Supply Chain Chapter 8
uncover
Reducing inventory levels can also __________ production problems.
Extra-Processing
A category of waste Processing beyond the standard required by the customer
Limited High MTS Short
The Continuous Flow Production Process: Product variety is very _____ Product volume is very _____ Manufacturing strategy is ____ Lead time is very ____
Measure
A part of DMAIC Map out the current process What is the frequency of defects?
Sustain
One of the Five- S's that facilitates LEAN layout Stick to the rules. Maintain and review the standards
prevention zero defects
Phillip Crosby's 4 absolutes of quality: 1.Quality is conformance to requirements 2.The system of quality is ___________. 3.Performance standard is ________________. 4.The measure of quality is the price of non-conformance
cause and effect diagram
With this tool, the user can see all possible causes of a problem to help find the root cause.
5 hows technique
a questioning technique for drilling down into the details of a potential solution to a known problem It is designed to bring clarity and refinement to a solution and arrive the root solution (best solution). a useful method of brainstorming resolutions to the root causes and developing action items to resolve the problem are typically used in conjunction with the Cause and Effect Diagram
5 why's technique
a questioning technique for identifying the root cause of a problem. By repeatedly asking the question "Why" (five is a good rule of thumb), you can peel away the layers of symptoms which can lead to the root cause of a problem (i.e., the underlying factors or causes of an event). used in the "Analyze" phase of the Six Sigma DMAIC (Define, Measure, Analyze, Improve, Control) methodology. are typically used in conjunction with the Cause and Effect Diagram
Non value added process
Process steps that take time, resources, or space, but do not add value to the product or service
DMADV DMAIC
What are the 2 key methodologies of Six Sigma?
Waiting
A category of waste People or parts that wait for a work cycle to be completed
Quality Improvement (Joseph Juran)
Hint: Joseph Juran show the need for improvement Identify projects for improvement. Implement remedies Provide control to maintain improvement.
Quick Response Efficient Consumer Response Just in Time Keiretsu Relationships
In the 1990s, Supply Chain Management combined: ________________ - the rapid replenishment of a customer's stock by a supplier with direct access to data from the customer's point of sale. ________________________ - a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers. ___________________ - an inventory strategy to decrease waste by receiving materials only when and as needed in the production process, thereby reducing inventory costs. ___________________ - involves companies both upstream and downstream of a manufacturing process, remaining independent but working closely together for mutual benefit The combination of these concepts have emerged as the philosophies and practices known as LEAN Manufacturing
manufacturing process
Part of any manufacturing strategy involves developing a ____________________ that can create the exact product that has been designed.
improve quality
The Role of Workers in a LEAN supply chain (part of "respect for people"): Perform tasks and actively pursuing company goals: _________ production process Correct ________ problems Monitor quality Work in Teams (i.e., Quality Circles) Since the workers see all of the problems happening in the process, they are best equipped to address these issues, whereas top management can barely see the problems happening
Lean Tools
The approach and tools of LEAN: A wide range of ___________ are available "Learn-by-doing" approach to performance improvement and capability-building
Value Stream Mapping (drawing out every step of the process from start to finish. From there, you can identify steps which add value to customers)
The focus and scope of LEAN is: Using _________________ as primary work unit Focusing on improving process performance Having a clear view of the end state
not add value
The objective of LEAN is eliminate everything that does _________________ (waste) in the customer's eyes
Total Quality Management (TQM)
a management philosophy based on the principle that every employee must be committed to maintaining high standards of work in every aspect of a company's operations. a combination of quality and management tools which are designed to increase business and reduce losses resulting from wasteful practices. Six Sigma is an integral part in this
Sharing Fewest
The Role of Suppliers in a LEAN supply chain (part of "respect for people"): LEAN involves building long-term supplier relationships Partnerships with suppliers. Improving process quality. _________ information. The goal is to have the ________ number of high-quality suppliers possible without unnecessarily increasing risk.
Non-Utilized Talent
A category of waste Not using employees full intellectual contribution
Overproduction
A category of waste Producing sooner, faster or in greater quantities than customer demand
Inventory
A category of waste Raw material, WIP or finished goods which is not having value added to it
continuous improvement
An element of LEAN Manufacturing A system involving every employee that is based on making little changes on a regular basis, anywhere changes can be made, to reduce process, delivery, and quality problems. Continuous small improvements Changes are implemented quickly Everyone gets involved
Setup Time
An element of LEAN Manufacturing the time taken to prepare and format the manufacturing equipment and systems for production Is considered a waste, so this should be minimized for a LEAN supply chain Ex. If it takes 8 hours, to set up all the equipment for a batch, it can be possible to minimize the time to 4 hours instead. After that, you can use the leftover 4 hours as extra running time, increasing productivity. A non value added operation
Manufacturing Management
the management of all the processes which are involved in manufacturing
External Failure Costs
A cost of poor quality occur when the product or service does not meet the designed quality standards, but is not detected until after the product or service is delivered to the customer. They include costs for: Handling and responding to customer complaints. Failed products that must be replaced or services that are repeated. Repair of returned products and products still in the field. Handling and investigation of rejected or recalled products, including return transportation costs.
Analyze
A part of DMAIC Identify the cause of the problem Why, when and where do defects occur?
Improve
A part of DMAIC Implement and verify the solution How can we fix the process?
Control
A part of DMAIC Maintain the solution How can we make the process stay fixed?
Supplier's
This is the ______________ risk for acceptance sampling: The buyer rejects a shipment of good-quality units because the sample quality level did not meet the acceptance standard (type I error)
Define
A part of DMAIC _______ the problem What is the customers' expectation of the process?
W Edwards Deming
A quality expert that framed the TQM framework is widely considered the father of TQM. He is the creator of the Plan-Do-Check-Act model. Stressed management's responsibility for quality. He developed 14 points to guide companies in quality improvement.
Quality Control (Joseph Juran)
Hint: Joseph Juran determine what to control Establish standards of performance. Measure performance, interpret the difference, take action.
Sort
One of the Five- S's that facilitates LEAN layout Keep only necessary items in the workplace, eliminate the rest
People Involvement
One of the foundational aspects of Six Sigma A company must involve all of its employees in the Six Sigma program, and provide opportunities and incentives for employees to focus their talents on satisfying customers. It is important that all Six Sigma team members are assigned specific well-defined Six Sigma Roles with measurable objectives. All employees are responsible to identify quality problems.
Manufacturing
To process or make raw materials or components into a finished product, especially by means of a large-scale industrial operation, i.e., mass production. involves the entire process of converting the raw material(s) or the component(s) into a finished goods item. It includes the machines used, the personnel involved, inventory handling, warehousing, etc.
Assemble to Order
A Manufacturing Strategy manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent (Dell Laptops) a hybrid strategy, attempting to combine the benefits of both Make-to-Stock and Make-to-Order strategies, getting products into customers' hands quickly while allowing for some customization to take place. requires that the basic parts for the product are already manufactured but not yet assembled. Once an order is received, the parts are assembled quickly into the finished product which is then sent to the customer.
Intermittent Processes
A broad manufacturing process used to produce a large variety of products with different processing requirements in lower volumes
Repetitive Processes
A broad manufacturing process used to produce one, or a few, standardized products in high volumes
Transportation
A category of waste Unnecessary movement of materials or parts between processes
Motion
A category of waste Unnecessary movement of people, or multiple hand-offs
Defects
A category of waste Work not done right the first time such as scrap and rework
Appraisal Costs
A cost of good quality are associated with the evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications They include costs for: Testing, evaluating, and inspecting the quality of incoming materials, process setups, and products, against agreed upon specifications. Quality assessment and approval of suppliers. Performing audits to confirm that the quality system is operating properly.
Prevention Costs
A cost of good quality are 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 They include costs for: Establishment of specifications for incoming materials, processes, products, and services Creation of quality plans Development, preparation, and maintenance of quality training Creation and maintenance of the quality system
internal failure costs
A cost of poor quality occur when the product or service does not meet the designed quality standards, and are identified before the product or service is delivered to the customer. They include costs for: Defective product or material that cannot be used, sold, or repaired, and the costs associated with correction of these defects. Unnecessary work or inventory resulting from errors. Activities required to establish the root causes of product or service failures.
Engineer to Order
A manufacturing strategy a manufacturing strategy in which the product is designed, engineered, and built to the customer's specifications after receipt of the order. involves building a unique product every time. There may be components that are common from one product to another, but the finished product is different each time. The cost of poor quality can be very high. It is a more dramatic evolution of Make-to-Order strategy.
Make to Order
A manufacturing strategy is a manufacturing strategy in which manufacturing starts only after a customer's order is received. This strategy creates additional wait time for the customer to receive the product, but allows customers to purchase products that are customized to their specifications. It is not appropriate for products where customers expect immediate availability/delivery. Example: Grocery items It is appropriate for highly configured products. Examples: aircraft, ocean vessels, bridges, or products that are very expensive to keep in inventory.
Make to Stock
A manufacturing strategy means to manufacture products for stock based on demand forecasts. Push system Since accurate forecasts will prevent creating excess inventory and avoid stockouts, the critical issue is how to forecast demands accurately. Most daily necessities such as foods, sundries, and textiles
Philip Crosby
A quality expert that framed the TQM framework coined the phrase "quality is free" (which is also the title of his book) as defects are costly. He introduced the concepts of zero defects, and focus on prevention and not inspection. argued that organizations choose to pay for poor quality. Demonstrated what a powerful tool the cost of quality could be to raise awareness of the importance of quality
Joseph Juran
A quality expert that framed the TQM framework defined quality as "fitness for use". He developed the concept of the cost of quality. Contributed to our current quality thinking in 3 different areas: Quality Planning Quality Control Quality Improvement
Kaoru Ishikawa
A quality expert that framed the TQM framework developed one the first tools in the quality management process, the cause and effect diagram, which is also called the "Ishikawa" or "fishbone" diagram. known as the father of quality circles and helped bring this concept into the mainstream he was a proponent of continuous customer service, meaning that a customer should continue receiving service even after receiving the product.
Continuous Flow Production
A repetitive product system -High capital investment - frequently dedicated to one specific product -Involves a series of processes which raw materials flow through. These processes are very inflexible. -Generally highly automated, and workers act as monitors rather than as active participants. -Typically, production runs 24 hours a day with the end result being a large quantity of finished product -Examples: ─Oil Refining / Gasoline ─Cement ─Laundry Detergent ─Chemicals
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. Any cost that would not have occurred if quality was perfect, contributes to _______________ Helps a company determine the benefits and savings generated by potential process improvements. Can be divided into the: Cost of Good Quality ─Appraisal Costs ─Prevention Costs Cost of Poor Quality ─Internal Failure Costs ─External Failure Costs
Waste Reduction
An element of LEAN Manufacturing Firms reduce costs and add value by eliminating waste from the production system. Waste encompasses wait times, inventories, material and people movement, processing steps, variability, any other non-value-adding activity. Before waste is removed, processes are often scattered, which can negatively affect your customers After waste is removed, processes are more streamlined, resulting in more satisfied customers. You'll also save your organization time and money
Workforce Commitment
An element of LEAN Manufacturing Managers must support LEAN Manufacturing by providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions Managers can also create a culture in which workers are encouraged to speak out when problems are found. In LEAN Manufacturing, employees are cross-trained on many of the various production processes to enable capacities to be adjusted as needed when machines break down or when workers are absent.
Uniform Plant Loading
An element of LEAN Manufacturing Planning up to capacity in earlier time periods to meet demand in later time periods. Taking excess capacity and work from the 2nd half of the year and shifting it to the 1st half of the year. This allows for more sufficient capacity in the 1st half, and no overproduction/excess capacity in the 2nd half of the year. However, the first 3 months may still see insufficient capacity. Also called "front-loading" the plan or "leveling" the plan. Production schedule is frozen in the up-front time period (i.e., month) Helps suppliers better plan production.
Small Batch Scheduling
An element of LEAN Manufacturing Production in small batches creates a smooth workload and enables production to be synchronized with customer demand (people are probably not demanding large batches anyways) It increases flexibility allowing the company to respond to changes in customer demands more quickly. If you have large batches of product moving through a system, and each unit within that large batch has to go through each step of the process, it is going to take longer for that large batch to make it to the final step. But a SMALLER batch will be able to make it to the final step faster. Even if demand rises, you can produce 1 small batch after another quicker than producing large batches. This allows companies to respond better to changes in demand. In the real world, material availability, labor availability, and setup or changeover time influences the scheduling of large batches Large batches can exacerbate the Bullwhip Effect as production in large batches creates an uneven workload
Inventory
An element of LEAN Manufacturing Some inventory may be necessary, but excess inventory is a waste Excess inventory takes up space, and costs money to hold, maintain, protect, secure, and insure. It ties up financial capital which could be used for other aspects of the business. Reducing inventory can free up capital and reduce holding costs. There is less likelihood of waste being created by obsolescence, expiry, spoilage, or damage with lower inventory levels.
LEAN Layouts
An element of LEAN Manufacturing The physical construct of your operating process Move people and materials when and where needed, and as soon as possible Are very visual (lines of visibility are unobstructed) with operators at one processing center able to monitor work at another Manufacturing cells ─Process similar parts or components saving duplication of equipment and labor ─Are often U-shaped to facilitate easier operator and material movements The Five- S's facilitate LEAN layout (Sort, set in order, shine, standardize, Sustain)
LEAN Supply Chain Relationships
An element of LEAN Manufacturing both customers and suppliers get connected in ways that allow them to easily exchange information, demand data, and the visibility of status. Mutual dependency and benefits occur among these partners. Suppliers and customers work to remove waste, reduce cost, and improve quality and customer service These are developed with key suppliers and customers
Job Shop Production (Project Production)
An intermittent product system Creates a custom product for each customer One-off or small number of items produced, generally one unit manufactured at a time. High customization - Normally made to customs specifications Often undertaken by small, specialist businesses -Examples: •Architects - Custom Home Construction •Ship Builders- Building a specific ship for a specific company •Road Builders
down up down
As volume goes up... A. Manufacturing and Procurement costs go ______ due to economies of scale. Generally-step function applies as more capital is required to produce. B. Inventory and Warehousing costs go ______. C. Transportation costs go _______, but level off at high volumes as the shipping container gets filled to capacity and another container must be used.
types of products strengths
Companies must develop a manufacturing strategy that suits the ___________________ that they produce, their customer's expectations, and their ___________.
DMADV
Define, Measure, Analyze, Design, Verify a data-driven quality strategy for designing products & processes. This methodology is used when the company wants to create a new product design or business process that is more predictable and defect free.
DMAIC
Define, Measure, Analyze, Improve, Control a data-driven quality strategy for improving products & processes. This methodology is used when the company wants to improve an existing product or business process. is the most widely adopted and recognized Six Sigma methodology in use. It defines the steps a Six Sigma practitioner typically follows during a project.
Quality Planning (Joseph Juran)
Hint: Joseph Juran identify internal / external customers and needs Develop products satisfying those needs. Mangers set goals, priorities, and compare results. If you don't have a plan in place for quality, you won't achieve your goals and objectives
Customer Demand Moving Products Collaboration
LEAN Manufacturing is a natural fit within the discipline of Supply Chain Management as all of the LEAN goals and objectives help to facilitate an efficient and effective supply chain. It encompasses the following: Satisfying internal _______________ Communicating demand forecasts and production schedules up the supply chain Quickly _____________ in the production system Optimizing inventory levels across the supply chain Increasing the value, capabilities, and flexibility of the workforce through cross-training Extending _____________ and alliances beyond just 1st tier suppliers and customers to include 2nd and 3rd tier suppliers and customers as well
LEAN Manufacturing Respect for People Total Quality Management
LEAN is composed of three components working in unison:
Line Flow Production (mass production)
Mostly a repetitive product system For standardized products with a limited number of variations Product moves on an assembly line through various stages of production When one task is finished the next task must start immediately, therefore, time taken on each task must be the same -Examples: •Automobile Assembly •Cell Phones •Toilet Paper
Batch Production
Mostly an intermittent product system Manufacturing of a small fixed quantity of an item in a single production run. Each individual item in the batch goes through one stage of the production process before the whole batch moves on to the next stage. Aims to achieve better use of equipment Produces good quality products more economically than manufacturing them individually -Examples: •Bakeries •Textiles •Furniture •Pharmaceuticals
Histograms
One of the 7 tools of quality control A graphical display where the data is grouped into ranges Shows how many incidents and problems are occurring each day of the week Similarly to check sheets, this tool lets us hone in on where we should focus our attention
Pareto Analysis
One of the 7 tools of quality control For presenting data in an organized fashion, indicating process problems from most to least severe. If you were trying to figure out where to spend your resources and how to prioritize, this tool displays data based on most to least common
Control Charts
One of the 7 tools of quality control Graph to study how a process changes over time Firms: -Gather process performance data -Create control charts to monitor process variability -Then collect sample measurements of the process over time and plot on charts. This allows firms to: -Visually monitor process performance -Compare the performance to desired levels or standards -Take corrective action as necessary
Flow Diagram
One of the 7 tools of quality control Sequence of movements or actions of people or things involved in a complex system or activity Mapping out the process from start to finish Another tool to help identify where a problem might be occurring
Scatter Diagrams
One of the 7 tools of quality control The values of two variables plotted along two axes, to reveal any correlation present. Provides data that helps you find out how things change over time, how they relate to one another, and it may even determine on finding a root cause for a problem
cause and effect diagrams
One of the 7 tools of quality control Used to aid in brainstorming and isolating the causes of a problem. This helps identify all the root causes of a problem
Check Sheets
One of the 7 tools of quality control Used to determine frequencies for specific problems How often does a particular problem occur? This tool lets us hone in on where we should focus our attention
Shine
One of the Five- S's that facilitates LEAN layout Clean the work area so it is neat and tidy
Set in Order
One of the Five- S's that facilitates LEAN layout Organize and arrange items to promote an efficient workflow
Standardize
One of the Five- S's that facilitates LEAN layout Schedule regular cleaning and maintenance
Quality is Defined by the Customer
One of the foundational aspects of Six Sigma Quality and excellence are what your customers say they are. Customers of your products and services define quality! Customers want quality that is appropriate to the price that they are prepared to pay and the level of competition in the market. Key aspects of quality for the customer include: Reliable - acceptable level of breakdowns or failure Good functionality - it does the job well Durable - lasts as long as it should Good design - looks and style Good after sales service Value for money Consistency
The Use of Technical Tools
One of the foundational aspects of Six Sigma Six Sigma provides a statistical approach for solving any problem and thereby improves the quality level of the product as well as the company. Six Sigma is concerned with the permanent fix to quality problems and seeks to identify and correct the root cause of the problem through the use of Root Cause Analysis. All employees should be trained to use the Seven Tools of Quality Control.
Value added process
Process steps that transform or shape a product or service which is eventually sold to a customer.
Kanbans
Small Batch Scheduling can be facilitated by these. means "Signal" or "Card" in Japanese and is used for communication (e.g., visual signal) between workstations. authorize production or the movement of materials to the next workstation. Ex. If you are producing a particular product, when you are ready for more materials to flow in. Rather than having people dump materials to you (piling up your workstation), you can now signal other workstations that you are ready to receive the material. Could be facilitated through the use of a computer software program, i.e., ERP system
False (it is a philosophy and culture)
T/F: LEAN is a toolbox of methods, ideas, and methodologies
True
T/F: The goal of Six Sigma is to attain less than 3.4 Defects Per Million Opportunities (DPMO)
True
T/F: The term LEAN was first coined by John Krafcik in 1988 and the definition was expanded in the 1990 book, The Machine that Changed the World.
Voice of the Customer (VOC)
Term used in business to describe the in-depth process of capturing internal and external customer's expectations, preferences, likes, and dislikes. can be captured in a variety of ways: Customer Interviews Market Surveys Focus Groups Customer Specifications Observation Warranty Data Field Reports Complaint Logs This data is used to identify the quality attributes needed for a process or product.
high low MTO ATO long
The Batch Production Process: Product variety is _____ Product volume is _____ Manufacturing strategy is ____ and ____ Lead time is ____
high low ETO MTO long
The Job Shop Process: Product variety is very _____ Product volume is very _____ Manufacturing strategy is ____ and ____ Lead time is very ____
limited High ATO MTS Short
The Line Flow Production Process: Product variety is _____ Product volume is _____ Manufacturing strategy is ____ and ____ Lead time is ____
Cooperation Empower
The Role of Management in a LEAN supply chain (part of "respect for people"): Create the cultural change needed for LEAN to succeed: Provide an atmosphere of _______________. ______________ workers to take action based on their ideas. Develop incentive systems to recognize and reward LEAN behaviors.
customer technical
There are three foundational aspects of Six Sigma: 1.Quality is Defined by the __________ 2.The Use of __________ Tools 3.People Involvement
inspection barriers everyone
These were W Edwards Deming's most important points to guide companies in quality improvement Cease dependence on _____________ to improve quality Constantly improve the production and service system Institute leadership Break down ____________ between departments Put ____________ to work to accomplish the transformation
Buyer's
This is the ______________ risk for acceptance sampling: The buyer accepts a shipment of poor-quality units because the sample falsely provides a positive result against the acceptance standard (type II error)
Respect for People
This must exist for an organization to be at its best LEAN involves a flatter hierarchy than traditional organizations. Ordinary workers are given greater responsibility. Supply chain members work together in cross functional teams. The goal is NOT to reduce the number of people in an organization, it is to people resources more wisely.
Defects Overproduction Waiting Non-utilized talent Transportation Inventory Motion Extra-Processing
What are the 8 waste categories?
Management Commitment Employee Empowerment Fact Based Decision Making Continuous Improvement Customer Focus
What are the Key Principles of TQM?
Make to Stock Make to Order Assemble to Order Engineer to Order
What are the major manufacturing strategies?
Acceptance Sampling
When a shipment is received from a supplier, a statistically significant representative sample is taken and measured against the quality acceptance standard. The entire shipment is assumed to have the same quality as the representative sample that was taken. Sampling is less time-consuming than testing every unit but can result in errors
Root Cause Analysis
a collective term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems. The root cause is the core issue that sets in motion the entire cause-and-effect reaction that ultimately leads to the problem(s). Some _________________ approaches are geared more toward identifying true root causes than others, some are more general problem-solving techniques, and others offer support for the core activity of ________________.
Changeover Time
a setup time to change production from one type of product to another the time taken to adapt and modify the manufacturing equipment and systems to produce a different product or a new batch of the same product. Is considered a waste, so this should be minimized for a more LEAN supply chain Ex. If it takes one hour to switch from 1 product to another, you should try to minimize that time to a few minutes. Thus, all those extra minutes you save can be minutes used to actively product more products. A non value added operation
Six Sigma
is a disciplined, statistical-based, data-driven methodology for identifying and removing the causes (errors) and minimizing variability in manufacturing and in business processes. It was originally developed by Motorola. improves the supply chain "process" by reducing variation became famous when Jack Welch made it central to his successful business strategy at General Electric in 1995
LEAN
is an operating philosophy of waste reduction and value enhancement. It was originally created as the Toyota Production System (TPS) by key Toyota executives. improves the supply chain "flow" by eliminating waste
Operations Management
refers to 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. The nature of how ________________ is carried out varies by company and depends on the nature of the products or services in the portfolio.
Total Cost of Manufacturing (TCM)
the complete cost of producing and delivering products to your customers It incorporates both fixed and variable costs used in the manufacturing, storage, and delivery of the product. Generally expressed as cost per unit. includes: 1.Manufacturing and Procurement activities 2.Inventory and Warehousing activities 3.Transportation activities
Value
the inherent worth of a product as judged by the customer, and reflected in its selling price and market demand. It is any activity that increases the market, form, or function of the product/service. Things for which the customer is willing to pay.
