Business Process Improvement Exam #3

Finding the Right Metrics for your Company

"If you can't measure something, you can't improve it." Take 3 steps to find and apply the right framework: 1. Establish the right metrics 2. Link metrics to the company's strategic objectives 3. Create a detailed bank for the metrics used It is important to measure the right things, if you wish to find areas of improvement. Take into account financial impacts the metrics will have. Reviewing scorecard during S&OP is beneficial to the framework of the company.

Chapter 14

"Only 15 percent of the companies surveyed said they had full information on supply chain performance at their own companies..." This chapter is all about why supply chain metrics and measurements are important and how they can be used to create and maintain a lean supply chain. It discusses several metrics and measurements that typically indicate how lean a supply chain is.

Logistics Quantification Pyramid

- Channel satisfaction - Logistics operations - Logistics services Transaction cost and revenue

Where to Use Control Charts

- Process could go out of control - Process is particularly harmful and costly, if it goes out of control. Examples - at the beginning of a process because it is a waste of time and money to begin production process with bad supplies - before a costly or irreversible point, after which product is difficult to rework or correct - before and after assembly or painting operations that might cover defects - before the outgoing final product or service is delivered

Characteristics of Good Measures

- is quantitative - is easy to understand - is visible - encourages appropriate behavior - encompasses both outputs and inputs - uses economy of effort - facilities trust - is multidimensional - is defined and mutually understood - measures only what is important

How to Create a Current State Value Stream Map

1. Have team members do a quick map of major processes in a value stream and compare 2. Assemble data collection forms 3. Select a product family (or service) to map, observe and ask questions, start thinking about the "future state" 4. Identify a representative customer of the product 5. Assign team members individual value stream activities to collect data on 6. Begin mapping the detailed value stream using lean icons 7. Review the map with all the employees who work in the value stream to ensure accuracy

A Process Is in Control If

1. no sample points outside limits 2. most points near process average 3. about equal number of points above and below centerline 4. points appear randomly distributed

Visualizing Two Numerical Variables: The Time Series Plot

A Time-Series Plot is used to study patterns in the values of a numeric variable over time The Time-Series Plot: - Numeric variable is measured on the vertical axis and the time period is measured on the horizontal axis

Value Stream

A Value Stream is defined as the set of all actions (both value-added and non-value-added) needed to deliver a specific product or service from raw material through to the customer. Considered the first step to to creating a Lean initiative plan Most companies use Value Stream Mapping (flowcharts, etc.) Enables Business Process Reengineering

Language Barriers

A challenge that is becoming more common is the barrier of language. We find a variety of languages spoken. Unless the trainer is bilingual, it is best to find someone in the audience who is bilingual and can act as a translator of sorts. Companies could have a large part-time workforce, may be made up of many foreign language-speaking people.

Difference between Correlation and Causation

A correlation is the relationship between two sets of variables used to describe or predict information. Causation, also known as cause and effect, is when an observed event or action appears to have caused a second event or action In statistics, the phrase "correlation does not imply causation" refers to the inability to legitimately deduce a cause-and-effect relationship between two variables solely on the basis of an observed association or correlation between them.

Dashboards to Display and Control Metrics

A dashboard is a simple and effective way to monitor and manage performance. Metrics used in these dashboards are usually Key Performance Indicators (KPI's) most commonly falling under these three categories: - leading indicators, lagging indicators, and diagnostic. Dashboards most common application areas are: - Monitoring - Watch dashboard to make sure everything is healthy. - Analyzing - Look at data across the board to find causes of issues. - Managing - A mix of operations reviewed by staff.

Control Charts

A graph that establishes control limits of a process Control limits - upper and lower bands of a control chart ⬥Types of charts: - Attributes p-chart c-chart - Variables range (R-chart) mean (x bar - chart) (Statistical Process Control) ⬥Constructed from historical data, the purpose of control charts is to help distinguish between natural variations and variations due to assignable causes

Organizing Many Categorical Variables: The Multidimensional Contingency Table

A multidimensional contingency table is constructed by tallying the responses of three or more categorical variables. In Excel creating a Pivot Table to yield an interactive display of this type. While Minitab will not create an interactive table, it has many specialized statistical & graphical procedures (not covered in this book) to analyze & visualize multidimensional data.

A Measure or Variable:

A number or quantity that records a directly observable value or performance. All measures have a unit attached to them: inch, centimeter, dollar, liter, etc. In contrast, an indicator is an indirect measure or a predictor (such as a leading Indicator) of performance.

Using Excel Pivot Tables To Organize & Visualize Many Variables

A pivot table: - Summarizes variables as a multidimensional summary table - Allows interactive changing of the level of summarization and formatting of the variables - Allows you to interactively "slice" your data to summarize subsets of data that meet specified criteria - Can be used to discover possible patterns and relationships in multidimensional data that simpler tables and charts would fail to make apparent.

Organizing Categorical Data: Summary Table

A summary table tallies the frequencies or percentages of items in a set of categories so that you can see differences between categories.

Some Data Discovery Methods Are Primarily Visual

A tree-map is such a method A tree-map visualizes the comparison of two or more variables using the size and color of rectangles to represent values When used with one or more categorical variables it forms a multilevel hierarchy or tree that can uncover patterns among numerical variables.

Visualizing Numerical Data: The Histogram

A vertical bar chart of the data in a frequency distribution is called a histogram. In a histogram there are no gaps between adjacent bars. The class boundaries (or class midpoints) are shown on the horizontal axis. The vertical axis is either frequency, relative frequency, or percentage. The height of the bars represent the frequency, relative frequency, or percentage. (In a percentage histogram the vertical axis would be defined to show the percentage of observations per class)

Advanced Planning and Scheduling (APS) Systems

APS systems can include an array of software used in the manufacturing management process where raw materials and production capacity are optimally allocated to meet demand. Typically used in situations where there are complex trade-offs, sequencing optimization, and competing priorities, all of which are constantly changing. The systems can assist the planning process starting at the capacity or aggregate planning level, master production scheduling (MPS), and even detailed finite capacity scheduling (FCS) or short term scheduling levels. When integrated in an S&OP process, they have direct and powerful impact on supply chain logistics. Benefits: A robust S&OP process can drive a Lean process from a management perspective, but in order to do so, it takes the support from some extensive, detailed, complex planning & scheduling systems. A good APS system can contribute to Lean process in the following ways: - Reduce cycle time as a result of decreased waiting time and WIP inventory between manufacturing operations. - Reduce raw material carrying costs. - Reduce finished goods material storage by using storage space as a critical resource. - Improve on-time delivery by showing precisely when jobs will be finished. - Improve accuracy of order promise dates. - Increase utilization of key resources. - Streamline and standardize the schedule process by storing all of the rules in one system. - Centralize information to improve communication between functions.

Web Based EDI

Advantages: - No complex EDI Infrastructure required like Value Added Networks (VAN) - More affordable for small to medium sized firms to receive, create, send, and manage electronic documents using the web browser Disadvantage of Web Based EDI: - Requires customers to do some of the work the VAN used to do, like notifying people or checking invoice to make sure they have gone through. - More errors possible due to human error

Vendor-Managed Inventory

Another form of collaboration is called Vendor-Managed Inventory (VMI).Typically a VMI process involves suppliers replenishing its customers parts and orders automatically. - VMI has been around for over 50 years, but now has tools and technologies like EDI to give the vendor greater visibility - While the customer gives up control, they are able to reduce costs. In addition, VMI leads to a decrease in stockouts and improved inventory turnover.

Lean Opportunity Assessment

Areas Recommended for Evaluation (rate on a scale from 1 to 5, 5 being the best): Internal communication Operator flexibility Continuous improvement Mistake proofing Supply chain Balanced production Customer communication

Collaborative Planning, Forecasting, and Replenishment (CPFR)

CPFR involves trading partners establishing a joint business plan leading to a collaborative planning process that can then aid in the development of a joint sales forecast and replenishment forecast. Uniform Code Council (UCC) created a nine step model to formally view the CPFR concept. A disconnect between manufacturers and retailers can cause issues with the effectiveness of a CPFR strategy. Balancing retail replenishment with manufacturer's production and shipping requirements can be challenging for some companies.

Classifying Variables By Type

Categorical (qualitative) variables take categories as their values such as "yes", "no", or "blue", "brown", "green". Examples: Marital Status, Political Party, Eye Color (Defined categories) Numerical (quantitative) variables have values that represent a counted or measured quantity. - Discrete variables arise from a counting process Examples: Number of Children, Defects per hour (Counted items) - Continuous variables arise from a measuring process Examples: Weight, Voltage

Contingency Table

Contingency Table Showing Frequency of Invoices Categorized By Size and The Presence Of Errors Each invoice is categorized as a small, medium, or large amount. Each invoice is also examined to identify if there are any errors. These data are then organized in the contingency table to the right.

Types of Survey Errors

Coverage error: Excluded from frame Nonresponse error: Follow up on nonresponses Sampling error: Random differences from sample to sample Measurement error: Bad or leading question

Distribution Requirement Planning (DRP)

DRP is time phased planning used to manage finished goods in a distribution network. Ideal for businesses with complex distribution networks, but also effective in managing inventory in simpler ones. Enables businesses to go from a demand push, to a pull environment, thereby reducing waste in the form of inventory, transportation, and warehouse costs, as well as time by triggering replenishment based upon the pull of the customer order. DRP helps to improve supply chain visibility so that companies can plan rather than react. DRP allows you to react quicker to changes in demand at the retail level.

Data Discovery Methods Can Yield Initial Insights Into Data

Data discovery are methods enable the performance of preliminary analyses by manipulating interactive summarizations Are used to: - Take a closer look at historical or status data - Review data for unusual values - Uncover new patterns in data Drill-down is perhaps the simplest form of data discovery

Organizing Numerical Data: Cumulative Frequency Distribution Example

Data in ordered array:

Organizing Numerical Data: Frequency Distribution Example

Data in ordered array:

Organizing Numerical Data: Relative & Percent Frequency Distribution Example

Data in ordered array:

Goals of Measurement Section

Define Measures - Identify the Qualities of a good Measure - Discuss the Types of Measures BRIEF review of statistics and where we might use some (don't panic) - Visualize Variables - Identify Measurement Traps Cover typical SCM measures

SCOR Attributes

Delivery Reliability - waste in terms of shipping the correct product to the correct place and customer at the correct time 1. Delivery performance - Shipped and delivered to client specifications? 2. Order fill rate - Entire order shipped complete? 3. Accurate order fulfillment - Shipping errors? Responsiveness - how quickly your supply chain and logistics function can deliver products to customers (fulfillment lead time, dock-to-dock time, etc.) Flexibility - supply chain agility and response time when there are changes in the supply chain (economic, environmental, political changes) Cost - supply chain and logistics costs (cost of goods sold, returns, cash-to-cash, etc.) Asset Management - how effectively a company is managing assets to meet demand, including fixed assets and working capital (order-to-cash cycle, etc.)

Other potential Areas for Collaboration

Demand Management- going further than just forecasting production, planning, and replenishment; including collaborative merchandising, category management, promotional planning, and space management (at retail and DC) Company like Walmart and Procter and Gamble work together to forecast and replenish stores worldwide but also they develop new products or change product design to suit Walmart needs to better serve its customers. Fulfillment- Extend the reach of CPFR into areas not touched, such as transportation carriers, forwarders, and public warehouses. Real-time collaboration- CPFR, ECR, VMI are more focused on planning, while being able to receive real-time data is king allowing the company and its partners to adjust to sudden changes.

Frequency Distributions: Some Tips

Different class boundaries may provide different pictures for the same data (especially for smaller data sets) Shifts in data concentration may show up when different class boundaries are chosen As the size of the data set increases, the impact of alterations in the selection of class boundaries is greatly reduced When comparing two or more groups with different sample sizes, you must use either a relative frequency or a percentage distribution

Efficient Consumer Response (ECR)

ECR began in the 1990's and began as a way to make the grocery industry more responsive to customer needs while keeping costs as low as possible. It is now widely accepted as a tool and process that help increase inventory turns - Importing customer data through EDI, replenishing software, and PC-based forecasting improves a company's ability to accurately forecast demand. - Operating an ECR process can add cost initially, but the improvement in sales forecasting and inventory location placement can be extremely valuable information

Electronic Data Interchange (EDI)

EDI enables companies to exchange documents used in intercompany processes, such as purchase orders and invoices, in a structured electronic format easily processed by computers Electronic Data Interchange (EDI) is the computer-to-computer exchange of business documents in a standard electronic format between business partners

Enterprise Resource Planning (ERP) Systems

ERP is he most common lean technology in today's age. An integration of all business processes (functions) of an organization in one database. They help coordinate decision making all along the supply chain from customer to supplier. Typically, ERP manages: Materials requirements planning (MRP), finance, HR, SCM, and Customer Relationship Management (CRM). Can be very costly but it can reduce much waste and increase the speed and accuracy of information. Can also be integrated with other systems including Warehouse Management Systems (WMS), forecasting, distribution requirement planning (DRP), and quality systems.

Establishing A Business Objective Focuses Data Collection

Examples Of Business Objectives: A marketing research analyst needs to assess the effectiveness of a new television advertisement. A pharmaceutical manufacturer needs to determine whether a new drug is more effective than those currently in use. An operations manager wants to monitor a manufacturing process to find out whether the quality of the product being manufactured is conforming to company standards. An auditor wants to review the financial transactions of a company in order to determine whether the company is in compliance with generally accepted accounting principles.

In Excel It Is Easy To Inadvertently Create Distortions

Excel often will create a graph where the vertical axis does not start at 0 Excel offers the opportunity to turn simple charts into 3-D charts and in the process can create distorted images Unusual charts offered as choices by Excel will most often create distorted images

Demand Forecasting

Forecasting will never be 100% accurate. The use of qualitative and quantitative methods can make a forecast as accurate as possible. Technology can be a critical aspect when it comes to minimizing variability and the bullwhip effect (as discussed in Ch. 4) because it helps establish a solid planning process. With the use of better forecasting tools and methods, forecasting errors will decrease, but demand will become more unpredictable. One may combat this by utilizing more flexible, Lean Manufacturing and supply chain processes.

Lean Teams

Formalize things with a team charter so everyone knows their roles and responsibilities Create a lean team who has in depth knowledge of Lean Enterprise Select a consultant/ trainer The actual team members should be a blend of people from inside and outside the area

Measuring Success

From the pure training perspective, it is always useful to survey the participants in terms of the course and trainer before and after the training program. Employee training (and how you go about it) is one of the keys to success in your Lean journey. It shouldn't be taken lightly.

Kaizen Events

Goal of Kaizen event is continuous, but graduate improvement and eliminating waste at all levels of the process Event is usually either a 5S- workplace organization or simply implementing the results of a VSM project Prioritize the top ideas in terms of value for the customer United States seems to be in a rush to get results versus the slow but sure way of improvement in Japan (lean manufacturing)

Chapter 16 Summary

In this chapter we learned about the future ahead in supply chain and how to continue to implement Lean in ways that could help companies The key facts and details about all the different barriers that face supply chain integration were discussed How Lean trends have and continue to change through the years and contribute in the waste reduction of supply chain The chapter discussed the tools in Lean that bring the use of data analytics in supply chain How Lean tools can benefit companies by providing the information needed The obstacles that may come with implementing Lean thinking in the supply chain were discussed Lastly, how to continue to use and implement Lean in supply chain and get the most benefits out of it.

e-Commerce

Increasing at a rapid rate, the use of internet to make business transactions is transforming our demand making flexibility and responsiveness more essential than ever. e-Commerce allows for more customer customization which affects the demand pull, making responsiveness and flexibility extremely important. Extending supply chain automation is a great idea during the rise in e-commerce. Dynamic end to end supply chain networks can include real-time shared data and lead to better decision support. This creates value chains that allow systems to have better communication for optimization.

Games

If you are training an executive group, you may be okay with mostly visual presentations (e.g., slide shows and some video examples). If the company is working with front-line operators, who are hands-on types of people, then it needs to either have some training simulation games or go out into the workplace and implement change. When you are doing an introductory-type course, it may not be possible to go out on the floor, so you are best suited to using a Lean simulation game. If time is limited, then something like the "paper airplane" simulation may be good enough as well as cost-effective

Barriers to Supply Chain Integration

In "The Chain of Alignment" John van Veen identifies five types of barriers to effective supply chain integration, they are: - Human Resources - Structure - Relationships - Technology - Alignment All these factors can be barriers to the supply chain and they can all contribute to problems in the supply chain. These are covered in the net slides.

Lean and Technology: Background

It becomes more and more difficult to choreograph various activities without automation. "The majority of manufacturers rely on a combination of of corporate ERP and semi-automated Lean processes to support their business operating models." Although there is an increased use of technology in Lean programs, there is still room for continued growth. The "best-in-class" companies are using Lean principles and software solutions as a more permanent plan of action for improving processes and results.

Why Use a Frequency Distribution?

It condenses the raw data into a more useful form It allows for a quick visual interpretation of the data It enables the determination of the major characteristics of the data set including where the data are concentrated/clustered

Handouts and Forms

It is also helpful to never give handouts to the audience before the presentation. If you do, they tend to look down and read it while you are talking, which can distract from the learning process. You can always make handouts available to them afterwards as the handouts may include another learning tool, forms, which may be needed for the hands-on part of the training. There are many types of forms in Lean including those used for: Planning —team charter and value stream map implementation plan Gathering data —VSM data collection form, checklists, activity and process charts Assessing the current state of an area— Lean opportunity assessment and 5S audits

Visualizing Categorical Data: The Pareto Chart

It portrays categorical data A vertical bar chart, where categories are shown in descending order of frequency A cumulative polygon is shown in the same graph Used to separate the "vital few" from the "trivial many"

Structure

Key components to having an efficient supply chain structure: Having a dedicated high-level role such as a Chief Supply Chain Officer (CSO) - Companies can put "constant effort into designing and managing a lean and agile supply chain that supports the company's overall strategy" The supply chain and logistics function must match the company strategy which include: - Competing through quality and low cost - Delivery time - Flexibility - Vertical Integration - Process simplification - Changing your supply chain network - Product redesign - Third/Fourth party logistics

Measurement & Customer Service

Logistics outputs that influence customer service - Product availability - Order cycle time - Logistics operations responsiveness - Logistics systems information - Post logistics support Remember: The Goal is to satisfy the CUSTOMER!!!

Measures You MUST Calculate

May Already Know - Profitability - Order Cycle Time - Inventory Turn - ICC (Inventory Carrying Costs) - COLS (Cost of Lost Sold) New measures - Operating Ratio - ROA (Return on Assets) - Cash to Cash

Consultants

Most of the successful consultants try to get their clients heavily involved in the process in order to ensure success. If employees do not feel like they were involved and listened to, they will tend to not follow the recommendations of the consultant. Many consultants will try to get consensus by having validation of findings with executives, and employees. If a consultant expects to be around for the long haul, he or she will still need to do some training and facilitation of events as well. A consultant can help to solidify the opportunities, put together a rough plan, and identify the potential payoff. To really make things happen, and stick, you need your people trained and involved in the change process.

How do we present data?

Multiple Methods: - What "Tells the Story" is the goal - No Bias, but we should get the key point(s) from the data presented without explanation

Collecting Data Correctly Is A Critical Task

Need to avoid data flawed by biases, ambiguities, or other types of errors. Results from flawed data will be suspect or in error. Even the most sophisticated statistical methods are not very useful when the data are flawed. Data is plural. Datum is singular

Graphical Errors:

No Relative Basis Compressing the Vertical Axis No Zero Point on the Vertical Axis Chart Junk

Benefits of VSM

Shows connections between activities, information, and material flow that can impact the lead time of your value stream Helps employees understand your company's entire value stream Identifies areas of waste Establishes priorities for improvement efforts Provides a common language to talk about the process

Supply Chain Analytics and Lean

One of the mottos from Penn state university supply chain programs is "apply supply chain analytics to improve operational effectiveness and the make the supply chain a source of competitive advantage" Real time analytics have allowed more visibility and deeper analysis to improve the overall supply chain One of the major advantages of the Lean is that it can vastly improve the predictive analysis for a company With this trend growing in popularity, the amount of tools and algorithm have become more common and the useful data are more widely available to companies

Group-Building Methods

Outward Bound - is the adventure-type method, where the team goes through wilderness or outdoor training to develop teamwork and leadership skills. These methods are especially effective for improving problem-solving and conflict-management skills. The key to this type of training is a wrap-up at the end. Team Training - Team training involves getting the members to work together to reach a common goal. The optimal result of teamwork is that members learn to identify and resolve issues together. In order to be successful, the team members must be properly trained and supported by management. Action Learning - In action learning, the team or group works together on a real issue or problem and creates an action plan to resolve it. This type of group method can be used to make changes to processes, improve use of technology, or improve customer satisfaction for example.

NO Units = Death!!

Pet Peeve #1 - don't forget the units: $, lbs., cubic feet, parts per million, etc. DO NOT FORGET UNITS OR THE FLAMING SWORD OF JUSTICE WILL STRIKE!!

Population vs. Sample

Population: All the items or individuals about which you want to draw conclusion(s) Sample: A portion of the population of items or individuals

Sources of Data

Primary Sources: The data collector is the one using the data for analysis - Data from a political survey - Data collected from an experiment - Observed data Secondary Sources: The person performing data analysis is not the data collector - Analyzing census data - Examining data from print journals or data published on the internet.

Radio Frequency Identification (RFID)

RFID is more than just a small improvement from the barcode technology. RFID, in the long term, will potentially provide complete and continuous visibility throughout manufacture, shipping, warehousing, and sales of a pallet, a case, or single item. With RFID, information will be received much faster than with just bar codes and offer much more information.

Drill-Down Reveals The Data Underlying A Higher-Level Summary

Results of drilling down to the details about small market cap value funds with low risk.

Visualizing Two Numerical Variables: The Scatter Plot

Scatter plots are used for numerical data consisting of paired observations taken from two numerical variables One variable is measured on the vertical axis and the other variable is measured on the horizontal axis Scatter plots are used to examine possible relationships between two numerical variables

False Impressions Can Be Created In Many Ways

Selective summarization - Presenting only part of the data collected Improperly constructed charts - Potential pie chart issues - Improperly scaled axes - A Y axis that does not begin at the origin or is a broken axis missing intermediate values Chart junk

Quick Response (QR)

Similar to ECR, Quick Response (QR) was developed in the 1980's by the textile/apparel retailers and manufacturers as a strategy to reduce inventory levels, improve merchandise quality, help inventory turnover, and increase worker productivity. - The goal of QR is to integrate consumer information into production schedules that match customer demand. - A well executed QR improves retail shelf presence, increases order fill rates, and lowers ordering costs.

Future State Value Stream Map

Some questions to ask: - "What does the customer really want or need?" - "How often will we check our performance or customer needs?" - "Which steps create value, and which are waste?" - "How can we flow work with fewer interruptions?" - "What process improvements will be necessary and which are most important?"

Distribution Requirement Planning (DRP) Structure

Step #1: Creating projected ending inventory Step #2: Calculating planned receipts and planned orders.

Relationships

Supply Chain is adaptable, flexible, can work both independently and together, and optimize performance at company and individual levels. It is more of a "supply web" with complex relationships among: - Customers - Suppliers - Transportation companies - 3PL's and more. These may be challenging, but to be successful, you need to have mutual agreements on goals, trust, and compatible organizational cultures. Moving forward: - Long-term relationships with with fewer, more strategic partners can create value through economics. - Suppliers will be more willing to participate in Lean JIT programs and contribute is design and technology expertise - Customer relationships focusing on the big clients developing a partnership

Things to Look For When Collecting Data

Supply chain and logistics management VSM data collection sheet - process time - available time - setup time - lead time/turnaround time - typical batch size - % compensate and accurate information (% C&A) - Rework/revisions (eg. design changes) - Number of people involved - Reliability (eg. system downtime) - "Inventory" - queues of information (eg. electronic, paper) and/or physical inventory (raw, WIP, or finished goods)

Transportation Management Systems (TMS)

TMS - system which helps companies manage their transportation operations by selecting cost-effective modes and routes while considering the company's inventory and delivery objectives. Functions - Management of carriers, vehicle tracking, service quality control, vehicle load and delivery route optimization, transport costs, measure key performance indicators with reports, and shipment batching orders Benefits - decrease transportation cost, inventory levels, carrying costs, increased asset utilization, and better customer service Currently companies are reevaluating their transportation processes. - Surveys show waste reduction is most important - Increased efficiency through more accurate arrival status - Allows the company to have better understanding of lead times and reducing inventory costs - Web-based solutions are implemented faster - Reduces company operational costs and able to see excess inventory in real-time.

Chapter 12 Summary

The "best-in-class" companies will continue to use Lean principles and software solutions as a method to improve processes and results. • Due to an ever-growing market, companies facing problem maintaining close control of their business functions. • The technologies used include: ERP, DRP, APS, WMS, RFID, and TMS. • Automation, through the appropriate use of hardware and software, serves as a way to coordinate many different business functions. The benefits are: - Reduce company overall costs - Improve efficiency - Can be costly, but reduces company waste

Balanced Scorecard

The balanced scorecard (or scoreboard) approach requires one to not focus too much on one specific measure without considering how the measure relates to other measures. The balanced scorecard looks at four aspects of the business: Financial - To succeed financially, how should we appear to our stakeholders? Customer - To achieve our vision, how should we appear to our customers? Internal business processes - To satisfy our shareholders and customers, at what business process must we excel? Learning and growth - To achieve our vision, how will we sustain our ability to change and improve?

Visualizing Categorical Data: The Bar Chart

The bar chart visualizes a categorical variable as a series of bars. The length of each bar represents either the frequency or percentage of values for each category. Each bar is separated by a space called a gap.

Chapter 14 Summary

The chapter focused primarily on the use of metrics and measurements in order to keep the supply chain operations of a company running in a lean and efficient manner that cultivates an environment of continual improvement. The chapter discusses functions and benefits of several metrics that can be utilized to keep track of performances such as: SCOR Attributes, Balanced Scoreboards, and Dashboards. The chapter also discusses how a business needs to examine their needs and see which metric would be the most appropriate.

Alignment

The concept of alignment refers to having all of the members of your supply chain all moving the same direction so that the entire supply chain can be Lean and flexible. Common issues preventing alignment: - Turf protecting organizational structure - Resistance to change - Conflicting measures - Lack of trust - Lack of management support Solutions to the effective concepts in Lean Journey and alignment : - Collaborative strategy meetings - Executive steering committees - Collaboration workshops - Cross functional teams. Two companies with effective track record of co-locating their mangers were Proctor & Gamble and Walmart S&OP Co-located managers "C" suite SCM executives Supply chain advisory boards

Chapter 15 Summary

The different types of traditional training methods were described, and examples were given The role of consultants were discussed along with what they can do. The chapter described how to train key management personnel in lean processes through seminars, courses, and certifications Handouts and forums were described and how they are used for planning, gathering data, and assessing the current state of an area. The chapter explained ways to deal with language barriers.

Human Resources

The foremost barrier is having capable people needed to support the function and the never ending mission to identify and eliminate waste: Many schools (e.g. TTU) have begun to add the SCM major. Implement Lean into the SCM context and express its importance Create programs, training and certifications that leverage on the Lean principles across the Supply Chain Companies must also be able to include on the job education and training on how to use Lean and help them improve Supply Chain executives are not just looking for people good with numbers but also skilled to be able to work in the fast paced, international environment and team atmosphere.

Future Thoughts: Lean Times Ahead Introduction

The future of supply chain and logistics management as a discipline is very bright with: - Shortened product life cycles - Continued outsourcing - Growth of supply chain technology - Ongoing economic challenges - Consumer need for everything "now" In order to continuously improve the process by applying the Lean concepts discussed in this book many things need to happen.

Technology

The goal of technology within the supply chain is to have visibility in order to control waste which decreases costs and increase efficiency and service levels. Visibility can be broken down into two perspectives: - Logistics: technology that tracks a product and materials as they move through the supply chain - Solutions: enables manufacturers to track products throughout the various stages of its lifecycle The three major supply chain software trends are: - Moving away from customized software to "vanilla software" that uses industry-wide best practices - More built-in capability for analytics (visibility, reporting, metrics, forecasting) - Migration to cloud-based supply chain solutions - to handle external transactions with partners and suppliers

Other Performance Guidelines

The metrics must be consistent with overall corporate strategy. The metrics must focus on customer needs and expectations. Prioritize your metrics. Focus upon processes not functions. Use a balanced approach in selecting and developing metrics. Precise cost measurement is an important aspect for gauging improvement. Use technology to enhance efficient performance measurement.

Policies and Procedures

The performance of a supply chain is largely dependent on policies and procedures, which drive many critical segments of the supply chain. Things to ask when developing metrics according to Mandyam M. Srinivasan: - Help sell more products, profitably? - Help reduce investments in resources? - Help reduce payments or expenses over the long term? If the answer to every question is no, then that metric should be questioned.

Visualizing Categorical Data: The Pie Chart

The pie chart is a circle broken up into slices that represent categories. The size of each slice of the pie varies according to the percentage in each category. The Excel can produce these pie charts easily.

Trends Driving the Use of Technology to Reduce Waste

The range of business forecasting problems are increasing. The scale of business forecasting problems are increasing. It is crucial to distinguish the "high-value" forecasts for special attention while automating the "not-so-valuable" forecasts. There is a need to handle (special care) the "continuously evolving product." Quantity and quality of data will continue to increase. Use of structured judgement enhances collaboration.

Visualizing Categorical Data: Side By Side Bar Charts

The side-by-side bar chart represents the data from a contingency table.

Data Analytics

This is a growing trend in the supply chain field, which is the science of looking at data with the intention of using their useful information and intelligence for business decision making. This can be useful for supply chain managers because it can increase the visibility and increase collaboration between the members of the supply chain - Can enhance and create value - Reduce waste - Also can be helpful in predictive techniques Six Sigma and TQM have been very influential on the data analytics trend.

Potential Obstacles to Lean Thinking in the Supply Chain

There are many opinions on the obstacles that come with Lean thinking in the Supply Chain such as: - Tom Craig expressing the obstacles of accounting, the four walls mentality and not focusing on the international side of the inbound supply chain - Kelly Thomas expressing the greatest obstacles are about executive leadership and understanding that the journey never ends. Technology is a big part in helping overcome these obstacles for example: - Providing interlocks similar to the concept of poka-yoke, ensuring lean techniques have staying power But no matter the obstacles, if the challenges are handled with methodology and commitment as shown in this book then failure will not be an option.

Traditional Methods

There are three major Traditional Methods for Training (1) Presentation , (2) Hands on, and (3) Group Building: Presentation Method - The presentation method is where the group is passive and primarily listens to information presented to them through lectures supplemented by audiovisual means (e.g., slides and videos). This is typically one-way, from the trainer to the audience. It is a relatively inexpensive, efficient way to transfer knowledge to a large group. Hands-on Method - Hands-on methods usually require the trainee to be actively involved in the learning process. This method can be in the form of on-the-job training (OJT), simulations, case studies, business games, role playing, and behavior modeling. Group-building methods are used to improve team or group effectiveness. The trainees share ideas and experiences, build a group identity, and grow to understand their teammates' strengths and weaknesses.

Training: Key Management Team(Seminars, Certifications, etc.)

There is a need for experienced leadership for Lean to succeed. There may be not many employees who have experienced it Lean. A company will need to develop its leaders, or agents of change, on their own. The best path in this case is to select and develop key employees (internally or externally). There are many off-site (and on-site) seminars for a variety of Lean training in manufacturing, distribution, and services. These are typically good starting points to get everyone to a basic understanding of Lean. It is helpful to have key employees take courses that may involve a certification process that have levels of accomplishment. Once these key employees have been trained, they can work with the executive team to establish training and kaizen event schedules for the company's SCM function.

Types of Measures

Time: - On Time Delivery - Order Cycle Time (Variability) - Response Time Quality: - Customer Satisfaction - Processing Accuracy - Perfect Order Fulfillment On Time Delivery Complete Order Damage Free Accurate Invoice - Forecast Accuracy - Schedule Adherence Cost: - Inventory Turns - Cash-to-Cash Cycle Time - Total Landed Costs Cost of Goods Sold Transportation Costs Inventory Carrying Costs Material Handling Costs - Cost of Lost Sales Operational: - Asset Utilization - Operating Ration - Product Availability

A Multidimensional Contingency Table Tallies Responses Of Three or More Categorical Variables

Two Dimensional Table Showing The Mean 10 Year Return % Broken Out By Type Of Fund & Risk Level Three Dimensional Table Showing The Mean 10 Year Return % Broken Out By Type Of Fund, Market Cap, &Risk Level

Best Practices for Constructing Visualizations

Use the simplest possible visualization Include a title Label all axes Include a scale for each axis if the chart contains axes Begin the scale for a vertical axis at zero Use a constant scale Avoid 3D effects Avoid chart junk

Value Stream Mapping

VSM is a team based approach to mapping a value stream and breaks down the process into steps from the viewpoint of the customer. Should use a team of 8-10 employees (all supervisory or management level) Before starting, determine: The value stream you are mapping The product families that will be included The takt time for the selected product family The value stream manager Your goals and objectives

Warehouse Management System (WMS)

WMS is a software tool for managing inventory within the four walls of a distribution center. Typically integrated with a company's ERP system, which can be updated in batch or in some cases "real time." Typically covers planning and movement of inventory from receipt to shipment. Functionality includes: inventory control, storage location management, quality control interfacing, order picking, automated inventory replenishment, receiving, shipping, operator productivity, and report generation. WMS can reduce waste by reducing errors, better labor productivity, etc.

Chapter 11 Summary

What a lean opportunity assessment is and how it is used: a system of collecting market research and client data to identify opportunities for improvement in different areas of an organization. What value stream mapping is; a lean-management method for analyzing the current state and designing a future state for the series of events. Why value stream mapping is beneficial; it provides a visual representation of the flow of materials and information throughout a organization. Information needed in order to create a current state value stream map and specific information to look for when collecting data. Insight on what a lean team is, how they are used, and the steps to follow in order to create a effective lean team. What the goals of Kaizen Events are and how it is used for the implementation of a lean manufacturing program.

Relevant Lean Supply Chain and Logistics Metrics

When finding ways to develop a leaner supply chain, you could use the SCOR model (five performance attributes) and merge it with supply chain metrics related to lean. The perfect order measure can also be used to see how lean a supply chain is. Measurements can include order entry accuracy, warehouse pick accuracy, delivered on time, shipped without damage, and invoiced correctly.

Lean Ahead

When looking at possible challenges ahead there are some things you should keep in mind: - Always look to identify and minimize waste - Lean tools will vary from company to company and industry to industry - Using a "cookie cutter" approach is more likely than not to fail - It is important to have top management support, employee training, and a Lean culture The goal of Lean thinking is to be a competitive tool to keep up with the times and keep you at the front of the pack

The Challenges in Organizing and Visualizing Variables

When organizing and visualizing data need to be mindful of: - The limits of others ability to perceive and comprehend - Presentation issues that can undercut the usefulness of methods from this chapter. It is easy to create summaries that - Obscure the data or - Create false impressions

Future Opportunities and Roadblocks

With the advancement in technology and current world events it's important for businesses and firms to communicate with one another effectively. To better meet the needs of their customers. As a Supply Chain major or even business major you need to be flexible: Supply Chain Flexibility Traits: - Strategic alignment - Supplier Integration - Planning effectiveness - Relationship management technology Strategic alignment- clear supply chain goals and objectives driven by business strategy. To better maximize the firm's Supply Chain capabilities and to not have any fall through in the process. Also communication with employees is key Supplier Integration- develop relationships to build on suppliers capabilities. By exchanging information and continue to improve the Supply Chain Planning effectiveness- being able to forecast and plan to meet the needs of our customers better. Relationship management technology- CPFR, ECR, supplier performance, and CRM system

Trends in Lean Supply Chain

With time, Lean has gradually changed from the various types of manufacturing process such as: - The repetitive assembly line process like Auto Industry to the continuous and batch processes like Chemical Industry. And now more recently into the supply chain. Lean is even being implemented in the service industry such as: hospitals, hospitality, retail and restaurants. - In near future, this trend will accelerate with shortening product life cycles, lead times, continued global sourcing and increased demand for mass customization With these trends, we are seeing more: - visibility through the entire supply chain - collaboration - connectivity - warehouse automation - electronic data capture, and global tracking of goods movement - Contributing to the reduction of waste in supply chain

Training: General Workforce

Workforce training grants are one of the best things a state can do to help businesses survive in today's competitive environment. Most of these programs use trainers and consultants from the private sector to deliver the "free" training, but in many cases also allow for OJT delivered by qualified company employees. The grant application process and deciding which training to include can sometimes be more challenging While the trainer is both a trainer and facilitator, the company is responsible to make sure that the proper people are involved and responsible with clear goals and objectives for outcomes.

Chapter 13 Summary

• In this world of ever increasing technology businesses rely on instant communication all the time. • Businesses are having to integrate and become extremely reactive to the new demand pull brought on by E-commerce. • EDI is being used to help businesses communicate with each other when using ECR, QR, VMI, CPFR, and other areas for communication. • Businesses that are adaptable and use new technologies effectively and efficiently have an upper hand, and will succeed.

Basic Principles: Statistical Process Control (SPC)

⬥A process that is operating with only chance causes of variation present is said to be in statistical control. ⬥A process that is operating in the presence of assignable causes is said to be out of control. ⬥The eventual goal of SPC is the elimination of variability in the process. Statistical Process Control (SPC) - monitoring production process to detect and prevent poor quality Sample - subset of items produced to use for inspection Control Charts - process is within statistical control limits

Applying SPC to Service

⬥Nature of defect is different in services ⬥Service defect is a failure to meet customer requirements ⬥Monitor times, customer satisfaction ⬥Hospitals - timeliness and quickness of care, staff responses to requests, accuracy of lab tests, cleanliness, courtesy, accuracy of paperwork, speed of admittance and checkouts ⬥Grocery Stores - waiting time to check out, frequency of out-of-stock items, quality of food items, cleanliness, customer complaints, checkout register errors ⬥Airlines - flight delays, lost luggage and luggage handling, waiting time at ticket counters and check-in, agent and flight attendant courtesy, accurate flight information, passenger cabin cleanliness and maintenance ⬥Fast-Food Restaurants - waiting time for service, customer complaints, cleanliness, food quality, order accuracy, employee courtesy ⬥Catalogue-Order Companies - order accuracy, operator knowledge and courtesy, packaging, delivery time, phone order waiting time ⬥Insurance Companies - billing accuracy, timeliness of claims processing, agent availability and response time

Variability

⬥Random - common causes - inherent in a process - can be eliminated only through improvements in the system ⬥Non-Random - special causes - due to identifiable factors - can be modified through operator or management action

SPC in TQM

⬥SPC - tool for identifying problems and make improvements - contributes to the TQM goal of continuous improvements ⬥Began in Manufacturing - Most examples are defects in production

Quality Improvement and Statistics

⬥Statistical Process Control (SPC) is a collection of tools that when used together can result in process stability and variance reduction.