Supply chain and operations management Exam 1

Relationship management (Trend)

-Competition between chains, not individual firms -Trust and coordination

The service package

-Includes all value-added physical and intangible activities that a service organization provides to the customer. -The greater the emphasis on physical activities, the more attention will be directed to capital expenditures, material costs, and other tangible assets. -The greater the emphasis on intangible activities, the more critical are the training and retention of skilled employees and the development of the firm's knowledge assets.

Service customization

-Ranges from highly customized to standardized. -As the degree of customization increases, the service package becomes less predictable and more variable.

Six Sigma

A business improvement methodology that focuses an organization on: Understanding and managing customer requirements Aligning key business processes to achieve those requirements Utilizing rigorous data analysis to understand and ultimately minimize variation in those processes Driving rapid and sustainable improvement to the business processes.

Process Map -

A detailed map that identifies the specific activities that make up the informational, physical, and/or monetary flow of a process.

Total Quality Management

A managerial approach in which an organization is managed so that it excels in all quality dimensions that are important to customers.

Hybrid Manufacturing Processes

A manufacturing process that seeks to combine the characteristics and advantages of more than one classic process.

Productivity

A measure of process performance. Productivity = Outputs Inputs

Efficiency

A measure of process performance; the ratio of actual outputs to standard outputs. Efficiency = 100% (actual outputs / standard outputs) OR: Efficiency = 100% (standard time/actual time) for one unit

Order Qualifiers

A performance dimension on which customers expect a minimum level of performance to be considered.

Order Winners

A performance dimension that differentiates a company's products and services from its competitors.

Business Process Reengineering

A procedure that involves the fundamental rethinking and radical redesign of business processes to achieve dramatic organizational improvements in cost, quality, service, and speed.

Root cause analysis

A process by which organizations brainstorm about possible causes of problems and then narrow the focus to a root case.

Swim lane process map

A process map that graphically arranges the process steps so that the user can see who is responsible for each step.

Multifactor productivity

A productivity score that measures output levels relative to more than one input.

Single-factor productivity

A productivity score that measures output levels relative to single input.

Conformance perspective

A quality perspective focused on whether or not a product was made or a service was performed as intended.

Value perspective

A quality perspective that holds that quality must be judged, in part, by how well the characteristics of a particular product or service align with the needs of a specific user.

Control Chart

A specialized run chart that helps an organization track changes in key measures over time. Continuous variable - A variable that can be measured along a continuous scale. Attribute - The presence or absence of a particular characteristic.

First-tier supplier

A supplier that provides products or services directly to a firm.

Second-tier supplier

A supplier that provides products or services to a first-tier supplier.

APICS (Prof. org.)

APICS - Association for Operations Management

ASQ (Prof. org)

ASQ - The American Society for Quality

Upstream

Activities positioned earlier in the supply chain.

Downstream

Activities positioned later in the supply chain.

Standard output

An estimate of what should be produced, given a certain level of resources.

Front Room vs. (Back Room)

Back room - what the customer does not see Managed for efficiency and productivity Package sorting, car repair, blood test analysis, accounting department

Business Elements - Structural (Tangible)

Buildings Equipment Computer systems Other capital assets

Business Strategy -

Business Strategy - The strategy that identifies a firm's targeted customers and sets time frames and performance objectives for the business.

CSCMP (Prof. org.)

CSCMP - The Council of Supply Chain Management Professionals

Decisions Guided by the Structural Strategy

Capacity Amount, Type, Timing Facilities Services/Manufacturing, Warehouses, Distribution hubs Size, location, degree of specialization Technology Services/Manufacturing, Material handling equipment, Transportation equipment, Information systems

Cellular layout -

Cellular layout - Production resources are dedicated to a subset of products with similar requirements.

Supply Chain Operations Reference (SCOR) Model

Consists of: Planning activities Sourcing activities "Make," or production, activities Delivery activities Return activities

Types of Manufacturing Processes

Continuous Flow Production Line Batch Job Shop Fixed Position Layout

Core Competency -

Core Competency - An organizational strength or ability that customers find valuable and competitors find difficult or impossible to copy.

Appraisal costs

Costs a company incurs for assessing its quality levels.

Prevention costs

Costs an organization incurs to actually prevent defects from occurring to begin with.

Internal failure costs

Costs caused by defects that occur prior to delivery to the customer.

External failure costs

Costs incurred by defects that are not detected until a product or service reaches the customer.

Purposes of Mapping

Create a common understanding of the processes, activities, and results. Define the boundary of the process. Provide a baseline to measure the impact of improvement efforts.

DMAIC

Define the goals of the improvement activity Measure the existing process Analyze the process Improve the process Control the new process

DMADV

Define, Measure, Analyze, Design, Verify

Time

Delivery Speed - The ability for the operations or supply chain function to quickly fulfill a need once it has been identified. Delivery Reliability - The ability to deliver products or services when promised.

Customer contact

Differs from customization - relates to the importance of front-room or back-room operations. Front Room - The physical or virtual point where the customer interfaces directly with the service organization. Back Room - The part of a service operation that is completed without direct customer contact.

Customer focus

Each employee has a customer whether internal or external to the company.

Important Trends

Electronic commerce- Increasing competition and globalization- Relationship management-

Increasing competition and globalization (Trend)

Fewer industries protected by geography

Fixed position layout -

Fixed position layout - Productive resources are moved to where the product is being made or service is being provided.

What happens when customization occurs early in the supply chain

Flexibility in response to unique customer needs will be greater. Lead times to the customer will tend to be longer. Products will tend to be more costly.

What happens when customization occurs late in the supply chain

Flexibility in response to unique customer needs will be limited. Lead times to the customer will tend to be shorter. Products will tend to be less costly.

(Front Room) vs. Back Room

Front room - what the customer can see Managed for flexibility and customer service Customer lobbies, bank teller, receptionist

Functional Strategy -

Functional Strategy - A strategy that translates a business strategy into specific functional areas.

Functional layout -

Functional layout - Physically groups resources by function.

Job Shops

General-purpose equipment and broadly skilled workers Functional layout: Work areas are arranged by function Requirements can change dramatically from one job to the next Highly flexible but not very efficient

Employee empowerment

Giving employees the responsibility for managing quality.

Production Line

High-volume production of standard items with identical or highly similar designs Processes arranged by product flow Often "paced" Highly efficient, but not too flexible Resources are arranged sequentially

ISM (Prof. org.)

ISM - Institute for Supply Management

Batch Manufacturing

Items are moved through the different manufacturing steps in groups, or batches Moderate volumes, multiple products Sequence of steps is not as tightly linked as a production line Strikes a balance between the flexibility of a job shop and the efficiency of a production line

Cost

Labor costs Material costs Engineering costs Quality-related costs

Continuous Flow

Large production volumes High level of automation Basic material passed along, converted as it moves Usually cannot be broken into discrete units Usually very high fixed costs and inflexible

Line Balancing

Line balancing - a technique used in developing product-based layouts. Improve takt time: Minimizes number of workstations Minimizes idle time

Four Levels of Customization

Make-to-stock (MTS) - Products that require no customization. Assemble-to-order (ATO) - Products that are customized only at the very end of the manufacturing process. Make-to-order (MTO) - Products that use standard components but have customer-specific final configuration of those components. Engineer-to-order (ETO) - Products that are designed and produced from the start to meet unusual customer needs or requirements.

Mapping -

Mapping - The process of developing graphic representations of the organizational relationships and/or activities that make up a business process.

Process Capability Index (Cpk)

Measures whether or not a process is capable of meeting certain quality standards and is centered between the specification limits.

Process Capability Ratio (Cp)

Measures whether or not a process is potentially capable of meeting certain quality standards Cp = Upper Tolerance Limit - Lower Tolerance Limit (All divided by 6σ) Where σ is the estimated standard deviation for the individual observations

Mission Statement -

Mission Statement - Explains why an organization exists and what is important to the organization (its core values) and identifies the organization's domain.

Flexibility

Mix Flexibility - The ability to produce a wide range of products or services. Changeover Flexibility - The ability to produce a new product with minimal delay. Volume Flexibility - The ability to produce whatever volume the customer needs.

Leadership involvement

Must be 'top' down, throughout the company. If not, major cause of TQM failures.

Decisions Guided by the Infrastructural Strategy

Organization Structure, Control/reward systems, Workforce decisions Sourcing/Purchasing Sourcing strategies, Supplier selection, Supplier performance measurement Planning and Control Forecasting, Tactical planning, Inventory management, Production planning and control Business Processes and Quality Management Six Sigma, Continuous improvement, Statistical process control Product and service development The developmental process, Organizational and supplier roles

Business Element- Infrastructural (Intangible)

People Policies Decision rules Organizational structure

Eight Dimensions of Quality

Performance Features Reliability Durability Conformance Aesthetics Serviceability Perceived Quality

Quality

Performance Quality - The basic operating characteristics of the product or service. Conformance Quality - Was the product made or the service performed to specifications? Reliability Quality - Will a product work for a long time without failing?

Business Processes -

Process - A set of logically related tasks or activities performed to achieve a defined business outcome. TYPES Primary process - A process that addresses the main value-added activities of an organization. Development process - A process that seeks to improve the performance of primary and support processes. Support process - A process that performs necessary, albeit not value added activities.

Product-based layout -

Product-based layout - Arranges resources sequentially, according to the steps required to make a product or provide a service.

Four Performance Dimensions

Quality Time Flexibility Cost

Quality assurance

Quality Function Deployment (QFD) discussed in Chapter 15 Statistical quality control (SQC), also called statistical process control (SPC)

Electronic commerce (Trend)

Reduces the costs and time associated with supply chain relationships

Service Blueprinting -

Service Blueprinting - A specialized form of business process mapping that lays out the service process from the viewpoint of the customer and parses out the organization's service actions based on: The extent to which an action involves direct interaction with the customer. Whether an action takes place as a direct response to a customer's needs.

Strategic Quality Plan

Sets a broad set of objectives. Should establish measurable goals for the short-term.

Stages of Alignment Between Supply Chain and Operations Strategies

Stage 1 - Internally neutral Minimize negative potential in the operations and supply chain areas. Stage 2 - Externally neutral Follow industry practice. Stage 3 - Internally supportive Align structural and infrastructural elements with business strategy. Stage 4 - Externally supportive Seek to exploit core competencies.

Strategies -

Strategies - The mechanisms by which businesses coordinate their decisions regarding their structural and infrastructural elements.

Supply Chain Management

The active management of supply chain activities and relationships in order to maximize customer value and achieve a sustainable competitive advantage.

Quality

The characteristics of a product or service that bear on its ability to satisfy stated or implied needs; a product or service that is free of deficiencies.

Supplier Partnerships

The commitment between firms and supply chain partners must be the same.

Competitive Benchmarking

The comparison of an organization's processes with those of competing organizations.

Law of Variability

The greater the random variability either demanded of the process or inherent in the process itself or in the items processed, the less productive the process is.

Operations and Supply Chain Strategies

The operations and supply chain strategy is a functional strategy that indicates how the structural and infrastructural elements within the operations and supply chain areas will be acquired and developed to support the overall business strategy. What mix of structural and infrastructural elements ? Is the mix aligned with the business strategy? Does it support the development of core competencies?

Percent Value-Added Time

The percentage of total cycle time that is spent on activities that actually provide value. Percent Value-Added Time = 100% (value-added time)/(total cycle time)

Operations Management

The planning, scheduling, and control of the activities that transform inputs into finished goods and services.

Fixed-Position Layout

The position of the product is fixed. Materials, equipment, and workers are transported to and from the product. Used in industries where the products are very bulky, massive, or heavy and movement is problematic

Benchmarking

The process of identifying, understanding, and adapting outstanding practices from within the same organization or from other businesses to help improve performance.

Cycle Time

The total elapsed time needed to complete a business process.

Continuous improvement

There is always room for improvement.

Functional Strategy

Translates the business strategy into functional terms. Assures coordination with other areas. Provides direction and guidance for operations and supply chain decisions.

Sampling

Using carefully selected samples to get a fairly good idea of how well a process is working. Good sample: Every outcome has an equal chance of being selected into the sample. The sample size is large enough to not be swayed by any single observation.

Value Analysis -

Value Analysis - A process for assessing the value of a product or service.

Value Index -

Value Index - A measure that uses the performance and importance scores for an item or a service to calculate a score that indicates overall value of an item or a service to a customer.

To achieve Six Sigma quality

the variability of a process must be reduced to the point that the process capability ratio is greater than or equal to 2.

takt time

time available divided by desired output rate