supply chain test 2

sources of CI

1. competitor web site

steps to be considered value-added

1. physically change the product 2. the customer must care about and want this change 3. rework does NOT count

sources of CI

2. phantom shopping

make to stock

A production environment where the customer is served "on-demand" from finished goods inventory. not a lot of customization

Make-to-order

A production environment where the product is built directly from raw materials and components in response to a specific customer order. Ex. car production

Lead Capacity

An adding capacity in anticipation of an increase in demand

assemble to order

Combine a number of preassembled modules to meet a customer's specifications. Ex. pc builds

Step 4 Theory of Constraints

Elevate the constraint(long-term increase)

Percent value-added time

The percentage of total cycle time that is spent on activities that actually provide value

Work in Process(WIP)

Units of product that are only partially complete and will require future work(builds up at the bottleneck)

Indifference Point Formula

Units= (FC2 -FC1)/ (VC1-VC2)

most processes are

a complete mess and needs improvement

Job Shop

a flexible process structure for products that require different inputs and have different flows through the process

Process Map

a flowchart, which shows the steps in a process

Value Stream Mapping

a lean tool that employs a flow diagram documenting in high detail every step

Capacity

a process is the amount of output that it can produce in a time period

mass customization

a strategy that uses technology to deliver customized services on a mass basis

process step

activity(task) denoted by a rectangle

Efficiency equation

actual output/ standard output

Lag Strategy

adding capacity AFTER demand has already increased

Match Strategy

adding or reducing capacity in small increments

fixed cost

amount of cost that does not vary with level of input

decision

branch point denoted by a diamond

Internal Benchmarking

comparing a process in one function with that of another function

Benchmarking

comparing business processes

functional benchmarking

comparing processes to other organizations with similar processes in the same function, but outside the industry

competitive benchmarking

comparing with direct competitors either locally, nationally or worldwide

engineer to order

complete customization, with the product designed from scratch to meet the customer's needs

Productivity

describes various measures of the efficiency of production

Bottleneck

dictates the speed of the entire process

Step 2 Theory of Constraints

exploit the constraint(short-term increase)

Generic Benchmarking

finding organizations that have best in class processes and approach from one may learn and translate to improvement at ones own organization

pros of lead capacity

first to market, deman met immediately, dont miss any sales

total cost=

fixed cost + variable cost

Break-Even point formula

fixed cost / (unit price - unit variable cost)

cons of lead capacity

forecasting may be incorrect

pros of lag strategy

hiring and inventory only come after demands increase

Hybrid Strategy

hiring permanent staff only to the minimum expected.

cons match strategy

hiring when deman increases, layoffs when demand decreases, lowers employee statisfaction(turnover)

Step 1 Theory of Constraints

identify the bottleneck(slowest)

cons hybrid strategy

increased training for workers, outsourcing is expensive, quality may suffer

Sources of CI

interview customers

Business Process

is a collection of related, structured activities or tasks that produce a specific service or product

Efficiency

is a measure of the extent to which input is well used for an intended task

support process

is a process that may be necessary but is not one of the main value added activites

Theory of Constraints

is an approach to process improvement that focuses on the weakest link in the chain

primary process

is one that addresses the main value-added activities of an organization

competitive intelligence (CI)

is the action of defining, gathering, analyzing, and distributing intelligence about products customers, competitiors

effective capacity

is the normal operating output possible in a time period

indifference point

is the number of units of demand where the total cost is equal between two capacity alternatives

cons of lag strategy

may come to scene to late, stress from employees

pro match strategy

no excess inventory or labor, output matches demand

pros hybrid strategy

no excessive inventory or labor, output matches demand

labor productivity

output/ hours of labor

multi-factor productivity

output/ total input cost

Productivity measure

output/input

swim lane flowchart

parrallel lines divided into lanes. one lane for each process

Batch production

producing a limited number of identical products - each item in the batch passes through one stage of production before passing on to the next stage

mass prodcution

production of goods in large numbers through the use of machinery and assembly lines

Step 5 Theory of Constraints

repeat the process

Step 3 Theory of Constraints

subordinate to the constraint( slow down)

Design Capacity

the maximum output possible in a time period

break-even point

the number of units where the company makes zero point

the weakest link

the slowest step(Bottleneck)

Cyle Time

the time required or spent to convert raw materials into finished goods( total time spent)

common denominator of multi-factor

total cost of all factors of input

Single-factor productivity measures

use one class of inputs or factors

variable cost =

variable cost/ unit * units

Starved

wasted time in between steps