OM 300 EXAM 2 (CHAPTERS 5-8)

Natural Variations

"Common" causes Affect virtually all products and processes These are expected variations, it is just life and you live with these variations Natural Variation outputs follow a probability distribution were there is a measure of Central Tendency and a measure of Dispersion If the distribution falls within acceptable limits, then the process is said to be "in statistical control"

Product Based View of Quality

"Quality is a precise, specific, and measurable attribute of a product"

Manufacturing Based View of Quality

"Quality is making it right the first time" This is the view of Production Managers This calls for conforming to manufacturing and production standards

User Based View of Quality

"Quality lies in the eye of the beholder" THIS IS THE MOST IMPORTANT This can be subjective and difficult to quantify This is the view Marketers often take This calls for better performance and more product features

Assignable Variations

"Special" causes Outside of the norm and should be fixed Some change has occurred in the process Variations that have arisen due to a specific reason The objective is to ensure the process is capable of operation with only Natural Variations, and identifying and eliminate any Assignable Variations so that the process can be "in control"

7 Concepts of TQM

1) Continuous Improvement 2) Six Sigma 3) Employee Empowerment 4) Benchmarking 5)Just In Time (JIT) 6) Taguichi Concepts (QLF) 7) Knowledge of TQM Tools

Deming's 14 Points (Quality Management)

1) Create consistency of purpose 2) Lead to promote change 3) Build quality into the product, stop depending on inspections to catch problems 4) Build long term relationships based on performance instead of awarding business on price 5) Continuously improve product, quality, and service 6) Start training 7) Emphasize leadership 8) Drive out fear 9) Break down barriers between departments 10) Stop haranguing (criticizing) workers 11) Support, help, and improve 12) Remove barriers to pride in work 13) Institute a vigorous program of education and self-improvement 14) Put everyone in the company to work on the transformation

Steps for Benchmarking

1) Determine what to benchmark 2) Form a benchmark team 3) Identify benchmarking partners 4) Collect and analyze benchmarking information 5) Take action to match or exceed your benchmark

Product Strategy Options

1) Differentiation (better) 2) Low Cost (cheaper) 3) Response (faster)

Managerial Issues when it comes to Control Charts

3 Management Decisions: 1) Select points in their work processes that need Statistical Process Control (SPC) 2) Determine the chart technique you want to use 3) Set clear and specific policies Managers use these control charts to make sure that their processes are not outside of the UCL or LCL, so they are in control

Takumi

A Japanese character that symbolizes a broader dimension of quality, a deeper process than education, and a more perfect method than persistence THIS IS THE IDEA THAT EVERYTHING IS QUALITY DRIVEN

TQM Tools to Organize Data About Quality: FlowChart Process Diagram

A chart that describes steps in a process Lays out a full process so you can look at it step by step to improve quality Ex: step by step process of making toast

TQM Tools to Identify Problems With Quality: Statistical Process Control (SPC) Chart

A chart with the horizontal axis for plotting values of a statistic Shows the upper and lower limits for processes we want to control when it comes to quality It monitors standards, makes measurements, and then corrective actions as a product or service is being produced to improve it and fix problems WILL BE COVERED MORE IN CHAPTER 6S

Engineering Change Notices (ECNs)

A correction or modification to a product's definition or documentation Quite common with long product life cycles, long manufacturing lead times, or rapidly changing technologies...must notify engineers when changes inevitably take place

TQM Tools to Identify Problems With Quality: Histogram

A distribution that shows the frequencies of a variable and the deviation from the mean

TQM Tools to Generate Ideas About Quality: Scatter Diagrams

A graph of the value of one variable vs. another variable

Tools to help analyze, design, and redesign Processes: Time Function Mapping

A modified flowchart that has time added to the horizontal axis Nodes indicate activities, arrows indicate the flow direction, and time is on the horizontal axis Allows us to look at wasted time to get rid of it Leads to Value Stream Mapping which looks at the steps in the entire production process including the supply chain to see where value is added and where it is no

Six Sigma: Program Sense

A program philosophy designed to reduce defects, lower costs, save time, and improve customer satisfaction

Process Capability

Ability of a process to meet design specifications, which are set by engineering design or customer requirements Makes sure the variations of a process are small enough to produce products that meet the standards required Use either Cp or Cpk formula (note they must be 1 to be considered capable)

Manufacturing and Value Engineering

Activities concerned with improvement of design and specifications at research, development, design, and production stages Works to improve the value of goods and services Focuses on meeting customer requirements in an optimal way, reducing costs without reducing quality

Source Inspection

Also known as "source control" Just doing the job properly with employees self checking their own work Each supplier, process, employee, etc. do their best work to ensure the product is perfect and act as if the next step in the process is the customer

Additive Manufacturing

Also known as 3D printing Uses CAD technology to produce products by adding materials layer upon layer

TQM Tools to Generate Ideas About Quality: Cause and Effect Diagram

Also known as Fish Bone Chart or Ishikawa A tool that identifies process elements (causes) that may effect a quality outcome Includes 4 Ms= Materials, Methods, Manpower, and Machinery all leading to an effect

Zero Defects

American idea of Continuous Achievement and striving for perfection

Methods of Evaluating Location Alternatives (Objectively): Location Cost Volume Analysis

An economic comparison of location alternatives You use the fixed costs and variable costs for each location Use the formula to determine the crossover point (where costs will be equal) Plot and where the cost is lowest you pick that option for that volume amount

Augmented Reality

An extension of virtual reality where the real world is enhance by the use of technology Ex: your GPA location on your smartphone map

TQM Tools to Generate Ideas About Quality: Check Sheet

An organized method of recording data Helps find patterns Usually just tally marks checking off information

Staekholders

Any one with a vested interest in the firm and these people usually have strong opinions about environmental, social, and ethical issues

Just in Time (JIT)

As aspect of continuous improvement to deliver goods just as they are needed to allow for reduced inventory levels and costs This is good because it cuts costs and improves quality by showing issues immediately so they can be fixed

Documents for Production

Assembly Drawing Assembly Chart Route Sheet Work Order Engineering Change Notices (ECNs)

When and where to Inspect to try and find any possible quality issues...

At the supplier's plant while the supplier is producing At you facility upon receipt of goods from your supplier Before costly or irreversible processes During step-by-step production process When production or service is complete Before delivery to your customer At the point of customer contact You cannot wait until the customer has already bought the good or service because then it is too late, and you should have inspected for quality issues earlier

Examples of Production Technology: Automated Storage and Retrieval Systems (ASRs)

Basically computer controlled warehouses Automatically place and withdraw parts and products into and from designated places in a warehouse Decreases errors and labor required Useful in inventory and manufacturing firms Ex: useful in Walmart since they have so much inventory

What are some things involved in Employee Empowerment?

Building communication networks that include employees Developing open, supportive supervisor relationships Giving more responsibilities to employees (not so much of the typical top down power structure) Building an organization with high morale Create formal team structures like Quality Circles

Manufactured Goods is focused on...

COST (does not really care about customer interaction) When it comes to location looks at... Tangible Costs: transportation of raw materials, shipment of finished goods, and energy/utility costs Intangible and Future Costs: attitude towards unions, worker's quality fo life, education expenditures, and state and local government regulations Techniques to decide on location: Transportation Method, Factor Rating, Location Cost Volume Analysis, Cross Over Charts

CHAPTER 5S (CORPORATE SOCIAL RESPONSIBILITY)- Corporate Social Responsibility

CSR How we do the right thing and considering the environmental, societal, and financial impacts of your business Doing what is right can be beneficial to all stakeholders

Factors that Affect Location Decision: Costs

Can be Tangible (easily measured like utilities, labor, materials, taxes) or Intangible Costs (not as easy to quantify like public transportation, education, community, quality of life)

CHAPTER 5 (DESIGN OF GOODS AND SERVICES AND SUSTAINABILITY)- Goods and Services Selection

Choosing the good or service to provide to customers or clients Organizations exist to provide goods or services to society to provide satisfaction! Great products are the key to success! THE FIRST RULE OF BUSINESS IS YOU MUST HAVE GOOD PRODUCTS OR SERVICES TO SELL Top organizations typically focus on core products and their core competencies Customers buy satisfaction, not just a physical good or particular service Goods and services are fundamental to an organization's strategy with implications throughout the operations function Limited and predictable life cycles require constantly looking for, designing, and developing new products to take to the market to keep up with evolving demands (this means you must utilize strong communication among customers, products, processes, and suppliers) NEW PRODUCTS GENERATE SUBSTANTIAL REVENUE (products less than 5 years old)

Techniques for Improving Service Productivity: Training

Clarifying the service options and explaining how to avoid problems Ex: after sale maintenance services

Attribute Inspection

Classifies items as either good or defective But does not address the exact degree of failure All or nothing description

Factors that Affect Location Decision: Proximity to Competitors

Clustering This is often done around important resources in one location

Examples of Production Technology: Vision Systems

Combine video cameras and computer technology to aid inspection (quality control) Used then the items you are inspecting are similar Better than humans since we can make errors when inspecting Vision Systems are consistently accurate, never bored/tired, and are a modest cost Ex: inspecting food before it is sold

Product Development System

Come up with concept/ideas Determine feasibility (does the firm have the ability to carry out the idea) Requirements (customer requirements to win orders) Functional Specifications (how the product or service will work) Product Specifications (how it will be made) Design Review (the design that will best meet the expectations of customers) Test in the market Introduce to the market Evaluate the success of the product or service

What are some implications of Quality?

Company Reputation is on the line (quality affects perception of a firm and its new products, employment practices, and supplier reputations... Self Promotion is not a substitute for quality) Product Liability (quality helps to reduce the liability/risk for faulty goods/services) Global Implications (quality helps a company compete in the global economy)

Crossover Chart

Compares processes in terms of cost and volume so that you can choose the best process or piece of equipment See formula sheet for formula

Product Life Cycle: Maturity Phase

Competitors have now been established High volume and innovative production may be needed Improved cost control, reduction in options, trim down the product line The most revenue is made in this stage Minor changes

Location decisions require careful...

Consideration Because once you have chosen your location, there will be costs that are fixed and difficult to reduce This means that it is a good investment to spent ample time determining the optional facility location

Triple Bottom Line

Considers the 3 Ps: People, Planet, and Profit Keep in mind the utmost important thing is you must be Economically Sustained (you must make a profit) and then focus on being Socially and Environmentally Sustainable Alternate measures of success include risk profiles, intellectual property, and company valuation

Statistical Control Charts

Constructed from historical data The purpose is to help distinguish between Natural vs. Assignable Variations We want to get rid of any Assignable Variations so that we can bring our process back "in statistical control:

Region/Community Decision KSFs to consider...

Corporate desires Attractiveness of region Labor availability and costs Costs and availability of utilities Environmental regulations Government incentives and fiscal policies Proximity to raw materials and customers Land/construction costs

Costs of Quality: Prevention Costs

Costs associated with reducing the potential for defective parts or services This can be done through training, quality improvement programs, etc.

Costs of Quality: Appraisal Costs

Costs related to evaluating products, processes, parts, and services This can be done through testing, labs, inspections, etc.

Costs of Quality: External Failure Costs

Costs that occur AFTER delivery of defective parts or services This is done through rework, returned goods, liabilities, lost goodwill for your company, costs to society, etc.

Costs of Quality: Internal Failure Costs

Costs that result from production of defective parts or services BEFORE delivery to customers This is done through rework, scrap, downtime, etc.

C Chart

Counts the number of defects See formula sheet

Moment of Truth

Critical moment between customer and organization that determines the level of customer satisfaction Moment where people decide if they love or hate the company's product or service This moment is crucial in the organization's relationship with their customers Changing your process or product will impact this Moment of Truth

Techniques for Improving Service Productivity: Self Service

Customers examine, compare, and evaluate at their own pace Ex: this is typical in grocery stores or online shopping

Techniques for Improving Service Productivity: Postponement

Customize at delivery rather than at production to increase efficiency

DMAIC Six Sigma Model

Defines the project's purpose, scope, and outputs then identifies the required process information keeping in mind the customer's definition of quality Measures the process and collects data Analyzes the data ensuring repeatability and reproducibility Improves by modifying or redesigning existing processes and procedures Control the new process to make sure performance levels are maintained

Six Sigma: Statistical Sense

Describes a process, product or service with an extremely high capability (99.9997 % accuracy) Where Defects Per Million Opportunities (DPMO) is only 3.4 out of one million

Product Design's Environmental Impact

Design decisions affect materials, quality, cost, processes, related packaging, and logistics and how the product will be processed when it is discarded Incorporate systems tend to view environmental impact as more important than big corporate systems Alternative materials can be used that have a lower environmental impact (Ex: starch when shipping products since it can decompose on its own)

Quality Function Development (QFD)

Determines what will satisfy the customer and translate those customer desires into the target design of your product

Six Sigma

Developed my Motorola and implemented by Honeywell and GE Has a Statistical Sense and a Program Sense

Examples of Production Technology: Automated Guides Vehicles (AGVs)

Electronically guided and controlled carts Ex: often used to deliver mail in offices, or water crops on farms

Implementing Six Sigma

Emphasize defects per million opportunities Provide extensive training to meet quality goals Focus on top management as change champions since this can be hard to implement Create qualified process improvement steps to implement the change (from green belt, to black belt, etc.) Set stretch objectives (small steps over time like losing 2 pounds per week instead of 20 in one week) Must have commitment from top management

Total Quality Management (TQM)

Encompasses the entire organization from supplier to customer Stresses a commitment by management to have excellence in all aspects of product and services that are important to the customer Ex: UA, from the Quad to the building it is all pristine

Taguchi Concepts

Engineering and experimental design methods to improve product and process design Identifies key components and process variables that affect product variation including: Quality Robustness (ability to product products uniformly and remove adverse manufacturing and environmental conditions) Target Oriented Quality (continuous improvement in efforts to bring a product exactly on target) Quality Loss Function (QLF) (estimates the cost of deviating from the target value, says that costs increase as you deviate from the target value and from what customers wants)

Checklists

Ensures consistency and completeness (just a typical to-do list)

Techniques for Improving Service Productivity: Automation

Ex: automatic teller machines

Options when changing locations...

Expanding existing facilities Maintain existing facilities and add sites Close existing facilities and relocate

4 Basic Process Strategies: 1) Process Focus

Facilities are organized around specific activities or processes There is a low volume with high variability There is a high degree of product customization and flexibility Each process is designed to perform a variety of activities and handle frequent changes (this is an "intermittent process") High variable costs, but low equipment utilization Ex: Arnold Palmer Hospital which serves a variety of patients from baby deliver, surgeries, etc. Ex: University of Alabama which has many majors and career paths

4 Basic Process Strategies: 3) Product Focus

Facilities are organized by product Very high volume and low variability This uses Continuous Processes which are long and efficient production runs High fixed costs but low variable costs This requires less skilled labor Ex: Frito Lays (produce just one type of chip in their factories to sell at mass volume)

4 Basic Process Strategies: 2) Repetitive Process

Facilities often are organized in classic assembly lines Uses Modules where components have been previously prepared This is less flexible/lower variation than the Process Focus but has a decently higher volume (more efficient) Ex: typical for the automobile industry like Harley Davidson (low variability since you cannot get a hot pink bike)

Methods of Evaluating Location Alternatives (Objectively): Center of Gravity Method

Finds the location center that minimizes distribution costs Considers: location of markets, volume of goods shipped to those markets, shipping costs, etc. Use formula!

Product Life Cycle: Introductory Phase

Fine tuning may warrant profit loss and unusual expenses Includes: Research, Product Development, Process Modification and Enhancement, and Supplier Development

Examples of Production Technology: Computer Integrated Manufacturing (CIM)

Flexible manufacturing where technology is used in all parts of the production process from engineering and inventory to warehousing and shipping

Tools to help analyze, design, and redesign Processes: Service Blueprinting

Focuses on customer service interaction Also provides Pokayoke ("idiot proof") controls to improve quality)

Value Analysis

Focuses on design improvement during production Seeks improvements leading either to a better product or a product that can be produced more economically with less environmental impact

Service Location Strategy

Focuses on volume and revenue to make the service firm successful Considers... The purchasing power of customers in the area Service and image compatibility with the demographics of the customer-drawing area Competition in the area Quality of the competition Uniqueness of the firm's and competitors locations Physical qualities of facilities and neighboring firms/businesses Operating policies of the firm Quality of management

Poka Yoke

Foolproof ("idiot proof") device or technique that ensures production of good units every single time Avoids errors! Ex: McDonald's fry scoop

X Bar Chart

For the mean Tracks changes in central tendency (how close are we to the center or mean of the data) Refer to formula sheet to solve (there is one formula for when you know the Standard Deviation and one where you do not)

R Chart

For the range Measures the dispersion or variability of data Range is simply the largest - smallest value in a sample See formula sheet for this easy formula

Employee Empowerment

Getting employees involved and engaged in product and process improvements

Factors that Affect Location Decision: Globalization

Globalization means that we must consider market economics, communication, rapid transportation, ease of capital flow, differing labor costs, etc. in various countries

Defining a Product...

Goods and services are defined in terms of its function (what it does) Management decides how to design the product to achieve its functional purpose Rigorous specifications are developed during the design phase (ex: even what a block of cheese should look like) Includes creating Engineering Drawings and Bill of Materials (BOM)

TQM Tools to Organize Data About Quality: Pareto Chart

Graph that identifies and plots problems or defects in descending order of frequency Shows that usually 80% of profit comes from 20% of products And 80% of issues come from 20% of products

Quality Circles

Group of employees who meet regularly to solve problems They are trained in planning, problem solving, and quality statistical models They are led by a Facilitator Can be very effective in identifying quality issues when done properly

Examples of Production Technology: Machine Technology

Helps increase precision, productivity, and flexibility Has even helped to decrease environmental impact Can include Additive Manufacturing (3D Printing) and Computer Numerical Controls (CNC) where computers have their own memories

Examples of Production Technology: Automatic Identification Systems (AIS)

Helps us move data into electronic form so we can easily manipulate it Improves data acquisition, decreases data entry errors, increases speed, and increases scope of automation Can also include Radio Frequency Identification (RFID) where radio waves are used to send signals within a limited range to identify, track, and monitor things (ex: scanning barcodes when you are walking out of a grocery store)

Documents for Services

High level of customer interaction necessitates different documentation Often require explicit job instructions Scripts and storyboards are usually present to define how services may be delivered (typical for customer service jobs)

Process Strategies focus on...

How to produce a product to provide a service that meets or exceeds customer requirements, and meets cost and managerial goals This has long term effects on efficiency, production flexibility, costs, and quality

Assembly Chart

Identifies the point of production where components flow into subassemblies ultimately into the final product Step by step instructions Ex: how to make toast

Factors that Affect Location Decision: Proximity to Suppliers

Important for perishable goods, where there is an increased transportation cost, and bulky products

Geographic Information Systems (GIS)

Important tool to help in location analysis Enables more complex demographic analysis This is what we looked at in class (public data) Provides detailed census data, detailed maps, utilities, geographic features, location of major services, etc. to pinpoint the best location

Factors that Affect Location Decision: Political Risk, Value, and Culture

Includes the national, state, and local governments' attitudes toward private and intellectual property, zoning, pollution, employment stability, etc. Worker attitudes towards turnover, unions, absenteeism, etc. Global cultures where different countries can have different attitudes towards punctuality, legalities, and ethical issues

Variability

Inherent in every process Either Natural or Assignable Causes

What are some problems with Inspection?

Inspectors are human (they might be fatigued, they may have measurement errors, or the processes may vary) You cannot inspect quality into a process, you can only detect defects Robust Design, Empowered Employees, and Sound Processes can only fix your quality issues (Inspection will not fix issues, it will only alert you to them)

Work Order

Instructions to produce a given quantity of an item in relation to a schedule Ex: your waiter putting in an order ticket for your food to the restaurant kitchen

Special considerations for the Service Process Design...

Interaction with customers is necessary, but can often affect performance adversely (this is because customers' unique desires can cause havoc) This is why it is important to find the right combination of cost efficiency and customer interaction

Inspection

Involves examining items to see if they are good or defective Involves measuring, tasting, touching, weighing, testing, and sometimes even destroying products Detects defects but does not actually correct them This is an expensive way to determine where you should improve your product or process

Kaizen

Japanese word that describes the ongoing process of unending Continuous Improvement Involves going to the source to identify root causes of problems

When choosing a location, it is important to identify...

Key Success Factors (KSF) This will help choose a location that will provide you with a competitive advantage

Bill of Materials (BOM)

Lists components, quantities, and where the product parts are used Tells you what materials you need to buy and store in inventory Ex: a list of burger materials from McDonalds

Route Sheet

Lists operations and times required to produce a component of a product

CHAPTER 8 (LOCATION STRATEGIES)-The Strategic Importance of Location

Location is one of the most important decisions that a firm makes Location greatly affects fixed and variable costs It can impact the overall risk and profit of a company Companies make location decisions relatively Infrequently and they are a long term decision (once you have committed to a location, you have committed resources and money which are hard to change)

When analyzing and designing processes...

Make sure that it is designed to achieve a competitive advantage, eliminate steps that do not add value, make sure it maximizes customer value, and will win orders

Service Recovery Strategy

Managers should have a plan for when services fail Ex: Marriott's LEARN (Listen, Empathize, Apologize, React, and Notify)

Managing Quality and Strategy

Managing quality helps support differentiation, low cost, and response strategies to reach a competitive advantage Quality helps firms increase sales and decrease costs in the long run (because there is less rework to do, scrap, and warranty costs) Building a quality organization is a demanding task

The objective of Location Strategy is to...

Maximize the benefit of the location to the firm Create a competitive advantage through the location

Variable Inspection

Measures dimensions such as weight, speed, size or strength to see if an item falls within an acceptable range

P Chart

Measures the percentage of defects See formula sheet

Sampling

Measuring or inspection only a portion of the products or transactions at regular periodic time intervals Reduces inspection time and reduces the opportunity for bad quality products Samples can come together to form a bell curve distribution

Examples of Production Technology: Robots

Mechanical devices that use electronic impulses to activate motors and switches Can hold, move, or grab items Usually perform monotonous or dangerous tasks (so that humans don't have to) Perform tasks requiring strength or endurance Generally help provide consistency and accuracy

Sustainability

Meeting the needs of the present without compromising the ability of future generations to meet their needs More than going green Includes employees, community, customers, and company reputation (full Systems View)

Techniques for Improving Service Productivity: Modules

Modular selection of service and production Ex: prepackaged food modules in a restaurant

Continuous Improvement

Never ending process of continuous improvement (always striving for perfection) Covers customer, people, equipment, suppliers, materials, and procedures Believes every operation can be improved Foundation is PDCA cycle (PLAN, DO, CHECK, ACT)

What are some Ethical Issues when it comes to Quality Management?

Operations Managers must deliver healthy, safe, quality products and services Poor quality risks injuries, lawsuits, recalls, and regulations Ethical conduct must dictate responsible action All stakeholders must be considered

Techniques for Improving Service Productivity: Scheduling

Precise personnel scheduling Ex: Ticket counter personnel providing service at 15 minute intervals

Product Life Cycle: Growth Phase

Product begins to stabilize Effective forecasting of capacity becomes necessary Adding or enhancing capacity may be necessary

Robust Design

Product is designed so that small variations in the product or assembly do not adversely affect it Makes the product not sensitive to variation Tweaks the design to make it better Typically results in reduced costs and increased quality

Product Life Cycles

Products are born, live, and die as they are eventually cast aside by society The life of a product can be any length of time from a few days to decades

Modular Design

Products designed in easily segmented components You can change parts without changing the entire product Adds flexibility to both production and marketing Provides improved ability to satisfy customer requirements Makes product changes easier to implement Ex: McDonalds uses few ingredients (cheese, lettuce, buns, etc.) to make a variety of meals for customers

ISO 9000

Quality standards for products sold in Europe High quality standards companies must meet if they want to sell their products in Europe

Service/Retail is focused on...

REVENUE (customer interactions are the key to generate revenue, and assumes costs will stay relatively constant) When it comes to location looks at... Volume/Revenue: customer drawing area, purchasing power, competition Physical Quality: parking access, security, lighting, appearance, image Cost: rent, management, operations (hours/wages) Techniques to decide on location: Factor Rating, Regression, Traffic Counts, Demographics, Purchasing Power of Area, Center of Gravity, and Geographic Information Systems

What are some benefits of Manufacturing and Value Engineering?

Reduced complexity of the product reduction of environmental impact Additional standardization of components Improvement of functional aspects of the product Improved job design and job safety Improved maintainability (serviceability) of the product Robust design

Central Limit Theorem (CLT)

Regardelss of the distribution of the population, the distribution of sample means drawn from the population tend to follow a normal bell curve The more samples we take, the more it will resemble a bell curve In this case, the average of the samples and then that average (x bar bar) is equal to the population mean (mean tells us how centralized our data is) Also, the sample standard deviation is equal to the population standard deviation divided by the square root of n where n is the sample size (standard deviation tells us how spread or dispersed our data is)

Some determinants of Service Quality include...

Reliability Responsiveness Competence Access Courtesy Communication Credibility Security Understanding/Knowing the customer Tangibles

Techniques for Improving Service Productivity: Focus

Restrict offerings to specialize in a few things Ex: a restaurant with a limited menu

Tools to help analyze, design, and redesign Processes: Flowcharts

Schematic or drawing of the movement of materials, product, or people Quick big picture tool

Life Cycle Cost

See formula sheet for full formula but gives the cost of a vehicle or piece of equipments

Benchmarking

Selecting a demonstrated standard of products, services, costs, or practices that represent the very best performance for processes or activities very similar to your own You compare yourself to the standard of a similar company (usually one you would like to emulate) Ex: hospitals benchmarking car racing pit crews to see how to effectively work quickly

Selection of Equipment...

Selecting a process strategy also requires decisions bout equipment and technology These decisions can be complex since many alternative choices are available, so you must understand the industry and available processes/technology Consider cost, cash flow, market stability, quality, capacity, and flexibility

Adding Service Efficiency

Service productivity (efficiency) is notoriously low partially because of customer involvement in the design or delivery or both which complicates things To improve Service Efficiency... limit options to increase ability to meet the expectations of customers, delay customization, provide modularization, and increase automation to decrease cost while increasing customer service abilities

TQM in Services...

Service quality is more difficult to measure than the quality of goods Service quality perceptions depend on intangible differences and intangible expectations of customers Therefore Operations Managers must recognize that even the tangible component of a service is important, the service process is important, service is judged against the customer's expectations, and exceptions will occur

Crossover Point

Sets Life Cycle Costs equal and solves for M (miles) See formula sheet To put answer in years then divide M by the total annual miles

Assembly Drawing

Shows an exploded view of the product details relative to location to show how to assemble the products (a 3D graphic) Ex: how to set up your IKEA furniture

Engineering Drawing

Shows dimensions, tolerances, and materials for a product with all the details

Methods of Evaluating Location Alternatives (Objectively): Factor Rating Method

Simply multiplies weights (importance) by factors The location with the highest score should be chosen

Techniques for Improving Service Productivity: Separation

Structuring service so that customers must go where the service is offered Ex: if you want a loan, you must go to the bank and see a loan officer

Social Accounting

Supplements financial accounting and works to support economic and environmental sustainability

Sustainability and Life Cycle Assessment (LCA)

Sustainability means meeting the needs of the present without compromising the ability of future generations to meet their needs LCA= formal evaluation of the environmental impact of a product Evaluates the environmental impact of a product, from raw material and energy inputs all the way to the disposal of the product at the end of its life Goal is to make decisions to help reduce the environmental impact of a product throughout its entire life (Reduce, Reuse, and Recycle)

Configuration Management

System by which a product's planned and changing configurations are identified and controlled by maintaining accountability for any changes

Factors that Affect Location Decision: Labor Productivity

The Labor Cost Per Unit=Labor Cost Per Day/Productivity (Units Per Day) This is better for the Labor Cost to be lower

Flexibility

The ability to respond with little penalty in time, costs, or customer value Crucial because if you are not flexible then when change comes, you might have to start all over Flexibility helps give a competitive advantage

Process Redesign

The fundamental rethinking of business processes to bring dramatic improvements in performance Relies on reevaluating the purpose of the process and questioning both the process' purpose and underlying assumptions Requires reexamination of the basic processes and objectives Focuses on activities that cross function lines ANY PROCESS IS A CANDIDATE FOR REDESIGN

CHAPTER 7 (PROCESS STRATEGY)- Process Strategy

The objective is to create a process to produce offerings that meet customer requirements within cost and other managerial constraints (limitations of time, resources, money, etc.) An organization's approach to transforming resources into goods and services

CHAPTER 6S (STATISTICAL PROCESS CONTROL)-Statistical Process Control

The objective of a process control system is to provide a statistical signal when Assignable Causes of Variation are present A statistical signal occurs when Assignable Variability Causes are present to be able to quickly take appropriate actions to eliminate them A flag when something is outside of the norm so you know how to fix it to meet customer expectations The application of statistical techniques to make sure processes meet quality standards Do note that all processes are subject to a degree of variability

CHAPTER 5 (DESIGN OF GOODS AND SERVICES)- Product Decision

The objective of the product devision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage

4 Basic Process Strategies: 4) Mass Customization

The rapid, low-cost production of goods and services that fulfill and satisfy increasingly unique customer desires This combines the increased variability (of Process Focus) and the increased production of (Produce Focus) to get the best of both worlds This is difficult to do but gives great rewards Includes Built to Order (BTO) where high volume production is made exactly to the customer's orders (makes designs that are imaginative, flexible, tight inventory management, tight schedules, and responsive supply partners) Ex: Align teeth retainers

Quality

The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs of the customer

Factors that Affect Location Decision: Exchange Rates and Currency Risks

These can rise or fall over time to be favorable or unfavorable for your business

Attribute Data with Control Charts

This is data that is a yes or a no (categorical yes category or no category) Typically is it defective or non-defective This uses P Chart an C Chart They do not need to be used together

Country Decision KSFs to consider...

This is on a macro level Political risks/government rules/attitudes/incentives Cultural and or economic issues Location of markets Labor talent, attitudes, productivity, costs Availability of supplies, communications, energy Exchange rates and currency risks

Site Decision KSFs to consider

This is on a micro level Site size and cost Air, rail, highway, and waterway systems nearby Zoning restrictions Proximity of services/supplies needed Environmental impact issues Customer density and demographics

Factors that Affect Location Decision: Proximity to Markets

This is very important for services since they need to be close to their market of customers This is also important for Just In Time Manufacturing systems or in cases where transportation costs are high

CHAPTER 6 (MANAGING QUALITY)-An Operations Manager's objective is...

To build a total quality management system that identifies and satisfies customer needs Satisfying customer needs is the key

Generating new products involves...

Understanding the customer Being aware of economic change Being aware of sociological and demographic change Being aware of technological change Being aware of political and legal change Being aware of changes in market practice, professional standards, suppliers, and distributors

Product Life Cycle: Decline Phase

Unless product makes a special contribution to the organization, must plan to terminate it Product has died

Computer Aided Design (CAD)

Use of computers to interactively design products and prepare engineering documentation Uses 3D drawings to save time and money to shorten development cycles for products Ex: Invisilin braces use CAD

Examples of Production Technology: Process Control

Use of information technology to monitor and control a physical process Sensors collect data and devices read data on a periodic basis Measurement are translated into digital signals and sent to a computer where programs analyze the data

Computer Aided Manufacturing (CAM)

Use of specialized computer programs to direct and control manufacturing equipment Increases manufacturing efficiency and results in fewer defective units, less rework, and lower inventory

Decision Tree

Used when uncertainty is present Help form subsequent about a product or service

Tools to help analyze, design, and redesign Processes: Process Charts

Uses symbols, time, and distance to provide an objective and structured way to analyze and record the activities that make up a process Very detailed

House of Quality

Utilize a planning matrix to relate customer wants to how the firm is going to meet those wants Uses a graphic technique to build a house connecting customer desires with the company's product or service

Variable Data with Control Charts

Variable Data is product characteristics that can be measured: height, weight, speed, length, strength, etc To measure this, we must use BOTH X bar and R Charts to set our control limit parameters because one might make a mistake that the other one can catch

Virtual Reality Technology

Visual form of communication in which images substitute for the real thing, but still allow the user to respond interactively

Examples of Production Technology: Flexible Manufacturing Systems (FMSs)

When a central computer provides instructions to each workstation and to the material handling equipment (robots)

Internal Benchmarking

When the organization is large enough you can benchmark within your own business by comparing different departments This is good because it is your data, so it is much more accessible

Reasons companies typically move locations...

When their demand has outgrown the current location, changes in labor productivity have happened, changes in exchange rates/costs, changes in local attitudes, etc.