Supply Chain Management CH 8

People Attributes

- Wages & Salaries - Safety & Training - Working Conditions - Leadership & Motivation - Unionization - Communication

Six Sigma training and certification levels

- Yellow Belt: Basic understanding - Green Belt: Trained individual that can work on complex projects - Brown Belt: Green belt who has passed the black belt certification but has not yet completed their second six sigma project - Black Belt: Full time quality professional who has a thorough knowledge of six sigma philosophies and principles - Master Black Belt: Is a career path

Six Sigma Seven tools of quality control

- check sheets - cause and effect diagrams - control charts - histograms - pareto analysis - scatter diagrams - stratification/ flow diagrams

Philip Crosby

- credited with the concept that 'quality is free; defects are costly' - Introduced the concept of zero defects, and focus on prevention and not inspection - He introduced the 4 absolutes of quality

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.

Engineering to Order (ETO) Manufacturing Strategy

Manufacturing process in which the component is designed, engineered and built to specifications only after the order has been received. Building a unique product every time cost of poor quality very high -Longest Lead Time from customer's perspective

Make to Order (MTO) Manufacturing Strategy

Manufacturing strategy that typically allows customers to purchase products that are customized to their specifications. Manufacture send product once the customer places the order No excessive inventory Appropriate for highly configured products such as computer servers, aircrafts, automobiles that are expensive to keep in inventory. - Pure Pull Strategy/ System

Non Value added process

Process steps that take time, resources, or space, but do not add value to the product or service.

Value added process

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

job shop manufacturing process

Process that creates a customer product for each customer.

The 5 why's and the 5 how's technique

Questioning technique designed to drilled down into the details of a problem or a solution to find the root cause and the bets corrective measure. Technique typically used in conjunction with the cause and effect diagram

primary design objective of LEAN layout

Reduce wasted movements of workers and/or materials

Operations Management

Refers to the design, execution, and control of the operations that convert resources into desired goods and services, aligned with the company's business strategy.

Kanbans

Signal or card in Japanese used fro communication between work stations

Jack Welch

Six Sigma became famous when _____________ made it central to his successful business strategy at General Electric in 1995

Manufacturing Strategy

To make or process a raw material into a finish product, specially by means of a large scale industrial operation. It includes the machines used, the personnel involved, inventory handling, warehousing.

Cause and Effect Diagram

Used to aid in brainstorming and isolating the causes of a problem

Check Sheets LEAN statistical tool

Used to determine the frequency for a specific problem

DMADV Methodology

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

Acceptance Sampling

When a shipment is received from a supplier, a statistically significant representative sample is taken and measure against the quality acceptance standard.

Continuous improvement (kaizen)

Continuous approach to reduce processes, delivery, and quality problems, such as machine breakdown problems, and internal quality problems.

Role of Management

Create cultural change needed for LEAN to succeed: - Provide atmosphere of cooperation - Empower workers to take actin based on their ideas - Develop incentive system for lean behaviors

Total Quality Management

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 operation, focused on meeting customer needs and organizational objectives.

LEAN Term

The term was first coined by John Krafcik in 1988 and the definition expanded inn 1990 book " The machine that changed the world"

Goal of Manufacturing

The transformation of raw materials and operational inputs into outputs that, when distributed, meet the needs of customers.

DEMAIC Methodology

This methodology is used when a company wants to improve an existing business process Define> Measure> Analyze> Improve> Control

the goal of Six Sigma

To attain less than 3.4 defects per million opportunities (DPMO)

Goal of Operations Management

To convert materials and labor into goods and services as efficiently and effectively as possible, while also controlling costs to maximize profits.

Processes Attributes

- Available Capacity - Available Skills - Type of Production - Safety - Production Costs - Maintenance Requirements

W. Edwards Deming

- Considered the father of total quality management (TQM) he is the creator of the plan- do- check- act model - Developed 14 points to guide companies in quality improvement

ways in which VOC can be captured

- Customer interviews - Market surveys - Focus groups - Customer specifications - Observation - Warranty data - Field reports - Complaint logs

Six Sigma two key methodologies

- DMADV Methodology - DEMAIC Methodology

The eight wastes DOWN TIME

- Defects - Over Production - Waiting - Non- Utilized Talent - Transportation - Inventory - Motion/ Movement - Extra Processing

Respect for people

- Flatter hierarchy - workers given great responsibilities - cross functional teams - The goal is NOT to reduce the # of people , it is to reduce people resources more wisely.

Plants Attributes

- Future Demand - Health & Safety (HOSHA) - Productivity of Equipment - Reliability of Equipment - Environmental Issues

Role of workers

- Improve production process - Correct quality problems - Monitor quality - Work in teams: quality circles

4 Manufacturing Processes

- Job shop - Batch - Line flow - Continuous flow

Elements of LEAN

- LEAN manufacturing - Total Quality Management - Respect for people

LEAN results in:

- Large cost reductions - Improved quality - Increased customer service

4 Manufacturing Strategies

- Make to Stock (MTS) shortest - Assemble to Order (ATO) - Make to Order (MTO) - Engineering to Order (ETO) longest

Key principles of total quality management (TQM)

- Management commitment - Employee empowerments - Fact based decision making - Continuous improvement - Customer focus

Assemble to Order (ATO) Manufacturing Strategy

- Manufacturing strategy where products order by customers are produced quickly and are customizable to a certain extent. -Basic parts for the product are already manufactured but not assembled until an order is received. - Hybrid Strategy between MTS & MTO.

LEAN Layouts

- Move people when and where needed and as soon as possible. - Are very visual with operators at one processing center able to monitor work at another. - Manufacturing cells saving duplication of equipment and labor, are often U shaped.

Role of suppliers

- Partner with suppliers - Improve process quality - Information sharing - Goal to have single source suppliers

Products Attributes

- Performance -Aesthetics - Quality - Reliability - Quantity - Production Costs - Delivery Dates

Elements to consider when developing a plan for manufacturing:

- Products - Plants - Processes - Programs - People

Programs Attributes

- Purchasing Patters - Cash Flow - Need for Storage - Availability for Storage - Transportation

Concepts that came together with LEAN

- Quick response - Efficient Consumer response -Just in Time - Keiretsu Relationships

LEAN green practices

- Reduce the cost of environmental management - Lead to improved environmental performance - Increase the possibility that firms will adopt more advanced environmental management.

Benefits of LEAN

- Reduced cycle times - Greater throughput - Better productivity - Improved quality - Reduced costs - Improved customer satisfaction

Make to Stock (MTS) Manufacturing Strategy

-To manufacture products based on demand forecasts. -Pure Push Strategy/System -Accuracy of the forecast is critical -Used for most daily necessities such as processed foods, and textiles. Shortest Lead Time from customer's perspective -Issue: Avoid having excess inventory. Make the correct product, at the correct time, in the correct quantity.

3 main foundation aspects of Six Sigma

1- Quality is defined by the customer 2- Use of technical tools such as statistical quality controls and the 7 tools of quality 3- People involvement: all employees involved in six sigma program, all employees identify quality problems, and well defined and specific six sigma roles.

The 7 elements of LEAN manufacturing

1- Waste reduction 2- LEAN layouts 3- Inventory, set up time, and changeover time reduction 4- Small batch scheduling and uniform plant loading 5- LEAN supply chain relationships 6- Workforce empowerment 7- Continuous improvement

LEAN history

1910's Henry Fords mass production line - continuous assembly - flow systems 1940's Taichii Ohno & Shigeo Shingo create Toyota Production System (TPS)

Six Sigma

A quality management process: - Seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.

Efficient Consumer Response LEAN concept

A strategy to increase the level of service to customers through close cooperation among retailers, wholesalers, and manufacturers.

Statistical tools: control charts

Allows firm to; - Visually monitor process performance - Campare performance to desire levels/standards - Take corrective actions

Uniform Plant Loading

Also called front loading Planning up to capacity in earlier time periods to meet demand in later time periods

Six Sigma philosophy

An enterprise and supply chain wide-philosophy that emphasizes a commitment towards excellence, encompassing suppliers, employees, and customers. Identification and reduction of defects/ errors. Focuses on reducing defects and variations.

Just in Time LEAN concept

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 Prevention costs

Cost of quality

Approach that support 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.

Joseph Juran

Defined quality as "fitness for use" He developed the concept of the cost of quality. - Quality planning - Quality control - Quality improvement

Kaoru Ishikawa

Developed one of the first tools in the quality management process, the cause and effect diagram, which is also called the ------- or fish bone diagram.

LEAN elements: Waste (Muda) Reduction

Firms reduce cost and add value by eliminating waste. Waste encompasses; - wait times - inventory - material and people involvement - processing steps - variability - any other non value added activities

Statistical Tools- Pareto Analysis

For presenting data in an organized fashion, indicating process problems from most to least sever.

Cost of poor quality

Internal failure costs: product doesn't meet quality standards and is detected before delivered to customer external failure costs: product doesn't meet quality standards and is detected after delivered to customer

Keiretsu Relationships LEAN concept

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

LEAN is culture

LEAN is NOT a tool box of methods, ideas, and methodologies. LEAN provides value for customers through the use of the most efficient resources possible.

LEAN manufacturing & SCHM

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.

Malcome Baldrige National Quality Award

Objectives; - Stimulate firms to improve - Recognize firms for quality achievements - Establish guidelines Categories Measured: - Leadership - Strategic planning - Customer and market focus - Information and analysis - Human resource focus Process management - Business results

Carbon neutral

Offsetting the carbon footprint of a firm's operations

LEAN philosophy

Operating philosophy of waste reduction and value enhancement and was originally created as the Toyota Production System (TPS). Focuses on eliminating wastes and improving efficiencies

The five S's

Originally Japanese words related to industrial housekeeping - Sort - Straighten - Shine - Standardize - Sustain

LEAN elements Inventory, Set up Time, and Changeover Time Reduction

Some inventory might be necessary but excess inventory is a waste Reducing inventory can free up capital and reduce holding costs Pull approach

Acceptance Sampling Risks

Supplier's risks: the buyer rejects a shipment of good quality units because the sample quality level did not meet the acceptance standard (type I error) Buyer's risk: the buyer accepts a shipment of poor quality units because the sample falsely provides a positive result against the acceptance standard (type II error)

Small batch scheduling

The ideal schedule is to produce product as quickly as possible and at the same rate as customer demand. Large batches can exasperate the bullwhip effect as production in large batches creates an uneven workload. Lean manufacturing attempts to reverse this through:

Value

The inherent worth of a product as judged by the customer, and reflected in its selling price and market demand. Anything for which the customer is willing to pay.

Manufacturing Management

The management of all the processes, which are involve din manufacturing. It includes the management of personnel, management pf raw materials, planning for production.

Quick Response LEAN concept

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

Motorola

company that originated the concept of Six Sigma

LEAN & Six Sigma

philosophies mindsets they complement one another LEAN + Six Sigma= Faster Speed & Better Accurracy

Line flow manufacturing process

process that has standard products with a limited number of variations moving on an assembly line through stages of production. Ex. Ford

Continuous flow manufacturing process

process that is used to manufacture such items as gasoline, laundry detergent, and chemicals. Inflexible process High capital Investment

batch manufacturing process

process that manufactures a small quantity of an item in a single production run.

LEAN supply chain relationships

suppliers and customers work to remove waste, reduce cost, and improve quality and customer service. Mutual dependency and benefits occur between these partners.

Voice of the Customer (VOC)

term used in business to describe the in depth process of capturing internal and external customer's stated and unstated expectations, preferences, likes, and dislikes.

Total cost of manufacturing (TCM)

the complete cost of producing and delivering product to your customers. incorporates both fixed and variable costs. Generally expressed as a cost per unit

LEAN elements Set up Time, and Changeover Time Reduction

the time taken to prepare and format the manufacturing equipment and systems for production. The time taken to adapt and modify manufacturing equipment and systems to produce a different product or anew batch of the same product. Both considered a waste because they are non value added operations.