As competition with the imported car increases Ark manufacturing company ought to
stay price competitive with its competitors. To stand this test, the company have to listen to the
voices of its customers and manufacture cars that meets this requirements while still maintaining
the dependability and high level of quality (Teli, 2012). The company have to use the measure of
cost of quality and use the knowledge gained to better themselves. This company may choose to
invest beforehand quality costs to minimize or prevent occurrence of failure. Cost of quality
defines and provides an estimate to the amount of the organization resources that are being used
for maintaining a quality of cars that may come up as a result of either external or internal
failures. The cost of quality is usually represented as a sum of Cost of poor Quality and the sum
of Good Quality (Morris&Jose, 2016). Correct implementation will ensure that the company will
be able to measure correct amount of resources that are used for cost of poor quality and the cost
of good quality. With this information, the company will be able to determine where resources
are needed to be allocated to improve the quality. The cost of quality is mainly divided into four
categories namely; external failure costs, internal failure costs, prevention costs and appraisal
costs. Prevention costs refers to those costs that are normally incurred to minimize the
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occurrences of failure. This will include quality planning, developing a quality management
system, proper training of employees to minimize defects in production and establishing the
specifications of a car. Appraisal costs deals with maintaining an acceptable quality level of a
car. This will include inspecting incoming raw materials for assembly, assessing the suppliers,
controlling production processes and quality audits. Internal failure costs are the costs that are
associated that are associated in the car before it reaches the customer. This will include cost of
reworking on a car and the costs that are associated with analyzing the failure. External failures
are the costs that are incurred on defects after a buyer has received the car. This entails claims of
warranty, the cost of repairing and replacing the broken parts and customer complains. When the
resources are invested in the right manner the overall cost of quality should decrease.
B)
Kaizen costing approach is a technique that is used to control the cost incurred over
activities that are unproductive or the resources that do not add any value to the organization. It
tries to improve the overall efficiency of the organization. It is implemented to manage different
kinds of costs in a business. The cost of supply chain can be controlled by Kaizen approach. It
entails the costs of administration, procurement of orders, the transportation costs and
inventories. It regulates the cost that is normally incurred during the production of cars that
includes the cost of labor, costs of raw materials used during production and costs for machinery
used (Sani, 2012). The costs of hiring chattered accountants can also be controlled by kaizen
costing. This approach will be particularly important in researching, analyzing and hiring of
expert personnel that will be involved in redesigning the structure of the cars. Another major area
where this technique is useful is in human resource. Due to the projected changes in production
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of cars, there will be a necessity to hire new staff and still train the existing ones. Time wastage
and wastage of raw of materials will be reduced considerably thus improving the business
operations. Kaizen costing will also provide a solution through reusability of car parts thus
improving the production efficiency which in turn will reduce the manufacture of faulty
products. Increased importation of cars will call for proper advertising by Ark Autos. The cost of
adverting, promotion, selling, distribution, recruitment of staff to be involved in marketing can
be managed by Kaizen costing approach. This approach actively involves the employees. Their
feedback and ideas helps in eliminating resistance that may arise from their side. It also helps in
thinking and finding solutions. Managers at Ark may form a team of employees to find a
practical solutions to each problem i.e. high emission rates in their cars. This in turn also results
in creation of better environment of work between the employees and the management. Kaizen
approach also promotes teams that are cross-functional. This implies that the employees have
different knowledge and skills. However, the drawbacks associated with it is that it becomes
tedious and confusing for low level management to adopt to change that is implemented through
kaizen costing. Thus, it requires a lot of training and expertise to implement.
C)
In Just-in-time delivery cars are purchased and delivered as they are needed to meet
customer requirements and demands. With JIT, planning for production is done after receiving
customer orders. It results to more small orders and recurring deliveries. Just-in-time purchasing
offers advantage such as keeping production runs short and moving on to new products with ease
and quickly (Zaid&Abu, 2016). Ark implementing this approach will remove the need of using a
large warehouse to store the inventory. The company will no longer need to spend huge amounts
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of money in purchasing raw materials to be used in production because it will only order what is
needed. This will in turn free cash flow for other uses. Since production process will run for a
brief time after implementation, it will be easier to stop production of car model type and switch
to a different one according to the customer preference and demand. Production mistakes will be
spotted more quickly and corrected on time. This will results to fewer cars produced that may
contain defects. Chances of inventory becoming obsolete will be minimal due to the high rate of
inventory turnover ensures no items remains in stock thus becoming obsolete. This also creates
enough room for maneuvering by handlers hence they are not likely to cause damage to stored
inventory. Less inventory also means that the Ark business will spend less in cost of holding
inventory such as that one of the warehouse. The drawbacks associated with it is that production
process could be seriously impacted by a supplier who do not deliver the raw materials to the
company on time and in the required amount. The company may also not also be able to meet
immediately the massive order or maybe a huge unexpected order since it will have less no stock
of completed cars. The company will also have to invest in information technology that will link
its computer system with that of its raw material suppliers. This will coordinate the process of
delivery. In case a natural disaster occurs, the supply of raw materials may be interfered with and
this might result to a complete halt of the production process.
D)
Total quality management (TQM) refers to a continuous process of minimizing and
detecting or eliminating errors in production in supply management. It is aimed at improving
customer the experience of the customer and making sure that the employees are up in speed
with the training. Implementing TQM will ensure that employees will focus on managing quality
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and continuous improvement of the company. This will in return make sure that the company
upholds cultural values that are essential for long-term success for both the customers and the
company itself. TQM puts its details on the quality which helps to identify employee’s
deficiencies and mentoring that addresses this deficiencies. It also focuses on team work. This
leads to creation of a team that is cross-functional. Increased communication and coordination in
the different groups creates a deep institutional knowledge and the company becomes very
flexible in deploying personnel (Mehralian, 2017). This is particularly important ensuring that the
production does not stop. Total quality management will ensure that cars manufactured will have
less defects. This is because it one of the principles to produce products right at the first time.
Thus the customer complains will be less. Production of high quality cars will make customers
satisfied and they will have a higher preference of Ark cars. This will also necessitate word of
mouth marketing that will be initiated by customers. Less cars with defects will mean that the
company will save the cost of customer support services and creation of product fixes. This will
raise the profit margin of the company. Total Quality management lays down a clear and a well
defines values of culture. The core values are laid around quality management and continual
improvements. Implementing TQM in JIT approach will strengthen Ark company competitive
position. This will be brought about by improved market image as customers will be more
satisfied and it will also be easy to retain them. This approach will ensure that the company
becomes adaptable to the changing market demands and the government regulations. Motivation
of employees which is achieved by TQM will ensure that they become innovate and find ways of
meeting customers demand just in time.
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Work Cited
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Sani, Alireza Azimi, and Mahdi Allahverdizadeh. "Target and kaizen costing." World academy of
science, engineering and technology 6.2 (2012): 40-46.
Okoye, Pius Vincent Chukwubuikem, Francis Chinedu Egbunike, and Olamide Mofolusho
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Mgmt. & Sustainability 3 (2013): 114.
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Automotive Industry (Case Study: Iran Khodro's Assembly Line 2)." Indian J. Sci. Res 7.1 (2014): 001-
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and Inventory Management 1.4 (2016): 286-305.
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customer satisfaction." The TQM Journal (2012).
Mehralian, Gholamhossein, et al. "TQM and organizational performance using the balanced
scorecard approach." International Journal of Productivity and Performance Management (2017).