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respect for people

An element of JIT that considers human resources as an essential part of the JIT philosophy.

Process capability index:

An index used to measure process capability. *computed as the ratio of the specification width to the width of the process variability

total quality management

An integrated effort designed to improve quality performance at every level of the organization. no level of defects other than zero is acceptable Quality at the source: Uncovering the root cause of a quality problem.

Capacity Requirements Planning (CRP)

CRP checks to see if available capacity is sufficient to complete the orders scheduled in a particular work center during a specific time period.

Assignable causes of variation:

Causes that can be identified and eliminated. (ex: poor quality in raw materials, an employee who needs more training, or a machine in need of repair)

Methods used to Verify Inventory

Cycle counting is a method for maintaining accurate inventory records. Determining what and when to count are the major decisions.

Layout planning:

Deciding on the best physical arrangement of all resources that consume space within a facility.

behavioral feasibility:

Degree to which the job is intrinsically satisfying to the employee.

Total Quality Management

Different from the old concept of quality because its focus is on serving customers, identifying the causes of quality problems, and building quality into the production process.

Conformance to specifications:

How well a product or service meets the targets and tolerances determined by its designers. Ex: the wait for hotel room service may be specified as 20 minutes, but there may be an acceptable delay of an additional 10 minutes

Group technology (GT) or cell layouts:

Hybrid layouts that create groups of products based on similar processing requirements.

just-in-time manufacturing

The element of JIT that focuses on the production system to achieve value-added manufacturing (achieve high-volume production of high-quality, low-cost products while meeting precise customer needs) starts with the final assembly schedule, master production schedule, which is a statement of which products and quantities will be made in specific time periods. high inventory costs. relies on a coordination system that withdraws parts from a previous work center and moves them to the next. The system typically relies on cards, called kanban, to pull the needed products through the system. The kanban specifies what is needed. There is no excess production because the only products and quantities produced are those specified by the kanban.

technical feasibility:

The job must be physically and mentally doable.

Effective capacity:

The maximum output rate that can be sustained under normal conditions.

Product Design

The process of defining all of the product's characteristics.

Service design:

The process of establishing all the characteristics of the service, including physical, sensual, and psychological benefits.

Capacity Planning

The process of establishing the output rate that can be achieved by a facility.

Marketing Plan

The process that brings together all the functional business plans (marketing, operations, engineering, and finance) into one integrated plan. Identifies the markets to be served, desired levels of customer service, product competitive advantage, profit margins, and the market share needed to achieve the objectives of the strategic business plan.

Speculative inventory:

Used to protect against some future event. (ex: booking an airline flight three months in advance so you can take advantage of a reduced fare)

Product layouts:

Layouts that arrange resources in sequence to allow for an efficient buildup of the product. (ex: assembly lines, in cafeterias, or even at a car wash)

Hybrid layouts:

Layouts that combine characteristics of process and product layouts.

Process layouts:

Layouts that group resources based on similar processes or functions. (ex: A hospital is an example of process layout. Departments are grouped based on their function. A university is another example. Colleges and departments are grouped based on their function.)

Program Evaluation & Review Technique (PERT)

Network planning technique used to determine a project's planned completion date and identify the project's critical path. PERT uses probabilistic time estimates.

Critical Path Method (CPM)

Network planning technique, with deterministic times, used to determine a project's planned completion date and identify the project's critical path. CPM uses deterministic time estimates.Efficiency:

Efficiency:

Performing activities at the lowest possible cost.

Product specifications:

Preset ranges of acceptable quality characteristics

Outsourcing

Products or services not provided by the manufacturer are outsourced.

Insourcing

Products or services provided by the manufacturer are insourced.

Fluctuation inventory:

Provides a cushion against unexpected demand. (ex: you might keep extra food in the freezer just in case unexpected company drops in)

ISO 9004:

Provides guidelines for establishing a quality management system. It focuses not only on meeting customer requirements but also on improving performance.

Value for price paid:

Quality defined in terms of product or service usefulness for the price paid. Ex: suppose that you wish to sign up for a personal finance seminar and discover that the same class is being taught at two different colleges at significantly different tuition rates. If you take the less expensive seminar, you will feel that you have received greater value for the price.

Support services:

Quality defined in terms of the support provided after the product or service is purchased. Ex: the quality of a university is judged not only by the quality of staff and course offerings but also by the efficiency and accuracy of processing paperwork.

Supply chain measurements

ROI, profitability, market share, customer service levels

Forward scheduling:

Schedule that determines the earliest possible completion date for a job.

Backward scheduling:

Scheduling method that determines when the job must be started to be done on the due date.`

Infinite loading:

Scheduling that calculates the capacity needed at work centers in the time period needed without regard to the capacity available to do the work.

Finite loading:

Scheduling that loads work centers up to a predetermined amount of capacity.

Selecting an Ideal Location

Step 1 Identify Dominant Location Factors. Step 2 Develop Location Alternatives. Step 3 Evaluate Location Alternatives.

W. Edwards Deming

Stressed management's responsibility for quality. Developed "14 Points" to guide companies in quality improvement.

When you are using backward scheduling and forward scheduling together...

a difference between the start time of the first activity indicates slack in the schedule. Slack means that you can start a job immediately but you do not have to do so. You can start it any time up to the start time in your backward schedule and still meet the due date.

Location Analysis

Techniques for determining location decisions.

Process capability:

The ability of a production process to meet or exceed preset specifications.

economic feasibility

The cost of the job should be less than the value it adds.

JIT

broad view of operations: Tasks and procedures are important only if they meet the company's overall goals. Simplicity: The simpler a solution, the better it is. continuous improvement (kaizen): A philosophy of never-ending improvement Visibility: Problems must be visible to be identified and solved. Flexibility: A company can quickly adapt to the changing needs of its customers.

Implementing Supply Chain Management

change often is a result of external pressures faced by the company, such as increased global competitors, an industry consolidation reducing the number of surviving companies in the industry, a switch to e-commerce (including e-purchasing and e-sourcing), or major technological changes within the industry.

Impact of JIT/Lean Principles Across the Organization: Information systems (IS)

create the network of information necessary for JIT to function.

Materials Requirements Planning (MRP)

designed to calculate material requirements for items with dependent demand. MRP systems use backward scheduling to determine when each activity starts so that the finished product or service is completed on time.

The objectives of MRP

determine the quantity and timing of material requirements and to keep schedule priorities updated and valid. MRP determines what to order, how much to order, when to place the order, and when to schedule the order's arrival. It maintains priorities by recognizing changes in the operations environment and making the necessary adjustments.

Malcolm Baldrige National Quality Award

established in 1987 when Congress passed the Malcolm Baldrige National Quality Improvement Act. The award is named after the former Secretary of Commerce Malcolm Baldrige, and is intended to reward and stimulate quality initiatives.

Impact of JIT/Lean Principles Across the Organization: Finance

included are hiring consultants, training workers, purchasing or modifying equipment, more record keeping, and rearrangement of facilities. Finance must evaluate these investments and measure their performance, which requires an understanding of JIT.

Anticipation inventory:

inventory built in anticipation of future demand. (ex: the toy industry builds toys throughout the year in anticipation of high seasonal sales in December)

Components of Work System Design

job design work measurement worker compensation

Elements of JIT

just-in-time manufacturing total quality management respect for people

Many factors can affect location decisions, including:

proximity to customers, transportation, source of labor, community attitude, proximity to suppliers, and many other factors.

Common causes of variation:

random causes that cannot be identified

Lot-size inventory:

results when a company buys or produces more than is immediately needed (ex: Consider what happens when you buy a 24-can case of soda. You do not normally drink all 24 cans at once. Instead, what you do not need right away, you store for future consumption.)

Job Design

specifies the work activities of an individual or a group in support of an organization's objectives. You design a job by answering questions such as: What is your description of the job? What is the purpose of the job? Where is the job done? Who does the job? What background, training, or skills does an employee need to do the job?

Supply Chain Operations Reference (SCOR) model

standardize a company's supply chain performance.

three additional factors in job design

technical feasibility economic feasibility behavioral feasibility

MRP needs three inputs:

the authorized MPS, the BOM file, and the inventory records file. The MPS is the planned build schedule, the BOM file shows the materials needed to build an item, and the inventory records file shows the inventory on hand.

Design capacity:

the maximum output rate that can be achieved by a facility under ideal conditions.

ISO 9001:

the standard for the certification of a firm's quality management system. It is used to demonstrate the conformity of quality management systems to meet customer requirements.

Enterprise Resource Planning (ERP)

1. An information system designed to integrate internal and external members of the supply chain. 2. core processes include production planning and control, inventory management, purchasing, and distribution; administrative processes include accounting (cost control, accounts payable and receivable, etc.) and human resource management. 3. integrates the complete range of an organization's operations in order to present a holistic view of the business functions from a single information and IT architecture.

External Distributors

1. Logistics: Activities involved in obtaining, producing, and distributing materials and products in the proper place and in proper quantities. 2. Traffic management: Responsible for arranging the method of shipment for both incoming and outgoing products or materials. 3. Distribution management: Responsible for movement of material from the manufacturer to the customer.

Costs of Quality:

1. Prevention and appraisal costs: which are incurred by a company in attempting to improve quality 2. Internal and external failure costs: costs of quality failures that the company wishes to prevent.

Internal Functions of the company

1. Processing, which converts raw milk into dairy products and packages these products for distribution to retail grocery outlets. 2. Purchasing, which selects appropriate suppliers, ensures that suppliers perform up to expectations, administers contracts, and develops and maintains good supplier relationships. 3. Production planning and control, which schedules the processing of raw milk into dairy products. 4. Quality assurance, which oversees the quality of the dairy products. 5. Shipping, which selects external carriers and/or a private fleet to transport the product from the manufacturing facility to its destination.

According to the TOC, a system's output is determined by three kinds of constraints:

1. internal resource constraint: A regular bottleneck 2. market constraint: The condition that results when market demand is less than production capacity 3. policy constraint: The condition that results when a specific policy dictates the rate of production.

Objectives of Inventory Management:

1. provide the desired level of customer service 2. to allow cost-efficient operations 3. minimize the inventory investment.

Process flowchart:

A chart showing the sequence of steps in producing the product or service.

Lean systems:

A concept that takes a total system approach to creating efficient operations pull together best practice concepts, including just-in-time (JIT), total quality management (TQM), continuous improvement, resource planning, and supply chain management (SCM)

Fitness for use

A definition of quality that evaluates how well the product performs for its intended use. Ex: if the definition becomes more specific and assumes that the intended use is for transportation on mountain roads and carrying fishing gear, the Jeep Cherokee has a greater fitness for use

Six Sigma

A high level of quality associated with approximately 3.4 defective parts per million.

Theory of Constraints

A management philosophy that extends the concepts of OPT.

Vertical integration

A measure of how much of the supply chain is actually owned or operated by the manufacturing company.

Level aggregate plan:

A planning approach that produces the same quantity each time period. Inventory and back orders are used to absorb demand fluctuations.

Hybrid aggregate plan:

A planning approach that uses a combination of level and chase approaches while developing the aggregate plan.

Chase aggregate plan:

A planning approach that varies production to meet demand each period.

ISO 9000:

A set of international quality standards and a certification demonstrating that companies have met all the standards specified. Provides the terminology and definitions used in the standards. It is the starting point for understanding the system of standards.

ISO 14000:

A set of international standards and a certification focusing on a company's environmental responsibility.

Break-even analysis:

A technique used to compute the amount of goods a company would need to sell to cover its costs.

Continuous process:

A type of process that operates continually to produce a high volume of a fully standardized product.

Project process:

A type of process used to make a one-at-a-time product exactly to customer specifications.

Line process:

A type of process used to produce a large volume of a standardized product.

Batch process

A type of process used to produce a small quantity of products in groups or batches based on customer orders or specifications.

Psychological criteria:

A way of defining quality that focuses on judgmental evaluations of what constitutes product or service excellence. Ex: we commonly associate certain products with excellence because of their reputation; Rolex watches and Mercedes-Benz

Designing an Aggregate Plan

Aggregate plan: Includes the budgeted levels of finished products, inventory, backlogs, workforce size, and aggregate production rate needed to support the marketing plan.

Life Cycle of a Project

1. Concept: Identify the need for the project. 2. Feasibility analysis or study: Evaluate costs, benefits, and risks. 3. Planning: Decide who does what, how long it should take, and what you need to do it. 4. Execution: Do the project. 5. Termination: End the project.

Components of Supply Chain (the network of activities that delivers a finished product or service to the customer)

1. External Suppliers 2. Internal Functions of the company 3. External Distributors

Steps in Methods Analysis (Process concerned with the detailed process for doing a particular job)

1. Identify the operation to be analyzed. 2. Gather all relevant information about the operation, including tools, materials, and procedures. 3. Talk with employees who use the operation or have used similar operations. They may have suggestions for improving it. 4. Chart the operation, whether you are analyzing an existing operation or a new operation. 5. Evaluate each step in the existing operation or proposed new operation. Does the step add value? Does it only add cost? 6. Revise the existing or new operation as needed. 7. Put the revised or new operation into effect, then follow up on the changes or new operation. Do your changes to the existing operation improve it? Does your new operation add to the company's overall operations?

External Suppliers

1. Tier one supplier: Supplies materials or services directly to the processing facility. (ex: dairy products are packaged either in cardboard or plastic containers made by tier one suppliers) 2. Tier two supplier: Directly supplies materials or services to a tier one supplier in the supply chain. (ex: The paper mill and the chemical processing plant are tier two suppliers because they directly supply tier one suppliers but do not directly supply the packaging operation) 3. Tier three supplier: Directly supplies materials or services to a tier two supplier in the supply chain. (ex: The lumber company that provides wood to the paper mill is a tier three supplier, as is the chemical extraction plant that supplies raw materials to the chemical processing plant.)

Seven features of TQM combine to create the TQM philosophy:

1. customer focus 2. continuous improvement 3. employee empowerment 4. use of quality tools 5. product design 6. process management 7. managing supplier quality.

Process Design

1. idea generation 2. product screening: company's product screening team evaluates the product design idea according to the needs of the major business functions 3. preliminary design and testing 4. final design

Pull and Push Processes

In the pull system production orders begin upon inventory reaching a certain level, while on the push system production begins based on demand (forecasted or actual demand)

Independent and Dependent Demand

Independent demand is the demand for finished products, whereas dependent demand is demand that is derived from finished products. MRP systems use dependent demand.

Armand V. Feigenbaum

Introduced concept of total quality control.

Transportation inventory:

Inventory in movement between locations.

Maintenance, repair, and operating inventory (MRO):

Items used in support of manufacturing and maintenance. (ex: maintenance supplies, spare parts, lubricants, cleaning compounds, and daily operating supplies such as pens, pencils, and note pads. MRO items support general operations and maintenance)

Impact of JIT/Lean Principles Across the Organization: Marketing

JIT focuses on customer-driven quality, not quality as defined by the producer. Marketing managers must understand customer needs and ensure that this information is passed on to operations managers for proper design, production, and delivery of the product or service.

Impact of JIT/Lean Principles Across the Organization: Accounting

JIT relies on activity-based costing to allocate overhead. In activity-based costing, specific costs are identified and then assigned to various types of activities, such as inspection, movement of goods, and machine processing. Overhead costs are then assigned to jobs depending on how many activities a particular job takes up.

Philosophy of JIT (pull system)

Japan 1970s Toyota Motor Company central belief: elimination of waste: Material, energy, time, and space.