Operations Management

Manufacturing Strategy for Manufacturing Process:

-Job shop. -Batch. -Line Flow. -Continuous Flow.

Elements of Lean

-LEAN Manufacturing -Total Quality Management -Respect for People

Lean often results:

-Large cost reductions. -Improved quality. -Increased customer service

Manufacturing Strategies:

-Make-to-Stock (MTS). -Assemble-to-Order (ATO). -Make-to-Order (MTO). -Engineer-to-Order (ETO).

Operations management allow

-Managing the process to create goods and services. -Controlling costs to maximize profits.

Lean + Six Sigma

Faster(speed) and Better(accuracy)

Kaoru Ishikawa

Developed one the first tools in the quality management process, the Cause and Effect Diagram, which is also called the "Ishikawa" or "fishbone" diagram.

Straighten

Organize and arrange items to promote an efficient workflow

Buyers's Risk:

The buyer accepts a shipment of poor-quality units because the sample falsely provides a positive result against the acceptance standard (type II error)

Supplier's Risk:

The buyer rejects a shipment of good-quality units because the sample quality level did not meet the acceptance standard (type I error)

Operations Management refers to

The design, execution, and control of the operations that convert resources into desired goods and services, aligned with the company's business strategy.

Continuous Flow process

is used to manufacture such items as gasoline, laundry detergent and chemicals. Inflexible processes. High capital investment

Assemble to Order (ATO)

is when base components are made, stocked to forecast, but products are not assembled until customer order is received

W. Edwards Deming

is widely considered the father of TQM

Batch process

manufactures a small quantity of an item in a single production run

Make to Order (MTO) relies on

relatively small quantities, but more complexity

LEAN Green Practices

-Reduce the cost of environmental management . -Lead to improved environmental performance. -Increase the possibility that firms will adopt more advanced environmental management.

Quality gurus

Experts which contributes to TQM

Kanbans:

"Signal" or "Card" in Japanese used for communication between workstations.

Eight Wastes(Down Time)

-Defects -Overproduction -Waiting -Non-utilized talent -Transportation -Inventory -Motion -Extra-processing

Lean principles

1. Define value 2.Map value stream 3.Create flow 4. Establish pull 5. Pursuit perfection

MTS-->lead time

Customer delivery

DMADV

Define, measure, analyze, design, verify.

DMAIC

Define, measure, analyze, improve, control.

Make-to-Order (MTO)

Is a manufacturing strategy that typically allows customers to purchase products that are customized to their specifications.

Assemble-to-Order (ATO)

Is a manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent.

Voice of the Customer (VOC)

Is a 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.

Six Sigma became famous when

Jack Welch made it central to his successful business strategy at General Electric in 1995

Manufacturing strategy for Batch

MTO/ATO with long lead time

Manufacturing strategy for Continuous Flow

MTS with very short lead time

Uniform Plant Loading:(Front-loading)

Planning up to capacity in earlier time periods to meet demand in later time periods.

Line Flow

Process has standard products with a limited number of variations moving on an assembly line through stages of production

MTO-->lead time

Procurement

Benefits of Lean

Reduced cycle times, Greater throughput, Better productivity, Improved quality, Reduced costs.

Sustain

Stick to the rules. Maintain and review the standards

Malcolm Baldrige National Quality Award objectives:

Stimulate firms to improve, Recognize firms for quality achievements, Establish guidelines so that organizations can evaluate their improvement and provide guidance to others.

Taichii Ohno and Shigeo Shingo created

The Toyota Production System (TPS), which incorporated Ford's production system and other techniques to form the basis of what is now known as LEAN. (1940)

In the ETO world

The cost of poor quality can be very high.

Lean is

a CULTURE

Make to Stock (MTS)

features economies of scale, large volumes, long production runs, low variety, and multiple distribution channels

setup and changeover

are non-value added operations and should be minimized as much as possible.

Procurement and Production costs per unit go down

as volume goes up (generally, a step function applies as more capital will be required to produce more as volume grows)

Inventory and Warehousing costs per unit go up

as volume goes up (must hold more inventory and pay for more storage space, insurance, taxes, etc.)

Transportation costs per unit go down

as volume goes up, but level off at high volumes (economies of scale in transportation until the container/conveyance is filled up)

Philip Crosby

coined the phrase "quality is free"

The 5 why's are used

getting to the root cause of a problem

MTO is appropriate for

highly configured products such as computer servers, aircraft, ocean vessels, bridges, automobiles, or products that are very expensive to keep in inventory.

The 5 why's and the 5 how's

is a questioning technique designed to drill down into the details of a problem or a solution to find the root cause and the best corrective measure.

The essence of ETO

is building a unique product every time.

Make-to-Stock (MTS)

means to manufacture products for stock based on demand forecasts, which is a push system.

LEAN focuses on

on eliminating wastes and improving efficiency

Six Sigma focuses on

on reducing defects and variations

Lean and Six Sigma are complementary

principles providing the customer with the best possible quality, cost, and delivery.

The MTO strategy relieves

the problems of excessive inventory that is common with the traditional Make-to-Stock strategy.

Supply Chain Management combined:

-Quick respone -Efficient consumer response. -Just in Time -Keiretsu Relationships To emerge LEAN MANUFACTURING

Pull system

-Each stage in the supply chain requests quantities needed from the previous stage. -No excess inventory generated. -Reducing inventory levels can also uncover production problems.

Respect for people

-must exist for an organization to be at its best. -The Role of Workers, Management, and Suppliers.

Six Sigma has two key methodologies:

1 ) DMADV Methodology. 2) DMAIC Methodology

Quality tools ( Statistical tools)

1) Check Sheets 2) Cause and Effect Diagrams (aka, "Ishikawa" or "fishbone" diagram) 3) Control Charts 4) Histograms 5) Pareto Analysis 6) Scatter Diagrams 7) Stratification (aka, Flow Diagrams).

Three main foundational aspects of Six Sigma

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

The Five-S's

1) Sort 2) Straighten 3) Shine 4) Standardize 5) Sustain

Malcolm Baldrige National Quality Award categories

1)Leadership. 2)Strategic Planning. 3)Customer and Market Focus. 4) Information and Analysis. 5) Human Resource Focus 6) Process Management. 7)Business Results.

LEAN Layouts

1)Move people and materials when and where needed, and as soon as possible 2)Are very visual with operators at one processing center able to monitor work at another. 3)Manufacturing cells ( U shaped)

The Seven Elements of LEAN MANUFACTURING

1)Waste Reduction 2)LEAN Layouts 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

The classical view of quality ( 3.8 sigma)

99%

Six Sigma view of quality ( 6 sigma)

99.99966%

Manufacturing strategy for Line Flow

ATO/MTS with short lead time

ATO is a hybrid strategy

Between a Make-to-Stock strategy where products are fully produced in advance, and the Make-to-Order strategy where products are manufactured once the order has been received.

Shine

Clean the work area so it is neat and tidy

Variable Data

Continuous

Continuous Improvement

Continuous approach to reduce process, delivery, and quality problems, such as machine breakdown problems, setup problems, and internal quality problems

Manufacturing strategy for Job Shop

ETO/MTO with very long lead time

Manufacturing strategy is essential for

Establishing and maintaining an effective supply chain.

Natural Variations

Expected and random (can't control)

Muda ( waste) Reduction

Firms reduce costs and add value by eliminating waste from the production system.

Pareto Analysis

For presenting data in an organized fashion, indicating process problems from most to least severe.

Assignable Variations

Have a specific cause (can control)

Attribute Data

Indicate some attribute such as color and satisfaction, or beauty.

Term LEAN was first coined by

John Krafcik in 1988 and the definition was expanded in the 1990 book, The Machine that Changed the World.

Sort

Keep only necessary items in the workplace, eliminate the rest

Total Quality Management principles:

Management Commitment, Employee Empowerment, Fact Based Decision Making, Continuous Improvement, Customer Focus.

Workforce Commitment

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

ATO-->lead time

Manufacturing

ETO-->lead time

Product design

Standardize

Schedule regular cleaning and maintenance

Manufacturing strategies can vary

Significantly depending on the product and/or the customer requirements.

Cause and effect diagrams

Used to aid in brainstorming and isolating the causes of a problem

Check Sheets

Used to determine frequencies for specific problems.

One issue of MTS is

is to avoid having excess inventory. Companies today that operate with an MTS model struggle to make the correct product at the correct time in the correct quantities.

LEAN and Six Sigma

complement one another. Both are philosophies- mindsets.

Job Shop

creates a custom product for each customer. High customization

Production in small batches

creates a smooth workload as production can be synchronized with customer demand, facilitating a pull system.

Joseph Juran

defined quality as "fitness for use".

Large batches can

exacerbate the Bullwhip effect as production in large batches creates an uneven workload.

Engineer-to-Order (ETO)

is a manufacturing process in which the component is designed, engineered, and built to specifications only after the order has been received.

What is Six Sigma

is a structured and data-driven approach to drive a near-perfect quality goal(Zero Defects)

Six Sigma

is an enterprise and supply chain-wide philosophy that emphasizes a commitment toward excellence, encompassing suppliers, employees, and customers

LEAN

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

Value

is further defined as anything for which the customer is willing to pay. It is the inherent worth of a product.

TCM

is generally expressed as a cost per unit for each product. It incorporate both fixed and variable cost.

Total Cost of Manufacturing (TCM)

is the complete cost of producing and delivering products to your customers.

Changeover time

is the time taken to adapt and modify the manufacturing equipment and systems to produce a different product or a new batch of the same product.

Setup time

is the time taken to prepare and format the manufacturing equipment and systems for production.

The goal of Six Sigma

is to attain less than 3.4 Defects Per Million Opportunities (DPMO)

Six Sigma seeks

to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.

The 5 how's are

used to develop the details of a root solution to a problem.

Lean achieves its goals by

using less technical tools such as Lean Layouts, Continuous Improvement, and Respect for People.

Six sigma achieves its goals by

using technical tools such as Root Cause Analysis, Statistical Process Control, and DMAIC.

LEAN provides

value for customers through the use of the most efficient resources possible

Henry Ford's mass production line

was a first breakthrough by using continuous assembly and flow systems (1910)

Engineer to Order (ETO) is used

when products are unique and extensively customized for the specific needs of individual customers