Ch 1: Operations & Supply Chain Mgmt

triple bottom line strategy

A strategy that meets the needs of shareholders and employees and that preserves the environment.

delivery

A type of process that moves products to warehouses or customers.

making

A type of process where a major product is produced or a service is provided.

total quality control

A philosophy that aggressively seeks to eliminate causes of production defects.

Six Sigma Quality

A set of principles and practices whose core ideas include understanding customer needs, doing things right the first time, and striving for continuous improvement.

Helping the TQC movement along was the ______________________________, started in 1987 under the direction of the National Institute of Standards and Technology.

Baldridge National Quality Award

efficiency

Doing something at the lowest possible cost.

The ISO 9000 certification standards, created by the __________________________________, now play a major role in setting quality standards for global manufacturers.

International Organization for Standardization

value

Metaphorically defined as quality divided by price.

_________________________ refers to manufacturing and service processes that are used to transform resources into products.

Operations

returning

Processes that involve the receiving of worn-out, defective, and excess products back from customers and support for customers who have problems

Originally developed in the 80s as part of TQM, ________________________ in the 90s saw a dramatic expansion as an extensive set of diagnostic tools was developed.

Six Sigma

________________________ refers to processes that move information and material to and from the manufacturing and service processes of the firm.

Supply chain

supply chain network

The pipeline movement of the materials and information needed to produce a good or service.

sourcing

The selection of suppliers.

product-service bundling

When a company builds service activities into its product offerings.

days sales outstanding + days inventory - payable period =

cash conversion cycle

The ________________________, or cash-to-cash cycle time, the time it takes a company to convert the money it spends on raw materials into profits.

cash conversion cycle time

__________________ measures the average number of times inventory is sold and replaced during the fiscal year. This measures a company's efficiency (liquidity or speed of usage) at turning inventory into sales.

inventory turnover

cost of goods sold / average inventory value =

inventory turnover

Pioneered by the Japanese, _______________________ production is an integrated set of activities designed to achieve high-volume production using minimal inventories of parts that arrive just as they are needed.

just-in-time (JIT)

The 80s saw a revolution in management philosophies and technologies by which production is carried out. ______________________ refers to the the two key concepts: JIT and TQC.

lean manufacturing

A ___________ inventory turnover ratio is a signal of inefficiency, since inventory ties up capital that could be used for other purposes. It could be a sign of poor sales or excess inventory.

low

The _____________________ indicates how quickly suppliers are paid by the company.

payables period

service

A business where the major product is intangible, meaning it cannot be weighted or measured.

lean manufacturing

An approach that combines TQM and JIT.

total quality management

An approach that seeks to make evolutionary changes as opposed to revolutionary changes (which is advocated by business process reengineering).

business process reengineering

An approach that seeks to make revolutionary changes as opposed to evolutionary changes (which is advocated by total quality management).

effectiveness

Doing the right things to create the most value for the company.

_____________________ include processes physically move product, as well as the warehouse and storage processes that position the product for quick delivery to the customer.

Logistics

___________________________ is defined as the design, operation and improvement of the systems that create and deliver the firm's primary goods and services.

Operations and Supply Chain Management (OSCM)

___________________ is the amount of sales generated for every dollar's worth of assets. It measures a firm's efficiency at using its assets in generating sales revenue - the higher the number, the better.

asset turnover

revenue (or sales) / total assets =

asset turnover

A common set of financial indicators that Wall Street tracks to ___________________ companies are called management efficiency ratios.

benchmark

_____________________ is a process by which one company studies the processes of another company (or industry) to identify best practices.

benchmarking

Planning

The process needed to determine the set of future actions required to operate an existing supply chain.

The _______________________________ approach to seeking process innovations seeks to make revolutionary changes rather than evolutionary changes (which are commonly advocated in TQM).

business process re-engineering (BPR)

________________________ takes a fresh look at what a business is trying to do in all of its processes, then eliminates non-value-adding steps and computerizes the remaining ones to achieve the desired outcome.

business process re-engineering (BPR)

_____________________________ is the number of days' worth of inventory the company holds in operations and supply chain processes. This includes raw material, WIP and finished goods inventory.

days inventory

__________________________ is the number of days it takes for a company to collect cash from customers.

days sales outstanding

______________ means doing the right things to produce the most value for the customer.

effectiveness

______________ means doing something at the lowest possible cost.

efficiency

The goal of a(n) ______________ process is to produce a good or service by using the smallest input of resources.

efficient

A ___________ inventory turnover ratio implies either strong sales or ineffective buying (buying too often, in small quantities). It can be a sign of higher liquidity but could also indicate shortages.

high

Asset turnover can indicate pricing strategy: companies with low profit margins tend to have ____________ asset turnover and companies with high profit margins tend to have ___________ asset turnover.

high, low

annual credit sales / average accounts receivable =

receivables turnover

__________________ requires scheduling processes for workers and coordinating material and other critical resources such as equipment to support producing or providing the service.

making

The late-70s/early-80s saw the development of the ___________________________ paradigm, which emphasized how manufacturing executives could use their factories' capabilities like strategic competitive weapons. Central to this thinking are trade-offs among performance measures such as low cost, high quality and high flexibility.

manufacturing strategy

____________________ includes the processes needed to operate an existing supply chain strategically.

planning

___________________ measures the number of times receivables are collected, on average during the fiscal year. This measures a company's efficiency in collecting sales on credit.

receivables turnover

_____________________ involves the selection of suppliers that deliver the goods and services needed to create the firm's product.

sourcing

_______________________ is the ability to maintain balance in a system.

sustainability

________________________ aggressively seeks to eliminate causes of production defects.

total quality control (TQC)

Management must consider the mandates related to ongoing economic, employee and environmental viability of the firm (the _______________________).

triple bottom line

Related to efficiency and effectiveness is ____________, which can be abstractly defined as quality divided by price.

value