Recently, you were dining with four chief financial officers (CFOs) who were attending a seminar on management tools and approaches to improving operations. During dinner, the CFOs shared information about their organizations’ current operating environments. Excerpts from the dinner conversation appear below. Indicate whether each excerpt describes activitybased management (ABM), the just-in-time (JIT) operating philosophy, total quality management (TQM), or the theory of constraints (TOC).
CFO 1: We think quality can be achieved through carefully designed production processes. We focus on minimizing the time needed to move, store, queue, and inspect our materials and products. We’ve reduced inventories by purchasing and using materials only when they’re needed.
CFO 2: Your approach is good. But we’re more concerned with our total operating environment, so we have a strategy that asks all employees to contribute to the quality of both our products and our work environment. We focus on eliminating poor product quality by reducing waste and inefficiencies in our current operating methods.
CFO 3: Our organization has adopted a strategy for producing high-quality products that incorporates many of your approaches. We also want to manage our resources effectively, and we do it by monitoring operating activities. We analyze all activities to eliminate or reduce the ones that don’t add value to products.
CFO 4: All of your approaches are good, but how do you set priorities for your management efforts? We find that we achieve the greatest improvements by focusing our time and resources on the bottlenecks in our production processes.