SCM 301 Chapter 8: Lean and Six Sigma in the Supply Chain

Cause and Effect Diagrams (Fishbone or Ishikawa diagrams)

Used to aid in brainstorming & isolating the causes of a problem.

Lean Thinking

Includes delivering smaller quantities, more frequently to point of use

Attribute Data

Indicate some attribute such as color & satisfaction, or beauty.

Design Quality

Inherent value of the product in the marketplace. i.e. performance, features, reliability, durability, serviceability, response, aesthetics, and reputation.

Assignable Variations

Have a specific cause (can control)

The DMAIC Improvement Cycle

1. Define 2. Measure 3. Analyze 4. Improve 5. Control

Key elements of Process Management and have emerged as philosophies and practices known as

1. Lean Production (lean manufacturing) 2. Six Sigma

Lean Production (Lean manufacturing)

An operating philosophy of waste reduction & value enhancement & was originally created as Toyota Production System (TPS) by key Toyota executives

Customer's Risk

Buyer accepts a shipment of poor-quality units because the sample falsely provides a positive answer (Type II error).

Variable Data

Continuous (i.e. weight)

ECR

Efficient consumer response - speed & flexibility

Inventory & Setup Time Reduction

Excess inventory is a waste. Reducing inventory levels causes production problems. Once problems are detected, they can be resolved. The end result is a smoother running organization with less inventory investment.

Natural Variations

Expected and random (cannot control)

Lean Production & the Toyota Production System: Key concepts incorporated in TPS are

Muda Kanban Statistical process control (SPC) Poka-Yoke Yokoten

Six Sigma

Near quality perfection. Pioneered by Motorola in 1987. A statistics-based decision-making framework designed to make significant quality improvements in value-added processes.

Attribute Data Control Charts

P Chars: monitor the percent defective in each sample. C Charts: count the number of defects per unit of output.

Keiretsu Relationships

Partnership arrangements

QR

Quick response - speed & flexibility

Lean Supply Chain Relationships

Suppliers & customers work to remove wast, reduce cost, & improve quality & customer service

Check Sheets

To determine frequencies for specific problems.

Conformance Quality

Degree to which the product or service design specifications are met. This is the primary focus of Six Sigma and Lean projects!

Small Batching Scheduling

Drives costs down by reducing purchased, WIP, & finished goods inventories. Makes the firm more flexible to meet customer demand.

Waste (Muda) Reduction

Firms reduce costs & add value by eliminating waste from the productive system. Waste encompasses wait times, inventories, material & people movement, processing steps, variability, any other non-value-adding activity.

Pareto Charts

For presenting data in a organized fashion, indicating process problems from the most to least severe.

JIT

Just in time - continuous reduction of waste

Workforce Commitment

Managers must support lean production by providing subordinates with the skills, tools, time, & other necessary resources to identify problems & implement solutions

Lean Production emphasizes

Reduction waste, continuous improvement, synchronization of material flows within the organization, channel integration (extending partnerships in the supply chain)

Acceptance Sampling

When shipments are received from suppliers, samples are taken and measured against the quality acceptance standard. Shipments is assumed to have the same quality.

Six Major Sources of Variation

1. People 2. Machines 3. Materials 4. Methods 5. Measurements 6. Environment

Producer's Risk

A buyer rejects a shipment of good quality units because the sample quality did not meet standards (type I error).

Lean Layouts

More people & materials when & where needed, ASAP. They are very visual with operations at one processing center able to monitor work at another

Quality at the source

Person who does the work takes responsibility for making sure the output meets specifications.

Manufacturing Cells

Process similar parts or components saving duplication of equipment & labor. Are often U-shaped to facilitate easier operator & material movements.

Defects per Million Opportunities (DMPO)

Six Sigma allows manager to readily describe process performance using a common metric

ISO 9000 and ISO 14000 Families of Management Standards

international Organization for Standardization (ISO) located in Switzerland has > 163 member countries. ISO 9000 & 14000 govern quality and environmental certification standards of production, respectively. ISO standards are voluntary.

The Seven Wastes

1. Overproduction 2. Waiting time 3. Transportation 4. Excess inventory 5. Over processing 6. Excess motion 7. Defects / rework

The 5 S's of Waste Reduction

1. Sort (organize) 2. Set in order (tidiness) 3. Sweep (shine / purity: cleaning) 4. Standardize (cleanliness - simplify processes) 5. Self-discipline (sustain / maintain) Can be employed in any service or manufacturing firm by doing a "waste hunt"

Elements of Lean

1. Waste reduction 2. Lean supply chain relationships 3. Lean layouts 4. Inventory & setup time reduction 5. Small batch scheduling 6. Continuous improvement 7. Workforce empowerment

Statistical Tools of Six Sigma: Statistical Process Control

Allows firms to - 1. visually monitor process performance 2. compare the performance to desired levels or standards 3. take corrective action Fims - 1. gather process performance data 2. create control charts to monitor process variability 3. then collect sample measurements of the process over time and plot on charts

Flow Diagrams

Annotated boxed representing process to show the flow of products or customers.

Process Management

Is the appreciation of knowledge, skills, tools, techniques, and systems to define, visualize, measure, control, report, and improve processes with the goal to meet customer requirements efficiently.

Continuous Improvement

Kaizen, continuous approach to reduce process, delivery, & quality problems, such as machine breakdown problems, setup problems, & internal quality problems

Small production batches are accomplished with the use of

Kanbans. Kanbans generate demand for parts at all stages of production creating a "pull" system.