Page 1 - CIMA MCS Workbook November 2018 - Day 2 Suggested Solutions

Day 2 Suggested Solution

SUGGESTED SOLUTIONS

CHAPTER EIGHT

SUGGESTED SOLUTIONS

TASK 1 ‐ JUST IN TIME AND TOTAL QUALITY MANAGEMENT

To: Matthew Jones

From: Finance Manager

Date: Today

Subject: Just in time and total quality management

Just in time

The aim of a just‐in‐time manufacturing process is to have a smooth running, efficient process
that minimises the amount of inventory held by the business at any time.

If Grapple were to adopt a just‐in‐time approach to all its production and purchasing, we would
aim to produce products for customers just as they are ready for them, reduce the amount of
work‐in‐progress at each point of the production line and have our suppliers delivering raw
materials to us just as we need them for production.

Reduction of inventory levels means that less cash is tied up in stock, freeing it up for other
purposes such as capital investment. It also means that there is less likelihood of damage or of
obsolescence of stock, for instance fruit becoming over‐ripe while it waits to be processed. We
would potentially need less space to store raw materials, finished goods and completed inventory
too.

The main barrier to achieving these aims is achieving an appropriate level of quality and efficiency
that is needed in the production processes.

With a just‐in‐time operation, failures in the production process have a much larger impact than if
we had large levels of inventory held at the factory.

For instance, if a supplier is a couple of days late delivering fruit due to a delay in harvesting, we
would have no buffer of fruit stock available and production would have to be delayed. This
would have a knock on effect on deliveries to customers as we would not have a buffer inventory
of completed product that we could send instead.

So the whole process from supplier to customer must be as efficient as possible. This is where
total quality management comes in.

Total quality management

Businesses undertaking total quality management aim for two things – to get things right first
time and if this has not yet been achieved, to continuously improve until it is achieved.

KAPLAN PUBLISHING 91