Intro to Supply Chain Chapter 8
Quality Tools
1. Check Sheets 2. Histograms 3. Pareto Analysis 4. Cause and Effect Diagrams 5. Flow Diagram 6. Control Charts 7. Scatter Diagrams
Philip Crosby
Coined phrase "quality is free" as defects are costly. Introduced concept of zero defects and focus on prevention, not inspection.
Manufacturing Strategy
Companies must develop a manufacturing strategy that suits the type of products that they produce, their customer's expectations, and their strengths.
Continuous Process
Used to manufacture items such as gasoline, laundry detergent and chemicals. Inflexible process, high investment.
Intermittent Processes
Used to produce a large variety of problems with different processing requirements in lower volumes. - Project and Batch Process
Repetitive Processes
Used to produce one, or few, standardized products in high volumes. - Line and Continuous Process
Waste Categories
DOWNTIME
D
Defects - anything that does not meet the acceptance criteria
DMADV Methodology
Define, Measure, Analyze, Design, Verify. Used when company wants to create a new product design or process that is more predictable and defect-free.
DMAIC Methodology
Define, Measure, Analyze, Improve, Control Used when company wants to improve an existing business process.
Joseph Juran
Defined quality as "fitness for use". Developed concept of cost of quality.
Quality Control
Determine what to control, establish standards of performance, and measure performance.
Six Sigma
Disciplined, statistical based, data driven methodology for identifying and removing caused of defects and minimizing variability in manufacturing and in business processes. Originally developed by Motorola.
Pull System
Each stage in the supply chain requests quantities needed from the previous stage, no excess inventory is generated. Can uncover production problems.
W. Edwards Deming
Father of TQM Created Plan, Do, Check, Act Model.
LEAN Supply Chain Relationships
Firms develop lean supply chain relationships with key customers and key suppliers. Allows customers and suppliers to easily exchange information.
Waste Reduction
Firms reduce costs and add value by eliminating waste from the production system
Role of Supplier
Goal is to have the fewest number of high quality suppliers as possible without creating risk.
Respect for People
Goal is to use people more wisely, ordinary workers are given more responsibility.
Small Batch Scheduling and Uniform Plant Loading
Ideal schedule is to produce every product as quickly as possible and at the same rate as customer demand. Large batches can exacerbate the Bullwhip Effect as production in large batches creates an uneven workload. Small batches create a smooth workload, increasing flexibility.
Quality Planning
Identify internal/external customers and needs, develop products satisfying those needs, and managers set goals, priorities and compare results.
Value
Inherent worth of a product as judged by the customer and reflected in it's selling price and market demand.
I
Inventory - Excess products or materials not being processed
Keirestsu Relationships
Involves companies both upstream and downstream of a manufacturing process, remaining independent but working closely together for mutual benefit.
Assemble-to-Order
Manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent. Basic parts are manufactured but not assembled. Hybrid of both MTS and MTO.
Make-to-Stock
Means to manufacture products for stock based on demand forecasts - a push system. Avoid having excess inventory.
M
Motion/Movement - Unnecessary movement of people.
LEAN Layouts
Move people and materials when and where needed and as soon as possible.
N
Non-Utilized Talent - under-utilizing people's talents, skills, or knowledge. De-motivation.
Malcolm Baldridge National Quality Award
Objective was to stimulate firms to improve, recognize their quality achievements, and establish guidelines so organizations can evaluate their improvement and provide guidance to others.
External Failure Costs
Occur when the product or service does not meet the designated quality standards, and are identified after the service is delivered to the customer.
Internal Failure Costs
Occur when the product or service does not meet the designated quality standards, and are identified before the product or service is delivered to the customer.
LEAN Manufacturing
- Satisfying internal customer demand - Communications demand forecasts and production schedule up the supply chain - Quickly moving products in the production system - Optimizing inventory levels across the supply chain - Increasing the values, capabilities and flexibility of the workforce through cross-training - Extending collaboration and alliance beyond just 1st tier suppliers and customers to include 2nd and 3rd tier suppliers and customers as well.
Cost of Quality
An approach that supports a company's efforts to determine the level of resources necessary to prevent poor quality and to evaluate the quality of the company's products and services.
5 Hows
Questioning technique for drilling down into the details of a potential solution to a known problem to find the best solution.
5 Whys
Questioning technique for identifying root cause of a problem.
Quick Response
Rapid replenishment of a customer's stock by a supplier with direct access to data from the customer's point of sale.
LEAN Green Practices
Reduce the cost of environmental management and lead to improved environmental performance.
Prevention Costs
Related to the design, implementation and maintenance of the quality management system. They are planned, and experienced before actual products or materials are acquired or produced.
Quality Improvement
Show the need for improvement, identify projects for improvement, and implement remedies. Provide control to maintain improvement.
Voice of the Customer
Term used in business to describe the in-depth process of capturing internal and external customer's preferences, likes, and dislikes.
Efficient Consumer Response
a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers.
Cost of Poor Quality
Internal Failure Costs External Failure Costs
Components of LEAN
- LEAN Manufacturing - Total Quality Management - Respect for people
Kaoru Ishi Kawa
Developed the cause and effect diagram.
E
Extra-Processing - Unnecessary steps in a process, redundancies.
Manufacturing Management
Management of all the processes which are involved in manufacturing.
Straighten
Organize and arrange items to promote an efficient workflow
Sustain
Stick to the rules, maintain and review the standards
Manufacturing
The process or making of raw materials or components into a finished product, especially by means of large scale industrial operations, i.e mass production.
LEAN
operating philosophy of waste reduction and value enhancement. Originally created as the Toyota Productions System by key Toyota executives.
Standardize
Schedule regular cleaning and maintenance
Foundational Aspects of Six Sigma
1. Quality is defined by customers 2. Use of technical tools 3. People Involvement
The Five S's
1. Sort 2. Straighten 3. Shine 4. Standardize 5. Sustain
Components of LEAN Manufacturing
1. Waste Reduction 2. LEAN Layouts 3. Inventory, Setup time, Changeover time reduction 4. Small Batch Scheduling and Uniform Plant Loading 5. LEAN Supply Chain Relationships 6. Workforce Empowerment 7. Continuous Improvement
Manufacturing Processes
2 Broad categories: Intermittent processes and repetitive processes
Just-In-Time
An inventory strategy to decrease waste by receiving materials only when and as needed in the production process, thereby reducing inventory costs.
Cost of Good Quality
Appraisal Costs and Prevention Costs
Appraisal Costs
Associated with the evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications.
Cause and Effect Diagram
Can see all possible causes of a problem to help find the root cause.
Shine
Clean the work area so it is neat and tidy
Total Cost of Manufacturing
Complete cost of producing and delivering products to your customers. Includes manufacturing and procurement activities, inventory and warehousing activities, and transportation activities.
Continuous Improvement
Continuous approach to reduce process, delivery, and quality problems.
Role of Management
Create the cultural change needed for LEAN to succeed.
Project Process
Creates custom product for each customer
Sort
Keep only necessary items in the workplace, eliminate the rest
Make-to-Order
Manufacturing strategy in which manufacturing starts only after a customer's order is received. Additional wait time, but products are customized to the customer's specifications. Relieves the problem of excess inventory, but isn't appropriate for all products - better for highly configured products like aircraft.
Major Manufacturing Strategies
Make-to-Stock Make-to-Order Assemble-to-Order Engineer-to-Order
Total Quality Management
Management philosophy based on the principle that every employee must be committed to maintaining a high standard of work in every aspect of a company's operations.
Workforce Commitment
Managers must support LEAN manufacturing by providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions.
Operations Management
Managing the process to convert resources into goods and services, in alignment with the company's business strategy as efficiently and effectively as possible, while also controlling costs.
Batch Process
Manufactures a small quantity of an item in a single production run
As Volume goes up
Manufacturing and procurement costs go down due to economies of scale. Inventory and warehousing costs go up. Transportation costs go down, but level off at higher volumes as shipping containers fill up and more containers must be used.
Engineer-to-Order
Manufacturing strategy in which the product is designed, engineered and built to the customer's specifications after receipt of the order.
O
Overproduction - production before it is needed, or in excess of a customer requirements.
Role of Workers
Perform tasks actively pursuing company goals
Uniform Plant Loading
Planning up to capacity in earlier time periods to meet demand in later time periods.
Non-Value Added Process
Process steps that time, resources or space but do not transform or shape the produce or service.
Value Added Process
Process steps that transform or shape a product or service which is eventually sold to a customer.
Kanban
Small batch scheduling can be facilitated through this Means "signal" in Japanese and is used for communication between workstations.
Inventory, Setup Time, and Changeover Time Reduction
Some inventory may be needed, but excess inventory is a waste. Takes up space, costs money to hold, maintain, protect, and insure. Ties up capital.
Line Process
Standard products with a limited number of variations moving on an assembly line thru stages of productions
Manufacturing Strategy vs Performance Cycle
The choice of strategy determines the performance cycle (lead times) the customer experiences.
Changeover Time
Time taken to adapt and modify the manufacturing equipment and systems to produce a different product or a new batch of the same product.
Setup Time
Time taken to prepare and format the manufacturing equipment and systems for production.
T
Transportation - Unnecesary movement of materials or products
Supplier's Risk
Type 1 Error - Buyer rejects a shipment of good quality units because sample quality didn't meet standards
Buyer's Risk
Type 2 Error - Buyer accepts a shipment of poor quality units because the sample falsely provided positive results against the standards
W
Waiting - elapsed time when no work is being done
Acceptance Sampling
When a shipment is received from a supplier, a statistically significant representative sample is taken and measure against the quality acceptance standard. The entire shipment is assumed to have the same quality as the sample taken.
