Republic of the Philippines

DR. EMILIO B. ESPINOSA, SR. MEMORIAL

STATE COLLEGE OF AGRICULTURE AND TECHNOLOGY
College of Industrial Technology
www.debesmscat.edu.ph. Cabitan, Mandaon, Masbate

MODULE # 06
Subject: IT 321- INDUSTRIAL ORGANIZATION AND MANAGEMENT PRACTICES
Course : BSIT- Third Year Students
Course Description: Basic principles of analyzing the structure of a business; types of organization and
planning; organizational set-up; factors necessary in a business enterprise; its type
and categories.
Topic: SIGNIFICANT FACTORS IN BUSINESS ENTERPRISE: Quantity and Quality Control
Instructor: SHARMAINE Z. TORREGOZA
Week: #11-12

LEARNING OBJECTIVES

At the end of the unit, the students must have:

 Analyze and apply methods-improvement practices and waste control
 Familiarized with plant and equipment maintenance.
 Understood and apply inspections and statistical techniques.

INTRODUCTION

Both quality and quantity are of crucial importance in the manufacturing industry. After
all, it’s essential to produce a good product, but it’s also important to create a large
number of said products.
Of these two critical concepts, however, which one do you think is more crucial to the
operations?
Practically, you might think of quality as a scale ranging from perfect to utterly
disastrous. Whenever you manufacture an item or a product, it will inevitably fall
somewhere on the scale. If it is on the end of the scale closer to perfect, we refer to it as
high-quality, and if it falls on the other end, we might say it is low-quality.

CONTENT FOCUS

QUANTITY CONTROL: The Search for Improved Methods

The search for better production methods probably originated with man's earliest
inventions of the lever, wheel, and inclined plane. It continues both as personal
invention and through the use of techniques to be described.
The merger of general improvement in industrial management with the systematic
approach formed the scientific management moment about the start of the twentieth
century.

METHODS-IMPROVEMENT PRACTICES AND WASTE CONTROL

A well-managed enterprise does not view methods work as the prerogative of the
industrial engineers only. Methods analysis pervades the organization. Plant and
product engineers, controllers, cost accountants, production- and quality control
specialists, purchasing buyers, industrial-relations personnel, and line supervision at all
levels spend a significant portion of their time on methods.

When methods-improvement techniques are taught to employees, the term WORK

SIMPLIFICATION is often used to designate the cooperative project. Employee
acceptance of methods-improvement activities is essential to any program. If their
enthusiastic participation also can be obtained, results and savings can skyrocket.
While in some quarters work simplification is restricted to improvements in
manufacturing employee motions and effort, actually it can cover all phases of work in
the industrial enterprise, including procedures, systems, equipment engineering,
tooling, maintenance activities, and office work.

Companies which fail to call on employees for improvements overlook the fact that the
person who spends 8 hours a day on a job is perhaps the one best informed about and
most interested in that job and how it is performed. Frequently he can suggest changes
that would elude even the trained methods person. The more people in the organization
who are thinking about methods, the better.

Many processes, operations, and work elements are best analyzed by charting
observed practices and work patterns. Investigation can be made by personal
observation at the scene or, where close study of details is required.

Three Forms of Charts Used in Methods Study

1. PROCESS-FLOW CHART - is used to study a part or product through its

process.
2. MAN-MACHINE CHART - gives in detail actions, simultaneous or sequential, of
the operator and equipment operated. It points up idle time of either the man or
the machine, which can be eliminated by a change in work pattern.
3. SIMOMOTION CHART - When Man-Machine chart is carried further and all parts
of the body are charted in greater details.

Suggestion System

One of the most successful bridges between methods-Improvement efforts and good
industrial relations is the use of suggestion system in which employees may offer
ideas to save time, effort, cost, or injury for prizes or money rewards. Industrial-relations
departments promote suggestion plan to improve employee morale. Employee
cooperative spirit may be estimated from the attitude shown in the suggestion made.
Suggestion systems have operated continuously since the closing years of the
nineteenth century. The Labor-Management committee (LMC), a type of suggestion
system operated with employee participation, developed to increase production.

WASTE CONTROL

Industrial waste control is accomplished most effectively by a twofold program of (1)

waste prevention, which endeavors to eliminate or reduce the waste; and (2) salvage,
which attempts to utilize, reclaim, or dispose of all waste that does occur.

These two functions are separate in organization and approach. Waste prevention is a
Hydra-headed program in which everyone in the manufacturing organization, from plant
manager to sweeper, engages. In spite of all efforts, manufacturing processes do
generate a variety of waste which must be disposed of so as to bring the greatest
financial return-or the least financial loss-to the enterprise. Here, then, lies the raison
d'etre of the salvage function. Contrasted with waste prevention, which is everybody's
business, salvage is generally the responsibility of a section or department reporting to
the plant engineer or allied with the maintenance function.

Waste Prevention

Types of industrial waste and preventive measures:

1. Unusable Production Material - This material generally results from such causes as
errors in engineering and drafting; defective purchased materials; improperly made or
sharpened, worn, or wrong tools; defective or poorly set-up equipment; poor
workmanship; damage in handling and transporting: and surplus, Spoiled, or obsolete
materials. In all the above the element of carelessness stands out as ne prime cause.
Since to err is human, it cannot be entirely eliminated, but it can be minimized by the
application of controls.
2. Residue Material from the Process - This category operations; includes "skeleton and
scrap" plastic or filigree remaining from punch-press operations: butt ends or short
pieces original material; and chips, turnings, remnants of fabrics and plastics and other
items left from production processes.
3. Dormant Equipment - Here we consider worn-out, obsolete, or broken machine parts,
tools, dies, fixtures, jigs, and gages as well as plumbing and electrical parts, partitions,
conveyors, and the like. Careful use and maintenance and controlled issuance and
storage are typical of the preventive measures which prolong the life of such items.
Once worn out, they should be relegated to the scrap pile and not allowed to clutter up
the plant interior.
4. Supplies - As in the spoilage of production material, carelessness also dominates the
wastage of shop supplies. The answer to this type of waste is generally to be found in
educational and control measures which militate against carelessness and neglect by
employees.
5. Power and Fuel - Unnecessary use of lights and failure to shut down motors or
machinery not in use are two common ways in which power is wasted. Steam, gas, or
air leaks likewise are sources of waste. Here the solution is prompt detection and
correction of the condition. Other wastage results from technical difficulties or poor
engineering of equipment.

Salvage

The salvage section collects waste from its point of occurrence and sorts, segregates,
grades, and stores it as necessary. Then this section earmarks it for (1) utilization as is;
(2) reclamation by repairing or reprocessed 3) disposal in the form of scrap. Shipping
containers from received goods, dismantled piping, electrical wiring and switches, and
used oil drums are typical of waste which can be utilized as found. The filtration of dirty
solvents or coolants, welding or brazing of broken tools and machine parts, dry-cleaning
of soiled work gloves, and reworking of a defective product so that it passes inspection
are examples of how items can be reclaimed to be "as good as new." Whatever cannot
be utilized or reclaimed must then be disposed of as scrap. Here we find such activities
as the sale of metal chips or machine turnings, the burning of scrap paper, and the
dumping as "fill" of scrap that cannot be sold or burned.

When scrap is sold, it is frequently handled through a scrap broker, the actual in-plant
arrangements being made jointly by the salvage section and the purchasing or sales
department, whichever by custom handles such miscellaneous sales. Finally, the duties
of the salvage function include a continual search for other uses of waste, either in the
plant or elsewhere, and encouragement of efforts to find ways of handling and
processing all forms of waste which will reduce costs and bring in a greater return.

PLANT AND EQUIPMENT MAINTENANCE

Effective maintenance of a plant and its equipment is prerequisite to efficient plant

operation and uninterrupted production.

Plant buildings deteriorate because of (1) the effects of the weather-sun, rain, cold,
heat, wind-and (2) wear and tear resulting from general use vibration, fumes, etc. While
deterioration cannot be stopped, it can he greatly retarded by maintenance.

Machines and equipment likewise are subject to wear and tear from use. Furthermore,
machines gradually tend to go out of adjustment not only as the result of use but also
because of temperature changes, vibration, seasoning" of machine parts, settling of
floors, and a host of other causes. Time is likewise a factor as corrosion forms in pipes
and on vital parts, moisture seeps into electrical windings and breaks down insulation,
and dirt gradually finds its way into many types of equipment. To arrest or counteract
the effects of all these diseases in its equipment, the only wonder drug at industry's
disposal is proper maintenance.
Scope of Maintenance

Industrial maintenance activities generally cover building exteriors, interiors,

installations, and servicing equipment; yards and yard equipment; power-plant and
power-transmission equipment; electrical equipment; and productive equipment. Also
functions of the maintenance department are the stocking of repair parts, piping, wiring,
and other materials of maintenance; the introduction or installation of measures to
reduce factory waste (e.g., self-closing water faucets, proper dispensers for powdered
soap, heat exchangers to permit reuse of cooling water); the responsibility for
maintaining safe working conditions for plant employees (discussed previously in this
chapter); and the guidance or education of plant supervision on ways of reducing the
maintenance required in their respective departments.

Most large maintenance departments today have one or more specialists skilled in each
of the major maintenance trades. Smaller plants usually hire outside tradesmen for
specific maintenance jobs, principally building repairs and painting, laying roofs, and
cleaning windows. These trades people operate under the supervision of the
maintenance supervisors or all-round handy man, depending on the size of the plant.

Even the larger plants possess some complicated equipment which must be serviced by
outside specialists. Automatic elevators with their self-closing doors and various safety
devices often call for the attention of trained elevator service personnel if they are to
function properly. Complicated office equipment, such as calculators and payroll
machines, likewise defy diagnoses by regular maintenance personnel. Many
manufacturers of such equipment offer contractual arrangements for periodic servicing
by trained specialists.

The apparent trends toward more automatic machines and complex electronic
equipment for manufacturing mean that maintenance will become even more important
than it is now. And it will be more difficult. Malfunction must be detected and corrected
quickly because an outage in one part of an integrated system can shut down the entire
system, and a loss of control can result in a huge number of defective products in a very
short operating period. It is reasonable to expect that more refined maintenance
equipment will be developed to treat the more elaborate production systems. Such
equipment will require greater technological competence to operate. The maintenance
personnel of the future will have to be intensively trained. They will likely form a highly
selective and respected segment in tomorrow's industrial society

Planned Maintenance and Preventive Maintenance

Planned maintenance is an organized attempt to prevent sudden breakdown in

equipment and emergency shutdowns for repairs. It is accomplished first of all by
preventive maintenance-a definite program of periodic cleaning, servicing, inspection,
and replacement of worn parts for vital plant facilities. When a failure does occur,
investigation is made of the cause, and statistical records are kept to indicate whether
or not the preventive program really is effective.
Continuity of operations demands that the following general procedures be carried out:
1. Down time of each item of production equipment for servicing should be
planned in advance, and the maintenance department notified.
2. Important items of equipment that require regular cleaning and maintenance or
are liable to sudden failure should be installed in duplicate. Included in this
category are pumps, compressors, transformers, and power lines.
3. Where (2) is not possible, spare units, parts, assemblies, controls, etc., should
be at hand for rapid substitution for an item that fails or shows signs of
approaching failure.
4. Records should be kept and analyses made of repetitive failures. Regular and
prescribed inspections should be made for signs of approaching failure.

QUALITY IN MANUFACTURING

Quality is never absolute-it is always relative to certain other considerations. For one
thing, the word "quality" is meaningless unless the end use of the product is also
stipulated. The term "good quality" means that the article is good for the purpose for
which it was intended. For example, a high-quality automobile tire jack might pass every
test for quality required of tire jacks, but if it were subjected to tests given jackscrews
designed to raise buildings, it would fail miserably. Its quality is adequate only for its
intended end use, that of supporting 2 tons-not 20. Also, quality is an abstract word
unless related to definable and measurable characteristics of the product involved.

Most of us would agree on an instinctual level that quality control is important

everywhere — especially in the manufacturing industry. But why exactly is this? Why is
it a good idea to produce the highest-quality products you can, and why is it essential to
have a system in place to ensure this happens? Here are just a few of the reasons.

1. Create Improved Products

With intensive quality-control measures in place, your products will begin to
reach higher and higher qualities, which has numerous benefits for you and your
company. They’ll get a better product, and you’ll have the satisfaction of knowing that
when customers buy from you, they’re truly buying the best product out there, and are
genuinely getting their money’s worth.

2. Inspire Brand Loyalty

When your products are trustworthy and high-quality, it doesn’t go unnoticed.
Customers pay attention to things like that. They become loyal to your brand and begin
to seek you out instead of your competitors. Even if your product changes or looks
slightly different, they trust it’s still the best, and they’re willing to stick with it. Even
better, they may begin recommending your products to their friends and family, growing
your customer base still further. brand loyalty in manufacturing

3. Comply with Regulations

 You don’t need anyone to tell you about the many regulations and rules that
dictate manufacturing processes and procedures. You’re surely already familiar with
them. By undertaking the responsibility of your quality control measures, following these
regulations won’t become an extra task. It’ll become an integral part of your operations.
You can avoid delays and potential fines you might otherwise incur from not complying
with regulations.

4. Become Confident and Consistent

With quality-control measures in place, you don’t have to wonder if your products
are all achieving a similar level of quality. You can know for sure. Measures like these
allow you to feel absolutely confident every product leaving the manufacturing floor is of
equal quality, and you can sell it for the same price.

5. Conserve Resources
In the manufacturing industry, conserving resources is of paramount importance.
Acquiring more resources means spending more money, which means lower profits all
around. Because of this, it’s important to make the most of the resources you have and
avoid wasting them whenever possible. Quality control is an excellent way to do this, as
it helps ensure fewer mistakes and false starts, thus helping you get the most out of
your materials and resources.

6. Reduce Level of Risk

Any time a product leaves your hands, you’re assuming a certain level of risk.
The product may be defective. It may break after a single use. A customer may dislike it
and avoid buying your products in the future. When you employ effective quality-control
methods, however, you can drastically reduce this risk and do everything in your power
to create products that will serve your customers well and build brand satisfaction and
loyalty.

Inspection and Statistical Techniques

Quality control is taking on the emphasis of quality assurance-the means to achieving

true product reliability. Reliability cannot be inspected into a product; it must be
designed and built in. Furthermore, quality control must do more than simply see that
products meet specifications. It must follow through to see that products perform in
service and, in some circumstances that they perform in the end product of a customer.
When quality control adopts this systems concept of reliability, it becomes a factor in
every decision in engineering, in manufacturing, and in application, from product
development to shipment to end use.

Methodical control of quality can be achieved by means of four principal tools of the
trade.

1. Standards and specifications that establish the quality objectives to be measured or

evaluated
2. Inspection of materials, parts, and products to compare them against the established
standards and to separate good quality from bad
3. Statistical techniques, including sampling, analysis, and charting, to indicate whether
or not quality is under control
4. Measuring instruments or inspection devices used for objective and measurable
comparison of actual quality against the established standards

The terms "quality control" and "inspection" are often used interchangeably. This, no
doubt, is the result of the historical concept of inspection as the principal tool of quality
control. Important though inspection is, we must remember that, whereas a program of
quality control by bringing variables under control enlarges the production pile,
inspection, by separating the good from the bad, merely enlarges the scrap pile.

The administration of quality control in most companies rests with the inspection
department. The program is usually headed by a quality manager who, in the case of
precision products, operates directly under the top manufacturing executive, usually the
plant manager. For manufacture in which precision is not a major factor, the lesser
importance of quality permits subordination of the inspection department to the
divisional or plant superintendent. Although inspection has been known to operate
effectively under the wing of an operating foreman or other supervisor charged with the
maintenance of production schedules, this practice is definitely risky. When rush orders
arise or when the pressure is on quantity, an operating foreman has a tendency to
sacrifice quality in favor of quantity. Best practice dictates setting the people responsible
for quantity and for quality on a par with each other and under impartial authority.

INSPECTION

Inspection serves the following two main purposes in any quality-control program:

1. To Segregate defective goods and thus ensure that the customers receive
only goods of adequate quality. This type of control is of paramount importance, for
upon its success rests the good will and satisfaction of the users of those goods. The
principal objective of all "final" inspection (the inspection of finished products) as well as
much of inspection of raw and in-process material is to ensure that no, or at the most
very few, defective goods leave the plant.
2. To locate laws in the raw material or in the processing of that material which
will cause trouble at subsequent operations. This phase of quality control is purely a tool
of manufacturing in that it is designed to anticipate and prevent manufacturing
difficulties that might occur. For example, by such inspection, oversize or undersize
parts of an assembly are located and segregated before the assembly operation, at
which stage such defective parts would cause trouble.

Authority to pass or reject raw material, purchased parts, in-process material, and
finished products is vested in the inspection department. Another part of this
department's duties generally is the inspection of critical supplies, tooling, and
equipment items. It is also responsible for the issuance, control, and inspection of all
gages, instruments, and other measuring devices used by both inspectors and
production operators. Joint or possibly complete supervision of the salvage of rejected
work and the disposition of scrap to ensure that no defective material is returned to the
production flow may be within the province of the inspection department.

Inspection Practices

 CONTROL RAW MATERIALS AND PURCHASED PARTS

The quality of purchased items usually is established through definite, written
standards and specifications agreed to by both vendor and purchaser. Thereafter,
frequent personal contacts and consultation may be necessary to resolve question of
interpretation, deviation, and substitution.
 LOCATE IN-PROCESS INSPECTION STRATEGICALLY
Effective in-process inspection prevents (a) a defect from being concealed in the
end product (as might happen where the next operation involves assembly or painting);
(b) a defect from affecting a subsequent operation (e.g., discovery of a crack in a
forging which would break tools and ruin the setup of a machining operation or
discovery of an oversize or undersize part that would cause trouble at assembly); and
(c) additional work from being performed on rejectable material. In-process inspection is
mainly a tool of manufacturing designed to anticipate and prevent subsequent
production difficulties that otherwise would occur. The proper locations for such
inspection, then, are at points in the process where these objectives are most effectively
and economically achieved.

STANDARDS AND SPECIFICATIONS

It is important here to consider how the establishment of standards relating to quality

affects the maintenance of a program of quality control.

There is a well-known axiom in industrial circles to the effect that perfection in

manufacture is impossible to attain and costly to approach. We have seen that
imperfections are caused by the variables in a manufacturing process and that, through
control, the effect of these variables can be minimized to reduce the imperfections.
However, the economic law of diminishing returns applies to quality control as it does to
everything else: as perfection is approached, costs rise disproportionately.

Tolerances

To be salable, a product must be acceptable to customers as regards both quality and

cost. Somewhere along the scales of quality and cost there is a point of compromise at
which the quality meets the customer's minimum requirements and the cost fits his
pocketbook. At this point, then, is established what might be termed the "basic
standard" of quality. In practice, however, there is no such thing as an exact standard,
for such a thing is as difficult to attain as is perfection itself. So, recognizing that while it
is impossible to avoid variations from any basic criterion it is possible restrict such
variations, industry usually states each standard in terms of a tolerance or permissible
deviation from the basic criterion. This tolerance defines by means of limits the zone of
acceptability-a zone of variation that may be permitted without altering the functional
fitness of the article involved.

In order that we may better understand the principles underlying the establishment of
standards of qualities we must explore further the nature of the manufacturing variables
that make tolerances necessary.

Basically, manufacturing variables can be grouped into two classes:

 1. Chance variables - These include all variables which are inherent in the
manufacturing process and which, even if located, cannot be corrected except by
a significant change in the manufacturing process itself. They are "chance" in the
sense that they are sporadic and may have no regular or predictable effect on
the product. Such variables include materials that are not entirely homogeneous,
imperfections inherent in the design of the machines employed, natural
inaccuracies of inspection instruments, the "feel," eyesight, or judgment of the
production operators all variables that cannot be removed without a major
change in materials, equipment, or methods.

 2. Assignable variables - These are the variables not inherent in the

manufacturing process. Generally, they result from such extraneous causes as
improper operation of a machine, incorrect sequence of manufacturing
operations, machines or inspection instruments worn and in need of repair, room
temperatures that vary during the day or in different parts of the same room,
vibration of the plant building affecting the performance of the machines-all
variables that can be assigned and controlled without altering the manufacturing
process.

STATISTICAL TECHNIQUES

The application of statistical techniques to the field of quality control is one of the
leading advances in industrial technology of the present century. Originally introduced
and perfected in the Bell Telephone Laboratories and the Western Electric Company in
the 1920s, statistical quality control did not find general acceptance in industry until the
1940s.

By that time, workable shop tables eliminating most of the statistical calculations were
published, and, as charting techniques became popular, statistical quality control really
"caught on" in industry. It has brought startling reductions in inspection costs and
permitted a more fundamental control of quality than previously was possible. Proper
tolerances for a process can now be set scientifically. Needless inspections and
production interruptions (e.g., machine adjustments when the work is well within control)
can be eliminated. A reduction in scrap and in material to be reworked, together with an
improvement in the plant's average quality level, almost invariably results. Definite
assurance of incoming or outgoing quality is obtainable. For the future, as the statistical
techniques are improved further and as their application becomes universal, quality
control should be virtually freed from its bonds of empiricism.

Statistical quality control is the application of statistical principles and techniques in all
stages of production, directed toward the most economic manufacture of a product that
is maximally useful and has a market.

A manufacturer must make a product that is wanted: the product must find a market,
and it must be one for which there is purchasing power in money or barter; otherwise,
the manufacturer may find himself making a product that suits him very well but for
which there is no buyer. In short, for maximum effect, he must apply the full meaning of
statistical quality control, from raw material to consumer, and not just in one stage of
production.

Some advantages of statistical quality control. Through the full use of statistical quality
control, from raw material to the consumer, a manufacturer may expect to achieve in
some measure the following advantages:
1. Increased production, without investment in capital equipment or expansion of
plant.
2. Savings in raw materials and fuel (a particularly vital advantage when scarce
materials threaten production).
3. Better operating efficiency: (a) idle time of machines decreased; fewer
rejections; less scrap and rework; (b) better prediction of the market, through
consumer research, by which the purchase of materials, and the expansion and
contraction of the plant are carried out rationally, resulting in better economy than
would be possible otherwise.
4. Decreased inspection, but with increased assurance of dependable quality
5. Quality and uniformity better suited to the market.
6. Greater precision of dimensions when required (us when parts use to be
interchangeable).
7. Better design, through consumer research, carried it by modern methods of
sampling and design of experiment.
8. Stronger competitive position, through ability to meet world price, quality, and
uniformity.

As an aspect of business intelligence, statistical analysis scrutinizes business data and

reports on trends using five key steps.
1. Describe the type of data that will be analyzed
2. Explore the relation of the data to the underlying population
3. Create a model to summarize the understanding of how the data related to the
underlying population
4. Prove, or disprove, the validity of the model
5. Use predictive analytics to run scenarios that will guide future actions.
ASSESSMENT:

Instruction: Read comprehensively the questions below and explain the answer in your
own words.

1. There are different Methods-Improvement Practices discussed in this module. What

do you think is the most effective and why? Cite some instances or examples as to why
do you think it is the most effective.

2. When do you think is the best time to inspect the quality of the product? Is it after the
completion of the process of manufacturing? Or is it after each stages of the process
the product has undergone?