BUS110 Chapter 9

Principles of System Thinking

1. help everyone see the big picture 2.understand how individual systems really work and how they interact 3. understand problems before you try to fix them 4.understand the potential impact of solutions before you implement them 5.don't just move problems around-solve them 6.understand how feedback works in the system 7.use mistakes as opportunities to learn and improve

Six Sigma

A comprehensive approach that encompasses a philosophy of striving toward perfection, a rigorous methodology for measuring and improving quality, and specific tools such as SPC to track progress. It is a highly disciplined, systematic approach to reducing the deviation from desired goals in any business process. Six Sigma efforts typically follow a five-step appracoh known as DMAIC

ISO 9000

A globally recognized family of standards for quality management systems administered by the ISO (international organization for standardization). ISO 9000 is based on eight quality management principles including customer focus, a systems approach to management, and fact-based decision making.

Facilities Location and Design

Choosing location of production facilities is a decision that must consider factors like land, construction, availability of talent, taxes, energy, living standards, transportation, and proximity to customers and business partners. Also support from local communities and governments plays a role in location decisions too. To provide jobs and expand their income and sales tax bases, local state and national governments often compete to attract companies by offering financial incentives such as tax reduction.

Continuous Improvement

Companies that excel tend to empower their employees to continuously improve the quality of goods production or service delivery, a strategy often expressed through the word kaizen. Kaizen approach encourages workers to look for quality problems, halt product when needed and generate ideas for improvement, adjust work rounites as needed.

Supply Chain Systems and Techniques

Having too much inventory is expensive because you have to store it. Inventory control job is determining the right quantities of supplies and products to have on hand and where those items are. Radio frequency Identification (RFID) is a technology to help inventory control. It uses small antenna tags attached to products, special sensors detect the tags and track the flow of goods through the supply chain. Procurement (aka purchasing) goal is to make sure a company has the material it needs when it needs them at the lowest possible cost. To accomplish these goals 1.Material requirement planning (MRP)- helps get the correct materials when they are needed without unnecessary stockpiling 2. Manufacturing Resource Planning (MRP II)- expands MRP with links to a company's financial systems and other processes 3. Enterprise Resource Planning (ERP)- Extends the scope of resource planning and management even further to encompass the entire organization.

Mass Production, Customized Production, and Mass Customization

Identical goods or services are created in large quantities. Customized production (batch of one production) is when producers create a unique good or service for each customer. Mass customization is when part of the product is mass produced and then the remaning features are customized for each buyer.

Statistical Process Control (SPC)

Involves taking samples from the process periodically and analyzing these data points to look for trends and anomalies. Control chart is the most important SPC tool which plots measured data over time and helps identify performance that is outside the normal range of operating conditions and therefore in need of investigation.

System View of Business

One of the most important skills you can develop as a manager is the ability to view business from a systems perspective. A system is an interconnected and coordinated set of elements and processes that convert inputs into desired outputs. Systems in a company are marketing, engineering, accounting, etc.

Challenges of Service Delivery

Perishability, location constraints, scalability challenges, performance variability and perceptions of quality, and customer involvement and service provider interaction. (1) perishability, which means that services are consumed at the same time they are produced; (2) location constraints, which often require that customers and service providers be in the same place at the same time; (3) scalability challenges, which can make some types of service businesses more difficult to expand; (4) performance variability and perceptions of quality, which heighten the challenge of delivering consistent quality and increase the subjectivity of the customer experience; and (5) customer involvement and service provider interaction, which can put some of the responsibility for service quality on the customer's shoulders and increase the importance of good interpersonal skills.

Production and operations Management

Production describes the transformation of resources into both goods and services. The term production and operations management or operations management, refers to overseeing all the activities involved in producing goods and services.

Forecasting and Capacity Planning

Production forecasts is estimates of future demand for the company's products. Capacity planning is the collection of long term strategic decisions that establish the overall level of resources needed to meet customer demands. *Capacity choices are among the most important decisions that top level managers make because of the potential impact on finances, customers and employees, and the difficulty of reversing major decisions.

Lean Systems

Productivity, the efficiency with which they can convert inputs to outputs is the most vital responsibilities in operations management because it is the key factor in determining the company's competitiveness and profitability. Lean systems, which maximize productivity by reducing waste and delays are at the heart of many productivity improvement efforts. Many lean systems borrow techniques from Toyota. Just in Time (JIT) is inventory management in which goods and materials are delivered throughout the production process right before they are needed rather than being stockpiled in inventories. Reducing stocks to immediate needs reduces waste and forces factories to keep production flowing.

Product and Process Quality

Quality is defined as the degree to which a product or process meets reasonable or agreed-on expectations.

Scheduling- MPS,GNATT,PERT

Scheduling is determining how long each operation takes and deciding which tasks are done in which order. Manufacturing facilities use a master production schedule (MPS) to coordinate production of all the goods the company makes. To plan and track projects managers throughout a company can use a Gantt chart which is a special type of bar chart that shows the progress of all the tasks needed to complete a project. The program evaluation and review technique is a more complex project that is useful. PERT helps managers identify the optimal sequencing of activities, the expected time for project completion, and the best use of resources. To use PERT manages map out all the actives in a network diagram. The longest path through the network is the critical path because it represents the minimum amount of time needed to complete a project. Tasks in the critical path usually receive special attention because they determine when the project can be completed

Supply Chain Management

Supply chain is a set of connected systems that coordinate the flow of goods and materials from suppliers all the way through to final customers. SCM combines business procedures and policies with information systems that integrate the various elements of the supply chain into a cohesive system. How SCM can impact companies and the broader economy by 1. Managing risks-SCM can help companies manage the complex risks involved in a supply chain, risks that include everything from cost and availability to health and safety issues. . 2. Managing relationships-SCM can coordinate the numerous relationships in the supply chain and help managers focus their attention on the most important company-to-company relationships. 3. Managing trade-offs- SCM helps managers address the many trade-offs in the supply chain. These trade-offs can be a source of conflict within the company, and SCM helps balance the competing interests of the various functional areas. 4. Promoting sustainability- As the part of business that moves raw materials and finished goods around the world, supply chains have an enormous effect on resource usage, waste, and environmental impact. A major effort is under way in the field of SCM to develop greener supply chains.

Supply Chains vs Value Chain

Supply chain is the part of the overall value chain that acquires and manages the goods and services needed to produce whatever it is the company produces and then deliver it to the final customer. Everyone in the company is part of the value chain but not everyone is involved in the supply chain. Supply chain focuses on the upstream part of the process, collecting the necessary materials and supplies with an emphasis on reducing waste and inefficiency.

Strategies for Ensuring Product Quality

The traditional means of maintaining quality is called quality control, measuring quality against established standards have the good or service has been produced and weeding out any defects. Quality assurance is a more proactive approach which is a holistic system of integrated policies, practices, and procedures designed to ensure that every product meets preset quality standards. *Companies can use a variety of tools and strategies to help ensure quality; four of the most significant are continuous improvement, statistical process control, Six Sigma, and ISO 9000.

Value Chains and Value Webs

Value chain is a helpful way to consider all the elements and processes that add value as input materials are transformed into the final products made available to the customer. The value web concept expands this linear model to a multidimensional network of suppliers and outsourcing partners. In the complex argument over offshoring—the transfer of business functions to entities in other countries in pursuit of lower costs—proponents claim that (a) companies have a responsibility to shareholder interests to pursue the lowest cost of production, (b) offshoring benefits U.S. consumers through lower prices, (c) many companies don't have a choice once their competitors move offshore, (d) some companies need to offshore in order to support customers around the world, and (e) offshoring helps U.S. companies be more competitive. Those who question the value or wisdom of offshoring raise points about (a) the future of good jobs in the United States, (b) hidden costs and risks, (c) diminished responsiveness, (d) knowledge transfer and theft issues, (e) product safety issues, and (f) national security and public health concerns.