BUSOPS Final Exam

Matrix Project

- A structure that blends the functional and pure project structures. - Each project uses people from different functional areas. - A dedicated project manager decides what tasks must be performed and when, but the functional managers control which people to use. (must convince leadership in each category for resources) pros - access to talent/technology of all functional divisions (reduce overstaffing) - less anxiety about what happens when a project is completed (no job uncertainty) - consistency with policies and practices of the parent organization (fosters project credibility) -- no projectitis (not making your own structure or policing) - allows better balance of resources (no holding of resources) cons - difficult to achieve balance between functional organization and the project - violates unity of command (project workers typically have two bosses) - success is difficult without strong negotiating skills on behalf of the PM (need to be good at negotiating to get what you want/need)

Assumptions of EOQ

- Demand is known and steady - Lead times are constant - Costs are constant - Item is supplied as needed - Each individual item is independent

Placement of Inventories

- The positioning of a firm's inventories supports its competitive priorities - Inventory can be held at a single or multiple locations to meet firm and customer needs - Depends on the type of service you are trying to provide Service Levels Risk Management Cost Considerations

Project Schedule

- What is he final deadline? - What are the key milestones to track progress? - in order to make this deadline, we should hit certain intervals within a certain amount of time - What activities need to be completed? - What are the precedence relationships between activities? - need one thing done in order to do the subsequential How do we keep track of progress? Gantt Chart - graph or bar chart with a bar for each project activity that shows the passage of time - how long is it going to take? Critical Path Method (CPM) - developed in the 1950s to improve scheduling of plant maintenance Program Evaluation and Review Technique (PERT) - How long is it going to take? Minimum + maximum? - combines statistics

Benefits of Project Management

- achievement of business goals and objectives - completion of the project by making the most effective use of time, resources, and dollars - timely information for decision making - continuous improvement from lessons learned - support for the quality systems - common process for everyone involved

Why do projects succeed?

- clearly defined goals - project manager ability - team member skills - top management support - project planning communication - user involvement - commitment of team - control systems - risk management

Globalized SCM Functions

- manufacturing - procurement - maintenance and monitoring - logistics and distribution services - customer service and support - knowledge-based processes - product development and innovation

Successful Project Manager

- organizational and leadership experience - contact with needed resources - ability to coordinate a diverse resource pool - communication and procedural skills - ability to delegate and monitor work - dependability - ability to handle stress

Three steps of developing a strategy:

1. Assess, monitor, and adjust to the environment 2. Identify and develop core competencies 3. Develop firm's core processes

A well-designed service system is:

1. Consistent with competitive priorities Deals with the things that we do not have and are trying to attain 2. User friendly 3. Robust It has to work in extreme situations 4. Consistent performance is possible 5. Links 'front' and 'back' office processes Front Office = direct interaction with customers Back Office = necessary, but little to no direct interaction with customers 6. Evidence of quality (value) is visible to customers 7. Cost effective

Lean Production Core Components

1. Customer value Value determined from the customer's point of view 2. Waste elimination Not-needed actions (anything that does not add value) are waste. 3. Tight links Things should be tied together tightly (sequence of steps in a tight and integrated sequence to develop a smooth flow towards the customer) 4. Flow Pull not push Focuses manufacturing on customer - wait for customer needs (make quantities the customer wants, when the customer wants it) 5. People all members of the organization must be tied up in this

Resource Management

1. Resource breakdown structure (RBS) a standardized list of personnel required to complete various activities in a project - what do we need to make this happen? (break down individual steps) 2. Resource leveling an approach to reduce the amount of fluctuations in day-to-day resource requirements within an organization - level out resources so there is not a peak in activity that would soon drop after

What 4 core processes do operations (supply chain) managers "obsess" over?

1. Supplier relationship 2. New service/product development (quality) 3. Order fulfillment 4. Customer relationship

Inventory Management is used to determine:

1. What items should be ordered and stored 2. When items should be ordered and stored 3. How much should be ordered and stored

Process

A system of activities that transforms inputs into valuable outputs - We want the output to be larger than the input in order to profit Key inputs: - people - knowledge - equipment - facilities - material - services - energy - time - money

Three Approaches to global integration

Adaptation trying to boost revenue by maximizing local presence in a country - trying to gain them into our market Aggregation trying to get economies of scale by trying to bring things together Arbitrage trying to exploit differences in a country and utilize those skills

As sales opportunity gets _______ efficiency gets _______.

As sales opportunities get higher, efficiency gets lower. Striking the right balance between labor, customer contact, and sales opportunities is not just a challenge but a strategic opportunity. It allows you to focus on your desired audience, enhance your efficiency, and maximize your sales potential. Examples 1. Mail contact - No customer contact - Low sales opportunity - High efficiency Low customer response, but it does not take a lot of work 2. Internet A little more labor, increased customer contact, and the ability to hone in on your desired audience. 3. Phone contact - Need someone sitting on the other end of the phone (more work) - Increased chances of sale once on the phone 4. Face-to-face (tight specs) For example, going to the car dealership and knowing exactly what make, color, model, etc. you want 5. Face-to-face (loose specs) Know exactly what you want to do, but not how to do it. For example, not knowing what car you want, but you go to less dealerships.. 6. Face-to-face (customized) For example, getting your house custom-designed/made.

Capacity Strategies

Aspects of capacity management: - the timing of expansion & contraction - the amount of capacity cushion - the size of facilities - long-term investment - the linkage with marketing/business plans - the linkage with competitive priorities

Utilization

Available time that the resource is used How much a resource is being used

When does EOQ work best?

Best Make-to-stock environments with stable demand and known holding & ordering costs Inappropriate Make-to-order or order size constrained environments

SCM Metrics

Business Cycle or Cash-to-Cash Cycle Time it takes to transfer cash Total delivered cost price + shipping & handling + tax Inventory Measures Avg. Aggregate Inventory Value Weeks/days/hours of supply Inventory Turnover Process Measures Customer Relationship Order Fulfillment - are you actually meeting the orders as you say they are? Supplier Relationship

Capacity

Capacity The ability to take inputs, transform them through our processes, and come up with outputs that hopefully our customers want - Can we hold, receive, absorb, process, or transform resources? Output Measures Units or resources exiting a process or system Input Measures Units or resources that are put into or enter the process or system Capacity measured in output/unit of time

Aggressive Expansion Capacity Strategy

Capacity exceeds projected demand in the short term. - "I buy capacity in anticipation of increased demand." Advantages: - Economies of scale (cost of maintaining facilities goes down per unit produced) - Higher service, volume flexibility and possibly quality Disadvantages: - Capacity > demand - loss of money - Technological obsolescence - can't expand into a new/evolved market This occurs primarily in: - Growing markets - Market-share leader - Maintain a high level of service, flexibility and responsiveness

Competitive Priorities vs Competitive Capabilities

Competitive Priorities The things we need to have (that we do not already have in-house) to meet our goals 1. Cost - high vs low 2. Quality - consistent vs superior Quality = meeting our customers' expectations and requirements 3. Time - reliable vs. on-time delivery - fast vs slow delivery & development 4. Flexibility - custom vs cookie-cutter - large vs small volume - high vs low variety Competitive Capabilities The unique skills that we already have. - Use the capabilities we already have to meet our goals

Product-Process Matrix

Continuous Flow - Doing the same thing over and over again - Low flexibility - High volume - Low cost, quality - Quick delivery Line Flow - Ex: car wash Batch (manufacturing cell) - Can actually change what products I'm making Job shop (work center) - Order 20 widgets, they make 20 widgets, and then send it out Project - Low volume - High customization - High cost, quality - Slow delivery Mass Customization - Car production lines are line flow, but are becoming more and more like mass customization

Types of Inventory (by reason for having it)

Cycle Inventory Lot size or batch inventory Avg. = order quantity/2 Safety Stock Extra inventory is held to cover variations in supply and demand Anticipation Stock Stock we keep on hand in preparation for a known event ex: have lots of turkey during thanksgiving Hedge Stock Stock we keep on hand in preparation for a possible event ex: snow shovels and snowblowers Pipeline Inventory In-Transit Inventory Considered a part of on-hand inventory, even though it is not available Work in Process (WIP) Inventory undergoing transformation Remanufactured/Reconditioned Items that did not pass the quality test (defective units) Could repair and sell as remanufactured goods Obsolete Stock (dead stock) Items for which there is no demand expected

Poor Quality Waste

Defect that the customer would find unacceptable Caused by - out of control or incapable processes - lack of skill, training, or on-the-job support - poor design, material, or processing Results in: - increased costs - longer lead times - schedule disruption - reduced customer confidence

The Phases of Project Management

Define Why must it be undertaken, and what are the key results? - project charter - project initiation Plan How do we get there? - may have subject matter experts - scope & budget (map) - work breakdown schedule - gantt chart - communication plan (key points that each level needs to know) - risk management (identify risk and how are we going to manage them) Implement Actual execution of the plan - peak effort - most money spent - status and tracking - KPIs - quality - forecasts Deliver Final product - objectives - quality deliverables - effort & cost tracking - performance Close Out Lessons learned - This where I can do improvements on the define and planning phase for the next project. - post mortem - project punchlist - reporting

Economic Order Quantity

Determines the least total cost quantity to order by balancing the two costs of holding and acquiring inventory.

Three main characteristics of a project

Each must be controlled: Scope The desired outcome or goal of a project - Defined specifications (what are the expectations?) - Why is the project being undertaken? (importance) - sacred cow (suggested by a senior manager) - operating necessity (Y2K & federal mandates) - competitive necessity - product line extension (want to get more out of it) - comparative benefit model (ROI, NPV, IRR, Payback) Cost of Resources How much will the product cost? What other resources are needed? - do we want to subcontract? Will the company have to invest money in research, capital, equipment, promotion, or test marketing? - what supports the success of this project? Time Schedule

Economies of Scale

Economies of scale occur when the average unit cost of service or good can be reduced by spreading fixed costs over a larger volume - The larger the volume I produce, the more that fixed cost is spread out per unit, therefore bringing it down per unit Diseconomies of scale occur when the average cost per unit increases as the volume changes - Even though you are spreading out fixed costs over a larger number of units, you have to utilize other resources and incur more costs in order to maintain said units.

The Right Kind of Supply Chain

Efficient Focus on cost efficiency, economies of scale, and higher capacity utilization - Functional & Stable - low supply & demand uncertainty Risk-hedging pooling/sharing risk, sharing inventory, and real-time data needed - uncertain supply and functional demand Responsive flexible to changing customer needs - stable supply and innovative demand Agile combine risk hedging and responsiveness, respond to front-end changes with less back-end disruptions - high uncertainty supply & demand Total Cost of Ownership Acquisition Cost - cost to get it Ownership Cost - cost to maintain it Post-Ownership Cost - cost of getting rid of it

Strategies for Production

Engineer to order No processing begins until the design is completed - We have no design in mind. We work together to create a design and then begin processing after. - General equipment Make to order Begin processing only after receiving a customer order - We have the raw materials but don't start making anything until after you order Assemble to order Begin processing prior to receiving customer order; complete after receiving customer order - We have parts sitting here and put it together - Ex: Wendy's = everything is already made; they just put it together after you order Make to stock Complete processing prior to, and hold until, receipt of customer order - Make a product and put it on the shelf for a customer to buy - Specialized equipment

Underutilization of Employees or Other Resources Waste

Failure to learn from and capitalize on employee knowledge and creativity Caused by - acceptance of set-up times as a "given: Results in - higher inventory storage and handling costs - idle resources such as employees, raw materials, and compounds

Project Risk Management

Financial Resource Risk where are finances coming from? Human Resource Risk can i get the people I need when I need them Supply Risk do I have the supply chain in place Quality am I able to meet customer specifications?

Customer-Contact Matrix

Front Office = High interaction and customization = Higher variability, flexibility, complexity, and customer involvement = Visible Does the sales part Hybrid Office Does the financing of car sale Back Office = More standardization (less complex) = More routine & simplification = Less customer involvement = Less resource flexibility = Out of sight Makes the car

Functional Manager vs Project Manager

Functional Manger - specialist (subject-matter expert) - analytic approach - direct technical supervisor Project Manager - generalist (deal with the big picture; what do I need from across the picture) - systems approach - PM is the facilitator

Process Structures in Services

High Customer Contact & Involvement - Customer presence - People processed - Active/visible contact - Personalized attention - In-person delivery Low Customer Contact & Involvement - No customer presence - Objects (goods) processed - Passive/out-of-sight contact - Impersonal attention - Electronic/remote delivery

Yield

How much of that output is usable? - The units without defects Comparable to effective capacity.

If capacity does not equal demand....

If capacity is less than demand: Problems: - Not enough product to meet demand Solutions: - Increase stock - Increase prices (short-term) If capacity is greater than demand: Problems: - Too much product - Money loss (due to money invested in processes we cannot use) Solutions: - Improve quality - Decrease price - Find ways to use excess capacity

How do we improve capacity?

Increase Utilization - increase up-time - reduce changeovers and set-up times - improve scheduling & sequencing - make sure breaks don't overlap Improve Efficiency - improve layout - break bottlenecks - reduce or buffer variation - strategic inventory (if we know a supplier is typically two days late, keep an extra two days of inventory on hand) - increase labor productivity - cutting down on waste of motion Increase Yield (quality) - voice of the customer - know what the customer wants - poka-yoke - mistake-proof operations - increase process capability and control - make sure the process fits within the customer's needs - improve incoming materials quality

Independent Demand Inventory vs Dependent Demand Inventory

Independent Demand Inventory The inventory that's associated with your customer (or the market) - How much of your finished product leaves your system? - No control over this Dependent Demand Inventory The required components that go into something you are producing - What do I need for the finished product? - Have control over this - Goes into your independent demand item

Wait-and-See Capacity Strategy

Involves postponing commitments to building or expanding facilities, or acquiring equipment or personnel until after demand has already exceeded capacity. - "I see increased demand down the road, but I will not make that change right now. I am going to wait and see if that maintains itself." Advantages: - Postpone large investments until I am absolutely sure that they are needed Disadvantages: - Little to no capacity cushion (risk of losing business and could compromise quality, flexibility, and responsiveness) - there could be a shortage of resources Best fit in slow-growth industries - Unused capacity is expensive - compete on low cost

Low Inventories

Item Cost Same Holding/Carrying Cost Decrease Ordering/Set-up Costs Increase Stock-Out (shortage) Costs Increase Service Level Decrease Worry about cost

High Inventories

Item Cost Same Holding/Carrying Cost Increase Ordering/Set-up Costs Decrease Stock-Out (shortage) Costs Decrease Service Level Increase Worry about service

Inventory Costs

Item Cost What am I spending on the item? Holding/Carrying Cost A percentage of the per unit dollar value of inventory per unit of time (10-35% annually) Ordering/Set-up Costs This includes creating and issuing a purchase or build order, processing paperwork, receiving, set-up, invoice payment, order tracking, etc. Stock-Out (shortage) Costs Costs of expediting more or lower customer service Service Levels Do you have what the customers want?

Inventory Management depends on:

Item Cost expensive vs cheap? Holding Cost More money tied up in inventory, the more money I cannot use Set-Up Cost Cost associated with placing orders Ordering Cost Cost of every order we place Stock-out Cost Cost of not having something in inventory - cost of a lost sale - expedited from supplier Service Level Goal cost vs service how much safety stock to we have on demand Competitive Priorities how do you compete? Process & Capacity Characteristics of supply chain

How are manufacturing and service processes different?

Manufacturing Processes Physically changing the actual product into something else (Tangible, capital intensive) outsourcing = letting someone else do the whole thing for me offshoring = moving my operations to a different country Service Processes Intangible, labor-intensive - Locational (e.g., transportation/logistics) - exchange (e.g., retailing) - storage (warehousing) - physiological (healthcare) - informational (exchange of data/info)

Peak (maximum) Capacity

Maximum rate operation can hold for a short time Ex: 100 miles away, so go 100 mph the entire time (which is the fastest speed your car goes) - Working consistently at maximum capacity can cause workers to get worn out or less efficient

Movement Waste

Movement or unnecessary motion to complete a process Caused by - lack of standard operating procedures - poor housekeeping - poorly designed work area - inadequate training Results in - interrupted flow - increased processing time - potential for worker injury

Three broad categories of waste

Muda production of activities that are wasteful and do not add value to the goods or services Mura waste associated with unevenness in the process Muri waste from overburden and unreasonableness

Functional Project

Occurs just within that area - all occur within tat area of the organization pros - maximum flexibility in the use of staff - individual experts can be assigned manydifferent projects - the functional division serves as a base of technological continuity (not moving outside of a function that will nurture us and allow us to grow) - The functional division contains the normal paths of advancement cons - the project is not a focus of activity and concern (not important to everyone) - tends to be oriented towards the activities particular to its function - no individual is given full responsibility for a project (no ownership) - the motivation of people assigned to the project tends to be weak (due to lack of ownership)

Offshoring vs Outsourcing

Offshoring Moving something from the country you are in to another country - maintain ownership, but relocate Factors that influence this decision: - comparative labor costs - logistics costs - labor laws and unions - skill shortages - tariffs and taxes - internet Pitfalls: - pulling the plug too quickly by not making a good-faith effort to fix the existing process - technology transfer - difficulty integrating processes Outsourcing stay in the same country, but sell our product to another supplier Make-or-buy decisions Make = more integration - backward integration: acquisition of upstream entities - forward integration: acquisition of downstream channels Buy = more outsourcing - outsourcing of non-core processes allows a firm to concentrate efforts on those processes it does best - skills and knowledge of the outsources process are often lost and difficult to bring back to the firm

What is the importance of operations management?

Operations accounts for 60-80% of the direct expenses that burden a firm's profit - It has a lot of power and influence. Increases profits Firms with good OM deliver better products and services that are of higher value.

Operations management impacts all organizational _____________.

Operations management impacts all organizational decisions. When, where, and how will we produce our product or service?

Why study operations management and supply chain management?

Operations management involves how we use our resources and manage our organizational relationships. If this is done well, we will: - Efficiently use resources - reduce cost - Improve effectiveness - greater competitiveness - remove waste and increase value-add - Improve our relations - Help meet strategic goals - Increase customer services This applies to all managers and all business functions.

Operations management is a ________ oriented discipline.

Operations management is a process-oriented discipline.

Operations management is about....

Operations management is about how we tie everything together to get things done.

Competitive Advantage Categories

Order Winners Characteristics causing customers to prefer you over your competitors - You are qualified, but what sets you apart? "Delighters" Order Qualifiers Characteristics you need to have to be considered by potential customers - Do you meet the requirements? "One Dimensional" Order Losers Characteristics you have that may drive customers away - What immediately disqualifies you? (e.g., not meeting requirements) "Must Be" Expectations are always changing, so there needs to be a continual understanding of the market and customers alongside continual improvement.

Waiting Waste

People or parts waiting to be processed Caused By: - shortages or unreliable supply chain - lack of multi-skill/flexible workforce - ineffective scheduling - unexpected breakdown Results in: - poor workflow - longer lead times to customers - start/stop processing - missed delivery commitments

What are the four major process strategy decisions?

Process Structure How is this process designed, and what are its key characteristics? Customer Involvement How much customer participation do we want in design and delivery? Resource Flexibility Handling a wide variety of products, output levels, duties, and functions Ex: can your workforce only do one thing? can your equipment make multiple things? Capital and Labor Intensity What is the mix of equipment and human skills in a process? Large capital investment = small labor intensity

Inappropriate Processing Waste

Processing beyond the required standard Caused by: - a lack of knowledge of customer needs - out of date standards - 'always done like this' attitude - lack of innovation Results in: - increased processing time - consumes resources beyond what is needed - doesn't generate value add

Three Service Designs

Production-Line Approach Delivery is more like manufacturing (assembly line) than service Ex: Car Manufacturer Self-Service Approach Customer does more of the service for themselves Ex: buffet restaurant Personal-Attention Approach More face-to-face, customized, and individual Ex: Upscale salons

What is a project?

Project - a unique, temporary endeavor - specific object - prescribed time, budget, and resource limitation - made up of an interrelated set of activities that have a definite starting and ending point Project Management application of knowledge, skills, tools, and techniques to successfully plan, direct, and control resources to meet the technical, cost, and time constraints of the project - Do you have a lot of time - Do you have a lot of money - Do you have a lot of resources Characteristics of a Project - goal-oriented - I have some specific outcomes in mind - numerous sequential and interrelated activities - cannot complete step 2 without completing step 1 - finite with definite beginning and end dates - unique set of events - cannot always anticipate problems - limited resources and budget - people, fiscal resources, time - many people are involved, often cross-functional - specific end product or service must result - methods for handling problems during execution - plan never goes seamlessly

Pros and Cons of customer involvement

Pros High flexibility - allows customers to ask questions, provide clarification, and make special requests Cons Could be disruptive and slow down the operation - Ex: customer decides to change things in the middle of building a house

Six Sigma

Quality management framework based heavily on statistical and fact-based data and tools - it has many aspects in common with the principles and tools of top quality management - it is driven by a close understanding of customer needs; the disciplined use of facts, data, and statistical analysis; and diligent attention to managing, improving, and reinventing business processes

Inventory Waste

RM, WIP, PGI, which are not currently having value-added (anything sitting around not having work done to it) Caused by - non-level schedules (focus on wants rather than needs) - inaccurate forecasts - large batch sizes - unreliable supply chain - push rather than pull processing Results in - need for extra storage space - hides problems - holding costs - potential for damage, obsolescence and spoilage

Types of Inventory (by point in the supply chain)

Raw Material Used to build products or components Components Small parts (already made) of product MRO Maintenance and repair items consumed in making the product (not in the end product) ex: oil for the machine to keep it running Work in Progress Items in the process of being built Finished Goods Final product ready to be consumed VMI Vendor Managed Inventory Distribution Our distribution system

Management's Functional Responsibilities

Staff Functions Things that support our operations Line Functions Things that go into providing the service or product to our customer Demand Managers Decide how much we actually need to produce or how much service we need to provide Materials Manager In-charge of warehouse Will tell: - Purchasing (how much materials need to come in) - Human Resources (how much staff we need to have available to provide a product or service)

Structural vs Infrastructural Decisions

Structural Decisions Long-term, high-capital decisions that we make very infrequently ex: What manufacturing facility should we invest in? = capacity, facilities, vertical integration & sourcing, information & process technology Infrastructural Decisions Short-term, less capital-intensive decisions that occur frequently ex: What do I have to do within this facility to increase production? = workforce, organization, quality systems, planning & control

Supply Chain & Supply Chain Management

Supply Chain Network of organizations that convert and move materials to customers via a linkage of physical, informational, and financial flows Supply Chain Management Describes how organizations are linked together - a total system approach (looking at the whole picture

Service Package

Supporting Facilities The physical resources that must be in place to provide the service Do you have the facility to support the process we are trying to operate? Facilitating Goods Material purchased or consumed by the customer while receiving the service What types of goods are you going to consume in order to deliver this process? Explicit Services The benefits that are readily observable by the customer and an essential feature of the service Explicitly stated: "This is what you will receive." Implicit Services Psychological benefits that the customer may vaguely sense or are nonessential features of the service Something that'll make you feel better about your product or service Information What data/information do we need to provide this service? ex: doctors need to know what is wrong with the patient in order to properly treat them

Sustainable Operations Management

Sustainability meeting today's needs without compromising the ability to meet tomorrow's - being more productive/efficient with resources Making decisions that provide benefit now and in the future... - People or human capital (employees and stakeholders) - Planet or Natural Capital (use and impact of resources throughout the lifecycle) - Profit (include economic benefit for the host society Lifecycle Analysis evaluate the cost of waste through the product lifecycle - extraction - production - packaging and transport - usage - disposal/recycling Triple Bottom Line (TBL or 3BL) full impact of activities on people, planet, and profit - firms have a responsibility to all stakeholders

Globalization

Taking supply chain glocally Why do it? - Access to less expensive labor - Locate facilities closer to potential customers - Access to resources - Access to new market - Access to knowledge and skills of people in that country - Reduce logistics, distribution, or redistribution costs - Reduce tax loads and take advantage of financial incentives - Political and industry-specific reasons Challenges - Time differences - Cultural differences - negotiations differ, and interpersonal communication differs - Lead time - Hidden costs - Language differences - Returns and repairs of defective products - distance and crossing borders - Political risks - Differences in units of measurement - Customization

Supply Chain Dynamics

The complex linkages between organizations in our supply chain and their interdependencies actions at one point in the supply chain will affect another point in the supply chain Bullwhip Effect Describes how variance in demand from a downstream point increases as it goes back (upstream) in the supply chain - responding to things we don't understand (reactive supply chain) Proactive Supply Chain seek to reduce uncertainty by communicating with upstream levels of the supply chain External Causes Causes of SC disruption that come from things outside of you - variable lead time - incorrect shipment quantities - volume changes - service and product mix changes Internal Causes Causes of SC disruption inside my company - service or product promotions - information errors - new service or product introductions - engineering changes - internally generated shortages

Project Management Tools and Techniques

The discipline of project management has available several tools and procedures that enable the project team to organize its work to meet the constraints - statement of work - (dimensions and planned execution) - work breakdown structure - break down into steps - Gantt Chart - measuring tool for tracking where we are in a project - network diagram - picture of interrelated steps (what we have to do) - critical path method - which tasks are critical in the method (could this delay the entire project or subsequent tasks) - cost and time tradeoff analysis - "crashing" = cost goes down, time goes up - program evaluation and review technique (PERT) - resource management

Inventory

The physical items used by the firm to transform and provide goods and services to customers.

Moment of Truth

The point during customer/provider interaction during which a customer forms (or changes) their impression of the provider. Moment of Magic Exceed expectations Moment of Mediocrity Meet expectations Moment of Misery Below expectations

Lean Thinking

The process of increasing the ratio of value to non-value by identifying and eliminating sources of waste. - how much of that was being produced using value-added processes Waste is " anything other than the minimum amount of equipment, materials, parts, space, and worker's time, which are essential to add value to the product."

Acceptable Quality Range

The range that the customer will accept - customer's set specifications

Productivity

The ratio of outputs over inputs How well a resource is being used Productivity > 1 = Profit Productivity = 0 = break even Productivity < 1 = loss How successful do you have to be, or what volume do you need, to cover the costs you inquired, whether you produced anything or not?

Overproduction Waste

To produce sooner, faster, or in greater amounts than demanded by the customer Caused by - large batch sizes - 'push' rather than 'pull' processing - focus on utilization metrics - lack of customer focus Results in: - excess inventory, - costs extra money - consumes resources before planned - consumes space - hides problems

Core Competencies

Unique strengths, embedded deep within a firm, that are critical to gaining and sustaining competitive advantage - What is it that we have that makes us efficient and effective at what we do? Includes: - trained, productive and flexible workforce - appropriately designed and located facilities - having market and financial know-how - expertise in systems and technology Used to develop the firm's core processes The processes we have that allow us to provide our products and services.

Transportation Waste

Unnecessary movement of material between processed or locations Cause by: - complex material flows and long supply chains - badly designed process/work cells - sharing of resources Results in: - longer lead times - increases WIP - potential for damage in transit - holding costs

Virtual Supply Chain

Virtual Supply Chain outsourcing some or part of your inventory out of somebody else Benefits: - reduced investment in inventories and order fulfillment infrastructure - greater service or product variety - lower costs - lower transportation costs

Why should we have inventory beyond immediate needs?

We should only have inventory beyond immediate needs when it costs less to have it than not to have it. Covers for variation in cash flow

What is strategy?

What are we going to do, and how are we going to do it? Direction - What should we do? - What markets should we be in? - What product or service are we going to offer that our customers want? - How should it serve our target market? Implementation - How are we going to do it? - What capabilities do we have and how will we exploit those? Everything we do at every level of operation (e.g., marketing strategy, operations strategy, financial strategy) should support that business strategy.

Effective Capacity

What you can achieve under normal circumstances Ex: You average 50 mph on the 100 mile trip due to speed limits, traffic, stop lights, etc. (not meeting maximum capacity) - What we truly expected to get out of it

Lean Production

a management approach that organizes resources such as people and machines around the flow of business processes and that only produces units in response to customer orders - accomplish goals to meet customers' requirements with using the least amount of resources - all about eliminating waste by concurrently reducing or minimizing supplier, customer, and internal variability Toyota Production System gold standard - eliminate waste and variability - make operations fit the customer's needs (only make what you need when you need it) - a mindset for all employees and managers - can easily be applied to service sector and production sector

Small Batch sizes

a quantity of products that are produced together

Pure Project

a self-contained team works full-time on the project - own individual entity (remove people from many parts of the company and all work on their own little project) pros - The project manager has full authority over the project - all members of the project are directly responsible to the project manager - lines of communication are shortened (everyone knows where to go to) - strong and separate identity of its own (react rapidly) - unity of command; each subordinate only have one boss cons - need more staffing (high turnover rate) - to ensure access to technological knowledge and skills, the project manager may stockpile equipment and technical assistance in order to be certain that it will be available (PM may take resources they may not need just to be safe -- greedy) - team members can fall behind in other areas of their technical expertise (could move from area of expertise) - PROJECTITIS - "we vs they" divisiveness grows. (friendly rivalry may become bitter competition) - life after the project is uncertain (will your job still be there for you after you return?)

Network Diagram

determines precedence - doesn't show time

Capacity Cushion

extra capacity used to offset demand uncertainty - not producing the maximum amount you can make capacity cushion = 100% - utilization rate (%) How much capacity cushion is needed depends on: - customer expectations - Is it realistic for them to expect you to provide this good or service immediately? - the uncertainty/variability of demand and supply - the cost of lost business - the cost of idle capacity - how expensive is it to make & store? - process attributes and linkages - How do things that you are providing link together? - competitive priorities - how are you trying to compete?

Pull production system

pull system uses customer demand as the primary driver for production planning push system focuses on maximizing the use of production capacity (based on estimated customer demand)

Gantt Chart

shows activities horizontal axis = time activity 2 cannot begin until activity 1 is done activities 3, 4 and 5 can all be done concurrently, but they cannot begin until activity 2 is done

Project Creep

that tendency during projects for tasks to "creep" into a larger mass - When you get into a project and a ton of people come up with GFI's - adds to the number of tasks, cost of tasks, and time All of these changes are being made throughout the project even though it already started