PBL Session 4 - Production Cycle

PBL SESSION 4 : PRODUCTION CYCLE
a) Discuss five (5) internal control weaknesses that exist in the production cycle
system of the company and suggest the improvements that can be
implemented. Your answer should be written using the following format:
No. Weaknesses Improvement
1. Choosing to gear the production Make an accurate and current sales

based on sales forecast derived forecast and data about the inventory
from a loosely projected demand is stocks, information that the revenue and
not proper as the sales forecast is expenditure cycle systems can provide.
not based on sales but from loosely In addition, the information about
projected demand. This will result in production performance, particularly
overproduction or underproduction concerning trends in total time to
and it will probably cause losses to manufacture each product should be
the company. regularly collected to improve forecasts.
2 There is no proper procedure for the To reduce the risk of losing inventory,
movement of inventory. This will they need to do physical counts of raw
lead to inaccurate data or misplaced materials. At least do it once a year to
inventories that can cause compare accuracy of data in the system.
inappropriate decision making. The inventories can also do perpetual
record either by using RFID equipment,
bar-code scanners, and online terminals
that can be used to record the
movement of inventories.
3 Poor performance as there is only a As the production manager, he only has

person to control the production and to sign and authorize all the documents
also have to authorize all the and delegate the work to his
documents. subordinates to avoid any inaccuracies
and workloads.
4 As there is only one person Proper segregation of duties is very

controlling the movement of important to make sure the inventory is
inventories, it can cause theft of safe and any mistake can be avoided.
inventories as he has complete For example, the inventory stores
control over all the documents. He department is responsible for
also heads various work centers. maintaining physical custody of the raw
materials and finished goods inventories
while department supervisors are
responsible for work-in-process
inventories. In addition, proper access
controls and compatibility tests are
important to ensure that only authorized
personnel have access to those records.
5 The accounting department lacks The accounting department must

the responsibility to check or review involve and give a response for the
the complete production process. production process to make sure all the
This may lead to inaccurate cost data is complete and accurate.
data that can diminish the
effectiveness of production.
6 Even though the factory is equipped Training the staff to use computer
with up-to-date production, the technology so the flow of production will
company still has poor performance. be faster and orderly.
This causes waste of money and
resources.
b) Lean manufacturing is a methodology that focuses on minimizing waste within
manufacturing systems while simultaneously maximizing productivity. Waste is
seen as anything that customers do not believe adds value and are not willing
to pay for. Some of the benefits of lean manufacturing can include reduced lead
times, reduced operating costs and improved product quality. Discuss
techniques and technologies that promote lean manufacturing.
Lean manufacturing is a practice that organizations from numerous fields can

enable. Some well-known companies that use lean include Toyota, Intel and Nike.
Lean manufacturing was introduced to the Western world through the 1990
publication of The Machine That Changed the World which studied the future of
automobiles in detail by Toyota’s lean production system. Since then, lean principles
influenced manufacturing concepts throughout the world including healthcare,
software development and service industries. There are a few techniques and
technologies that promote lean manufacturing.
The first and foremost is automation of the manufacturing process. Automation

is the most important of the lean manufacturing philosophy. By replacing labor with
automation, a firm can reduce waste, improve efficiency, increase quality and improve
flexibility. The automation process starts with traditional manufacturing that consists
of a range of different types of machines, each controlled by a single operator. As
these machines require a great deal of setup time, the cost of setup must be
absorbed by large production runs. The next process is islands of technology that
describes an environment in which modern automation exists in the form of islands
that stand alone within the traditional setting. The island employs computer numerical
controlled (CNC) machines that can perform multiple operations with little human
involvement. CNC machines contain computer programs for all the parts that are
manufactured by the machine. The latest process of automation that people use is
Computer-Integrated Manufacturing (CIM) which is a completely automated
environment with the objective of eliminating non-value-added activities. A CIM
supports flexible manufacturing by allowing faster development of high-quality
products, shorter production cycles, reduced production costs and faster delivery
times.
Next, Computer - Aided Design (CAD) is one of the technologies under CIM.
The period between the initial concept and the final design is substantially reduced
using CAD technology. This enables businesses to respond quickly to changes in the
market demand and respond to unique product demand from customers. A
manufacturer can exchange product design requirements with vendors and
consumers using CAD systems that have an interface to the external communication
network. CAD also allows companies to receive product design requirements from
buyers and suppliers digitally for review. Thus, management can evaluate the
technical feasibility of the product and determine its manufacturability aided by CAD.
Besides, there is Computer-Aided Manufacturing (CAM) which uses

computers to assist the manufacturing process. CAM focuses on the shop floor and
the control of the physical manufacturing process. The CAD design is converted by
CAM into a sequence of processes such as drilling, turning or milling by CNC
machines. The CAM system monitors and controls the production process and
routing products through the cell. CAM can improve process productivity, improved
cost and time estimates, improves process monitoring, decreased setup times and
reduced labor costs.
In addition, another important technique to promote lean manufacturing is Total

Quality Management (TQM). TQM is a continuous quality program aimed at bringing
about teamwork among departments to come together and ensure a self-reliant
workflow, outputting optimum quality of products. TQM deals with participative
management and focuses on the customer needs and demands accordingly aligning
the process of production and timelines. Total Quality Management looks at
employee involvement and training, problem solving teams, statistical methods, focus
on long term goals, quality being defined by the needs of the customer, quality
increment being a continuous effort and one that needs to be continued as a long
term plan, systematic analysis after requirement gathering is essential and
improvement in work process and the maintenance of the production line. These are
part of the technique definition of TQM.
Lastly, the technique for lean manufacturing is value stream mapping.

Companies pursuing lean manufacturing often use a tool called a value stream map
(VSM) to graphically represent their business processes to identify aspects of it that
are wasteful and should be removed. A VSM identifies all of the actions required to
complete processing on a product, along with key information about each action item.
Some commercial VSM tools produce both a current-state map and a future-state
map depicting a leaner process with most of the waste removed. From this future
map, action steps can be identified to eliminate the non-value-added activities within
the process. The future state VSM is the basis of a lean implementation plan. VSM
works best in highly focused, high-volume processes in which real benefit is derived
from reducing repetitive processes by even a small amount of time.

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PBL SESSION 4 : PRODUCTION CYCLE

No. Weaknesses Improvement

1. Choosing to gear the production Make an accurate and current sales

3 Poor performance as there is only a As the production manager, he only has

4 As there is only one person Proper segregation of duties is very

5 The accounting department lacks The accounting department must

Lean manufacturing is a practice that organizations from numerous fields can

The first and foremost is automation of the manufacturing process. Automation

Besides, there is Computer-Aided Manufacturing (CAM) which uses

In addition, another important technique to promote lean manufacturing is Total

Lastly, the technique for lean manufacturing is value stream mapping.

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