Ch. 14 Mgmt

Theory of Constraints

A specific approach used to identify and manage constraints in order to achieve the company's goals. (applies to bunch of stuff not just manufacturing operations)

Integrated

A supply chain is integrated when all partners and processes work in harmony.

Statistical Process Control

A way of measuring whether or not a business is delivering value to their customers. (only change when a process is out of control - its above two standard deviations)

Process

An activity or group of activities that consumes an input and then transforms that input into outputs for customers.

Kaizen

Japanese for "change for better"

Muda

Japanese for "waste" (Lean - understanding what customer values and expects. Get rid of waste)

A process with poor ergonomic design will often result in which category of waste?

Motion

Pipeline (in-transit) stock

inventory that is en route between various fixed facilities in a logistics system such as a plant, warehouse, or store

cycle (base) stock

inventory that is needed to satisfy normal demand during the course of an order cycle

psychic stock

inventory that stimulates demand in the sense that customer purchases are stimulated by inventory that they can see

an evangelist

is a customer who promotes and markets our products without recompense (payment or reward) from the company

A control

is a mechanism to compare actual to planned performance and to take corrective action, as needed, to align performance with plan.

point-of-presence

is a supply chain node capable of delivering product to a customer.

speculative stock

is inventory held for reasons such as seasonal demand, projected price increases, and potential shortages of product.

Standard Work

is still around today - not good

Operations Management

is the design, direction, and control of processes.

Lean Management

its about minimizing/eliminating waste

Operation

A group of resources performing all or part of one or more processes.

Value Stream

A process flow that highlights which steps add value, and which do not (Lean - mapping and evaluating value stream for a process)

A product that has annual demand (AD) of 400 units, order processing cost (PC) of $50 per order, inventory carrying cost (CC) of 20% (.2) and a dollar value of held inventory (HI) of $5 per unit, has what economic order quantity (EOQ)?

200 ( square rout of 2(AD x PC)/(HI x CC) )

A company that has attained Six Sigma performance in a process or operation is experiencing how many defects per million opportunities (DPMOs)?

3.4 defeats

Gemba (Kaizen)

A place where work is performed

Rule of Seven

A component of a control chart that illustrates the results of seven measurements on one side of the mean, which is considered "out of control" in the project. (if theres a series of seven dots in a line - attack it - its out of control)

"A factor that limits the performance of a process or operation and therefore results in sub-optimal output" describes which concept?

A constraint

Constraint

A factor that limits the performance of a process or operation and therefore results in sub-optimal output.

System Thinking

All components of a business are interrelated, and changing one of them can have an unforeseen outcomes somewhere else.

Which concept focuses on processing through vast amounts of transactional data to derive customer insights?

Big Data

Which of the following is not a utility demanded by customers?

Constraint

Time (4 fundamental utilities of a customer)

Customer needs a item at a specific time

acronym DOWNTIME (types of waste companies try to eliminate)

Defeats, overproduction, waiting, not utilizing talent, transportation, inventory, motion, and excess processing

Operations Management

Design, direction, and control of processes

Safety Stock

Extra inventory that a company holds to protect itself against uncertainties in either demand or replenishment time. (held to prevent the organization from starving itself of the materials it needs to create a product)

"Any customer can have a car painted whatever color he wants as long as it is black"

Henry Ford

Carrying cost or Holding Cost

Holding inventory generates a cost

Fourth Industrial Revolution

Introduction of machines and automation.

First Industrial Revolution

Introduction of production machinery and factories

risks of holding too much inventory?

It must be insured, may become obsolete, may become damaged or lost

A metric used to measure forecasting accuracy is:

MAPE

Craft Production

Manufacturing products by hand.

Utilities

Needs whose fulfillment delivers them value (customer has 4 fundamental utilities)

Customers

People who consume goods and services (outputs).

Suppliers

Provides a business with inputs in order to create their product.

reorder points formula

RP = (DD x RC) + SS

Kaizen Blitzes

Short cycles intended to yield quick improvements

Place (4 fundamental utilities of a customer)

The item needs to be in a specific location for the customer to realize form and possession utility

Second Industrial Revolution

The migration of Americans from rural areas to urban ones.

RC and SS (reorder point's three components)

The replenishment cycle and any concessions related to how much safety stock (SS) the supply chain will hold are also measured

In which facility model are numerous similar finished goods created by combining common parts, kits, or sub-components?

T

Third Industrial Revolution

The introduction of computers introduced new capabilities and efficiencies in the workplace.

Locating and identifying all system constraints or bottlenecks is the important first step in which operational framework?

Theory of Constraints

possession (4 fundamental utilities of a customer)

They will only derive that form utility if they also posses or have control of the item

Which automotive company is credited with founding the modern school of Lean thought?

Toyota

Bottleneck

When a constraint causes an organization to be unable to meet the demand of its customers.

Reorder point (or trigger point)

When inventory drops below a certain level and more product is needed in order to prevent starving the supply chain.

supply chain

When linked together these processes constitute our supply chain

Tiers

When suppliers have their own suppliers and customers have their own customers.

Standard Work

Work that is broken down into individual processes and analyzed to determine the most efficient way to execute the job.

"An activity or a group of activities that consumes some sort of input from one or more suppliers, and transforms them into one or more outputs that are then provided to customers" describes which concept?

a process

In Lean, the customer pulls

a product towards them.

Conversion

add or change stuff - convert something - change the nature

Steps of defining standard work (Part 2)

analyze each step to identify the most efficient way to execute it and optimize flow of product, and document optimized steps into a repeatable operation

DD (reorder point's three components)

average daily demand (DD) for the product is measured

Elements of Standard Work

decompose operations into its processes, break processes into sub-processes, divide sub-processes into steps, analyze each step to identify most efficient way to execute each process, document and adopt most efficient way, give birth to the idea of "system thinking"

Optimizing

doesn't mean that the whole system is optimized - there's at least one resistant that is holding us back

What is true for an integrated supply chain?

end-to-end visibility is critical, balanced attention to both supply and demand is important, Transparency and data-sharing are common

Buffer stock

extra inventory held to guard against uncertainty in demand or supply

In which type of analysis does a company design and evaluate a facility or supply chain where one doesn't previously exist?

greenfield

speculative stock

held for reasons such as seasonal demand, projected price increases, and potential shortages of product

System thinking

highlights that all components of a supply chain are part of an interrelated, integrated system and must be analyzed and changed with that interrelation in mind.

How to Optimize a System (Theory of Constraints)

locate and identify all constraints (only one limiting restraint), exploit or optimize constraints (open it up), subordinate all other activities to the constraint (don't care about optimizing everything - only optimize constraint), elevate the constraint (equipment and manpower), and "lather, rise, repeat"

steps of defining standard work (Part 1)

operation is decomposed into its discrete processes, break processes down into their sub-processes, break all processes and sub-process into their constituent steps

considerations with selecting a facility location?

proximity to customers, access to human resources with needed skill sets, tax abatement and government incentives

In Lean the customer

signals the demand for a product, and only what the customer demands (and values) flows towards them. This is much easier, and quicker when non-value adding process steps have been eliminated.

The process framework steps in order.

supplier, input, process, output, customer

product is pushed

towards a customer.

Form (4 fundamental utilities of a customer)

wants an item because it can perform a function they need or provides value they desire

Six Sigma

waste of "defeats" (if you don't fix re-work, it becomes a reject, then discount, then customer returns it)

Lean

when possible work to continuously flow product to customer

Value add process

you take something that is pretty complete and just add value to it