Operations Management
Manufacturing Strategy for Manufacturing Process:
-Job shop. -Batch. -Line Flow. -Continuous Flow.
Elements of Lean
-LEAN Manufacturing -Total Quality Management -Respect for People
Lean often results:
-Large cost reductions. -Improved quality. -Increased customer service
Manufacturing Strategies:
-Make-to-Stock (MTS). -Assemble-to-Order (ATO). -Make-to-Order (MTO). -Engineer-to-Order (ETO).
Operations management allow
-Managing the process to create goods and services. -Controlling costs to maximize profits.
Lean + Six Sigma
Faster(speed) and Better(accuracy)
Kaoru Ishikawa
Developed one the first tools in the quality management process, the Cause and Effect Diagram, which is also called the "Ishikawa" or "fishbone" diagram.
Straighten
Organize and arrange items to promote an efficient workflow
Buyers'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)
Supplier's Risk:
The buyer rejects a shipment of good-quality units because the sample quality level did not meet the acceptance standard (type I error)
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.
Continuous Flow process
is used to manufacture such items as gasoline, laundry detergent and chemicals. Inflexible processes. High capital investment
Assemble to Order (ATO)
is when base components are made, stocked to forecast, but products are not assembled until customer order is received
W. Edwards Deming
is widely considered the father of TQM
Batch process
manufactures a small quantity of an item in a single production run
Make to Order (MTO) relies on
relatively small quantities, but more complexity
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.
Quality gurus
Experts which contributes to TQM
Kanbans:
"Signal" or "Card" in Japanese used for communication between workstations.
Eight Wastes(Down Time)
-Defects -Overproduction -Waiting -Non-utilized talent -Transportation -Inventory -Motion -Extra-processing
Lean principles
1. Define value 2.Map value stream 3.Create flow 4. Establish pull 5. Pursuit perfection
MTS-->lead time
Customer delivery
DMADV
Define, measure, analyze, design, verify.
DMAIC
Define, measure, analyze, improve, control.
Make-to-Order (MTO)
Is a manufacturing strategy that typically allows customers to purchase products that are customized to their specifications.
Assemble-to-Order (ATO)
Is a manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent.
Voice of the Customer (VOC)
Is a 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.
Six Sigma became famous when
Jack Welch made it central to his successful business strategy at General Electric in 1995
Manufacturing strategy for Batch
MTO/ATO with long lead time
Manufacturing strategy for Continuous Flow
MTS with very short lead time
Uniform Plant Loading:(Front-loading)
Planning up to capacity in earlier time periods to meet demand in later time periods.
Line Flow
Process has standard products with a limited number of variations moving on an assembly line through stages of production
MTO-->lead time
Procurement
Benefits of Lean
Reduced cycle times, Greater throughput, Better productivity, Improved quality, Reduced costs.
Sustain
Stick to the rules. Maintain and review the standards
Malcolm Baldrige National Quality Award objectives:
Stimulate firms to improve, Recognize firms for quality achievements, Establish guidelines so that organizations can evaluate their improvement and provide guidance to others.
Taichii Ohno and Shigeo Shingo created
The Toyota Production System (TPS), which incorporated Ford's production system and other techniques to form the basis of what is now known as LEAN. (1940)
In the ETO world
The cost of poor quality can be very high.
Lean is
a CULTURE
Make to Stock (MTS)
features economies of scale, large volumes, long production runs, low variety, and multiple distribution channels
setup and changeover
are non-value added operations and should be minimized as much as possible.
Procurement and Production costs per unit go down
as volume goes up (generally, a step function applies as more capital will be required to produce more as volume grows)
Inventory and Warehousing costs per unit go up
as volume goes up (must hold more inventory and pay for more storage space, insurance, taxes, etc.)
Transportation costs per unit go down
as volume goes up, but level off at high volumes (economies of scale in transportation until the container/conveyance is filled up)
Philip Crosby
coined the phrase "quality is free"
The 5 why's are used
getting to the root cause of a problem
MTO is appropriate for
highly configured products such as computer servers, aircraft, ocean vessels, bridges, automobiles, or products that are very expensive to keep in inventory.
The 5 why's and the 5 how's
is a questioning technique designed to drill down into the details of a problem or a solution to find the root cause and the best corrective measure.
The essence of ETO
is building a unique product every time.
Make-to-Stock (MTS)
means to manufacture products for stock based on demand forecasts, which is a push system.
LEAN focuses on
on eliminating wastes and improving efficiency
Six Sigma focuses on
on reducing defects and variations
Lean and Six Sigma are complementary
principles providing the customer with the best possible quality, cost, and delivery.
The MTO strategy relieves
the problems of excessive inventory that is common with the traditional Make-to-Stock strategy.
Supply Chain Management combined:
-Quick respone -Efficient consumer response. -Just in Time -Keiretsu Relationships To emerge LEAN MANUFACTURING
Pull system
-Each stage in the supply chain requests quantities needed from the previous stage. -No excess inventory generated. -Reducing inventory levels can also uncover production problems.
Respect for people
-must exist for an organization to be at its best. -The Role of Workers, Management, and Suppliers.
Six Sigma has two key methodologies:
1 ) DMADV Methodology. 2) DMAIC Methodology
Quality tools ( Statistical tools)
1) Check Sheets 2) Cause and Effect Diagrams (aka, "Ishikawa" or "fishbone" diagram) 3) Control Charts 4) Histograms 5) Pareto Analysis 6) Scatter Diagrams 7) Stratification (aka, Flow Diagrams).
Three main foundational aspects of Six Sigma
1) Quality is defined by the customer. 2) Use of technical tools. 3) People involvement.
The Five-S's
1) Sort 2) Straighten 3) Shine 4) Standardize 5) Sustain
Malcolm Baldrige National Quality Award categories
1)Leadership. 2)Strategic Planning. 3)Customer and Market Focus. 4) Information and Analysis. 5) Human Resource Focus 6) Process Management. 7)Business Results.
LEAN Layouts
1)Move people and materials when and where needed, and as soon as possible 2)Are very visual with operators at one processing center able to monitor work at another. 3)Manufacturing cells ( U shaped)
The Seven Elements 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
The classical view of quality ( 3.8 sigma)
99%
Six Sigma view of quality ( 6 sigma)
99.99966%
Manufacturing strategy for Line Flow
ATO/MTS with short lead time
ATO is a hybrid strategy
Between a Make-to-Stock strategy where products are fully produced in advance, and the Make-to-Order strategy where products are manufactured once the order has been received.
Shine
Clean the work area so it is neat and tidy
Variable Data
Continuous
Continuous Improvement
Continuous approach to reduce process, delivery, and quality problems, such as machine breakdown problems, setup problems, and internal quality problems
Manufacturing strategy for Job Shop
ETO/MTO with very long lead time
Manufacturing strategy is essential for
Establishing and maintaining an effective supply chain.
Natural Variations
Expected and random (can't control)
Muda ( waste) Reduction
Firms reduce costs and add value by eliminating waste from the production system.
Pareto Analysis
For presenting data in an organized fashion, indicating process problems from most to least severe.
Assignable Variations
Have a specific cause (can control)
Attribute Data
Indicate some attribute such as color and satisfaction, or beauty.
Term LEAN was first coined by
John Krafcik in 1988 and the definition was expanded in the 1990 book, The Machine that Changed the World.
Sort
Keep only necessary items in the workplace, eliminate the rest
Total Quality Management principles:
Management Commitment, Employee Empowerment, Fact Based Decision Making, Continuous Improvement, Customer Focus.
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
ATO-->lead time
Manufacturing
ETO-->lead time
Product design
Standardize
Schedule regular cleaning and maintenance
Manufacturing strategies can vary
Significantly depending on the product and/or the customer requirements.
Cause and effect diagrams
Used to aid in brainstorming and isolating the causes of a problem
Check Sheets
Used to determine frequencies for specific problems.
One issue of MTS is
is to avoid having excess inventory. Companies today that operate with an MTS model struggle to make the correct product at the correct time in the correct quantities.
LEAN and Six Sigma
complement one another. Both are philosophies- mindsets.
Job Shop
creates a custom product for each customer. High customization
Production in small batches
creates a smooth workload as production can be synchronized with customer demand, facilitating a pull system.
Joseph Juran
defined quality as "fitness for use".
Large batches can
exacerbate the Bullwhip effect as production in large batches creates an uneven workload.
Engineer-to-Order (ETO)
is a manufacturing process in which the component is designed, engineered, and built to specifications only after the order has been received.
What is Six Sigma
is a structured and data-driven approach to drive a near-perfect quality goal(Zero Defects)
Six Sigma
is an enterprise and supply chain-wide philosophy that emphasizes a commitment toward excellence, encompassing suppliers, employees, and customers
LEAN
is an operating philosophy of waste reduction and value enhancement and was originally created as the Toyota Production System (TPS) by key Toyota executives.
Value
is further defined as anything for which the customer is willing to pay. It is the inherent worth of a product.
TCM
is generally expressed as a cost per unit for each product. It incorporate both fixed and variable cost.
Total Cost of Manufacturing (TCM)
is the complete cost of producing and delivering products to your customers.
Changeover time
is the 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
is the time taken to prepare and format the manufacturing equipment and systems for production.
The goal of Six Sigma
is to attain less than 3.4 Defects Per Million Opportunities (DPMO)
Six Sigma 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.
The 5 how's are
used to develop the details of a root solution to a problem.
Lean achieves its goals by
using less technical tools such as Lean Layouts, Continuous Improvement, and Respect for People.
Six sigma achieves its goals by
using technical tools such as Root Cause Analysis, Statistical Process Control, and DMAIC.
LEAN provides
value for customers through the use of the most efficient resources possible
Henry Ford's mass production line
was a first breakthrough by using continuous assembly and flow systems (1910)
Engineer to Order (ETO) is used
when products are unique and extensively customized for the specific needs of individual customers