Case 6-1 Browning Manufacturing

Michellee Marie B. Chavez 2004-39460 BM 220 – Management Accounting 1) BROWNING MANUFACTURING COMPANY T-Accounts Cash Accounts Receivable Notes Payable 2,604,000. 00 144,000. 00 2,562,000. 00 49,200. 00 288,840. 00 118,440. 00 78,000. 00 311,760. 00 19,200. 00 264,000. 00 264,000. 00 492,000. 00 2,604,000. 00 552,840. 00 198,000. 00 2,873,760. 00 2,672,400. 00 49,200. 00 201,360. 00 Interest Expense 135,600. 00 38,400. 00 522,000. 00 Finished Goods 38,400. 00 38,400. 00 257,040. 00 1,806,624. 00 788,400. 00 1,901,952. 00 Indirect Manufacturing Labor 9,000. 00 2,158,992. 00 1,806,624. 0 198,000. 00 36,000. 00 352,368. 00 198,000. 00 52,200. 00 2,986,440. 00 2,542,800. 00 Manufacturing plant and equipment Direct Manufacturing Labor 443,640. 00 2,678,400. 00 492,000. 00 144,000. 00 492,000. 00 Prepaid taxes and insurances 2,822,400. 00 66,720. 00 52,800. 00 Materials 78,000. 00 Accounts Payable 110,520. 00 811,000. 00 144,720. 00 52,800. 00 788,400. 00 825,000. 00 825,000. 00 91,920. 00 66,000. 00 935,520. 00 811,000. 00 185,760. 00 124,520. 00 788,400. 00 1,076,760. 00 Income Taxes Payable 288,360. 00 Work in Process 9,000. 00 9,000. 00 172,200. 00 1,901,952. 00 5,800. 0 Selling and Administrative Expense 811,000. 00 9,000. 00 14,800. 00 522,000. 00 1,129,200. 00 5,800. 00 522,000. 00 2,112,400. 00 1,901,952. 00 210,448. 00 Supplies Depreciation :: 17,280. 00 61,200. 00 140,400. 00 492,000. 00 66,000. 00 907,200. 00 198,000. 00 83,280. 00 61,200. 00 1,047,600. 00 49,200. 00 22,080. 00 135,600. 00 52,800. 00 Capital Stock Income Tax Expense 61,200. 00 1,512,000. 00 58,000. 00 140,400. 00 1,512,000. 00 58,000. 00 1,129,200. 00 Sales Cost of Goods Sold Power, Heat and Light 2,562,000. 00 1,806,624. 00 135,600. 00 2,562,000. 00 1,806,624. 00 135,600. 00
Sales Returns and Allowances Sales Discounts Social Security Taxes 19,200. 00 49,200. 00 49,200. 00 19,200. 00 49,200. 00 49,200. 00 Retained Earnings 829,560. 00 36,000. 00 68,576. 00 36,000. 00 898,136. 00 862,136. 00 Statement of Retained Earnings Retained earnings, 12/31/09 $829,560. 00 Add net income 68,576. 00 898,136. 00 Less dividends 36,000. 00 Retained earnings, 12/31/10 $862,136. 00 BROWNING MANUFACTURING COMPANY Projected 2010 Statement of Cost of Goods Sold Finished Goods Inventory, 1/1/10 $257,040. 00 Work in process inventory, 1/1/10 $172,200. 00 Materials used 811,000. 00 Plus: Factory expenses
Direct manufacturing labor 492,000. 00 Factory Overhead: Indirect manufacturing labor $198,000. 00 Power, heat and light 135,600. 00 Depreciation of plant 140,400. 00 Social security taxes 49,200. 00 Taxes and insurance, factory 52,800. 00 Supplies 61,200. 00 637,200. 00 2,112,400. 00 Less: Work in process inventory, 12/31/10 210,448. 00 Cost of goods manufactured 1,901,952. 00 2,158,992. 00 Less: Finished goods inventory, 12/31/10 352,368. 00 Cost of goods sold $1,806,624. 00 2) BROWNING MANUFACTURING COMPANY Projected 2010 Income Statement Sales 2,562,000. 00 Less: Sales returns and allowances 19,200. 00

Sales discounts allowed 49,200. 00 68,400. 00 Net Sales 2,493,600. 00 Less: Cost of Goods Sold 1,806,624. 00 Gross margin 686,976. 00 Less: Selling and administrative expense 522,000. 00 Operating Income 164,976. 00 Less: Interest Expense 38,400. 00 Income before federal and state income tax 126,576. 00 Less: Estimated income tax expense 58,000. 00 Net Income 68,576. 00 BROWNING MANUFACTURING COMPANY Projected 2010 Balance Sheet Assets Current Assets: Cash and marketable securities $443,640. 00 Accounts receivable (net of allowance for doubtful accounts) 201,360. 00 Inventories: Materials $124,520. 00
Work in process 210,448. 00 Finished goods 352,368. 00 Supplies 22,080. 00 709,416. 00 Prepaid taxes and insurance 91,920. 00 Total current assets 1,446,336. 00 Other Assets: Manufacturing plant at cost 2,822,400. 00 Less: Accumulated depreciation 1,047,600. 00 1,774,800. 00 Total Assets $3,221,136. 00 Liabilities and Shareholders’ Equity Current liabilities: Accounts Payable $288,360. 00 Notes Payable 552,840. 00 Income Taxes payable 5,800. 00 Total current liabilities $847,000. 00 Shareholders’ equity: Capital stock 1,512,000. 00 Retained earnings 862,136. 00 Total Liabilities and Shareholders’ Equity $3,221,136. 00
Comparative Statement of Cost of Goods Sold, Projected 2010 vs. 2009 20092010% change Finished Goods Inventory, 1/1/10 218,820. 00 257,040. 00 17. 47% Work in process inventory, 1/1/10 137,760. 00 172,200. 00 25. 00% Materials used 663,120. 00 811,000. 00 22. 30% Direct manufacturing labor 419,040. 00 492,000. 00 17. 41% Indirect manufacturing labor 170,640. 00 198,000. 00 16. 03% Power, heat and light 116,760. 00 135,600. 00 16. 14% Depreciation of plant 126,600. 00 140,400. 00 10. 90% Social security taxes 42,120. 00 49,200. 00 16. 81% Taxes and insurance, factory 46,320. 00 52,800. 00 13. 99% Supplies 56,880. 00 61,200. 00 7. 9% Work in process inventory, 12/31/10 172,200. 00 210,448. 00 22. 21% Finished goods inventory, 12/31/10 257,040. 00 352,368. 00 37. 09% Comparative Income Statement, Projected 2010 vs. 2009 2009 2010 % change Sales 2,295,600. 00 2,562,000. 00 11. 60% Sales returns and allowances 17,640. 00 19,200. 00 8. 84% Sales discounts allowed 43,920. 00 49,200. 00 12. 02% Cost of Goods Sold 1,568,280. 00 1,806,624. 00 15. 20% Selling and administrative expense 437,160. 00 522,000. 00 19. 41% Interest Expense 34,080. 00 38,400. 00 12. 68% Estimated income tax expense 89,520. 00 58,000. 00 -35. 21% Net Income 105,000. 00 68,576. 0 -34. 69% Comparative Balance Sheet, Projected 2010 vs. 2009 2009 2010 % change Cash and marketable securities 118,440. 00 443,640. 00 274. 57% Accounts receivable 311,760. 00 201,360. 00 -35. 41% Materials 110,520. 00 124,520. 00 12. 67% Work in process 172,200. 00 210,448. 00 22. 21% Finished goods 257,040. 00 352,368. 00 37. 09% Supplies 17,280. 00 22,080. 00 27. 78% Prepaid taxes and insurance 66,720. 00 91,920. 00 37. 77% Manufacturing plant at cost 2,678,400. 00 2,822,400. 00 5. 38% Accumulated depreciation 907,200. 00 1,047,600. 00 15. 48% Accounts Payable 185,760. 00 288,360. 00 55. 23% Notes Payable 288,840. 0 552,840. 00 91. 40% Income Taxes payable 9,000. 00 5,800. 00 -35. 56% Capital stock 1,512,000. 00 1,512,000. 00 0. 00% Retained earnings 829,560. 00 862,136. 00 3. 93% The comparison shows that in 2010, it is projected that there will be a significant increase by 274. 57% in the company’s cash and marketable securities. It can also be noted that accounts receivables for 2010 is expected to go down by 35. 41%, meaning the company will have more and faster collections of receivables, thus, increase in cash can be expected. On the other hand, notes payable and accounts payable is projected to increase by 91. 40% and 55. 3% respectively, which indicates that the company will not be able to pay its financial obligations in due time. Their credit standing as a company will worsen, because the company’s expenses will be higher in 2010. They may have faster collections of receivables, however, payables and expenses increases, resulting to the inability of the company to become liquid. Aside from this, inventory turnover is expected to be low, meaning; the company will not be able to utilize its resources efficiently. It can also be attributed to the slight increase in sales which shows that the company is having a hard time disposing / using its resources.
Due to these projections, net income is also expected to decrease in 2010. 3) The company will fail to achieve its notes payable repayment goal of a year-end cash balance of $150,000. 00 after paying off at least $350,000. 00 of the notes payable, because after repaying $350,000, year-end cash balance will decrease to $93,640, which is short of its $150,000 year-end cash balance. In order to achieve its minimum objective, the company should be able to increase its sales, and lessen the expenses as well as the payables. ) Management’s inventory turnover goal will not be achieved in 2010. Inventory turnover can be computed as: Cost of Goods Sold / Average Inventory 20091,568,280. 00/ [(218,820. 00+257,040. 00)/2] = 6. 59 20101,806,624. 00/ [(257,040. 00+352,368. 00)/2] = 5. 93 As shown in the above computation, inventory turnover in 2010 is lower than that of 2009. In the budget, inventory turnover goal is not indicated to be achieved. The company should analyze its market and demand of the people in order to evaluate how many of the goods should be prepared and ordered by them.
They should be aware of the average number of products that they should have and it will be determined based on the demand. They should also strategize by having effective marketing and selling techniques. 5) The budget shows that the company will have a poor credit trade standing due to its higher payables. This shows that the company is not able to pay its obligations in time, primarily because of its inability to monitor and control their expenses. Eventually, the company will have a hard time borrowing if there will have continuous past dues, thus, operations might soon be affected and eventually will not be sustained.


Corporate Compliance Plan of Riordan Manufacturing

The purpose of this corporate compliance plan is to outline a design that provides for the employees and management staffs of Riordan Manufacturing a concise approach to enable it remain compliant with every legal and ethical requirement of the federal and international laws as well as the applicable state with regard to its manufacturing operations. In essence, this plan will provide pedestals upon which Riordan manufacturing company will address any possible ethical misconduct as well as the criminal activities that may emerge in the organization. With the help of the new risk management officer Mr. Lowell Bradford as a mechanism of conforming to the enterprise risk management outlined by Committee of Sponsoring Organization of the Treadway Commission (COSO) and in collaboration with chief legal counsel, Riordan Manufacturing will through this corporate plan examine its entire legal environment especially when addressing areas of Alternative dispute resolution, product liability, enterprise liability, tangible as well as international law, intellectual property, governance and legal forms of business.

Riordan Manufacturing Inc is an international manufacturer of plastics owned by Riordan industries. As an enterprise of over $ 1 billion revenue, Riordan manufacturing continues to significantly grow as a global competitor in the plastic market. With over 550 employees, the company has an intense focus on the production and sale of plastic beverage bottles and many other plastic parts. Through a strategic plan, Riordan Manufacturing can build on changes in the legal framework recommended by Committee of Sponsoring Organizations of the Treadway Commission (COSO), to determine whether a formal corporate compliance plan can be instituted (Riordan and Cameron, 2006). It is therefore a policy that Riordan Manufacturing operates its business in an environment that complies with all regulations and laws that apply cross the world and more especially in the United States. This corporate compliance plan therefore serve as a template upon which Riordan Manufacturing should implement such an imperative policy with compliance within all the applicable measures and standards.
Alternative Dispute resolution (ADR)
In this compliance plan, Riordan Manufacturing can draw from the alternative dispute resolution outline to structure its legal process as well as standards in a bid to ensure that the company contributes to global business practice and operate profitably in future. With regard to this, the plan outlines an approach for the company to address the laws that affect it towards ensuring that employees adhere to the set rules and laws. Riordan and Cameron (2006) assert that  the strategic recommendations of Committee of Sponsoring Organizations of the Treadway Commission (COSO) upon which Riordan Manufacturing can create an environment in which it can  expand its the market size as well as the customer base.
As such, there is a definite possibility that conflicts in the workplace can be experienced. Accordingly, as a result of job losses, rank demotions as well as promotions issues among others. With regard to this, Riordan manufacturing can institute a process and principles of dispute resolution such that there is arbitration and mediation processes of dispute resolution. In so doing, an arbitrator will be chosen on a neutral ground to listen to both aggrieved and conflicting sides and hence determine the best outcomes of the situation. Arguably, the arbitrator can decide on a biding way forward or a non binding one that can be litigated in the court of law. Through mediation as an alternative dispute resolution, Riordan Manufacturing can choose a neutral mediator who will of course be proposed and selected by the two involved parties.
The underlying objective of a mediator is to strike a deal that within the consideration of the legal and ethical framework of the situation, a solution may be reached. This short term solutions serve as pedestals on which long term solutions are sought. In light of this, Riordan Manufacturing will have a concise plan of addressing all conflicts, discrepancies, discord and any action that relates to dispute among employees as well as affiliates. Essentially, the leadership heeding or negligence of this compliance platform will determine the appropriate dispute resolution in the company.
Enterprise and product Liability
The business environment in the present society requires organizations to have a concise plan when it comes to addressing corporation’s risk. Riordan Manufacturing should build on the recommendations of Committee of Sponsoring Organizations of the Treadway Commission (COSO) to develop a corrective action plan that can detect and address any risk that involves the business enterprise as well as the product liability (Riordan and Cameron, 2006). Ultimately, Riordan Manufacturing should consider a significant ethical and legal responsibility which extends to consumer rights as well as the corporation’s relationship with other agencies, companies it works with as well as the its employees and the public at large.
 In light of this, Riordan Manufacturing must conform to the stipulations outlined by the Committee of Sponsoring Organization of the Treadway Commission (COSO) by announcing part of its strategic plan to move to Beijing and spread throughout China. Such strategic transition often requires changes in the legal structures of the compliance plan to utilize COSO outlines. In this case, Riordan Manufacturing opted to hire a risk management officer who was meant to work under the chief legal council Mr. Bradford. The benefits of such strategic internal controls within the recommendations of the COSO, is a mitigation plan that can entirely help Riordan Manufacturing to cushion itself against enterprise risks by means of applying such sound principles and recommendations.
In relation to with business ethics, the company should extend its future operation through its ability to structure a risk management and enterprise liability board which will make follow ups on the state of the entity’s enterprise risk management and offer any needed insight. Accordingly, the formed board can go an extra mile in ensuring that it monitors any resultant risk and the process of instituting necessary actions effective to enterprise risk management. In so doing, it is evident that input from external as well as internal auditors will improve on the organizational management and enterprise management.
International law
Riordan Manufacturing corporate compliance plan outlines the organization’s mission to comply with applicable rules, regulations and laws; both regional and international to the workforce which includes state and federal programs, waste as well as abuse, fraud, privacy ethics an service requirements. In view of this, Riordan Manufacturing should incorporate internal control to facilitate a monitoring process of any proposal to mitigate enterprise risks by way of applying international law. Adhering to the set standards within the legal framework, Riordan Manufacturing will insure a compliance and awareness with applicable international laws.
The legal changes in this case will be administered by the Chief legal counsel, who in case of any dispute will answer questions relating to legal decisions and going over the contracts. Within the precincts of the global environmental policies, the company should strip of the help of a legal company and rely on its legal counsel to apply the legal principles of business management bearing in mind the internal legal provisions. Such provisions should be customized to the company’s specialized production of plastic design and address moral, business and ethical principles in an utmost degree. For example, the expectations of the employees should be dealt with such that the business organization of the company is within the ethical standard with integrity. As such, the Riordan Manufacturing management contributes to achieving these recommendations by demonstrating leadership, integrity and committed to promoting an environment friendly business practice adherence to legal and ethical business practice in the world.
Tangible and Intellectual Property
Business assets for Riordan Manufacturing and its entire human resource should be valued at the highest degree. As an approach to tangible and intellectual property, the corporate compliance plan outlines the respectful and profitable use of the property by ensuring that both financial and human capital is available and valued for the company’s sustainable growth. By maintaining an innovative and team oriented work environment, Riordan Manufacturing will create for itself long time viability such that employees are not only well informed but also properly supported. Tangible and intellectual property forms the future of the Riordan Manufacturing Inc since it is through this compliance that customer relationship will be realized and the concept of the organizational value will be a reality. Therefore, the company should strive to maintain rigorous quality control, responsive business attitude, innovative solution and a reasonable pricing for its products (Riordan and Cameron, 2006).
In so doing, Riordan manufacturing will undoubtedly achieve and maintain high profitability and an industry leader in the polymer materials to face challenges. For instance, managers and entity personnel should consider various ways of conducting their responsibilities within the framework of tangible and intellectual property towards strengthening their input in the enterprise management. Every employee should consider the breath of their role on business practice and hence Riordan Manufacturing should consider supporting innovation, discipline and pay its employees handsomely. In addition, the company should allow reasonable leisure time and recreational facilities for its employees. The underlying goal will be an apt management of resource, finance included. In this line, the ethical standards will not only guide the Riordan Manufacturing employee expectation and business practice, its management will lead to promotion of an environment that enforces compliance and ethical business practices.
Legal Forms of Business
It is essential that that in the present fast changing business environment, there is need to conform and apply certain forms of legal principles of business management. This compliance plan therefore highlights a concise approach on how Riordan Manufacturing will conduct its business activities. Accordingly, certain forms of legal entities in business range from ethics, legal contracts, business formation, expansion, legal interpretation as well as breach of contracts (Riordan and Cameron, 2006). In this case, the mission of the legal system ensures that the company is  to only aware of the applicable laws but also considering such laws in relation to work force, fraud, business waste and abuse, federal and state business programs, privacy as well as the governance of the corporation. Such legal frameworks facilitates a clear and succinct roadmaps in questions regarding the appropriate conduct in the workplace and similarly guide the business practice that will ensure that every business activity is carried out in a legal and ethical manner.
Riordan manufacturing has a board of director; a factor that is apt in the operations of business. The board should therefore overrule on important matters that affect the business by discussing the state of affairs in business management and ensuring effective management. The overall responsibilities of this governance structure are to assess the risk management capabilities of the company. For example, the Chief executive officer should bring together all heads of department and other key functional staff in a bid to discuss a way forward for assessing the capabilities of the organizations, effectiveness in formulated policies and structuring strategic approaches to dispute resolution.
From the foregoing discussion, it is evident that Riordan Manufacturing corporate compliance plan has outlined appropriate mechanisms in conducting its business activities in an ethical and legal manner. In this case, Riordan Manufacturing will succinctly examine its legal businesses environment within the legal foundation especially in addressing areas such as alternative dispute resolution enterprise liability, product liability, international laws, tangible and intellectual property, legal forms of business, and governance.

Riordan, T and Cameron, J (2006). Complying with COSO Manufacturing Requirements. Riordan Manufacturing Inc. New York: Routledge



Cement Clinker Manufacturing Process Manual

What is cement? Cement is a fine powder which sets after a few hours when mixed with water, and then hardens in a few days into a solid, strong material. Cement is mainly used to bind fine sand and coarse aggregates together in concrete. Cement is a hydraulic binder, i. e. it hardens when water is added. There are 27 types of common cement which can be grouped into 5 general categories and 3 strength classes: ordinary, high and very high. In addition, some special cements exist like sulphate resisting cement, low heat cement and calcium aluminate cement.
The quarry is the starting point Cement plants are usually located closely either to hot spots in the market or to areas with sufficient quantities of raw materials. The aim is to keep transportation costs low. Basic constituents for cement (limestone and clay) are taken from quarries in these areas. A two-step process Basically, cement is produced in two steps: first, clinker is produced from raw materials. In the second step cement is produced from cement clinker. The first step can be a dry, wet, semi-dry or semi-wet process according to the state of the raw material.
Making clinker The raw materials are delivered in bulk, crushed and homogenised into a mixture which is fed into a rotary kiln. This is an enormous rotating pipe of 60 to 90 m long and up to 6 m in diameter. This huge kiln is heated by a 2000°C flame inside of it. The kiln is slightly inclined to allow for the materials to slowly reach the other end, where it is quickly cooled to 100-200°C. Four basic oxides in the correct proportions make cement clinker: calcium oxide (65%), silicon oxide (20%), alumina oxide (10%) and iron oxide (5%).

These elements mixed homogeneously (called “raw meal” or slurry) will combine when heated by the flame at a temperature of approximately 1450°C. New compounds are formed: silicates, aluminates and ferrites of calcium. Hydraulic hardening of cement is due to the hydration of these compounds. The final product of this phase is called “clinker”. These solid grains are then stored in huge silos. End of phase one. From clinker to cement The second phase is handled in a cement grinding mill, which may be located in a different place to the clinker plant.
Gypsum (calcium sulphates) and possibly additional cementitious (such as blastfurnace slag, coal fly ash, natural pozzolanas, etc. ) or inert materials (limestone) are added to the clinker. All constituents are ground leading to a fine and homogenous powder. End of phase two. The cement is then stored in silos before being dispatched either in bulk or bagged. What is concrete? Concrete is a solid material made of cement, sand, water, aggregates and often with admixtures.
When fresh, it has a certain workability and takes the form of the mould into which it is put. When set and hardened, it is as strong as natural stone and resists time, water, frost, mechanical constraints and fire. Typically, concrete is the essential material used in all types of construction [residential (housing), non-residential (offices) and civil engineering (roads, bridges, etc. )]. Read more: http://www. crusherindustry. com/ skype: anna. smith20121 Email: [email protected] com


Lean and Agile Manufacturing Systems

The market place in today’s world has undergone revolutionary changes with respect to many factors such as competition, customer preferences, delivery locations, cost of production and lead time for new product development. These changes have affected the industrial manufacturing sector to adopt strategies that attempt to satisfy these changed needs. Lean and Agile are two manufacturing strategies applied in industrial sectors all over the world today in order to achieve this goal.
Though they are distinct in many respects, manufacturing houses today are increasingly combining the various aspects of two strategies to survive profitably. “By combining the strengths of lean and agility with renewal strategy manufacturing firms can achieve fitness and business perpetuation for economic gain” (Pham et al, 2007) Lean is a strategy for achieving the maximum productivity at the lowest possible cost by a process of continuous improvement in manufacturing achieved by systematically removing all waste in pursuit of reducing costs through optimum use of resources.
Agility, on the other hand, aims to achieve competitive performance by flexible manufacturing and quickly and efficiently responding to changing business needs. [Kidd, 1994). The all round dynamism of market place, customer needs and competition are forcing manufacturers to produce their products at the lowest cost with acceptable quality levels while at the same time offering customers more options in terms of product variables to be made available on shorter lead times with more flexible delivery.

This is exactly the case for a combination of lean and agile manufacturing concepts, strategies, techniques and systems to be put into place. As customers are increasingly asserting their control over various aspects of the product and competition is forcing to improve efficiency and reduce cost, companies have to find a way to control their own resources. i. e. , processes, materials and suppliers by adopting lean and agile manufacturing techniques. (Intermec Technologies, 2007) Relationship between Lean & Agile
Lean manufacturing emphasizes on efficiency and cost reduction while in Agile manufacturing, the focus is on flexibility, such as product attributes, configuration and delivery options without increasing the price. This makes Lean and Agile fundamentally different with conflicting ideas on processes and resource management and choosing between the two can be difficult for an organization. But there is plenty of common ground between the two models to enable companies to be lean and agile much at the same time. “Lean methodologies can be a powerful contributor to the creation of agile enterprises” (Aitken, Christopher, Towill, 2002).
Automated data collection combined with advanced communication technologies help manufacturers to become lean and agile simultaneously which is the need of the day to counter the competition and exceed the customer expectations consistently. Information technology and telecommunication developments like Industrial mobile computers and wireless networks help both lean and agile manufacturers to improve productivity, adapt to product variations, with fewer errors and less labor by distributing information and quick decision making with real-time data collection systems. (Intermec Technologies, 2007).
Lean and Agile paradigms, though distinctly differerent, are mutually complementing and can be combined in the operations of an enterprise in order to compete in the age of uncertainties that exists today. ( Naylor et al, 1999). The business environment in the 21st century calls for a market centric approach to production rather than a production centric approach to the market. From the era of making a product in huge quantities at lowest costs using lean production strategies and then finding buyers for it, manufacturers have to start the production process after they get the order from the customer. (Sanchez, Nagi, 2001)
Lean Manufacturing: Lean manufacturing as a concept emanated from a series of processes aimed identifying and reducing waste at every stage of production, introduced by Toyota in their Japanese facilities which was later hailed as Toyota Production System (TPS) (Ohno, 1988). TPS advocated a series of measures such as, “Pull” systems to avoid over-production, use of visual controls for quick identification of problems, a culture of continuous improvement etc. (Kochnev, 2007). With a clear emphasis on efficiency and quality, Lean manufacturing looks at optimum utilization of resources such as raw materials, inventory, labor and machinery.
“Lean techniques are not limited to production operations and often extend to receiving, materials management, inventory and distribution” (Intermec Technologies, 2007). Effective Supply chain management systems are used and suitable arrangements are made with the suppliers and customers by companies to avoid building up of inventories of raw material on the input side and finished products on the out put side resulting in the reduction of inventory duration from days to merely hour basis. Lower inventories mean less storage space, better utilization of the saved space, reduced intra-factory movement of materials etc.
Agile Manufacturing: Agile manufacturing, also known as “flexible manufacturing,” was first introduced in 1991 by the Iacocca Institute of Lehigh University, USA. (Kidd 1994). Agile manufacturing focuses on the ability to respond quickly to changes at an acceptable cost.. These changes could be in terms of demand volume, variety or mix of products. (Gunesakaran 1998). Manufacturers today are facing challenges like continuous customization needs, shorter product development time availability, more product variations, and higher uncertainty in terms of market dynamics and demand.
To overcome these challenges organizations need to achieve a level of flexibility in their manufacturing set up. (Ngamsirijit, 2008). This flexibility requires real time data capture, efficient communication channels and quick decision making, which in turn requires application of state-of-the-art information technology systems that enable the standard for the exchange of product model data (STEP), concurrent engineering, virtual manufacturing architecture, component-based hierarchical shop floor control system, information and communication infrastructure, and organizational and behavioral changes (Cho et al.
1996) Agile manufacturing concepts are adopted by organizations in order to quickly respond to changing market situations. The concepts are an extension of lean production techniques and are essential for manufacturing concerns across the world especially in environments where the product mix is complex and customer demand is highly variable.
The traditional dependence on economies of scale using large, central facilities has given way to a high degree of customization, the range of variations and multiple configurations driving organizations towards achieving agility, by operating multiple, small production facilities closer to their customers keeping them in the loop of a highly flexible supply chain. By doing so, manufacturers are able to allow frequent product customization resulting from changing customer preferences, just-in-time and just-in-sequence delivery, shorten the setting up of a work flow for a new product etc.
( Intermec Technologies, 2007) Comparison of Lean and Agile Manufacturing Concepts: 1. Lean manufacturing is a methodical approach to manufacture products with systematic approach to find and avoid wastages in raw materials, machinery, labor force and defects. This is done over time by consciously reviewing and correcting the aspects all processes with aim of achieving more efficiency at a higher quality levels with lesser expenses.
Agile Manufacturing, takes the concept further to adapt organizations to the changing business paradigm of uncertainties in customer preferences and market dynamics leading to infrequent demands and higher product variations. 2. Lean manufacturing provides organizations with concepts, techniques and strategies aimed at producing high quality products more economically while agile manufacturing equips the organizations with the flexibility that’s required to survive in the changing world and the changes in the customer demands.
Agile manufacturing gives a new lease of life for organizations that are looking for new initiatives to compete with the matured lean manufacturers especially in the south east Asian countries like China and Japan. 3. The techniques and strategies of Lean Manufacturing has cemented its place over the years as a very reliable means to increase productivity, maximize resource usage, reduce costs and achieve consistently high quality.
In markets that offer constant demands for products with little or no variations, lean manufacturing is well suited to provide organizations a profitable run. On the other hand, agile manufacturing enterprises are equipped to respond to rapid changes in the market and by doing so, they are in a position to take advantage of the windows of opportunities offered frequently in the highly turbulent market place of the 21st Century. ( Kidd, 2000)