Intro to Supply Chain Chapter 8

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Quality Tools

1. Check Sheets 2. Histograms 3. Pareto Analysis 4. Cause and Effect Diagrams 5. Flow Diagram 6. Control Charts 7. Scatter Diagrams

Philip Crosby

Coined phrase "quality is free" as defects are costly. Introduced concept of zero defects and focus on prevention, not inspection.

Manufacturing Strategy

Companies must develop a manufacturing strategy that suits the type of products that they produce, their customer's expectations, and their strengths.

Continuous Process

Used to manufacture items such as gasoline, laundry detergent and chemicals. Inflexible process, high investment.

Intermittent Processes

Used to produce a large variety of problems with different processing requirements in lower volumes. - Project and Batch Process

Repetitive Processes

Used to produce one, or few, standardized products in high volumes. - Line and Continuous Process

Waste Categories

DOWNTIME

D

Defects - anything that does not meet the acceptance criteria

DMADV Methodology

Define, Measure, Analyze, Design, Verify. Used when company wants to create a new product design or process that is more predictable and defect-free.

DMAIC Methodology

Define, Measure, Analyze, Improve, Control Used when company wants to improve an existing business process.

Joseph Juran

Defined quality as "fitness for use". Developed concept of cost of quality.

Quality Control

Determine what to control, establish standards of performance, and measure performance.

Six Sigma

Disciplined, statistical based, data driven methodology for identifying and removing caused of defects and minimizing variability in manufacturing and in business processes. Originally developed by Motorola.

Pull System

Each stage in the supply chain requests quantities needed from the previous stage, no excess inventory is generated. Can uncover production problems.

W. Edwards Deming

Father of TQM Created Plan, Do, Check, Act Model.

LEAN Supply Chain Relationships

Firms develop lean supply chain relationships with key customers and key suppliers. Allows customers and suppliers to easily exchange information.

Waste Reduction

Firms reduce costs and add value by eliminating waste from the production system

Role of Supplier

Goal is to have the fewest number of high quality suppliers as possible without creating risk.

Respect for People

Goal is to use people more wisely, ordinary workers are given more responsibility.

Small Batch Scheduling and Uniform Plant Loading

Ideal schedule is to produce every product as quickly as possible and at the same rate as customer demand. Large batches can exacerbate the Bullwhip Effect as production in large batches creates an uneven workload. Small batches create a smooth workload, increasing flexibility.

Quality Planning

Identify internal/external customers and needs, develop products satisfying those needs, and managers set goals, priorities and compare results.

Value

Inherent worth of a product as judged by the customer and reflected in it's selling price and market demand.

I

Inventory - Excess products or materials not being processed

Keirestsu Relationships

Involves companies both upstream and downstream of a manufacturing process, remaining independent but working closely together for mutual benefit.

Assemble-to-Order

Manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent. Basic parts are manufactured but not assembled. Hybrid of both MTS and MTO.

Make-to-Stock

Means to manufacture products for stock based on demand forecasts - a push system. Avoid having excess inventory.

M

Motion/Movement - Unnecessary movement of people.

LEAN Layouts

Move people and materials when and where needed and as soon as possible.

N

Non-Utilized Talent - under-utilizing people's talents, skills, or knowledge. De-motivation.

Malcolm Baldridge National Quality Award

Objective was to stimulate firms to improve, recognize their quality achievements, and establish guidelines so organizations can evaluate their improvement and provide guidance to others.

External Failure Costs

Occur when the product or service does not meet the designated quality standards, and are identified after the service is delivered to the customer.

Internal Failure Costs

Occur when the product or service does not meet the designated quality standards, and are identified before the product or service is delivered to the customer.

LEAN Manufacturing

- Satisfying internal customer demand - Communications demand forecasts and production schedule up the supply chain - Quickly moving products in the production system - Optimizing inventory levels across the supply chain - Increasing the values, capabilities and flexibility of the workforce through cross-training - Extending collaboration and alliance beyond just 1st tier suppliers and customers to include 2nd and 3rd tier suppliers and customers as well.

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.

5 Hows

Questioning technique for drilling down into the details of a potential solution to a known problem to find the best solution.

5 Whys

Questioning technique for identifying root cause of a problem.

Quick Response

Rapid replenishment of a customer's stock by a supplier with direct access to data from the customer's point of sale.

LEAN Green Practices

Reduce the cost of environmental management and lead to improved environmental performance.

Prevention Costs

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.

Quality Improvement

Show the need for improvement, identify projects for improvement, and implement remedies. Provide control to maintain improvement.

Voice of the Customer

Term used in business to describe the in-depth process of capturing internal and external customer's preferences, likes, and dislikes.

Efficient Consumer Response

a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers.

Cost of Poor Quality

Internal Failure Costs External Failure Costs

Components of LEAN

- LEAN Manufacturing - Total Quality Management - Respect for people

Kaoru Ishi Kawa

Developed the cause and effect diagram.

E

Extra-Processing - Unnecessary steps in a process, redundancies.

Manufacturing Management

Management of all the processes which are involved in manufacturing.

Straighten

Organize and arrange items to promote an efficient workflow

Sustain

Stick to the rules, maintain and review the standards

Manufacturing

The process or making of raw materials or components into a finished product, especially by means of large scale industrial operations, i.e mass production.

LEAN

operating philosophy of waste reduction and value enhancement. Originally created as the Toyota Productions System by key Toyota executives.

Standardize

Schedule regular cleaning and maintenance

Foundational Aspects of Six Sigma

1. Quality is defined by customers 2. Use of technical tools 3. People Involvement

The Five S's

1. Sort 2. Straighten 3. Shine 4. Standardize 5. Sustain

Components of LEAN Manufacturing

1. Waste Reduction 2. LEAN Layouts 3. Inventory, Setup time, Changeover time reduction 4. Small Batch Scheduling and Uniform Plant Loading 5. LEAN Supply Chain Relationships 6. Workforce Empowerment 7. Continuous Improvement

Manufacturing Processes

2 Broad categories: Intermittent processes and repetitive processes

Just-In-Time

An inventory strategy to decrease waste by receiving materials only when and as needed in the production process, thereby reducing inventory costs.

Cost of Good Quality

Appraisal Costs and Prevention Costs

Appraisal Costs

Associated with the evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications.

Cause and Effect Diagram

Can see all possible causes of a problem to help find the root cause.

Shine

Clean the work area so it is neat and tidy

Total Cost of Manufacturing

Complete cost of producing and delivering products to your customers. Includes manufacturing and procurement activities, inventory and warehousing activities, and transportation activities.

Continuous Improvement

Continuous approach to reduce process, delivery, and quality problems.

Role of Management

Create the cultural change needed for LEAN to succeed.

Project Process

Creates custom product for each customer

Sort

Keep only necessary items in the workplace, eliminate the rest

Make-to-Order

Manufacturing strategy in which manufacturing starts only after a customer's order is received. Additional wait time, but products are customized to the customer's specifications. Relieves the problem of excess inventory, but isn't appropriate for all products - better for highly configured products like aircraft.

Major Manufacturing Strategies

Make-to-Stock Make-to-Order Assemble-to-Order Engineer-to-Order

Total Quality Management

Management philosophy based on the principle that every employee must be committed to maintaining a high standard of work in every aspect of a company's operations.

Workforce Commitment

Managers must support LEAN manufacturing by providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions.

Operations Management

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.

Batch Process

Manufactures a small quantity of an item in a single production run

As Volume goes up

Manufacturing and procurement costs go down due to economies of scale. Inventory and warehousing costs go up. Transportation costs go down, but level off at higher volumes as shipping containers fill up and more containers must be used.

Engineer-to-Order

Manufacturing strategy in which the product is designed, engineered and built to the customer's specifications after receipt of the order.

O

Overproduction - production before it is needed, or in excess of a customer requirements.

Role of Workers

Perform tasks actively pursuing company goals

Uniform Plant Loading

Planning up to capacity in earlier time periods to meet demand in later time periods.

Non-Value Added Process

Process steps that time, resources or space but do not transform or shape the produce or service.

Value Added Process

Process steps that transform or shape a product or service which is eventually sold to a customer.

Kanban

Small batch scheduling can be facilitated through this Means "signal" in Japanese and is used for communication between workstations.

Inventory, Setup Time, and Changeover Time Reduction

Some inventory may be needed, but excess inventory is a waste. Takes up space, costs money to hold, maintain, protect, and insure. Ties up capital.

Line Process

Standard products with a limited number of variations moving on an assembly line thru stages of productions

Manufacturing Strategy vs Performance Cycle

The choice of strategy determines the performance cycle (lead times) the customer experiences.

Changeover Time

Time taken to adapt and modify the manufacturing equipment and systems to produce a different product or a new batch of the same product.

Setup Time

Time taken to prepare and format the manufacturing equipment and systems for production.

T

Transportation - Unnecesary movement of materials or products

Supplier's Risk

Type 1 Error - Buyer rejects a shipment of good quality units because sample quality didn't meet standards

Buyer's Risk

Type 2 Error - Buyer accepts a shipment of poor quality units because the sample falsely provided positive results against the standards

W

Waiting - elapsed time when no work is being done

Acceptance Sampling

When a shipment is received from a supplier, a statistically significant representative sample is taken and measure against the quality acceptance standard. The entire shipment is assumed to have the same quality as the sample taken.


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