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FMCG Companies

Japanese manufacturing firms have developed and applied a series of manufacturing methods that allow them to achieve great results regarding production, cost deployment, and high quality as well. Such methods include: Total Quality Control (TQC), Total Quality Management (TQM), Total Productive Maintenance (TPM), Just in Time (JIT), Total Industrial Engineering (TIE), and KAIZEN manufacturing methods. Total Quality Control is required in cases when sales decrease despite statistical quality control techniques or quality improvements implemented (Wikipedia, 2007).

Japanese manufacturers also rely a great deal on Total Quality Management. Total Quality Management is a “people-focused management system that aims at continual increase in customer satisfaction at continually lower real costs” (Wikipedia, 2007). In order words, TQM focuses satisfying both customers and manufacturers. In Japan, TQM process includes four steps: Kaizen Atarimae Hinshitsu Kansei Miryokuteki Hinshitsu TQM process has a significant influence on reducing production costs due to performance improvements and increased efficiency.

Another Japanese technique that is widely used by Japanese manufacturers is Total Productive Maintenance that was developed in 1951 by Toyota. TPM focuses on identifying and systematically eliminating the 16 types of waste by using the Kaizen method (Wikipedia, 2007). TPM implementation is based on eight sets of activities: Eliminating waste through

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focused improvement Autonomous maintenance that is based on operators Planned maintenance for ensuring there are no breakdowns Education and training for increasing personnel’s productivity

Early product management for reducing waste Maintenance for quality Safety and hygiene of the work environment Office TPM that focuses on improving office processes as well Japanese Lean Manufacturing Model, Just in Time Method and Kaizen Lean manufacturing is a Japanese process management philosophy that was developed and successfully applied by Toyota Production System (TPS). Lean manufacturing process focuses on reducing waste, improving overall customer value, and reducing production costs.

Also, this process relies a great deal on reducing process variation (Wikipedia, 2007). Basically, the lean manufacturing process is implemented through a set of tools that were initially applied by the Toyota Production System. Using these tools ensures the identification of waste, the systematical elimination of the previously identified waste, which eventually leads to an improved quality and a significant reduction of production time and production costs. The most important tool used in the lean manufacturing process is kaizen.

Kaizen philosophy is considered to be the key to Japan’s competitive success. Main reasons for implementing the Japanese production model in FMCG companies The Japanese production model is required by certain negative issues regarding the quality of product, all kinds of waste, the production time that sometimes is very long, the space needed for manufacturing a product, human resources’ low productivity level, and cost related issues. The quality of the manufactured FMCG’s can be significantly improved by eliminating the seven types of waste.

Also, this leads to reducing the time, the space, and the costs required for manufacturing the product. Advantages of the Japanese production model Using the lean manufacturing process for FMCG companies will generate a series of advantages for these companies, like: material handling benefits, inventory benefits, quality benefits, people benefits, and customer benefits. However, the most important thing that lean manufacturing can generate is competitive advantage.

FMCG companies that use this Japanese production model present a series of advantages over other companies that do not use this model, like: the manufacturing lead time is significantly shorter the delivered quality is at least three times higher the delivery performance is higher the manufacturing space is 35-50% less than other companies new product development is 6 months shorter that other companies the skilled trades response is less than 2 minutes the skilled trade ratio for production is over 20:1

Another very important aspect that needs to be taken into consideration is the financial one, as lean manufacturing leads to significantly reducing production costs. These savings may be reached by increasing the inventory turns and by reducing the Work in Process inventory. These cost reductions can generate themselves other positive aspects, as they can be used for reinvestments in the business’s growth, for reducing debt, or for adding it to the bottom line profit (Epply, 2007).

Cost reduction can also be generated by the reduction of the amount of floor space required. The floor space required can be reduced up to 35-50% due to lean manufacturing. The additional area that results from this reduction can be used for expanding the business or eliminate it completely. Production cost reduction through lean manufacturing is strongly related to the fact that manufacturers only produce to meet their clients’ requirements regarding how they want the products, when they want it and how much of it they want.

By focusing on this aspect, manufacturers will be able to meet these requirements with less capital equipment, reducing the production costs, and therefore reducing the investment. Other benefits of lean manufacturing for FMCG companies are: overhead operating costs are reduced up to 30% sales $ per employee are 10 times higher sales doubles or even more than doubles profits are usually 4 times higher lead time is cut by 50% to 90% process queues cut by 70% less frustration on the job (PQA, 2006).

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