Ch 1

Work-in-process

Inventory purchased at the beginning of production to be processed into finished goods Usually 1/2 of the final value

Country's source of wealth

manufacturing/production (raw materials aren't useful unless transformed)

Just-in-time concept

-Developed by Toyota and other Japanese companies in 70s -Mutual analysis for cost reduction -Mutual product design -Enhanced information flow -Lead to "lean production"

Delivery Lead Time Strategies

-Engineer-to-order -Make-to-order -Assemble-to-order -Make-to-stock

Operations Management is affected by

-Government:regulation is extensive -Economy:influences demand -Competition:foreign and domestic, internet makes competition fierce -Customers: expect fair price, high quality, delivery lead time, service, and flexibility -Quality: must exceed customer's expectations

Three Elements of Supply Chain

-Physical Supply (raw materials) -Manufacturing, planning, controlling -Physical Distribution

Six major challenges for production control

1. Customers never satisfied 2. Large supply chains mud the managed 3. Short product life cycles 4. Vast amount of data 5. Emphasis on squeezed profit margins 6. More alternatives

Current Supply Chain Concept Issues

1. Flow of materials 2. Flow of information and sharing of information, mostly through the internet 3. Fund transfers New trend- manage recovery, recycling, and reuse of material

Elements of production planning

1. Forecasting 2. Master planning 3. Material requirements planning 4. Capacity planning

Inputs for manufacturing planning and control

1. Product description 2. Process specifications 3. Time 4. Available facilities 5. Quantities required

Primary activities of manufacturing planning and control

1. Production planning 2. Implementation and control 3. Inventory management

Objectives for Profit

1. Provide best customer service 2. Provide lowest production costs 3. Provide lowest inventory investment 4. Provide lowest distribution costs

Metrics give us

1.Control by superiors 2. Reporting of data to superiors and external groups 3. Communication 4. Learning 5. Improvement

Order Qualifiers

A minimum requirement set to be considered a viable competitor in the marketplace

Postponement

A product design strategy that shifts product differentiation closer to the consumer by postponing identity change to the last possible supply chain location Reduces the number of different items in the supply chain, lowering in-process inventory

Metric

A verifiable measure stated in either quantitative or qualitative terms defined with respect to a reference point

Order Winners

Competitive characteristics that persuade a company's customers to choose its products or services. Change over time and are different for different markets.

Design/Demand Information Flow

Customer -> supplier

Engineer-to-order

Customer's specifications require unique engineering design or significant customization. Delivery lead time is long because it includes purchase and design lead time

Product Life Cycle

Introduction -> Growth -> Maturity -> Decline

Performance Measure

Must be quantified and objective and contain at least two parameters

Product/Services Flow

Supplier -> customer

Materials Management

The concept of having one department responsible for the flow of materials, from supplier through production to consumer Objects: 1. Maximize the use of the firm's resources 2. Provide the required level of customer service

Orchestrator/Channel Master

The individual or company that takes the initiative to integrate both the upstream and downstream supply chain, getting members to work cooperatively to lower costs

Make-to-order

The manufacturer does not start to make the product until a customer's order is received. Final product is made from standard items, but may include custom-designed components. Delivery lead time reduced because little design time is required.

Assemble-to-order

The product is made from standard components that the manufacturer can inventory and assemble according to a customer order No design time needed and inventory is held ready for assembly

Make-to-stock

The supplier manufactures the goods and sells from a finished-goods inventory Shortest lead time. Customer has little direct involvement in the product design

Delivery Lead Time

The time from the receipt of an order to the delivery of the product (customer's desire it to be short)

Performance Standards

Transforming company policies into objectives and specific goals. Goals should have target values