Test 1 Study Guide

DPMO (Six Sigma)

Defects Per Million Opportunities - In Six Sigma "as close to zero defects as possible" translates into a statistically based numerical goal of 3.4 defects per million opportunities (DPMO) - which is the near elimination of defects from a process, product, or service

Human Resource (The Operation Function)

- personal needs - skills set - performance evaluations - job design - work measurement - hiring/firing - training - legal requirements - union contract negotiations

Sourcing

- The selection of suppliers - suppliers are literally the "source" of supply

Landed Cost

- The total cost of producing, storing, and transporting a product to its destination or port - It can include such costs as brokerage and logistics fees, port fees, custom duties, tariffs, taxes, insurance, currency conversion, and handling fees; as many as 80 components can be included in landed cost - 85% of these components fall into two broad categories: (1) transportation cost and duty, and (2) governmental charges such as value added tax (VAT) and excise tax

Black Belts (Six Sigma)

- The project leader who implements the DMAIC steps - hold full-time positions and are extensively trained in the use of statistics and quality-control tools, as well as project and team management - A Black Belt assignment normally lasts two years during which the Black Belt will lead 8 to 12 projects from different areas in the company, each lasting about one quarter - A Black Belt is certified after two successful projects. - - Black Belts are typically very focused change agents who are on the fast track to company advancement

Globalization (Historical Events)

- World Trade Organization - European Union - (1990s) GATT, 164 countries Europe - Global supply chains - (2000s) China, India Emerging economies - Outsourcing

SCOR Metrics Defined

Plan: develop a course of action that best meets sourcing, production, and delivery requirements Source: Procure goods and services to meet planned or actual demand Make: Transform product to a finished state to meet planned or actual demand Deliver: Provide finished goods and services to meet planned or actual demand, including order management, transportation, and distribution Return: return products, post-delivery customer support Enable: guidance on how to support the previous five processes with the best practice

Quality Tools

Process Flow Chart - is a diagram of the steps in a job, operation, or process. It enables everyone involved in identifying and solving quality problems to have a clear picture of how a specific operation works and a common frame of reference Cause-and-Effect Diagram (fishbone) - is a graphical description of the elements of a specific quality problem and the relationship among those elements & usually developed as part of brainstorming to help a quality team of employees and managers identify causes of quality problems - cause and effect matrix: A grid used to prioritize causes of quality problems Checksheets & Histograms - s a fact-finding tool used to collect data about quality problems Pareto Analysis: is a method of identifying the causes of poor quality & can be applied by tallying the number of defects for each of the different possible causes of poor quality in a product or service and then developing a frequency distribution from the data Scatter Diagrams - graphically show the relationship between two variables

Partnering

definition: A relationship between a company and its supplier based on mutual quality standards - Companies and their suppliers joined together in a supply chain must work together to meet the needs of the company's customers - the supplier agrees to meet the company's quality standards, and in return the company enters into a long-term purchasing agreement with the supplier that includes a stable order and delivery schedule

Quality Management System (QMS)

definition: A system to achieve customer satisfaction that complements other company systems. - It is a systematic approach to achieving quality and hence customer satisfaction, and while it suggests no less commitment to that goal than TQM, it maintains less of a core strategic focus than TQM.

Prevention Costs

definition: are the costs of trying to prevent poor-quality products from reaching the customer - Quality planning costs: The costs of developing and implementing the quality management program. - Product-design costs: The costs of designing products with quality characteristics. - Process costs: The costs expended to make sure the productive process conforms to quality specifications. - Training costs: The costs of developing and putting on quality training programs for employees and management. - Information costs: The costs of acquiring and maintaining (typically on computers) data related to quality, and the development and analysis of reports on quality performance.

Human Relations (Historical Events)

Hawthorne studies - Elton Mayo (1930) motivation theories - Abraham Maslow (1940s) - Frederick Herzberg (1950s) - Douglas McGregor (1960s)

Scientific Management (Historical Events)

principles of scientific management - Frederick W. Taylor (1911) time and motion studies - Frank and Lillian Gilbreth (1911) activity scheduling chart - Henry Gantt (1912) moving assembly line - Henry Ford (1914)

Outsourcing

the act of purchasing goods and services that were originally produced in-house from an outside supplier

Core Competency

what they do best

Quality by The American Society for Quality (ASQ)

"a subjective term for which each person has his or her own definition. In technical usage, quality can have two meanings: (1) The characteristics of a product or service that bear on its ability to satisfy stated or implied needs and (2) A product or service free of deficiencies."

Labor Productivity

- (output per labor-hour) and machine productivity (output per machine-hour) - the quantity of goods and services that can be produced by one worker or by one hour of work

Benchmarking

- "Best" level of quality achievement in one company that other companies seek to achieve

Digital Revolution (Historical Events)

- Big data, 3D printing, Internet of Things (IoT), Smart cities, Autonomous vehicles, drones, Privacy and security - (Today) Google, Apache, P&G, MIT,NSF, Amazon, and others

Value Added Tax (VAT)

- An indirect tax assessed on the increase in value of a good at any stage of the production process from raw material to final product

Sustainability (Historical Events)

- Global warming - Carbon footprint (2010s) Numerous companies, scientists, statesmen, and governments - Green products - Corporate social responsibility (CSR) (Today) World Economic Forum, Kyoto Protocol United Nations - UN Global Compact

Trade Specialists

- Include freight forwarders, customs house brokers, export packers, and export management and trading companies

Quality Revolution (Historical Events)

- JIT (Just-in-Time) - Taiichi Ohno (Toyota) (1970s) - TQM (total quality management) - W. Edwards -Deming, Joseph Juran (1980s) - strategy and operations - Wickham Skinner, Robert Hayes (1990s) - Reengineering - Michael Hammer, James Champy GE, Motorola (1990s) - Six Sigma - Michael Hammer, James Champy GE, Motorola (1990s)

Nation Groups

- Nations have joined together to form trading groups, also called nation groups, and customs unions, and within these groups products move freely with no import tax, called tariffs or duties, charged on member products - The members of a group charge uniform import duties to nations outside their group, thus removing tariff trade barriers within the group and raising barriers for outsiders. - The group adopts rules and regulations for freely transporting goods across borders that, combined with reduced tariffs, give member nations a competitive advantage over nonmembers. - These trade advantages among member nations lower supply chain costs and reduce cycle time—that is, the time required for products to move through the supply chain

Green Belts (Six Sigma)

- Project team members - not a full-time position; they do not spend all of their time on projects - receive similar training to Black Belts but somewhat less of it

Tariffs

- Taxes on imported goods

Global Supply Chain

- Technology advances have made it possible for middle-tier companies to establish a global presence. - Companies previously regional in scope are using the Internet to become global overnight. Information technology is the "enabler" that lets companies gain global visibility and link disparate locations, suppliers, and customers Obstacles: - Moving products across international borders is like negotiating an intricate maze, riddled with potential pitfalls - For U.S. companies eager to enter new and growing markets, trading in foreign countries is not "business as usual." - Global supply chain management, though global in nature, must still take into account national and regional differences. - Customs, business practices, and regulations can vary widely from country to country and even within a country. - Foreign markets are not homogeneous and often require customized service in terms of packaging and labeling. - Quality can be a major challenge when dealing with emerging markets in countries with different languages and customers

Supply Chain Operations Reference (SCOR)

- a model is a supply chain diagnostic tool that provides a cross-industry standard for supply chain management - developed by the Supply Chain Council, a global not-for-profit trade association organized in 1996 with membership open to companies interested in improving supply chain efficiency primarily through the use of SCOR - The purpose of the SCOR model is to define a company's current supply chain processes, quantify the performance of similar companies to establish targets to achieve "best-in-class" performance, and identify the practices and software solutions that will yield "best in class" performance - is organized around a set of six primary management processes—plan, source, make, deliver, return, and enable

The American Customer Satisfaction Index (ACSI)

- a well-recognized survey of consumer satisfaction with product and service quality. The ACSI reports company scores on a 0 to 100 scale, which are based on an econometric modeling of data obtained from telephone interviews with customers - is funded in part by corporate subscribers who receive industry benchmarking data and company-specific information about financial returns from improving customer satisfaction - measures customer satisfaction with the goods and services of 7 economic sectors, 39 industries (including e-commerce and e-business), and more than 200 companies and 70 federal and local government agencies

Supply Chain Sustainability

- also referred to as "going green," has become one of the most visible recent trends in operations and supply chain management - according to the United Nations, is "meeting present needs without compromising the ability of future generations to meet their needs." Implicit in this definition is not depleting or abusing our natural resources like air, water, land, and energy in a way that's going to harm current or future generations - Meeting present needs without compromising the ability of future generations to meet their needs - to many companies, sustainability means becoming environmentally friendly and socially conscious (i.e., "green") at the expense of competitiveness and higher costs - companies have learned, sustainability can, in fact, be cost-effective and profitable and provide the impetus for product and process innovations

Risk Pooling

- an approach to managing risks in which an attempt is made to aggregate risks to reduce the impact of individual risks - One way to pool risks is to combine inventories from multiple at-risk locations into a few, or one, location, like a warehouse or distribution center, in a more risk-free environment - Adding a distribution center between a supplier and a customer can also shorten lead times, which is another way to pool risks (i.e., it's more costly to meet variations in demand from several locations than from one)

Warehouse Management Systems (WMS)

- an automated system that runs the day-to-day operations of a distribution center - The WMS places an item in storage at a specific location (a putaway), locates and takes an item out of storage (a pick), packs the item, and ships it via a carrier. The WMS acknowledges that a product is available to ship, and, if it is not available, the system will determine from suppliers in real time when it will be available On-demand (direct-response) delivery: requires the supplier to deliver goods when demanded by the customer. Continuous replenishment: supplying orders in a short period of time according to a predetermined schedule.

International Trade Logistics (ITL)

- companies use web-based software products that link directly to customers' websites to eliminate or reduce the obstacles to global trade - They convert language and currency from the U.S. system into those used by many of the United States' trading partners, giving potential buyers in other nations easy access to product and price information - ITL systems also provide information on tariffs, duties, and customs processes and some link with financial institutions to facilitate letters of credit and payment. Through the use of extensive databases, these systems can attach the appropriate weights, measurements, and unit prices to individual products ordered over the Web

E-Marketplace (E-Hubs)

- consolidate suppliers' goods and services at one Internet site like a catalog - E-hubs for direct goods and services are similar in that they bring together groups of suppliers at a few easy-to-use websites - Websites where companies and suppliers conduct business-to-business activities - An e-marketplace also offers services such as online auctions where suppliers bid on order contracts, online product catalogs with multiple supplier listings that generate online purchase orders, and request-for-quote (RFQ) services, through which buyers can submit an RFQ for their needs and users can respond

Supply Chain

- encompasses all activities associated with the flow and transformation of goods and services from the raw materials stage to the end user (customer), as well as the associated information flows - it is all the assets, information, and processes that provide "supply." It is made up of many interrelated members, starting with raw material suppliers and including parts and components suppliers, subassembly suppliers, the product or service producer and distributors, and ending with the end-use customer - The facilities, functions, and activities involved in producing and delivering a product or service from suppliers (and their suppliers) to customers (and their customers)

Master Black Belts (Six Sigma)

- monitor, review, and mentor Black Belts across all projects - primarily teachers who are selected based on their quantitative skills and on their teaching and mentoring ability - They also hold full-time positions and are usually certified after participating in about 20 successful projects, half while a Black Belt and half as a Master Black Belt

Distribution

- encompasses all of the channels, processes, and functions, including warehousing and transportation, that a product passes through on its way to the final customer (end user). It is the actual movement of products and materials between locations - Distribution management involves managing the handling of materials and products at receiving docks, storing products and materials, packaging, and the shipment of orders. Order Fulfillment: The process of ensuring on-time delivery of an order Logistics: Logistics management in its broadest interpretation is similar to supply chain management. However, it is frequently more narrowly defined as being concerned with just transportation and distribution, in which case logistics is a subset of supply chain management Speed and Quality: One of the primary quality attributes on which companies compete is speed of service. That also requires real-time information about carrier location, schedules, and capacity. Thus, the key to distribution speed is information, as it has been in our discussion of other parts of the supply chain. Distribution Centers and Warehousing: are buildings that are used to receive, handle, store, package, and then ship products. Postponement: moves some final manufacturing steps like assembly or individual product customization into the warehouse or distribution center. Generic products or component parts (like computer components) are stored at the warehouse, and then final products are built-to-order (BTO), or personalized, to meet individual customer demand

Supply Chain Management (SCM)

- focuses on integrating and managing the flow of goods and services and information through the supply chain to make it responsive to customer needs while lowering total costs - Requires managing the flow of information through the supply chain to attain the level of synchronization that will make it more responsive to customer needs while lowering costs - It is the rapid flow of information among customers, suppliers, distributors, and producers that characterizes today's supply chain management - suppliers and customers must participate together in the design of the supply chain to achieve their shared goals and to facilitate communication and the flow of information

Spend Analysis

- formal process of collecting, cleansing, classifying, and analyzing spending data in order to reduce procurement costs and improve the efficiency of the procurement process - A formal process usually incorporating software for analyzing spend data to lower procurement costs - attempts to assess the who, what, when, where, why, and how of a company's expenditure process and thereby answer the questions: How much is being spent? With which suppliers? Is the promised value being realized?

ISO 9000 (The International Organization for Standardization)

- has as its members the national standards organizations for more than 163 countries - The ISO member for the United States is the American National Standards Institute (ANSI) - The purpose of ISO is to facilitate global consensus agreements on international quality standards. It has resulted in a system for certifying suppliers to make sure they meet internationally accepted standards for quality management. It is a nongovernment organization and is not a part of the United Nations - A standard is a document that provides requirements, specifications, guidelines, or other precise criteria that can be used consistently to ensure that materials, products, processes, and services are fit for their purpose. ISO has over 19,500 published standards covering almost all aspects of technology and business - The ISO 9000 family of standards addresses various aspects of quality management and are the best-known ISO standards. The ISO 9000 quality management standards, guidelines, and technical reports were first published in 1987. - ISO 9000 includes a number of supporting documents and publications that provide detailed guidance to a company for developing and continually improving its quality management system in order to achieve and sustain customer satisfaction - All ISO standards are reviewed every five years to keep them current and relevant - the recently revised ISO 9001:2015 standard was an increased emphasis on "risk." Risk is defined as the "effect of uncertainty on an expected result.

Total Quality Management (TQM)

- has been the most prominent and visible approach to quality to evolve from the work of Deming and the early quality gurus definition: Customer-oriented, leadership, strategic planning, employee responsibility, continuous improvement, cooperation, statistical methods, and training and education. Points: 1. Quality can and must be managed. 2. The customer defines quality, and customer satisfaction is the top goal; it is a requirement and is not negotiable. 3. Management must be involved and provide leadership. 4. Continuous quality improvement is "the" strategic goal, which requires planning and organization. 5. Quality improvement is the responsibility of every employee; all employees must be trained and educated to achieve quality improvement. 6. Quality problems are found in processes, and problems must be prevented, not solved. 7. The quality standard is "no defects." 8. Quality must be measured; improvement requires the use of quality tools, and especially statistical process control.

Timeliness

- how quickly a service is provided, is an important dimension of service quality, and it is not difficult to measure

Waterways (Transportation)

- in the United States include 26,000 navigable miles over inland waterways, canals, the Great Lakes, and along coastlines - Water transport is a slow but very low-cost form of shipping - It is limited to heavy, bulk items such as raw materials, minerals, ores, grains, chemicals, and petroleum products - If delivery speed is not a factor, water transport is cost competitive with railroads for shipping these kinds of bulk products. - Water transport is the primary means of international shipping between countries separated by oceans for most products. Over 80% of freight imports into the United States arrive via ocean shipping.

External Failure Costs

- incurred after the customer has received a poor-quality product and are primarily related to customer service - Customer complaint costs: The costs of investigating and satisfactorily responding to a customer complaint resulting from a poor-quality product - Product return costs: The costs of handling and replacing poor-quality products returned by the customer. In the United States it is estimated that product returns reduce company profitability by an average of 4% annually - Warranty claims costs: The costs of complying with product warranties - Product liability costs: The litigation costs resulting from product liability and customer injury - Lost sales costs: The costs incurred because customers are dissatisfied with poor-quality products and do not make additional purchases

Internal Failure Costs

- incurred when poor-quality products are discovered before they are delivered to the customer - Scrap costs: The costs of poor-quality products that must be discarded, including labor, material, and indirect costs - Rework costs: The costs of fixing defective products to conform to quality specifications - Process failure costs: The costs of determining why the production process is producing poor-quality products - Process downtime costs: The costs of shutting down the productive process to fix the problem - Price-downgrading costs: The costs of discounting poor-quality products—that is, selling products as "seconds."

Internet Revolution (Historical Events)

- internet, WWW - ARPANET, Tim Berners-Lee SAP, Oracle, Dell, Apple (1990s) Amazon, Yahoo!, eBay, Google, Facebook, YouTube, Twitter, etc. (2000s) - ERP, supply chain management- ^ ( - E-commerce , social networking - ^

Electronic Data Interchange (EDI) (E-Business)

- is a computer-to-computer exchange of business documents in a standard format - which has been established by the American National Standards Institute (ANSI) and the International Standards Organization (ISO) - creates a data exchange that allows trading partners to use Internet transactions instead of paper when performing purchasing, shipping, and other business - links supply chain members together for order processing, accounting, production, and distribution - provides quick access to information, allows better customer service, reduces paperwork, allows better communication, increases productivity, improves tracking and expediting, and improves billing and cost efficiency - can be effective in reducing or eliminating the bullwhip effect - supply chain members are able to share demand information in real time and thus are able to develop more accurate demand forecasts and reduce the uncertainty that tends to be magnified at each upstream stage of the supply chain

Enterprise Resource Planning (ERP) (Supply Chain Management (SCM) Software)

- is software that helps integrate the components of a company, including most of the supply chain processes, by sharing and organizing information and data among supply chain members - Software that integrates the components of a company by sharing and organizing information and data - It transforms transactional data like sales into useful information that supports business decisions in other parts of the company - SAP is the FIRST AND LARGEST

Trucking (Transportation)

- is the main mode of freight transportation in the United States - annually carrying over 70% of U.S. freight tonnage, and generating over 80% of the nation's total freight cost each year - Trucks provide flexible point-to-point service, delivering small loads over short and long distances over widely dispersed geographic areas

Air Freight (Transportation)

- is the most expensive and fastest mode of freight transportation - For companies that use air freight, service is more important than price - For some companies, production stoppages because of missing parts or components can be much more expensive than the increased cost of air freight - shorter shipping times reduce the chances for theft and other losses - The general rule for international air freight is that anything that is physically or economically perishable has to move by air instead of by ship - The major product groups that are shipped by international air freight, from largest to smallest, are perishables, construction and engineering equipment, textiles and wearing apparel, documents and small package shipments, and computers, peripherals, and spare parts

Transportation

- is the movement of a product from one location to another as it makes its way to the end-use customer

Demand-Driven Value Chain

- is thought to have a broader focus with a more important and visible corporate presence that might also include such functions as customer management, new product innovation and launch, post-sales support, and change management. In this context, the ultimate goal of a value chain is the delivery of maximum value to the end user

Operations Research (Historical Events)

- linear programming - George Dantzig (1947) - digital computer - Remington Rand (1951) - simulation, waiting line theory, decision theory - operations research group (1950s) - PERT/CPM MRP - Joseph Orlicky, IBM, and others (1960s) - EDI / SIM - Auto industry, DARPA (1970s)

Bullwhip Effect

- occurs when slight-to-moderate demand variability becomes magnified as demand information is transmitted back upstream in the supply chain - Distorted information or the lack of information, such as inaccurate demand data or forecasts from the customer end can ripple back upstream through the supply chain and magnify demand variability at each stage - This can result in high buffer inventories, poor customer service, missed production schedules, wrong capacity plans, inefficient shipping, and high costs (which is called the bullwhip effect) - is created when supply chain members make ordering decisions with an eye to their own self-interest and/or they do not have accurate demand information from the adjacent supply chain members - If each supply chain member is uncertain and not confident about what the actual demand is for the succeeding member it supplies and is making its own demand forecast, then it will stockpile extra inventory to compensate for the uncertainty - demand for the end user is relatively stable and the inventory is small. However, if slight changes in demand occur, and the distributor does not know why this change occurred, then the distributor will tend to overreact and increase its own demand or, conversely, reduces its own demand too much if demand from its customer unexpectedly drops - creates an even greater overreaction by the manufacturer who supplies the distributor and the suppliers who supply the manufacturer. One way to cope with the bullwhip effect is for supply chain members to share information, especially demand forecasts. If the supply chain exhibits transparency, then members can have access to each other's information, which reduces or eliminates uncertainty

Key Performance Indicators (KPIs)

- or metrics, are often used to measure supply chain performance 1. Inventory Turns: a supply chain performance metric computed by dividing the cost of goods sold by the average aggregate value of inventory 2. Days of Supply: a measure of how many days (or weeks) of inventory is available at any point in time. It is computed by dividing the aggregate average value of inventory by the daily (or weekly) cost of goods sold 3. Fill Rate: are the fraction of orders placed by a customer with a supplier distribution center or warehouse that are filled within a specific period of time, typically one day. High fill rates indicate that inventory is moving from the supplier to the customer at a faster rate

Suppliers (The Operation Function)

- orders for materials - production schedules - quality requirements - design/performance specs - material availability - quality data - delivery schedules - design

E-Procurement

- part of the business-to-business (B2B) commerce being conducted on the Internet, in which buyers make purchases directly from suppliers through their websites, by using software packages, or through e-marketplaces, e-hubs, and trading exchanges - Benefits include lower transaction costs associated with purchasing, lower prices for goods and services, reduced labor (clerical) costs, and faster ordering and delivery times

Marketing (The Operation Function)

- product/service availability - lead-time estimates - status of order - delivery schedules - sales forecasts - customer orders - customer feedback - promotions

Finance/Accounting (The Operations Function)

- production and inventory data - capital budgeting requests - capacity expansion and technological plans - budgets - cost analysis - capital investments - Stockholder Requirements

Bar Codes (E-Business)

- referred to as an "automated data collection" system, or "auto-ID." - In bar coding, computer-readable codes are attached to items flowing through the supply chain, including products, containers, packages, and even vehicles - contains identifying information about the item. It might include such things as a product description, item number, its source and destination, special handling procedures, cost, and order number

E-Business

- replaces physical processes with electronic ones - supply chain transactions are conducted via a variety of electronic media, including electronic data interchange (EDI), email, electronic funds transfer (EFT), electronic publishing, image processing, electronic bulletin boards, shared databases, bar coding, fax, automated voice mail, CD-ROM catalogs, the Internet, websites Features: - Cost savings and price reductions derived from lower transaction costs (including labor and document savings) - Reduction or elimination of the role of intermediaries and even retailers and service providers, thus reducing costs - Shortening supply chain response and transaction times for ordering and delivery - Gaining a wider presence and increased visibility for companies - Greater choices and more information for customers Improved service as a result of instant accessibility to services - Collection and analysis of voluminous amounts of customer data and preferences - The creation of virtual companies, like Amazon.com that distribute only through the Web, which can afford to sell at lower prices because they do not need to maintain retail space - Leveling the playing field for small companies, which lack resources to invest in infrastructure (plant and facilities) and marketing - Gaining global access to markets, suppliers, and distribution channels

Risk Management

- requires due diligence to evaluate and anticipate the likelihood and possible impact of unexpected supply chain disruptions, which can be operational, economic, marketplace, or natural, and plan ahead for them

Package Carriers (Transportation)

- such as UPS, FedEx, and the U.S. Postal Service, transport small packages, up to about 150 pounds - The growth of e-business has significantly increased the use of package carriers - Package carriers combine various modes of transportation, mostly air and truck, to ship small packages rapidly - They are not economical for large-volume shipments; however, they are fast and reliable, and they provide unique services that some companies must have. - Package carriers have been innovative in the use of bar codes, RFID, and the Internet to arrange and track shipments. The FedEx website attracts more than 150 million package tracking requests daily, and it receives 70% of its customer orders electronically. FedEx, as shown in the photo, with over 670 aircraft and 185,000 motorized vehicles delivers around 14 million packages daily in over 220 countries.

The Internet (E-Business)

- the Internet a business can communicate with customers and other businesses within its supply chain anywhere in the world in real time - The Internet has eliminated geographic barriers, enabling companies to access markets and suppliers around the world that were previously inaccessible. - the Internet has shifted the advantage in the transaction process from the seller to the buyer, because the Internet makes it easier for companies to deal with many more suppliers around the world in order to get lower prices and better service - The Internet adds speed and accessibility to the supply chain. Companies are able to reduce or eliminate traditional time-consuming activities associated with ordering and purchasing transactions by using the Internet to link directly to suppliers, factories, distributors, and customers

Kaizen

- the Japanese term for continuous improvement, not only in the workplace but also in one's personal life, home life, and social life - Employees are most directly involved in kaizen when they are determining solutions to their own problems - kaizen is a system in which employees identify many small improvements on a continual basis and implement these improvements themselves

Radio Frequency Identification (E-Business)

- uses radio waves to transfer data between a reader (that is, a scanner) and an item such as a shipping container or a carton - Can send product data from an item to a reader via radio waves - RFID consists of a tiny microchip and computer, often a small, thin ribbon, which can be put in almost any form - RFID scanners transmit a radio signal via an antenna to "access" the tag, which then responds with its number. The tag could be an Electronic Product Code (EPC), which could be linked to databases with detailed information about a product item - RFID tags do not need a direct "line of sight" to read, and many tags can be read simultaneously over a long distance - RFID provides complete visibility of product location, is faster, reduces labor usage, and is more accurate than barcodes - RFID readers inside a store (or warehouse) can continuously monitor what is available, and when the inventory reaches a certain level it can be reordered

Railroads (Transportation)

- with more than 160,000 miles of track in the United States - are cost-effective for transporting products such as raw materials, coal, minerals, ores, and especially containers over long distances - railroads operate on less flexible and slower schedules than trucks, and they usually cannot go directly from one business location to another as trucks can -Railroad freight service also has the worst record of quality performance of all modes of freight transport, with a higher incidence of product damage and almost 10 times more late deliveries than trucking.

Deming's 14 Points

1. Create a constancy of purpose toward product improvement to achieve long-term organizational goals. 2. Adopt a philosophy of preventing poor-quality products instead of acceptable levels of poor quality as necessary to compete internationally. 3. Eliminate the need for inspection to achieve quality by relying instead on statistical quality control to improve product and process design. 4. Select a few suppliers or vendors based on quality commitment rather than competitive prices. 5. Constantly improve the production process by focusing on the two primary sources of quality problems, the system and employees, thus increasing productivity and reducing costs. 6. Institute worker training that focuses on the prevention of quality problems and the use of statistical quality-control techniques. 7. Instill leadership among supervisors to help employees perform better. 8. Encourage employee involvement by eliminating the fear of reprisal for asking questions or identifying quality problems. 9. Eliminate barriers between departments, and promote cooperation and a team approach for working together. 10. Eliminate slogans and numerical targets that urge employees to achieve higher performance levels without first showing them how to do it. 11. Eliminate numerical quotas that employees attempt to meet at any cost without regard for quality. 12. Enhance worker pride, artisanry, and self-esteem by improving supervision and the production process so that employees can perform to their capabilities. 13. Institute vigorous education and training programs in methods of quality improvement throughout the organization, from top management down, so that continuous improvement can occur. 14. Develop a commitment from top management to implement the previous 13 points.

What defines quality? (10 points)

1. Efficiently providing products and services that meet or exceed customer expectations 2. Adding value for the customer 3. Continuously measuring the improvement of processes and service for the customers 4. Acting as promised and reporting failures 5. Doing the right thing at the right time in the right way with the right people 6. Ensuring customers come back and products do not 7. Providing the best value to customers by improving everyday activities and processes 8. Beyond delivering what the customer wants, anticipating what the customer will want when he/she knows the possibilities 9. Delivering customer value across the company through best-in-class products, services, and support 10. Meeting and exceeding the expectations of clients, employees, and relevant constituencies in the community

Balance Scorecard

1. Finances—How should we look to our shareholders? 2. Customers—How should we look to our customers? 3. Processes—At which business processes must we excel? 4. Learning and Growing—How will we sustain our ability to change and improve?

Dimensions of Quality for Manufactured Products

1. Performance: The basic operating characteristics of a product; for example, how well a car handles or its gas mileage. 2. Features: The "extra" items added to the basic features, such as a stereo CD or a leather interior in a car. 3. Reliability: The probability that a product will operate properly within an expected time frame; that is, that a TV will work without repair for about seven years. 4. Conformance: The degree to which a product meets preestablished standards. 5. Durability: How long the product lasts; its life span before replacement. A pair of L.L. Bean boots, with care, might be expected to last a lifetime. 6. Serviceability: The ease of getting repairs, the speed of repairs, and the courtesy and competence of the repair person. 7. Aesthetics: How a product looks, feels, sounds, smells, or tastes. 8. Safety: Assurance that the customer will not suffer injury or harm from a product; an especially important consideration for automobiles. 9. Other perceptions: Subjective perceptions based on brand name, advertising, and the like.

The Deming Wheel

1. Plan - study process, identify the problem, set goals, and develop the plan for improvement 2. Do - implement the plan on a team basis, measure improvement 3. Study/Check - assess the plan; is it working? goals achieved? 4. Act - institutionalize improvement; continue the cycle with new problems from stage 1

Dimensions of Quality for Services

1. Time and timeliness: How long must a customer wait for service, and is it completed on time? For example, is an overnight package delivered overnight? 2. Completeness: Is everything the customer asked for provided? For example, is a mail order from a catalog company complete when delivered? 3. Courtesy: How are customers treated by employees? For example, are catalog phone operators at L.L. Bean nice and are their voices pleasant? 4. Consistency: Is the same level of service provided to each customer each time? Is your newspaper delivered on time every morning? 5. Accessibility and convenience: How easy is it to obtain the service? For example, when you call L.L. Bean, does the service representative answer quickly? 6. Accuracy: Is the service performed right every time? Is your bank or credit card statement correct every month? 7. Responsiveness: How well does the company react to unusual situations, which can happen frequently in a service company? For example, how well is a telephone operator at L.L. Bean able to respond to a customer's questions about a catalog item not fully described in the catalog?

The Breakthrough Strategy (DMAIC)

Define: The problem is defined, including who the customers are and what they want, to determine what needs to improve. It is important to know which quality attributes are most important to the customer, what the defects are, and what the improved process can deliver Measure: The process is measured; data are collected and compared to the desired state Analyze: The data are analyzed in order to determine the cause of the problem Improve: The team brainstorms to develop solutions to problems; changes are made to the process, and the results are measured to see if the problems have been eliminated. If not, more changes may be necessary Control: If the process is operating at the desired level of performance, it is monitored to make sure the improvement is sustained and no unexpected and undesirable changes occur

Inventory Insurance

Insurance against supply chain uncertainty

Productivity Equation

Productivity = Input / Output

Product Management (Demand-Driven Value Chain)

R&D, innovation, engineering, and product development

Cross-Enterprise Teams

coordinate processes between a company and its supplier. For example, suppliers may join a company in its product-design process. Instead of a company designing a product and then asking a supplier if it can provide the required part or a company trying to design a product around an existing part, the supplier works with the company in the design process to ensure the most effective design possible. This form of cooperation makes use of the expertise and talents of both parties. It also ensures that quality features will be designed into the product

Quality Gurus & Contribution

W. Edwards Deming - A disciple of Shewhart, he developed courses during World War II to teach statistical quality-control techniques to engineers and executives of companies that were military suppliers; after the war he began teaching statistical quality control to Japanese companies, initiating their quality movement. Joseph M. Juran - An author and consultant, he followed Deming to Japan in 1954; he focused on strategic quality planning within an annual quality program, setting goals for product quality, and designing processes to achieve those goals; quality improvement is achieved by focusing on projects to solve problems and securing breakthrough solutions. Philip Crosby - In his 1979 book, Quality Is Free, he emphasized that the costs of poor quality (including lost labor and equipment time, scrap, downtime, and lost sales) far outweigh the cost of preventing poor quality; in his 1984 book, Quality Without Tears, he defined absolutes of quality management—quality is defined as conformance to requirements, quality results from prevention, the performance standard is "zero defects." Kaoru Ishikawa - This Tokyo University professor promoted the use of quality circles and developed the "fishbone" (cause and effect) diagram to diagnose quality problems; he emphasized the importance of the internal customer, that is, that a quality organization is first necessary in order to produce quality products or services.

Demand Management (Demand-Driven Value Chain)

manufacturing, logistics, supply planning, and sourcing

Supply Management (Demand-Driven Value Chain)

manufacturing, logistics, supply planning, and sourcing

Industrial Revolution (Historical Events)

steam engine - James Walt (1769) division of labor - Adam Smith (1776) interchangeable parts - Eli Whitney (1790)