and Mura. Muda is the non value added activities leads to lengthen the time, like extra movement of material from factory to the production cell. Muri is the overburdening people and equipment that causes quality and breakdowns of system. Mura is like unevenness of production schedule due to internal problems like downtime. Muda is the only approach to implement lean tools because it is easy to identify and eliminate the waste. Toyota has given the concept of Heijunka, leveling out the work schedule. It is fundamental to eliminate Muda and Muri. Level scheduled production is the production emphasis on the equally level out the production to the whole time span. Unlevel scheduled production works on daily customer demands, i.e. what is required on that specific day. It has some disadvantages like if customer unexpectedly decides to buy an unusually large numbers of products when there is no production of that product. If the company does not sell all the products on the given tie of schedule, leads to pile up inventory that costs high.

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The schedule defines to use high labor on one day, and lesson the other day. This will lead to unbalanced use of resources, ultimately to potentially Muda and Muri. The company placed high uneven demand to the supplier. Sometime the raw material is required in high quantity without any prior notice. So, suppliers should be built some inventories for the rainy days, this will lead to bullwhip effect. The benefit of leveling the schedule is that it will reduce the plants inventory and its associated problems. The cost will be vanishing of owning and storing of inventory because the organization makes only what the customers orders. The level schedule leads to level the usage of resources. The demand from organization is smooth out to the organizations supplier. Leveling the schedule to plan the detail of production and standardized work practices. Heijunka can be easily applied in service industry too. It fits the customer demands into leveled schedule like every doctor has pre-specified time to check the patients. They establish standard time for delivering different types of service.

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INTRODUCTIONINDUS MOTOR COMPANYIndus Motor Company (IMC) is a joint venture between the House of Habib, Toyota Motor Corporation Japan (TMC), and Toyota Tsusho Corporation Japan (TTC) for assembling, progressive manufacturing and marketing of Toyota vehicles in Pakistan since July 01, 1990.

VISION STATEMENTService Department aims to ensure existence of an adequate and effective service network through which quality service can be provided to maximum number of Toyota and Daihatsu customers nationwide for achieving customer satisfaction, optimizing dealers performance and supporting sales to enhance brand equity. Customer Satisfaction is the corner stone of our policy. After Sales Services are provided to customers nationwide through a network of franchised dealers who operate on 3S basis (Sales - Service - Spare Parts). IMC has 28 dealers in 16 cities. Over 200,000 Service jobs were handled by dealers (cumulative) during last 12 months period. To ensure Quality Service, IMC monitors adequacy of dealers infrastructure in terms of facility, manpower and equipment. Availability of trained technicians equipped with state of the art computerized diagnostic equipment and special Service Tools ensure repair quality. Our Service network has a total number of 663 repair stalls/ bays (344 number General stalls and 319 numbers Body and Paint Stalls) to conveniently accommodate Toyota and Daihatsu vehicles for any Service need. Much emphasis is laid on training and development of Service Staff at our dealerships. Training courses are conducted for Technicians, Service Receptionists / Advisors and Managerial staff round the year at IMC Service Training Center. To enhance our own capabilities, IMC Training Instructors and Technical Staff also receive ongoing overseas training. In our relentless pursuit of excellence, we strive hard and work together with our dealers, for a high level of professionalism and for doing things the Toyota Way. In addition to a quality product, our Service Network offers our valued Toyota and Daihatsu customers (amongst others) the following facilities and services in after sales:

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Reliable Service / Quality Repairs. Courteous and Professional dealing Comfortable environment Warranty Services. Maintenance packages. In- House repair facilities for a wide variety of repair jobs. Genuine Parts and Toyota Motor Oil Loyalty incentives. Towing Services etc. Collision Damage Repairs / Insurance Services.

Our dealers and we would like to make your Service experience pleasant and hassle free one. Our satisfied customers are our pride and strength and we value their patronage.

CONCERN BEYOND CARS CORPORATE SOCIAL RESPONSIBILITYIndus Motor Company aims to demonstrate responsible corporate conduct throughout the entire spectrum of its activities and operations. From providing high quality and safe products to voluntary support of a broad range of social activities in the area of business connect, respecting workplace human rights, adhering to environmentally safe industrial practices, providing technical and managerial assistance to vendors, building long-term value for its shareholders and customers, providing marketing and consumer information, and above all, aligning its corporate activities, as far as possible, with reasonable societal expectations. Through our CSR program and slogan, "Concern Beyond Cars" , Indus Motor Co has contributed over Rs 100 million in the past 5 years for health, education, welfare, environment and road safety projects, thus playing a significant role in the communities where it operates. IMC is a member of the United Nations Global Compact , which is a voluntary initiative, asking companies to embrace, support and enact, within their sphere of influence, its ten principles in the areas of human rights, labor standards, the environment, and anti-corruption.

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CSR INITIATIVESAs a policy, IMC allocates 1% of Profit before Tax each year for CSR, and with our CSR initiatives, the company has made notable contributions to various sectors including Education, Health & Community Development, Environment, Response to Natural Calamities, Road Safety, Sports.

PRODUCTS

y Toyota line-up y

Toyota Corolla Toyota IMV or Hilux

Daihatsu line-up

y

Daihatsu Cuore

Imported vehicles

y y y y y y y y

Land Cruiser Camry Rav4 Prado Hilux Double Cab Fortuner Avanza Terios

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SWOT ANALYSISSTRENGTHy y y y They are dealing with Customized product They planned the things before running the process 80% raw material is present for the process running No extra inventory

WEAKNESSy Time give for reworking of the materials. It can damage the products quality.

OPPORTUNITYy They can grow their processing ability as they deal with the contracted suppliers. As they are using the Kanban technique so they need the full support and good relation with the suppliers. The people are now moving to the customized products that can increase their revenue

y

THREATy Rework can be sometime creating problem for the company leading to customer dissatisfaction.

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IMPORTANCE OF KANBAN SYSTEM IN THE ORGANIZATIONKanban is a Japanese word based on the Japanese word "Kan" for card and "ban" for signal. Kanban is a replenishment process where each lot has an assigned card. Whenever a lot is consumed, the card is sent to the supplying work center as a re-order signal. Since manufacturers re-order what they use, the system helps align inventory and orders to actual consumption. The physical cards and Kanban boards which collect all on order cards create a very visual system that allows anyone in the plant to recognize and act on a potential stock-out before it happens. As manufacturers align their inventory with demand and reduce stock-outs they typically see significant improvements in lead times, on-time delivery and inventory reduction. Kanban are one of the JIT or Lean techniques, which are most commonly misunderstood or poorly implemented. This highly practical course explains the concepts and how to implement them using a simulation game, which enables quick and easy learning. Kanban when implemented correctly will enable a true shop floor control system to be implemented, which facilitates a pull system reducing dependency on ERP and MRP systems. This leads to dramatically reduced inventory as you only make product when required. It highlights other issues in your manufacturing process as the work in progress levels are reduced. It makes you more responsive to your customers internal and external and ultimately will reduce your costs.

ADVANTAGESWith a Kanban system in place, managers and supervisors see the benefits of the Kanban system in: Better managed inventory levels Smoother manufacturing flow Overproduction elimination Reduced risk of Inventory obsolescence

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IMPORTANCE OF LEVELOUT WORKLOAD IN THE ORGANIZATION

MUDA Waste elimination is one of the most effective ways to increase the profitability of any business. Processes either add value or waste to the production of a good or service. The seven wastes originated in Japan, where waste is known as Muda." It includes overproduction, waiting, transporting, inappropriate processing, unnecessary inventory, excessive motion, and defects. Advantages: y y y y Reduce excessive lead times, high storage costs, and makes easier to detect defects. Linking processes together so that one feeds directly into the next can dramatically reduce waiting. Mapping product flows can make this easier to visualize. Investing in smaller, more flexible equipment where possible; creating manufacturing cells; and combining steps will greatly reduce the waste of inappropriate processing. Seamless flow between work centers Reduced excessive motion Reduce defects

y y y

MURA: Mura exists when workflow is out of balance and workload is inconsistent and not incompliance with the standard. The advantages include: no extra inventory, no downtime, no missing parts or defects. MURI: Any activity asking unreasonable stress or effort from personnel, material or equipment. For people, Muri means too heavy a mental or physical burden. For machinery Muri means expecting a machine to do more than it is capable of or has been designed to do. The advantages include: improved quality, safety of peoples health and no breakdowns.

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KANBAN SYSTEM IN INDUS MOTORORDERCustomers give the order to the company for the particular car like Toyota Corolla. The order includes color, internal accessories and etc. The order is send to the factory via showroom dealers. The production is taken place after a complete production of a preceding product has taken place. After then, the other order will be run. CUSTOMER

WHITE/ BLACK/ ETC

ORDER (EXAMPLE COROLLA)

INTERIOR DESIGNING AND OTHER SPECIFICATION

SHOWROOMS DEALER

TO THE COMPANY

PLANNING OF ORDER PROCESSING2 WEEKS PLANNING BEFORE FOR

1 WEEK PREPARING MATERIAL

FOR RAW

1 WEEK ASSEMBLING PRODUCT

FOR

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CHECKING THE SPECIFICATION IN THE WAREHOUSE:When the order is received, the first priority is checking the raw material available for the production or assembling of car. The raw material should be 80 percent present in the warehouse. If this requirement of raw material is not achieved then the production of a car will not be done. They take orders two weeks before the production so as to look on those raw materials to be present; this will reduce the waiting time or the machine downtime in the production stage. Checking raw material in warehouse

80% RAW MATERIAL

80% RAW MATERIAL NOT PRESENT

TO THE FACTORY

ASSEMBLING TAKE PLACE

DO

NOT

ASSEMBLING TAKES PLACE

CONTACT SUPPLIERS

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SUPPLIERSThe relationship with suppliers is strong in nature. They select the suppliers that have good background related to the deliveries. As Indus Motors is based on Kanban system, they always want their suppliers to be ready for the order given by them at any time. So, if the company needs any of the raw materials, the supplier will give the material in that 2 weeks time. 80% RAW MATERIAL NOT PRESENT

SUPPLIER-STRONG RELATIONSHIP

PLANNING OF RAW MATERIAL IN 1 WEEK FROM 2 WEEKS

SUPPLIERS GIVE THOSE MATERIALS ON TIME

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QUARANTINNE AREAAfter the product has been send to the warehouse from the suppliers. The products are stored in warehouses area where quality is checked. The quarantine area is the area in the warehouse where the received material is stored just to check the specification after that it will return to the suppliers or set in the warehouse. The defected items that can be rework are done by the employees. Other than those items, materials returned to the suppliers. RAW MATERIAL FROM SUPPLIER

QUARANTINNE AREA

CHECKING MATERIAL

THE

DEFECTIVE ITEMS

NONDEFECTIVE ITEMS

REWORK

REJECTED

SEND TO ASSMBLY LINE

SEND TO ASSEMBLY

RETURN TO SUPPLIERS

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ASSEMBLING PROCESSThe raw material is present in that assembly line to be able to make product without any stoppages. All the assembly line employees know what to make and in what quantity it should be made. The car begin to assemble will be ended up when the whole car is ready. They do not stop or wait to assemble the car all at the same time. The processing of the order has been done in the 2nd week of the 2 weeks planning. They try to finish the order in less than 1 week so that they can overcome any situational factors of the city. During the assembling if any machine stop working then they stops the whole process of assembling. 80 % RAW MATERIAL IN WAREHOUSE

TO THE FACTORY

ASSEMBLY LINEIf machine is not working then stoppage occur

EMPLOYEES KNOWS WHAT TO MAKE AND IN WHAT QUANTITY

All the work is stop until the machine is repaired

ASSEMBLING TAKES PLACE

PRODUCT READY

CUSTOMERThe shipments now will be taken place. The transportation is the solely of the organization. PRODUCT HAS BEEN MADE SHIPMENTS/ TRANSPORT TO THE CUSTOMER

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HEIJUNKA IN INDUS MOTOR COMPANYIndus Motors forecast the production planning according to the customer needs. They schedule their forecasted planning and replenish the inventory according to that planning. There is no urgent or emergency planning at Indus Motors. If the demand increases, they increase the production line workings in the next shifts. The assembly line workings are done when there is 80% of inventory available in warehouses. If the order is placed to vendor, and vendor is unable to supply on time. Indus Motor cancels the contract or bids at the lowest price for that product.

MUDAIndus Motors have placed their warehouses and assembly line department to the nearest point so that the transportation time reduces. Shelves at warehouses are placed in an FIFO manner. Picking machines are used to lift heavy equipments. This helps the company to reduce the processing time. 1) Overproduction Indus Motors works on what customers give orders. The company is not producing more than the customer requires. It decreases defects, inventory, waiting, unnecessary motion and transportation. PRODUCE WHAT IS REQUIRED

TRANSPORTATION DEFECTS INVENTORY

WAITING

UNNECESSARY MOTION

2) Inventory Inventory is the quantity of parts on stock which are required to manufacture a product. These goods also cause costs to the company. The inventory is ordered what is actually required for the particular order. The company controls the inventory so that money is not wasted on unwanted goods.

INVENTORY EXACTLY WHAT

IS

LESSEN THE COST OF UNWANTED GOODS

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3) Defects Scrap and rework are required when products are defective and have to be reworked. Rework is done for some of the defected items, other than that the material is returned to the suppliers. DEFECTED ITEMS

REWORK

CANNOT REWORK

TO THE FACTORY

TO THE SUPPLIER

4) Waiting The companys employees know what is to made and in what quantity it is to be made. The equipment, information or materials do not delay the production process, time is not wasted and the cost of production will be decreased ultimately. EQUIPMENT

EMPLOYEES KNOW ABOUT THE

INFORMATION

MATERIALSTIME WASTED IN WAITING

COST OF PRODUCTION

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5) Transportation The necessary information, products or items are prepared or planned before production has to be taken. The 80% raw material should be present at the time of production. 6) Motion All the things are present in the assembly line; there is no need of extra movement for getting the product. They have allotted tracks for getting the particular material. 7) Over processing The quality has been checked at the point where the products have to be stored before going to the factory. Sometimes, product needs rework but that product is little bit defected in nature. 8) Not used creativity of employees The employees know the skills and ideas about the work. This will help to improve available knowledge and creativity and ultimately increase employee satisfaction.

MURI (OVERBURDENING PEOPLE OR EQUIPMENT)Indus Motors does not over burden their employees or equipment. They take order before 2 weeks so as to plan things and the production activity. They divide their work in days so that work can be divided equally. There is no such thing at MURI at Indus Motors. They have strong forecasting techniques which avoids MURI. Once in a blue moon, if the work delays due to law and order situation of Karachi. They increase the shift times and transfer it to the next coming shifts.

MURA (UNEVENNESS)There is no unevenness related to missing parts or defects in the production phase. All the checks are done before the production has been taken place. There are tracks allotted so as to decrease the unnecessary motion to pick up the material.

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RECOMMENDATION

y

They should not work on the defected material but send back to the supplier. Because this will lessen the quality of the product.

y

They should appoint the suppliers that give only material as specified by the company.

y

For the above recommendation, they should increase the supplier certification terms and condition

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REFERENCE http://www.toyota-indus.com http://www.100pceffectivetraining.com/course_Kanban_and_how_to_reduce_and _control_inventory.php http://www.kanban.com/ResourceCenter/KCSupplychainFAQ.aspx http://www.brighthub.com/office/project-management/articles/71134.aspx http://emsstrategies.com/dm090203article2.html

ADEEL SIDDIQUI DEPUTY MANAGER QUALITY CONTROL DEPARTMENT INDUS MOTOR

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QUESTIONNAIRE1. What are the strengths of the company? 2. What is the potential threat you might face in near future or in this competitive world? 3. What is the lacking that you might think it lessen the organizations productivity? 4. What is the opportunity you are looking forward in future? 5. How do you identify that particular parts will be required in future? 6. How the transfer of inventory occurred from the warehouse to the factory? 7. How the workers transfer one step of production to the other step? procedure 8. What are the potential defects in an assembly line? 9. What is the step to conduct when a problem is occurred in an assembly line? 10. How the machine, equipments or labors workload managed? 11. How do you curtail the extra movement to get part? 12. What if the haphazard manner is occurred in planning? Do you pre-plan the raw materials that are required by the supplier at the particular time? 13. What challenges do you face when introducing leveling out strategy? 14. How does it affect the overall process?

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