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Money
Observation Made By:
Observation Date:
Kaizen made by:
Document made by: KranthiDocument prepared date: 25SEP13
Paper or Coin form (these days, earlier it used to be other things), of value of the
product or service
Objective of this document
Introduce and interrelate
Money, Exchange Rate, Business, Departments, Quality
Neolithic Revolution during 8000BC (8000 and 6000 BC)
• It was the wide-scale transition of many human
cultures from a lifestyle of hunting and
gathering to one of agriculture and settlement
which supported an increasingly large
population
Barter System6000 BC
A World Without Money:
Money, in some form, has been part of human history for at least the last 3,000 years.
Before that time, it is assumed that a system of bartering was likely used.
The history of bartering dates all the way back to 6000 BC. Introduced by Mesopotamia
tribes, bartering was adopted by Phoenicians. Phoenicians bartered goods to those
located in various other cities across oceans. Babylonian's also developed an improved
bartering system. Goods were exchanged for food, tea, weapons, and spices.
At times, human skulls were used as well. Salt was another popular item exchanged.
Salt was so valuable that Roman soldiers' salaries were paid with it. In the Middle Ages,
Europeans travelled around the globe to barter crafts and furs in exchange for silks and
perfumes. Colonial Americans exchanged musket balls, deer skins, and wheat. When
money was invented, bartering did not end, it become more organized.
Barter System- Disadvantages6000 BC
Just as with most things, there are disadvantages and advantages of bartering. A
complication of bartering is determining how trustworthy the person you are trading
with is. The other person does not have any proof or certification that they are
legitimate, and there is no consumer protection or warranties involved. This means
that services and goods you are exchanging may be exchanged for poor or defective
items.
You would not want to exchange a toy that is almost brand new and in perfect working
condition for a toy that is worn and does not work at all would you? It may be a good
idea to limit exchanges to family and friends in the beginning because good bartering
requires skill and experience. At times, it is easy to think the item you desire is worth
more than it actually is and underestimate the value of your own item.
History of money
The history of money begins around 2500 years ago with
the first minting of coinage in about the seventh to sixth
century BC. Money is any clearly identifiable object of
value that is generally accepted as payment for goods and
services and repayment of debts within a market or which
is legal tender within a country.
• The importance of grain with respect to the value of money is
inherent in language where the term for a small quantity of gold
was "grain of gold".
• When the inhabitants of one country became more dependent on
those of another, and they imported what they needed, and
exported what they had too much of, money necessarily came into
use.
Origin of Money
Origin of Money: Though trade was done through barter, people started confronting some
problems with the system. In order to exchange an item, the seller must have the specific
good the buyer needs and vice versa. This was not always possible. Another major drawback
was lack of a common value to measure the value of goods. How can a person fix the worth
of his goods? So, people started stacking certain valuable things that were acceptable for a
majority. They included salt, metal, farm animals, etc. Materials, like shells, feathers,
animal teeth, etc., were also used as money. This was made possible after they agreed upon
specific values for these materials and use the same for trade. However, it became difficult
to carry and use these materials. So traders wanted something that was not perishable and
easy to carry, as a medium of exchange. This led to the use of metal pieces as money. It is
believed that the first recognizable metal coins appeared in China, during 1000 B.C.
However, the first minted coins are believed to be made in some regions of Turkey, like
Lydia. Around 600 B.C., the Chinese started using paper money.
Industrial Revolution during 1780s (i.e. 1760-1840)
• This transition included going from hand production methods to
machines, new chemical manufacturing and iron production
processes, improved efficiency of water power, the increasing use
of steam power and the development of machine tools. It also
included the change from wood and other bio-fuels to coal.
Exchange Rate
The value of one currency for the purpose of conversion to
another.
Money, in and of itself, is nothing. It can be a shell, a metal coin, or a piece of paper with a historic
image on it, but the value that people place on it has nothing to do with the physical value of the
money. Money derives its value by being a medium of exchange, a unit of measurement and a
storehouse for wealth. Money allows people to trade goods and services indirectly, understand the
price of goods (prices written in dollar and cents correspond with an amount in your wallet) and
gives us a way to save for larger purchases in the future.
Money is valuable merely because everyone knows everyone else will accept it as a form of payment
- so let's take a look at where it has been, how it evolved and how it is used today. (To learn more
about money itself.
A generally accepted form of money, including coins and
paper notes, which is issued by a government and
circulated within an economy. Used as a medium of
exchange for goods and services, currency is the basis for
trade.
Value of currency can be determined from its purchasing power that
how much we purchase or buy with a single unit.
• The highest-valued currency unit is the currency in which a single
unit buys the highest number of any given other currency or the
largest amount of a given good. Most commonly the calculation is
made against a major reserve currency such as the euro (EUR), the
pound sterling (GBP) or the United States dollar (USD).
• A high-valued currency is distinct from a hard currency, which is a
currency widely accepted as a reliable store of value.
Evolution of Money
With barter, an individual possessing any surplus of value, such as a
measure of grain or a quantity of livestock could directly exchange that
for something perceived to have similar or greater value or utility, such
as a clay pot or a tool. The capacity to carry out barter transactions is
limited in that it depends on a coincidence of wants. The seller of food
grain has to find a buyer who wants to buy grain and who also could offer
in return something the seller wants to buy. There is no agreed standard
measure into which both seller and buyer could exchange commodities
according to their relative value of all the various goods and services
offered by other potential barter partners.
As it was difficult to carry such commodities for exchange, a common
thing for business transactions was thought and so Money has come into
existence.
Value of Money of a country i.e. Exchange rate; depends on Employment, GDP/ GNP.
How Currency Value is DeterminedHere is the basic idea of how currency value is determined. After the gold standard and the US
dollar standard fell, the world entered an age of the floating currency exchange. This means that
everyday a nations currency might be more valuable or less valuable than the day before.
What determines the fluctuations?
Buyers.
Countries all over the world purchase other countries currencies, which determines the value. The
American Dollar is strong because many countries buy a whole lot of US Dollars. If investors and
buyers decide to stop buying US Dollars, then the value of the US dollar would drop significantly.
Now about your Japan question, some economists argue that a country will intentionally keep the
exchange rate low so that buyers on the world market will not purchase the Yen for example. You
would think that a weak national currency would indicate that this country is poor. Not always the
case (China is a good example), the argument is that nations like Japan and China want their
currency to be low in value so that other nations (like the US) will buy more Japanese and Chinese
products imported. Think about it, if the US dollar is twice as strong as the Yen, than it can buy
twice as many Japanese goods. If a computer costs 1,000 dollars in the US, but 1000 Yen in Japan,
than you could buy two Japanese computers.
World War-II (1 September 1939 (1939-09-01) – 2 September 1945 (1945-09-02)
• During the second world war, a number of bombs exploded in factories during assembly. As a result, factories were required to document their procedures and to provide records to show that they were followed. They were then inspected to prove conformity to defined procedures.
Evolution of ‘Q’
1875 Taylorism (inspect, detect defects)
1925 Shewhart (statistical process control)
1930s Dodge/Roming acceptance sampling methods
1950s Deming's approach to quality and productivity management
1950s Taguchi's robust design
1980s The U.S. organizations recognize Deming's approach
1990s Turkish organizations recognize Deming's approach
2000s Many Turkish organizations excel at TQM, but building quality upstream is not emphasized yet
Step-1:
• Quality management is a recent phenomenon. Advanced civilizations that
supported the arts and crafts allowed clients to choose goods meeting
higher quality standards than normal goods. In societies where arts and
crafts are the responsibility of a master craftsman or artist, they would
lead their studio and train and supervise others. The importance of
craftsmen diminished as mass production and repetitive work practices
were instituted. The aim was to produce large numbers of the same
goods.
• The first proponent in the US for this approach was Eli Whitney who
proposed (interchangeable) parts manufacture for muskets, hence
producing the identical components and creating a musket assembly line.
Two:
• The next step forward was promoted by several people including
Frederick Winslow Taylor a mechanical engineer who sought to
improve industrial efficiency. He is sometimes called "the father of
scientific management." He was one of the intellectual leaders of
the Efficiency Movement and part of his approach laid a further
foundation for quality management, including aspects like
standardization and adopting improved practices.
Three:
• Henry Ford was also important in bringing process and quality
management practices into operation in his assembly lines. In
Germany, Karl Friedrich Benz, often called the inventor of the
motor car, was pursuing similar assembly and production practices,
although real mass production was properly initiated in Volkswagen
after World War II. From this period onwards, North American
companies focused predominantly upon production against lower
cost with increased efficiency.
Four:
• Walter A. Shewhart made a major step in the evolution
towards quality management by creating a method for
quality control for production, using statistical
methods, first proposed in 1924. This became the
foundation for his on-going work on statistical quality
control.
Five:
• W. Edwards Deming later applied statistical process
control methods in the United States during World War
II, thereby successfully improving quality in the
manufacture of munitions and other strategically
important products.
• Quality leadership from a national perspective has changed over the past
five to six decades. After the second world war, Japan decided to make
quality improvement a national imperative as part of rebuilding their
economy, and sought the help of Shewhart, Deming and Juran, amongst
others. W. Edwards Deming championed Shewhart's ideas in Japan from
1950 onwards. He is probably best known for his management philosophy
establishing quality, productivity, and competitive position. He has
formulated 14 points of attention for managers, which are a high level
abstraction of many of his deep insights. They should be interpreted by
learning and understanding the deeper insights.
• In the 1950s and 1960s, Japanese goods were synonymous with cheapness and low
quality, but over time their quality initiatives began to be successful, with Japan
achieving very high levels of quality in products from the 1970s onward. For
example, Japanese cars regularly top the J.D. Power customer satisfaction ratings.
In the 1980s Deming was asked by Ford Motor Company to start a quality initiative
after they realized that they were falling behind Japanese manufacturers. A
number of highly successful quality initiatives have been invented by the Japanese
(see for example on this page: Genichi Taguchi, QFD, Toyota Production System.
Many of the methods not only provide techniques but also have associated quality
culture (i.e. people factors). These methods are now adopted by the same western
countries that decades earlier derided Japanese methods.
• Customers recognize that quality is an important attribute in products and
services. Suppliers recognize that quality can be an important
differentiator between their own offerings and those of competitors
(quality differentiation is also called the quality gap). In the past two
decades this quality gap has been greatly reduced between competitive
products and services. This is partly due to the contracting (also called
outsourcing) of manufacture to countries like India and China, as well
internationalization of trade and competition. These countries amongst
many others have raised their own standards of quality in order to
meet International standards and customer demands.
• To have their own standards, every country has developed their own
standards which are developed by NSI (National Standards Institutes)
To meet the global standards,
• We need international standards that are accepted by
every country, then was ISO formed. For globalization
and unification of standards.
Quality Improvement:There are many methods for quality improvement. These cover product improvement, process improvement and people based improvement. In the
following list are methods of quality management and techniques that incorporate and drive quality improvement:
• ISO 9004:2008 — guidelines for performance improvement.
• ISO 15504-4: 2005 — information technology — process assessment — Part 4: Guidance on use for process improvement and process capability
determination.
• QFD — quality function deployment, also known as the house of quality approach.
• Kaizen — 改善, Japanese for change for the better; the common English term is continuous improvement.
• Zero Defect Program — created by NEC Corporation of Japan, based upon statistical process control and one of the inputs for the inventors of Six
Sigma.
• Six Sigma — 6σ, Six Sigma combines established methods such as statistical process control, design of experiments and failure mode and effects
analysis (FMEA) in an overall framework.
• PDCA — plan, do, check, act cycle for quality control purposes. (Six Sigma's DMAIC method (define, measure, analyse, improve, control) may be
viewed as a particular implementation of this.)
• Quality circle — a group (people oriented) approach to improvement.
• Taguchi methods — statistical oriented methods including quality robustness, quality loss function, and target specifications.
• The Toyota Production System — reworked in the west into lean manufacturing.
• Kansei Engineering — an approach that focuses on capturing customer emotional feedback about products to drive improvement.
• TQM — total quality management is a management strategy aimed at embedding awareness of quality in all organizational processes. First promoted
in Japan with the Deming prize which was adopted and adapted in USA as the Malcolm Baldrige National Quality Award and in Europe as the
European Foundation for Quality Management award (each with their own variations).
• TRIZ — meaning "theory of inventive problem solving"
• BPR — business process reengineering, a management approach aiming at optimizing the workflows and processes within an organisation.
• OQRM — Object-oriented Quality and Risk Management, a model for quality and risk management.
• EcoMobility SHIFT, a tool to assess, audit and label urban transport performance in cities.
Quality SoftwareQuality software
• Quality Management Software is a category of technologies used by organizations to manage the delivery of high quality products.
Solutions range in functionality, however, with the use of automation capabilities they typically have components for managing
internal and external risk, compliance, and the quality of processes and products. Pre-configured and industry-specific solutions are
available and generally require integration with existing IT architecture applications such as ERP, SCM, CRM, and PLM.
Quality Management Software Functionalities
• Non-Conformances/Corrective and Preventive Action
• Compliance/Audit Management
• Supplier Quality Management
• Risk Management
• Statistical Process Control
• Failure Mode and Effects Analysis
• Complaint Handling
• Advanced Product Quality Planning
• Environment, Health, and Safety
• Hazard Analysis & Critical Control Points
• Production Part Approval Process
Enterprise Quality Management Software
The intersection of technology and quality management software prompted the emergence of a new software category: Enterprise Quality
Management Software (EQMS). EQMS is a platform for cross-functional communication and collaboration that centralizes, standardizes, and
streamlines quality management data from across the value chain. The software breaks down functional silos created by traditionally
implemented standalone and targeted solutions. Supporting the proliferation and accessibility of information across supply chain activities,
design, production, distribution, and service, it provides a holistic viewpoint for managing the quality of products and processes.
Quality Certifications
• Product
• System/ Process
Value of Money of a country i.e. Exchange rate; depends on Employment, GDP/ GNP.
GDP: An estimated value of the total worth of a country’s production and services, within its boundary, by its
nationals and foreigners, calculated over the course on one year.
GNP: An estimated value of the total worth of production and services, by citizens of a country, on its land or on
foreign land, calculated over the course on one year.
i.e. GDP is the Indian Made products and GNP includes the manufacturing of foreign products also.
Higher the GDP, higher the countries income.
To increase the GDP• The exports shall be high
• Consumption of Indian made products shall be high.
• For consumption to be high, our products shall be liked by many and they shall be
willing to pay for the product/ service we provide and they will be willing to pay
when they trust they get enough value.
It depends on us....
Product developers: To develop a product that solves the pain or improves the present
living condition.
Marketing People: To see that our product reaches customers at the right time and
right way.
Manufacturing people: To see that manufacturing is the exact replica of the design
made and no Q is reduced.
Support People: To provide the needed support on behalf of R&D.
Quality People: To see that all the involved ones are Quality conscious and concerned
and see their involvement is as less as possible. Because involvement of another team
is an additional cost.
INR Per USD
Year INR per USD
1950Y 4.79
1955 Y 4.79
1960 Y 4.77
1965 Y 4.78
1970 Y 7.56
1975 Y 8.39
1980 Y 7.86
1985 Y 12.36
1990 Y 17.5
1995 Y 32.42
2000 Y 44.94
2005 Y 44.09
2010 Y 50
2013 Y 64
0
10
20
30
40
50
60
70
1950Y 1955 Y 1960 Y 1965 Y 1970 Y 1975 Y 1980 Y 1985 Y 1990 Y 1995 Y 2000 Y 2005 Y 2010 Y 2013 Y
INR Per USD
INR per USD
Indicating the increase in Value of Dollar and declining Rupee Value
Improvement in the exchange rate of us is in our hands.
1. Start Buying Indian products & Indian Made products.
2. Start making products that are really reaching the customer better than any other product does.
