Good Business Sense

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Developing Good Business Sense
Total Quality management is a system of operations and material management (OMM) which has revolutionized manufacturing by decreasing waste and improving quality of products. This OMM system has become so popular it has been adopted and its methods benchmarked by industries and companies outside of manufacturing. Toyota, Aetna, and Acer are three diverse companies with their core competencies residing in car manufacturing, healthcare services, and computer distribution. However all three companies have managed to successfully utilize TQM to govern their operations and processes. Toyota began using TQM which is specifically designated as the Toyota Production System. Toyota has as a result of this OMM been able to meet the demands of new markets and products without the excessive cost of retooling production lines. For example, as the popularity and demand for new hybrids rise, the cost of production will decrease as supply chains are maximized. This reality creates an opportunity that Toyota is already poised to take advantage. Utilizing TQM Toyota’s processes allow for the rapid increase of demand without overloading supply chains. This ability to meet demand is the result of using Takt time. Takt time creates an environment which the supply and demand (customer orders) are synchronized with supply chains and manufacturing. Interestingly enough, as the demand for hybrids increases the TQM increases in efficiency and cost effectiveness. This results from the continuous improvement process through which workers are capable of detecting and solving problems. This process requires a stable production system which has constant volume and product mix (Focacci and Simchi-Le, 2009). When these factors are optimized the TQM system provides production smoothing which in turn allows workers the ability to concentrate on reducing waste and improving the production through quality assurance. Toyota’s use of TQM provides a strategic

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