SCM Ch.8 (Exam 3)

Quality Standards and Awards

ISO (International Organization for Standardization): a network of standards institutes from more than 150 countries with a central office in Geneva, Switzerland - Non-governmental organization - The largest standards organization in the world - "To facilitate the international coordination and unification of industrial standards" - Wide applicability of standards Baldrige Award (The Malcolm Baldrige National Quality Award) - U.S. firms only - Establish criteria and guidelines for firms to evaluate their quality improvement efforts - Recognize firms for quality improvements - Improve quality and productivity

ISO Standards

ISO 9000 - is concerned with "quality management". This means what the organization does to enhance customer satisfaction by meeting customer and applicable regulatory requirements and continually to improve its performance in this regard. ISO 14000 - is primarily concerned with "environmental management". This means what the organization does to minimize harmful effects on the environment caused by its activities, and continually to improve its environmental performance. ISO 14001 - is an environmental certification

Unnecessary Motion (Ergonomics)

Ergonomics: Wasted movements of people or extra walking to get materials.

Lean Layouts

To reduce wasted movements of workers, customers, and/or WIP inventories, while achieving smooth product flow through the facility.

Defects

Use of materials, labor and capacity for production of defects; scrap materials and product rework activities due to poor- quality materials or processing.

Defect vs. Defective

- A defect is an error, mistake, flaw, fault or some type of imperfection that reduces the value of a product or unit. A single defect may or may not render the product or unit "defective" depending on the specifications of the customer. - Defect means that part of a unit is bad; - Defective means that the whole unit is bad; - Each product can have multiple opportunities for defects. - An opportunity is any step in a business process during which a defect can occur.

Lean Production

refers to the operating philosophy of waste reduction & value enhancement originating from the Toyota Production System (TPS) - Waste reduction - Lean supply chain relationships - Lean layouts (Visual) - Inventory and setup time reductions o Small batch scheduling - Continuous improvement - Workforce empowerment Lean Production seeks to eliminate waste in operations from

Kanban System

- 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 A "pull" production system A physical control system (typically visual in nature) Composed of cards and containers (production card and withdrawal card)

Malcolm Baldridge Award

- Established in 1987 to promote better quality management practices and improved quality results by American industry. - Named after Malcolm Baldrige, former Secretary of Commerce - Given to at most three companies in each of six categories

Inventory and Setup Time Reductions

- Excess inventory (high safety stock level) is a waste - Reduce purchase order quantities to reduce inventory - Reduce production lot sizes --> produce more batches: need to reduce setup time - Setup time: time to set up production equipment for the next production

Categories for the Baldrige Award

- Manufacturing companies - Service companies - Small businesses - Educational institutions - Health care organizations - Non-Profits (2007 first year)

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). Key Elements - Lean Production/Manufacturing - Six Sigma

The Seven Wastes

1. Overproduction 2. Waiting 3. Transportation 4. Over processing 5. Excess inventory 6. Unnecessary motion 7. Defects / rework

The 5 S's of Waste Redution

1. Sort (Organize) 2. Set in order (Tidiness) 3. Sweep (Shine / Purity: cleaning) 4. Standardize (Cleanliness - simplify processes) 5. Self-discipline (Sustain / maintain)

Control Charts

A graph used to study how a process changes over time. Data are plotted in time order. A managerial tool used to analyze whether a process is "in control" or "out of control". Components: - a central line for the average - an upper line for the upper control limit - a lower line for the lower control limit Type of Control Chart: Variable (Continuous) - Usually measured by the mean and the standard deviation - X-bar (𝑥ҧ) chart (mean chart) and R chart (range chart)

Lean Supply Chain Relationships

A team-based approach to continuous improvement focused on eliminating non-value added activities or "waste" from the viewpoint of the customer. Focal firm, its suppliers and its customers working together to identify customer requirements, remove wastes, and reduce costs, whilst improving quality and customer service. Lean supply chain relationships: mutual benefits, increased product value and competitiveness.

Assignable/Natural Causes

Assignable causes: - Poor adjustment of equipment - Operator falls asleep - Machine malfunction - Computer crash - Poor batch of raw material Natural causes: - Inappropriate procedures - Poor design - Measurement error - Normal wear and tear of machine

Continuous Improvement

Continuous approach to reduce process, delivery, & quality problems, such as machine breakdown problems, setup problems, and internal quality problems. 1. Plan: Plan a change aimed at improvement 2. Do: Execute the change 3. Check: Study the results, did it work? 4. Act: Institutionalize the change or abandon

Six Sigma

It's all about quality - Meeting, or exceeding, customer requirements now and in the future. - "On Target with Minimum Variance." - Quality at the source: person who does the work takes responsibility for making sure the output meets specifications. - Quality management - 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. When 99.9% quality is not enough - Two million documents would be lost by IRS each year - 22,000 checks would be deducted from the wrong bank account in the U.S. - 1,314 phone calls in the U.S. would be misrouted each day - 12 babies would be given to the wrong parents each day - Two plane landings daily at O'Hare would be unsafe 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 Quality Defined - A philosophy and set of methods companies use to eliminate defects in their products and processes - Identifying and removing the causes of defects and minimizing variability in manufacturing and business processes - Use of quality management methods (mainly empirical and statistical) - The name, "six sigma" refers to the ability of manufacturing processes to produce a very high proportion of output within specification Six Sigma allows managers to readily describe process performance using a common metric: - Defects Per Million Opportunities (DPMO)- equation

Six Sigma & Lean Production: Combination

Lean Six Sigma (LSS or Lean Six) - 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.

Workforce Empowerment

Managers must support Lean Production by providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions.

Six Sigma Training Levels

Master Black Belt - Champion - Oversee/ Guide Projects Black Belt - Coach and Support - Project Leader Green Belt - Lead project to success Yellow Belt - Analyze and implement improvements

Overprocessing

Non value-adding manufacturing, handling, packaging, or inspection activities. - Painting areas that will never be seen or be affected by corrosion. - Over polishing an area that does not require it. - Using components that are more precise, complex, higher quality or expensive than absolutely required.

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 Ex: You are the manager of a 500-room hotel. You want to analyze the time it takes to deliver room service food orders to the room. For 7 days, you collect data on 5 deliveries per day. Is the process in control? - Does not detect change in mean - detects increase in dispersion

Push vs. Pull

Push (Make all we can just in case) - Production approximation - Anticipated usage's - Large lots - High inventories - Waste - Management by firefighting - Poor communication Pull (Make what's needed when we need it) - Production precision - Actual Consumption - Small lots - Low inventories - Waste Reduction - Management by sight - Better communication

Mean (X) chart

Shows sample means over time - Monitors process average • Steps: 1. Gather data (sample size: k) 2. Determine the center line: the overall mean 3. Calculate the upper and lower control limits Ex: You are the manager of a 500-room hotel. You want to analyze the time it takes to deliver room service food orders to the room. For 7 days, you collect data on 5 deliveries per day. Is the process in control? - Detects shift in central tendency - Does not detect the increase in dispersion

Small Batch Scheduling and Kanban System

Small batch scheduling: produce small batches - Firms become more flexible to meet varying customer demand Small Batches - produces smaller and more variety of batches compared to large batches - have a short setuptime Kanban: Japanese meaning signboard/billboard or a uniform to indicate authority - When manufacturing cells need parts or materials, they use a Kanban to signal their need for items from the upstream manufacturing cell, processing unit, or external supplier. - Nothing is provided until a downstream demand occurs. - The system is driven by demand from downstream.

Statistical Process Control (SPC)-Six Sigma Tool

Statistical Process Control (SPC): a method of quality control using statistical methods. Allows firms to: - visually monitor process performance - compare the performance to desired levels or standards - take corrective actions 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 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. Examples: - Your order time at McDonald's - Size/Weight of your McDonald's sandwich - Spiciness of Chick-fil-A Spicy Chicken Sandwich 1) What are the possible reasons for variation? 2) If you were the manager, why would you care? 3) When something goes wrong, we can know the source of the variation. When everything is right, where does the variation come from? SPC involves monitoring and eliminating variability using tools, knowledge, and data. ALL processes have variability. Two causes of variation are: 1. An assignable cause: is a clearly identifiable, specific cause of variation in a given process. A cause of variation that is not random and does not occur by chance is "assignable." It can possibly be managed and eliminated. 2. A natural/common cause: is inherent to the production process. In order to reduce variation due to common causes, the production process must be changed. - Key: Determining which is which!

Excess Inventory

Storage of excess raw materials, work-in- process, and finished goods.

Kanban Card

What is a Kanban card? - Operators use Kanban card to signal their need for items from the upstream manufacturing cell, processing unit, or external supplier - Movement/Withdrawal Kanban - Production Kanban

Manufacturing cell/work cell

designed to process any parts, components, or jobs requiring the same or similar processing steps, saving duplication of equipment and labor.