operations MNG

Implementing LEAN and Six Sigma

LEAN and Six Sigma are complementary principles with significant overlap. They are frequently implemented together but the two initiatives approach their common purpose from somewhat different angles:

Tools of Quality Control-Control Charts

Graph to study how a process changes over time Firms - Gather process performance data - Create control charts to monitor process variability - Then collect sample measurements of the process over time and plot on charts. Allows firms to - Visually monitor process performance - Compare the performance to desired levels or standards - Take corrective action as necessary

Cost of Poor Quality - Internal Failure Costs

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 They include costs for: § Defective product or material that cannot be used, sold, or repaired, and the costs associated with correction of these defects. § Unnecessary work or inventory resulting from errors. § Activities required to establish the root causes of product or service failures.

the goal of lean is elimination of waste and the minimization of the amount of all resources, including time, used in the operations of a company.

LEAN achieves its goals by using less technical tools such as value stream mapping, LEAN Layouts, Continuous Improvement, and Respect for People

lean principle

1, Define Value 2, map value stream 3, create flow 4, Establish pull 5, pursuit perfection

Types of Manufacturing Processes

1, Job Shop Production: HIGH Variety -----LOW volume 2,Batch Production: high-mid variety---lowmid volume 3,Line Flow Production: lowmid variety---highmid volume 4,Continuous Flow Production: low variety --- high volume

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

TCM includes

1, manufacturing and procurement activities 2, Inventory and warehousing activities 3, transportation activities

The Foundation of Six Sigma There are three foundational aspects of Six Sigma:

1. Quality is Defined by the Customer 2. The Use of Technical Tools 3. People Involvement

Philip Crosby introduced the four absolutes of quality

1. Quality is conformance to requirements 2. The system of quality is prevention 3. Performance standard is zero defects 4. The measure of quality is the price of nonconformance

The Seven Tools of Quality Control

1. cause and effect diagrams 2. flowcharts 3. checklists 4. control charts 5. scatter diagrams 6. pareto analysis 7. histograms

The Five-S's These were originally Japanese words relating to industrial housekeeping

5-S, or the five pillars of the visual workplace, is a systematic process of workplace organization. "There is a place for everything, and everything should be in its' place"

Tools of Quality Control-Histograms

A graphical display where the data is grouped into ranges

What is Six Sigma?

A quality management process § Six Sigma focuses on improving the quality of process outputs by identifying and removing the Causes of Defects(errors) and minimizing Variability in manufacturing and business process. § The goal of Six Sigma is to attain less than 3.4 Defects Per Million Opportunities (DPMO) § Six Sigma is a structured and data-driven approach to drive a near-perfect quality goal, i.e., "Zero Defects"

7.Continuous Improvements (Kaizen)

A system involving every employee that is based on making little changes on a regular basis, anywhere changes can be made, to reduce process, delivery, and quality problems. § Continuous small improvements § Changes are implemented quickly § Everyone gets involved

LEAN is composed of three components working in unison:

A. LEAN Manufacturing B. Respect for People C. Total Quality Management (covered with Six Sigma)

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. § Any cost that would not have occurred if quality was perfect, contributes to the cost of quality. § Helps a company determine the benefits and savings generated by potential process improvements.

TCM-vs-Strategic Alternatives

As volume goes up. . . A. Manufacturing and Procurement costs go down due to economies of scale. B. Inventory and Warehousing costs go UP C. Transportation costs go down, but level off at high volumes as the shipping container gets filled to capacity and another container must be used.

While setting up the equipment is a necessary function, if the set up time can be minimized, the difference will be more time available to produce.

Both setup and changeover are non-value added operations and should be minimized as much as possible

Cost of Quality can be divided into the:

Cost of GOOD Quality : --Appraisal Costs --Prevention Costs Cost of Poor Quality: -- Internal Failure Costs -- External Failure Costs

Manufacturing Processes

Part of any manufacturing strategy involves developing a manufacturing process that can create the exact product that has been designed. § Although there are differences between companies, many manufacturing processes have certain characteristics in common.

Role of Workers

Perform tasks and actively pursuing company goals: § Improve production process § Correct quality problems § Monitor quality Work in Teams (i.e., Quality Circles) iceberg of ignorance on ground: 4% top manager knows under : 9% mid-manager 74%supervisors 100% line workers

Value Added Process

Process steps that transform or shape a product or service which is eventually sold to a customer.

Root Cause Analysis

Root Cause Analysis (RCA) is a collective term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems. § The root cause is the CORE ISSUE that sets in motion the entire cause-and effect reaction that ultimately leads to the problem(s). § Some root cause analysis approaches are geared more toward identifying true root causes than others, some are more general problem-solving techniques, and others offer support for the core activity of root cause analysis. § Next, we will examine some of the essential techniques and tools in the RCA toolbox, such as the Seven Tools of Quality Control, DMADV, DMAIC, and the 5 Why's / 5 How's Technique used to address a specific problem.

Tools of Quality Control-Flow Diagram

Sequence of movements or actions of people or things involved in a complex system or activity

Setup Time and Changeover Time Reduction

Setup Time and Changeover Time are both considered a waste as they are times when the equipment is not performing its intended function . . . . producing product.

Six Sigma focuses on the elimination of defects and the reduction of variations

Six Sigma uses technical tools such as Root Cause Analysis, Statistical Process Control, and DMAIC The most successful implementations begin with LEAN, followed by the more technical Six Sigma statistical tools used to resolve process problems.

3. Inventory, Setup Time, & Changeover Time Reduction

Some inventory may be necessary, but excess inventory is a waste § Excess inventory takes up space, and costs money to hold, maintain, protect, secure, and insure. § It ties up financial capital which could be used for other aspects of the business.

4. Seiketsu

Standardize ----Schedule regular cleaning and maintenance

LEAN History

Starting in the 1910's, Henry Ford's mass production line was a first breakthrough by using continuous assembly systems that made parts find their way into finished products

Total Cost of Manufacturing TCM is generally expressed as cost per unit

Total Cost of Manufacturing (TCM) is the complete cost of producing and delivering products to your customers. - It incorporates both fixed and variable costs used in the manufacturing, storage, and delivery of the product.

Tools of Quality Control-Cause and Effect Diagrams

Used to aid in brainstorming and isolating the causes of a problem. biggest problem: long wait to buy ticket

Tools of Quality Control-Check Sheets

Used to determine frequencies for specific problems

Lean Facilitates a Culture Change

Work Systems & Processes(Eliminate Waste) | Behavior(Change the way we act) | Attitude (Change the way we think) | Culture (Culture Change)

Before waste is removed, processes are often scattered, which can negatively affect your customers

_After___ waste is removed, processes are more streamlined, resulting in more satisfied customers. You'll also save your organization time and money

What Lean is

a management philosophy based on the Toyota Production System (TPS)

Efficient Consumer Response:

a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers.

Cost of Good Quality-Appraisal Costs

are associated with the evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications They include costs for: § Testing, evaluating, and inspecting the quality of incoming materials, process setups, and products, against agreed upon specifications. § Quality assessment and approval of suppliers. § Performing audits to confirm that the quality system is operating properly.

Cost of Good Quality - Prevention Costs

are related to the design, implementation, and maintenance of the quality management system. They are planned, and experienced before actual products or materials are acquired or produced They include costs for: § Establishment of specifications for incoming materials, processes, products, and services § Creation of quality plans § Development, preparation, and maintenance of quality training § Creation and maintenance of the quality system

ATO is a hybrid strategy

attempting to combine the benefits of both Make-to-Stock and Make-to-Order strategies, getting products into customers' hands quickly while allowing for some customization to take place.

the nature of how operations management is carried out varies by

company and depends on the nature of products or services in the portfolio

the role of management

create cultural change needed for LEAN to succeed -provide atmosphere of cooperation -empower workers to take action based on their ideas -develop incentive system for lean behaviors

Developing a manufacturing strategy that suits a company's strengths is essential for

establishing and maintaining an effective supply chain.

Keiretsu Relationships

involves companies both upstream and downstream Relationships of a manufacturing process, remaining independent but working closely together for mutual benefit

1. Seiri

sort --- Keep only necessary items in the workplace, eliminate the rest

5. Shitsuke

sustain------ Stick to the rules. Maintain and review the standards

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

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

manufacturing involves

the entire process of converting the raw material or the component(s) into a finished goods item. It includes the machines used, the personnel involved, inventory handling, warehousing, etc.

The VOC can be captured in a variety of ways:

ü Customer Interviews ü Market Surveys ü Focus Groups ü Customer Specifications ü Observation ü Warranty Data ü Field Reports ü Complaint Logs

3.People Involvement

§ A company must Involve all its employees in the Sigma program, and provide opportunities and incentives for employees to focus their talents on satisfying customers. § It is important that all Six Sigma team members are assigned specific well-defined SIX SIGMA ROLES with measurable objectives. § All employees are responsible to identify quality problems.

1. Quality is Defined by the Customer

§ Quality and excellence are what your customers say they are. Customers of your products and services define quality § Customers want quality that is appropriate to the price that they are prepared to pay and the level of competition in the market. § Key aspects of quality for the customer include: ü Reliable - acceptable level of breakdowns or failure ü Good functionality - it does the job well ü Durable - lasts as long as it should ü Good design - looks and style ü Good after sales service ü Value for money ü Consistency

2.The Use of Technical Tools

§ Six Sigma provides a statistical approach for solving any problem and thereby improves the quality level of the product as well as the company. § Six Sigma is concerned with the permanent fix to quality problems and seeks to identify and correct the root cause of the problem through the use of Root Cause Analysis. § All employees should be trained to use the Seven Tools of Quality Control.

Acceptance Sampling

§ When a shipment is received from a supplier, a ____ statistically significant representative sample is taken and measured against the quality acceptance standard. § The entire shipment is assumed to have the same quality as the representative sample that was taken. § Sampling is less time-consuming than testing every unit but can result in errors: - 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) - Buyer'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)

Six Sigma Methodology Six Sigma has two key methodologies:

DMADV: Methodology: Define --> Measure --> Analyze --> Design -->Verify: which is a data-driven quality strategy for designing products & processes ─ This methodology is used when the company wants to create a new product design or business process that is more predictable and defect free. -DMAIC Methodology: Define --> Measure --> Analyze --> Improve -->Control: which is a data-driven quality strategy for improving products & processes. ─ This methodology is used when the company wants to product or business process. improve an existing ─ DMAIC is the most widely adopted and recognized Six Sigma methodology in use. ─ It defines the steps a Six Sigma practitioner typically follows during a project.

Cost of Poor Quality - External Failure Costs

External Failure Costs occur when the product or service does not meet the designed quality standards, but is not detected until after the product or service is delivered to the customer They include costs for: § Handling and responding to customer complaints. § Failed products that must be replaced or services that are repeated. § Repair of returned products and products still in the field. § Handling and investigation of rejected or recalled products, including return transportation costs.

1. Waste Reduction

Firms reduce costs and add value by eliminating waste from the production system. § Waste encompasses wait times, inventories, material and people movement, processing steps, variability, any other non-value-adding activity.

Tools of Quality Control-Pareto Analysis

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

The 5 How's Technique

The "5 How's," is a questioning technique for drilling down into the details of a Potential Solution to a known problem §It is designed to bring clarity and refinement to a solution and arrive the root solution(best solution) §5 How's is a useful method of brainstorming resolutions to the root causes and developing action items to resolve the problem §Think of this activity as being halfway up a ladder, with 5 steps above it and 5 below. You go up the ladder by asking "why" and down it by asking "how." §The 5 Whys and 5 How's are typically used in conjunction with the Cause and Effect Diagram.

The 5 Why's Technique

The "5 Whys," is a questioning technique for identifying the Root cause of a problem §By repeatedly asking the question "Why" (five is a good rule of thumb), you can peel away the layers of symptoms which can lead to the root cause of a problem (i.e., the underlying factors or causes of an event). §At this point you understand the root cause, and can see where a change is needed. §5 Whys is used in the "Analyze" phase of the Six Sigma DMAIC (Define, Measure, Analyze, Improve, Control) methodology.

LEAN History In the 1990s, Supply Chain Management combined:

The combination of these concepts have emerged as the philosophies and practices known as LEAN Manufacturing

Six Sigma History

The concept of Six Sigma was originated by Motorola ─ Motorola developed the concept in the 1980's, created the methodology, and copyrighted it as well. ─ Motorola has documented > $16 Billion in savings as a result of Six Sigma. ─ Thousands of companies globally have adopted Six Sigma. ü This is a direct result of many of America's leaders openly praising the benefits of Six Sigma. § Six Sigma became famous when Jack Welch made it central to his successful business strategy at General Electric in 1995 - Reported $200MM in savings in the first year (1996) of implementation alone.

Tools of Quality Control-Scatter Diagrams

The values of two variables plotted along two axes, to reveal any correlation present.

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.

cost incurred in the process of establishing specifications for incoming materials, processes, products, and services, are categorized as which of the following?

prevention costs

Non-Value Added Process

process steps that take time resources, or space, but do not transform or shape the product or service.

Small Batch Scheduling

LEAN Manufacturing attempts to reverse this though small batch scheduling. § Smaller batches will facilitate producing at the same rate as customer demand.

2. Seiton

set in order----- Organize and arrange items to promote an efficient workflow

Manufacturing Management

- is the management of all the processes which are involved in manufacturing.

Manufacturing Strategies

Companies must develop a manufacturing strategy that suits the types of product that they produce, their customer's expectations, and their strengths

LEAN is standard in many industries

LEAN regularly results in: Large Cost reductions þ Improved quality þ Increased customer service

3. Seiso

Shine ----- Clean the work area so it is neat and tidy

Just-In-Time

an inventory strategy to decrease waste by receiving materials only when and as needed in the production process, thereby reducing inventory costs.

TQM is a combination of

quality and management tools which are designed to increase business and reduce losses resulting from wasteful practices.

§ Setup Time is the time taken

to prepare and format the manufacturing equipment and systems for production

Reducing wastes consequently results in

ü Reduced cycle times ü Greater throughput ü Better productivity ü Improved quality ü Reduced costs All of these can improve customer satisfaction and provide the company with a competitive advantage!!

In the 1990s, Supply Chain Management combined:

- Quick Response: the rapid replenishment of a customer's stock by a supplier with direct access to data from the customer's point of sale. -Efficient Consumer Response: a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers. -Just-In-Time: a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers. -Keiretsu Relationships: an inventory strategy to decrease waste by receiving materials only when and as needed in the production process, thereby reducing inventory costs.

people for TQM

- W. Edwards Deming - is widely considered the father of TQM. He is the creator of the Plan-Do-Check-Act model. - Philip Crosby - coined the phrase "quality is free" (which is also the title of his book) as defects are costly. He introduced the concepts of zero defects, and focus on prevention and not inspection. - Joseph Juran - defined quality as "fitness for use". He developed the concept of the cost of quality. - 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.

Job Shop Production (a.k.a., Project Production)

- creates a custom product for each customer -One-off or small number of items produced, generally one unit manufactured at a time. - High customization - Normally made to customs specifications -Often undertaken by small, specialist businesses -Examples: 1,Architects - Custom Home Construction 2, Ship Builders 3,Road Builders

Based on these characteristics, processes can be grouped into two broad categories:

-- Intermittent Process: used to produce a large variety of products with different processing requirements in lower volumes --Repetitive process - used to produce one, or a few standardized products in high volumes

Joseph Juran

--- Quality planning: identify internal / external customers and needs § Develop products satisfying those needs. § Mangers set goals, priorities, and compare results. ----Quality control: determine what to control § Establish standards of performance. § Measure performance, interpret the difference, take action. -----Quality Improvement: show the need for improvement § Identify projects for improvement. § Implement remedies § Provide control to maintain improvement.

the challenge of MTS is to avoid having excess inventory

Companies that operate with a MTS model tend to hold more inventory just in case they need it, therefore, they struggle to ensure that inventory levels don't get out of control.

Waste Categories (remember the acronym DOWN TIME )

Defects (error) Work not done right the first time such as scrap and rework Overproduction Producing sooner, faster or in greater quantities than customer demand WaitingPeople or parts that wait for a work cycle to be completed Non-Utilized Talent Not using employees full intellectual contribution Transportation Unnecessary movement of materials or parts between processes InventoryRaw material, WIP or finished goods which is not having value added to it Motion Unnecessarymovement of people, or multiple hand-offs Extra-Processing Processing beyond the standard required by the customer

Engineer-to-Order (ETO) is a manufacturing strategy in which the product is

Designed, engineered, and built to the customer's specifications after receipt of the order — It is a more dramatic evolution of Make-to-Order strategy. — ETO involves building a unique product every time. There may be components that are common from one product to another, but the finished product is different each time. — Example: Customized piece of manufacturing equipment

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. § With this tool, the user can see all possible causes of a problem to help find the root cause. § He is also known as the father of quality circles and helped bring this concept into the mainstream. § Further, he was a proponent of continuous customer service, meaning that a customer should continue receiving service even after receiving the product.

LEAN-objective

Eliminate everything that does NOT add value (waste) in the customer's eyes

5. LEAN Supply Chain Relationships

Firms develop lean supply chain relationships with key customers and key suppliers § In an ideal LEAN supply chain relationship, both customers and suppliers get connected in ways that allow them to easily exchange information, demand data, and the visibility of status._ § Mutual dependency and benefits occur among these partners. § Suppliers and customers work to remove waste, reduce cost, and improve quality and customer service

The Five-S's (continued)

Focuses on effective workplace organization and standardization. It allows us to easily spot variation from standard operating conditions. -- Cleaner, safer work environment -- Organized, user friendly workstations -- Open up space and reduce clutter

Line Flow Production (a.k.a., Mass Production)

For standardized products with a limited number of variations Product moves on an assembly line through various stages of production When one task is finished the next task must start immediately, therefore, time taken on each task must be the same Examples:• Automobile Assembly • Cell Phones• Toilet Paper

Philip Crosby

He introduced the concepts of zero defects, and the focus on prevention not inspection § Demonstrated what a powerful tool the cost of quality could be to raise awareness of the importance of quality. § Referred to the cost of quality as the "price of nonconformance" and argued that organizations choose to pay for poor quality.

Continuous Flow Production

High capital investment - frequently dedicated to one specific product Involves a series of processes which raw materials flow through. these process are very inflexible Generally highly automated, and workers act as monitors rather than as active participants Typically, production runs 24 hours a day with the end result being a large quantity of finished product Examples: ─ Oil Refining / Gasoline ─ Cement ✓ ─ Laundry Detergent ─ Chemicals

the role of suppliers

LEAN involves building long-term supplier relationships § Partnerships with suppliers. § Improving process quality. § Sharing information The goal is to have the fewest number of high-quality suppliers possible without unnecessarily increasing risk

Major Manufacturing Strategies

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

6. 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 Managers can also create a culture in which workers are encouraged to speak out when problems are found. In LEAN Manufacturing, employees are cross-trained on many of the various production processes to enable capacities to be adjusted as needed when machines break down or when workers are absent.

Batch Production

Manufacturing of a small fixed quantity of an item in a single production run Each Individual item in the batch/group goes through one stage of the production process before the whole batch moves on to the next stage aims to achieve better use of equipment produces good quality products more economically than manufacturing them individually e.g.: Bakeries Textiles Furniture Pharmaceuticals

2. LEAN Layouts

Move people and materials WHEN and WHERE needed and as soon as possible -- are very visual (lines of visibility are unobstructed) with operators at one processing center able to monitor work at another § Manufacturing cells ─ Process similar parts or components saving duplication of equipment and labor ─ Are often U-shaped to facilitate easier operator and material movements

The ATO strategy requires that the basic parts for the product are already manufactured but not yet assembled

Once an order is received, the parts are assembled quickly into the finished product which is then sent to the customer. Example: Dell Laptop Computers

Uniform Plant Loading (i.e., level-loading the plan)

Problem: § Demand exceeds capacity at points in the planning horizon. § Matching the production plan to follow demand exactly can contribute to inefficiency and waste, including Excess Inventory, or Shortage of Inventory Uniform Plant Loading: -- planning up to Capacity in earlier time periods to meet demand in later time periods. -- Also called "front-loading" the plan or "leveling" the plan. -- Production schedule is frozen in the up-front time period (i.e., month) -- Helps suppliers better plan production.

Large batches can exacerbate the Bullwhip Effect as production in large batches creates an uneven workload

Production is not synchronized with customer demand, making a pull system impossible. § Throughput times in manufacturing go up, and work-in-process inventory goes up, creating more waste in the system.

B.Respect for People

Respect for all people must exist for an organization to be at its best § LEAN involves a flatter hierarchy than traditional organizations. § Ordinary workers are given greater responsibility § Supply chain members work together in cross functional teams. § The goal is NOT to reduce the number of people in an organization, it is to use people resources more wisely

EXAMPLE: LEAN Layout (McDonalds -Speedee Service System)

Richard "Dick" (1909-1998) and Maurice "Mac" (1902-1971) McDonald first opened their restaurant in 1940, but re-created it in 1948 on the model of their "Speedee Service System". The Speedee Service System applied the principles of a LEAN Layout to fast food preparation, and formed the foundation of what Ray Kroc would later leverage into the world's largest food outlet chain, "McDonalds".

LEAN and Six Sigma complement one another Lean improves the supply chain "flow" by eliminating waste

Six Sigma improves the supply chain "process" by reducing variation

W. Edwards Deming

Stressed management's responsibility for quality. He developed 14 points to guide companies in quality improvement 1, Create constancy of purpose to improve product and service 2, Adopt the new philosophy 3, Cease dependence on inspection to improve quality 4, End the practice of awarding business on the basis of price 5, Constantly improve the production and service system 6, Institute training on the job 7, Institute leadership 8, Drive out fear 9, Break down barriers between departments 10. Eliminate slogans and exhortations 11. Eliminate quotas 12. Remove barriers to pride of workmanship 13. Institute program of self- improvement 14. Put everyone to work to accomplish the transformation

LEAN is NOT a tool box of methods, ideas, or methodologies, it is philosophy/ culture

The goal of LEAN is the elimination of waste and the minimization of the amount of all resources used in the operation of a company

4. Small Batch Scheduling and Uniform Plant Loading

The ideal schedule is to produce every product as quickly as possible and at the same rate as customer demand. § In the real world, material availability, labor availability, and setup or changeover time influences the scheduling of large batches

Manufacturing Strategy-vs-Performance Cycle

The manufacturing strategy defines what cycle time (i.e., lead time) the customer will experience for delivery

In the 1940's, 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.

The 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

Total Quality Management (continued)

There is no single academic formalization of total quality, however, a number of noted quality experts all contributed to the basic framework

Total Quality Management (TQM) is

a management philosophy abased on the principle that every employee must be committed to maintaining high standards of work in every aspect of company's operations

Make-to-Stock (MTS) - means to

manufacture products for stock based on demand forecasts. -----push system -- Since accurate forecasts will prevent creating excess inventory and avoid stockouts, the critical issue is how to forecast demands accurately. -- Most daily necessities such as foods, sundries, and textiles are MTS-type products.

LEAN Manufacturing is a

natural fit within the discipline of Supply Chain Management as all of the LEAN goals and objectives help to facilitate an efficient and effective supply chain. § Satisfying internal customer demand § Communicating demand forecasts and production schedules up the supply chain § Quickly Moving Products in the production system § Optimizing inventory levels across the supply chain § Increasing the value, capabilities, and flexibility of the workforce through cross-training § Extending collaboration and alliances beyond just 1st tier suppliers and customers to include 2nd and 3rd tier suppliers and customers as well

Operation Management 是指尽可能高效、有效地管理将资源转化为商品和服务的过程，同时控制成本

refers to managing the process to convert resources into goods and services in alignment with the company's business strategy as efficiently and effectively as possible, while also controlling cost

Kanbans

small batch scheduling can be facilitated through the use of Kan bans: § Kanban means "Signal" or "Card" in Japanese and is used for communication (e.g., visual signal) between workstations. § Kanban's authorize production or the movement of materials to the next workstation. § Could be facilitated through the use of a computer software program, i.e., ERP system.

Manufacturing strategies can vary significantly depending on

the product and/or the customer requirements.

Quick Response:

the rapid replenishment of a customer's stock by a supplier with direct access to data from the customer's point of sale.

§ 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.

Manufacturing -strategies -process -total cost

to process or make raw materials or components into a finished product, especially by means of a large-scale industrial operation, I.E. mass production

Work versus Waste

value-Added Activities - Transform or shape material or information - Customer wants it and is willing to pay for it - Done right the first time Non-Value Added Incidental Waste -no value created but required by current thinking required by process limitations required by current technology required by current regulations Non-Value Added Pure Waste - Consumes resources but creates no value for the customer - Could be stopped and it would be invisible to the customer

Assemble-to-Order (ATO) is a manufacturing strategy

where products ordered by customers are produced quickly and are customizable to a certain extent

Make-to-Order (MTO) is a manufacturing strategy in

which manufacturing starts only after a customer's order is received This strategy creates additional wait time for the customer to receive the product, but allows customers to purchase products that are customized to their specifications.

Total Cycle Experienced by Customers.----->

|. less: customer delivery cycle = only actual delivery time ----MTS ||. ATO-----more: Manufacturing cycle= + assemble time |||. MTO------more more: procurement cycle= +procurement time ||||. ETO-----most product design: + design time

What Lean is NOT

§ Laying off employees by the bus load §Delivering less or working harder §Outsourcing or offshoring§A cost reduction program § Just a set of "tools" like 5S, kaizen events, etc. § Automation or buying a monstrous ERP system § Winning a Shingo Prize so as to look Lean

Six Sigma is an integral part of Total Quality Management. The key principles of TQM are:

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

Reducing inventory can free up capital and reduce holding costs.

§ There is less likelihood of waste being created by obsolescence, expiry, spoilage, or damage with lower inventory levels.

Production in small batches creates a SMOOTH WORKLOAD as production can be synchronized with customer demand, facilitating a pull system.

§ Throughput times in manufacturing go down, and Work-in- Process inventory goes down, reducing costs and eliminating or minimizing waste in the system. § It increases flexibility allowing the company to respond to changes in customer demands more quickly.

Focus and Scope

§ Using Value Stream Mapping as primary work unit § Focusing on improving process performance § Having a clear view of the end state

Understand "Value"

§ Value is defined as the inherent worth of a product as judged by the customer, and reflected in its selling price and market demand. § It is any activity that increases the market, form, or function of the product/service. § Things for which the customer is willing to pay.

The Pull System

§Traditional Approach: - Supply chains work as "push" systems, and inventory is carried to cover up problems §Pull Approach: - Each stage in the supply chain requests quantities needed from the previous stage. - No excess inventory is generated. -Reducing inventory levels can also uncover production problems

The MTO strategy relieves the problems of excessive inventory that is common with the Make-to-Stock strategy

— MTO is not appropriate for all types of products. • It is not appropriate for products where customers expect immediate availability.delivery. e.g. Grocery Items • It is appropriate for highly configured products. Examples: aircraft, ocean vessels, bridges, or products that are very expensive to keep in inventory.

§ In the ETO world, the cost of poor quality can be very high

— The warranty costs, and the cost of rework to replace an item in a complex assembly, can have a serious negative effect on profit margins.