Supply Chain Test #1 (Ch. 1,2,4,5,14)
Activities and Linkage: Accounting
-forecasting -capacity planning
Six Sigma People: Black Belts
-full time Six Sigma technical analysis
Six Sigma People: Master Black Belts
-full time experts (strategy, training, mentoring, deployment) who lead groups of Black Belts
Critical Path Method (CPM): Activity, Duration, Predecessor
Steps: -1.) draw activity on Node (AON) Diagram -2.) calculate Forward Pass (includes Earliest Start(ES) and Earliest Finish(EF)); move from left to right, adding task times; EF = ES + activity's duration -3.) determine Project Duration, set Latest Finish(LF) times for all ending nodes -4.) calculate Backward Pass (includes Latest Start(LS) and Latest Finish(LF)); move from right to left, subtracting task times; LS = LF - activity's duration -5.) determine Critical and Slack activities; Slack Time = LS - ES -6.) evaluate Crashing (shortening the overall duration of a project by reducing the time it takes to perform some of the activities (by adding more equipment/people, using overtime, etc.)), if needed
Operations and SC Strategy Objectives
-help managers choose the right mix of structural and infrastructural elements -ensure choices are aligned with the firm's business strategy -support the development of core competencies
Performance Dimensions: Flexibility
-how quickly supply chains can respond to the unique needs of different customers -mix -changeover -volume
Project Phase: 2.) Project Definition Phase
-if feasible and approved, identify how to accomplish the work, organize the project -tentative schedules, budgets, organization (number of people, roles) -budget estimates +/- 5 to 10% -secure approval
Project Management Benefits
-independent operation -manageability -decentralize authority -enables monitoring and measurement -provides assessment of required resources
Service Operations
-intangible "product" or service (Ex: banking, consulting, legal, medical services, fast food) -key decisions driven by how we service the customer: -how do we interact with the customer? -what processes do we use? -how much technology do we incorporate?
Activities and Linkage: Information Technology
-inventory management -planning and control
Business Processes
-logically related sets of tasks or activities performed to achieve a defined business outcome -Primary = (value-added); customer will pay -Support = necessary, not value adding -Developmental = improve the performance of primary and support processes
Total Quality Management (TQM)
-managing the ENTIRE ORGANIZATION so that it excels in all dimensions important to the customer -product development -marketing -operations -supply chain -support services
Process Capability
-mathematical determination of a process's capability to meet certain quality standards 1.) Cpk = process capability index; (target value DOES NOT = the mean) 2.) Cp = process capability ratio; (target value DOES = the mean)
Supply Chain Diagram
-moves from Upstream-----> to Downstream Upstream: -Tier 2 Supplier (Gets aluminum from ground)---> -Tier 1 Supplier (turns aluminum into beer cans)---> Downstream: -Manufacturer---> -Distributor---> -Retailer---> -Customer
How Projects are Distinct from Business Activities
-non-routin, significant impact -difficult to manage -requires a large amount of cross-functional and inter-organizational coordination -clear starting and ending points with people and resources reassigned when project is complete
Six Sigma People: Team Members
-not trained in Six Sigma -assist based on knowledge or interest in process
Core Competencies
-organizational strengths and abilities that: -develop over long time periods -are valuable -competitors find difficult or impossible to copy
Dimensions of Quality
-performance -features -reliability -durability -conformance -aesthetics -serviceability -perceived quality -firms can gain competitive advantage with quality
Four Performance Dimensions
-potential sources of distinct competence: -quality -time -flexibility -cost
Continuous Improvement Tools
-process maps -cause and effect diagrams (aka "fishbone" or Ishikawa diagrams) -check sheets -Pareto analysis -run charts and scatter plots -bar graphs -histograms
Acceptance Sampling
-process of sampling a portion of goods for inspection rather than examining the entire lots (Note: Free Pass = no calculations required)
Activities and Linkage: Human Resources
-process selection -capacity planning
Performance Dimensions: Time
-product or service delivery -delivery speed -delivery reliability (delivery window; accuracy of quantity shipped)
Activities and Linkage: Engineering
-purchasing -logistics -process selection
Six Sigma People: Champions
-senior level executives who "own" Six Sigma projects
Six Sigma: DMAIC
-solving model -Define: -clarify how improvement will support the business -establish performance targets ------------------> -Measure: -understand how the process works -what data do we need? ----------------> -Analyze: -identify the true underlying cause of the problem (root cause) -typically use fishbone diagram and 5 "why's" ----------------> -Improve: -identify ways to eliminate the gap between current performance and target performance ----------------> -Control: -maintain improvements by measuring process performance
Six Sigma People: Green Belts
-some basic training -part time assistance to Six Sigma projects
Manufacturing Operations
-tangible product (Ex: Auto, TV, Computer) -key decisions driven by physical characteristics of the product: -how is the product made? -how do we store it? -how do we move it?
Process Variation
-the FLUCTUATION in process output -Six Sigma focuses first on REDUCING PROCESS VARIATION and then on improving the process capability
Performance Dimensions: Quality
-the characteristics of a product or service that bear on its ability to satisfy stated or implied needs -performance quality -conformance quality -reliability quality
Continuous Improvement
-the philosophy that small, incremental improvements can add up to significant performance improvements over time
Operations Management
-the planning, scheduling, and control of activities that transform inputs into finished goods and services
Benchmarking
-the process of identifying, understanding and adapting outstanding practices to help improve performance -types: -competitive benchmarking -process benchmarking
Electronic Commerce
-the use of computer and telecommunications technology to conduct business via electronic transfer of data and documents
Functional Strategy
-translates the business into FUNCTIONAL terms -identifies specific actions required -facilitates COORDINATION with other areas -provides DIRECTION and GUIDANCE for functional decisions
Statistical Quality Control Calculations
-use statistics to calculate if process is meeting the quality standard -use charts and sampling to identify when the process is missing the standard so corrective action can be taken -uses: -process capability -control charts -acceptance sampling
Chapter 14
Project Management
Delayed Flight Example & Bluebird Café Case
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Dittenhofer Case
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Intermountain Healthcare Example
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Netflix Case
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Proctor & Gable Example
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Total Cost of Quality
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Apple, Southwest Airlines and John Deere Examples
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Crash Cost Calculations
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Types of Management Tools for Project Control
-1.) Gantt Charts = graphical tools used to show expected start and end times for project activities and to track actual progress against these time targets -2.) Critical Path Method (CPM) = a network-based technique in which there is a single time estimate for each activity
Three Basic Reasons to Study Supply Chain
-1.) Pervasiveness = every organization must make a product or provide a service that someone values (manufacturer, retailer, design firm, university, health services) -2.) Interdependence = most organizations function as part of a larger supply chain -3.) Profitability & Survival = organizations must carefully MANAGE their operations and supply chains in order to prosper, and indeed, survive
Process Map Basic Steps
-1.) identify the entity that will serve as your focal point (e.g. customer?; order?; item?) -2.) identify clear boundaries, starting and ending points -3.) keep it simple (e.g. does this detail add any insight?; do we need to map every exception condition?)
Professional Organizations
-APICS -ISM -CSCMP -ASQ
Quality
-American Society for Quality (ASQ) defines quality as: -the characteristics of a product or service that bear on its ability to satisfy stated or implied needs - fitness for use (VALUE PERSPECTIVE) -a product or service free from deficiencies (CONFORMANCE PERSPECTIVE)
Career Paths
-Analyst -Production Manager -Service Manager -Sourcing Manager -Commodity Manager -Supplier Development Manager -International Logistics Manager -Transportation Manager
APICS
-Association for Operations Management
Tesla Motors Example
-Business Strategy = position Tesla as one of the leading manufacturers of electric-powered vehicles -Currently = sales increasing dramatically with hopes to drastically reduce sales price of entry level model -Manufacturing and After-Sales Service Strategy = latest technology, high quality, reliable, top-notch customer service -Upstream Sourcing Strategy = radically different electric drive train, shares common components such as brakes with other vehicles, state of the art $5B lithium-ion plant -Downstream Strategy = network of super-chargin stations
Structural Decisions Guided by the Supply Chain Strategy
-Capacity: -size? -timing? -type? -Facilities: -size? -location? -Technology: -equipment? -processes? -information systems? -Vertical Integration: -direction? -extent?
Six Sigma People
-Champions -Master Black Belts -Black Belts -Green Belts -Team Members
Measures of Business Process Performance
-Costs: -materials -labor -shipping -Quality: -defects (parts per million (ppm)) -number of returns -reliability (mean time between failures (MTBF)) -Time: -lead time to customer -percent orders late -Flexibility: -changeover time -volume to meet changes in demand
Structural Elements
-Difficult to change: -buildings -equipment -computer systems -other capital assets
Important Trends
-Electronic Commerce = the use of computer and telecommunications technology to conduct business via electronic transfer of data and documents -Increasing Competition and Globalization = fewer industries protected by geography -BRIC: (Brazil, Russia, India, China) -Relationship Management = competition between chains, not individual firms -trust and coordination
Supply Chain Activities and their Cross-Functional Linkages
-Finance -Accounting -Engineering -Information Technology -Human Resources -Marketing
ISM
-Institute for Supply Management
Top-Down Model of Strategy
-Mission Statement: -reason for existence -core values -domain --------------------------------> -Business Strategy: -targeted customers/markets -competitive advantage/core competency -role of supply chain partners -time frames and performance objectives --------------------------------> -Strategic Alignment (Operations and SC Strategy OR Other Functional Strategies) -Operations and SC Strategy: -translate business strategy into SC actions -provide value to targeted customers/markets -develop supporting core competencies in SC OR -Other Functional Strategies: -marketing -finance -human resources -research and development -engineering
Process Capability Symbols
-Mu (U with tail) = represents the average or mean -Sigma (O with tail) = represents the standard deviation from the mean -LTL = Lower Tolerance Limit (temp below 132 degrees is unacceptable) -UTL = Upper Tolerance Limit (temp above 148 degrees is unacceptable) -target value does NOT = the mean: Cpk = min((Mu-LTL)/(3xSigma), (UTL-Mu)/(3xSigma)) -target value DOES = the mean: Cp = (UTL-LTL)/(6xSigma)
EXTRA Performance Dimensions: Tradeoffs
-NOT ONE OF THE FOUR MAJOR PERFORMANCE DIMENSIONS -Tradeoffs: -the decision by a firm to emphasize one performance dimension over another
Infrastructural Decisions Guided by the Supply Chain Strategy
-Organization: -control/reward systems? -centralization/decentralization? -workforce-skilled/semi-skilled? -Sourcing and Purchasing: -supplier selection/performance metrics? -procurement systems? -sourcing strategy? -Planning and Control: -forecasting? -inventory management? -production planning/control? -Process and Quality: -continuous improvement processes? -business process management -SPC/Six Sigma -Product and Service Design: -development process? -organization/supplier roles?
Evaluating Business Process Performance
-Productivity = outputs/inputs -customer calls handled/support staff hours -items produced/machine hours -etc. -Efficiency = 100% x (actual outputs/standard outputs) -standard output is an estimate of what should be produced given a certain level of resources -Cycle Time: the total elapsed time needed to complete a business process (also known as throughput time) -percent value-added time = (100% x (value-added time))/ total cycle time
Infrastructural Elements
-Relatively easy to change: -people -policies -decision rules -organizational structure
ASQ
-The American Society for Quality
CSCMP
-The Council of Supply Chain Management Professionals
Project
-a TEMPORARY endeavor undertaken to create a unique product, service or result
Six Sigma Methodology
-a business improvement methodology that focuses an organization on: -understanding and managing customer requirements -aligning key business processes to achieve those requirements -using rigorous data analysis to understand and ultimately minimize variation in this processes -driving rapid and sustainable improvement to business processes
Process Map
-a detailed map (graphical representation) that identifies the specific activities that make up the informational, physical and/or monetary flows of a process
Value Index
-a measure that uses performance and importance scores for various dimensions of performance to determined the "best" value to the customer -V(value) = Sigma(E) x (In) x (Pn)
Business Strategy
-a mechanism for COORDINATING AND GUIDING decisions regarding the elements of a business: -decide on Core Competency (how do we compete? -decide on required structural and infrastructural elements to execute the strategy
Supply Chain
-a network of manufacturers and service providers that work together to create products or services needed by end users. These manufacturers and service providers are linked together through physical flows, information flows and monetary flows
Root Cause Analysis
-a process by which organizations brainstorm about possible causes of problems and narrows the list to focus on the most common causes
Control Charts
-a specialized run chart that helps an organization track changes in key measures over time 3.) continuous variables = measured along a scale (length, temperature) 4.) Attributes = measured discretely (yes/no, pass/fail)
Improving Business Processes
-attack each delay -examine each decision point -streamline, improve or automate -look for loops -process steps
Project Phase: 1.) Concept Phase
-broad definition, scope and feasibility analysis -budget estimates +/- 30% -identify key resources and time considerations -secure approval
Process Benchmarking
-comparison of an organization's processes with superior process from a non-competitor
Competitive Benchmarking
-comparison of an organization's processes with their competitors
5 Project Phases
-concept phase -project definition phase -planning phase -performance phase -post completion phase
Project Phase: 5.) Post Completion Phase
-confirms outcome, critiques project, and reassigns project personnel -conduct post implementation review
Total Quality Management (TQM) Principles
-customer focus -leadership involvement -continuous improvement -employee empowerment -quality assurance (including SQC aka Statistical Quality Control) -supplier partnerships -strategic quality plan
Project Phase: 3.) Planning Phase
-detailed tasks, timing, budgets, milestones and resources (specific names of people) -project management tools -secure approval
Quality Cost Improvement
-driven by prevention (quality at the source) -objective: to find the optimum level of investment in order to substantially reduce the Failure Costs and overall Quality Cost to both the customer and the business
Project Phase: 4.) Performance Phase
-execution and control of project plan (i.e., do the project) -directing and coordinating -secure approval
Performance Dimensions: Cost
-expense associated with a material or service -labor -materials engineering -quality
Activities and Linkage: Finance
-forecasting -capacity planning -purchasing
Activities and Linkage: Marketing
-forecasting -purchasing -logistics
Chapter 4
Business Processes
Chapter 1
Introduction to Operations and Supply Chain Management
Chapter 5
Managing Quality
Chapter 2
Operations and Supply Chain Strategies
