Chapter 8 - Operations Management (LEAN & Six Sigma)

External Failure Costs

occur when a defective product is discovered only after the product has made its way into the customer's hands

2 key methodologies of Six Sigma

1) DMADV --> designing products & processes 2) DMAIC --> improving products & processes

Components of LEAN

- LEAN manufacturing - Total Quality Management - Respect for People

Components of LEAN Manufacturing

1) Waste Reduction (DOWNTIME) 2) LEAN Layouts (5 S's) 3) Inventory, Setup Time, & Changeover Time Reduction 4) Small Batch Scheduling and Uniform Plant Loading 5) LEAN Supply Chain Relationships 6) Workforce Empowerment 7) Continuous Improvement

3 Foundational Aspects of Six Sigma

1. Quality is defined by the customer 2. Use of technical tools 3. People involvement

Cost of Quality

An approach that supports a company's efforts to determine the level of resources necessary to prevent poor quality, and to evaluate the quality of the company's products and services

Acceptance Sampling

When a shipment is received from a supplier, a statistically significant representative sample is taken and measured against the quality acceptance standard

Total Quality Management (TQM)

a management philosophy that focuses on satisfying customers through empowering employees to be an active part of continuous quality improvement

the 5 How's Technique

a questioning technique for drilling down into the details of a potential solution to a known problem

The 5 Why's Technique

a questioning technique for identifying the root cause of a problem

Appraisal costs

are associated with the evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications

Prevention costs

are related to the design, implementation, and maintenance of the quality management system. They are planned, xp'd before actual products or materials are acquired or produced

Six Sigma

is a disciplined, statistical-based, data-driven methodology for identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and in business processes (originally created by Motorola)

LEAN

is an operating philosophy of waste reduction and value enhancement. It was originally created as the Toyota Production System by key Toyota executives

Internal Failure Costs

occur when the product or service does not meet the designed quality standards, and are identified before the product or service is delivered to the customer

Voice of the Customer (VOC)

term used in business to describe the in-depth process of capturing internal and external customer's stated and unstated expectations, preferences, likes, and dislikes