SCM 301 Exam 3 - Bellville

Six Sigma Tools" Statistical Process Control

Allows firms to: -visually monitor process performance -compare the performance to desired levels or standards -take corrective action Firms: -gather process performance data -create control charts to monitor process variability -monitor the process by collecting sample measurements of the process over time and plot on charts.

Six Sigma

Its all about quality "on target with minimum variance"

Lean production emphasizes all of the following EXCEPT:

Large batch sizes

Chase

Match production to customer order rate by hiring and laying off employees

Available to Promise

uncommitted portion of firms planned production

Statistical Process Control (SPC)

- SPC involves monitoring and eliminating variability using tools, knowledge, and data. - ALL processes have variability. Two causes of variation are: 1. Assignable causes are factors that can be clearly identified and possibly managed. These can be eliminated. 2. Natural/common causes are inherent to the production process. In order to reduce variation due to common causes, the process must be changed. Key: Determining which is which!

Six Sigma Defined

-A philosophy and set of methods companies use to eliminate defects in their products and processes -Seeks to reduce variation in the processes that lead to product defects -The name, "six sigma" refers to the variation that exists within plus or minus three standard deviations of the process outputs

Defects Per Million Output (DPMO)

-Common metric used to describe and compare process performance -Watch the lightboard recording to learn how to calculate DPMO.

SPC: R Chart

-One of two control charts for variables -Shows sample ranges over time --Difference between smallest & largest values in inspection sample -Monitors variability in process -Example: Weigh samples of coffee & compute ranges of samples; Plot

PDCA Cycle

1. Plan a change aimed at improvement 2. Execute the change 3. study the results; did it work? 4. institutionalize the change or abandon. REPEAT

Which of the following is the hierarchical operations planning process order?

1st - Resource requirements plan (RRP), 2nd - Rough-cut capacity plan (RCCP), 3rd - Capacity requirements plan (CRP)

According to the textbook, which of the following is considered a reason that ERP implementations fail?

The organization may lack the necessary workforce and expertise to properly implement the system

A Master Production Schedule is a medium-range materials plan.

True

A Mixed Production Strategy uses a blend of chase and level strategies by striving to maintain a stable core workforce while using other means like temporary workers to manage short-term high demand.

True

According to the text, resource planning is the process of determining the production capacity required to meet demand.

True

System nervousness is when even small changes to upper-level production plans cause major changes in lower-level production plans.

True

The Malcolm Baldrige National Quality Award recognizes firms for their quality achievements and is only given to U.S. firms.

True

The primary design objective with lean layouts is to reduce wasted movements of workers, customers, and/or work-in-process.

True

External failure Costs

Warranty Costs Returns Customer complains Recalls and lawsuits

Elements of Lean

Waste reduction Lean supply chain relationships Channel integration Lean layouts (Visual) Inventory and setup time reductions Small batch scheduling Continuous improvement Workforce empowerment

Assemble-to-order Products

basic parts for the product are produced, but final assembly doesn't occur until of customer order

Manufacturing Resource Planning (MRP II)

combined MRP with master production scheduling, rough-cut capacity planning, capacity requirement planning, and other operations planning software modules

Distribution Requirement Planning (DRP)

describes the time-phased net requirements from warehouses & distribution centers. Links production with distribution planning

Bill of Materials

document that shows an inclusive listing of all component parts & assemblies making up the final product

Super Bill of Materials (AKA planning BOM, pseudo BOM, phantom BOM, or family BOM)

enables the firm to forecast the total demand end products

Firmed Segment:

from current period to several weeks into future. Can only be altered by senior management

Tentative Segment

from end of firmed segment to several weeks into the future

Aggregate Production Plan (APP)

hierarchical planning process that translates annual business plans & demand forecasts into a production plan for a product family (products that share similar characteristics) in a plant or facility leading to the APP

Enterprise Resource Planning Systems (ERP)

information system connecting all functional areas and operations of an organization and in some cases, suppliers and customers via common software infrastructure and database

Development of ERP Systems

information system connecting all functional areas and operations of an organization and in some cases, suppliers and customers via common software infrastructure and database -- ERP provides means for supply chain members to share information so that scarce resources can be fully utilized to meet demand, while minimizing supply chain inventories

Process Management

is the application of knowledge, skills, tools, techniques, and systems to define, visualize, measure, control, report, and improve processes with the goal to meet customer requirements efficiently. enables firms to achieve desired levels of customer service (low cost, quality, responsiveness).

Capacity

maximum workload that an organization is capable of completing in a given period of time.

Resource Planning

process of determining the production capacity required to meet demand

Make-to-stock Products

produces produced ahead of customer order so it is immediately available for delivery

Make-to-order Products

products produced at time of customer order

System Nervousness

small changes in the upper- level-production plan cause major changes in the lower-level production plan

Material Requirements Plan (MRP)

system of converting the end items from the master production schedule into a set of time-phased component part requirements

Time Fence System

used to deal with nervousness by separating the planning horizon into: Firmed Segment and Tentative Segment

Advantages of ERP Systems

Added visibility reduce supply chain inventories Helps to standardize manufacturing processes Measure performance & communicate via a standardized method

ERP Software Providers

After mergers & acquisitions, the 3 major ERP providers are: Oracle SAP Microsoft Other small software firms provide applications as well as full ERP solutions but lack applistructure:, --The merger of enterprise application and infrastructure technology (used by the top 3 ERP providers)

Which of the following is a Long Range Materials Plan:

Aggregate Production Plan

Statistical Process Control

Basics Basic assumptions (tenets) of Process Quality Control: -Every process has random variation in it. -Production processes are not usually found in a state of control. "State of Control"; what does it mean? How do we find it?

Which of the following basic production strategies used for addressing the aggregate planning problem would work best with make-to-order manufacturing firms?

Chase Production Strategy

Six Sigma: DMAIC Cycle

Define, Measure, Analyze, Improve, and Control (DMAIC) Developed by General Electric as a means of focusing effort on quality using a methodological approach Overall focus of the methodology is to understand and achieve what the customer wants DMAIC consists of five steps....

Lean Six Sigma

Describes the melding of lean production and Six Sigma quality practices. Both use: --High quality input materials, WIP, and finished goods --Continuous Improvement (Kaizen) Lean and Six Sigma use complementary tool sets and are not competing philosophies STILL distinct practices but very commonly utilized together in organizations.

Components of Quality

Design quality: Inherent value of the product in the marketplace -Dimensions include: Performance, Features, Reliability, Durability, Serviceability, Response, Aesthetics, and Reputation. Conformance quality: Degree to which the product or service design specifications are met -This is the primary focus of Six Sigma and Lean projects!

The common term across the seven wastes is:

Excess

The process of converting a parent item's planned order releases into component gross requirements is referred to as the ERP Implosion.

False

An important outcome of statistical process control is:

Firms can take corrective actions before process variabilities get out of control Firms can visually monitor process performance

An integral part of Six Sigma is:

Firms committing to a program of continual reassessment and improvement

Materials Requirements Planning (MRP)

Is the logic for determining the number of parts, components, and materials needed to produce a product. MRP provides time scheduling information specifying when each of the materials, parts, and components should be ordered or produced. Dependent demand drives MRP. MRP Inputs -MPS -Inventory Records -Bill-of-Material MRP Outputs -Planned orders to be released at a future time. -Order release notices to execute the planned orders. -Changes in due dates of open orders due to rescheduling. -Cancellations or suspensions of open orders due to cancellation or suspension of orders on the master production schedule. Inventory Status Data

Kanban

Japanese word for "Card". It is a visual tool used in lean production. When this was used, the system became more effective. The realization that products should only be produced when needed.

Small Batch Scheduling & Kanban System

Kanban -A "pull" production system -A physical control system (typically visual in nature) -Composed of cards and containers (production card and withdrawal card) Process: -Authorizes production and controls materials movement -Work centers generate production orders for previous work centers -As parts are used - empty containers with production authorization are returned to the work center -Production fills up the container and is sent to the downstream work center Objectives: -Reduce time it takes to circulate a container --Machine setup time, run time, wait time, transit time -Reduce the number of containers and number of parts in each container

Key elements of Process Management and have emerged as philosophies & practices known as:

Lean Production Six Sigma

Lean Production

Organizing work and analyzing the level of waste existing in operating machinery, warehouses and systems to fit a lean process flow. The goals are to reduce production throughput times and inventory levels, cut order lead times, increase quality and improve customer responsiveness with fewer people and other assets.

Seven Wastes

Overproduction Waiting Time Unnecessary Transportation Excess Processing Too much inventory Unnecessary Motion Defects

Which tool is useful for presenting data in an organized fashion, indicating process problems from most to least severe:

Pareto Charts

Six Major Sources of Variation

People Machines Materials Methods Measurement Environment

MRP Explosion

Process of converting planned production of parent item into component gross requirements.

Prevention Costs

Quality Planning Supplier Capability Quality Improvement

Lean Production

Refers to the operating philosophy of waste reduction & value enhancement of the Toyota Production System (TPS) in its entirety.

To check the feasibility of the Master Production Schedule, one would look to:

Rough-Cut Capacity Plan

Internal Failure Costs

Scrap and Rework re-inspection and re-testing Deliever

SPC: X Chart

Second control chart for variables Shows sample means over time Monitors process average Example: Weigh samples of coffee & compute means of samples; Plot

Level

Stable workforce with constant output, inventory and backlogs absorb fluctuations in demand

Some combination of chase and level

Stable workforce, variable hours - vary output through overtime or flexible schedules

Disadvantages of ERP Systems

Substantial time & capital investment Complexity Firms adapt processes to meet ERP system

Master Production Schedule

A detailed disaggregation of the aggregate production plan, listing the exact end items to be produced by a specific period. -More detailed than APP & easier to plan under stable demand. -Planning horizon is shorter than APP, but longer than the lead time to produce the item. -Note: For the service industry, the master production schedule may just be the appointment book, where capacity (e.g., skilled labor or professional service) is balanced with demand.

Appraisal Costs

Inspection (incoming, in process and final) Audits

Six Sigma: The Origins

Total quality management (TQM): managing the entire organization so that it excels on all dimensions of products and services that are important to the customer. -Near quality perfection (the statistical likelihood of non-defects 99.99966% of the time) -Pioneered by Motorola in 1987 -A statistics-based decision-making framework designed to make significant quality improvements in value-adding processes.