Chapter 8 Intro to Supply Chain

Which stage of supply chain management evolution is characterized by an emphasis on cost reduction

Functional Integration

How many wastes are addressed in the Lean production process?

7

Defects per Million Opportunities (DPMO)

= number of defects / (opportunity for a defect x number of units) x 1,000,000

Small Batch Scheduling

Can drive down costs by: -reducing raw materials, WIP, finished good inventories -makes firm more flexible to meet customer demand -accomplished with the use of kanbans(cards); kanbans generate demand for parts at all stages of production creating a "pull" system

DMAIC Improvement Cycle

Define; Measure; Analyze; Improve; Control

LEAN production is an operating philosophy or mindset that attempts to minimize the impact of supply variability and flaws in forecasting through the use of safety stock inventories.

False

Kaizen means Waste Reduction

False; Continuous Improvement

Which is not one of the 4 M's of the Cause and Effect Diagram: a)money b)methods c)machinery d)manpower

Money; should be Material

Production and Withdrawal Kanban

Production- tells a manufacturing cell to produce to REFILL an empty container Withdrawal- used to tell previous cells that more parts are needed

Joseph Juran's Quality Trilogy

Quality Planning; Quality Control; Quality Improvement

1st Stage: Internal Focused

Silo Effect -not integrating, every group for themself -Top-down management -internal performance measures; no internal integration -reactive, short-term planning; "" goal oriented

Sample Data Collected Can be:

Variable(measurable) and Attribute(indicate some attribute such as color, satisfaction, or beauty)

Which quality guru (expert) advocated the elimination of quotas for workers

W.Edwards Demming

Elements of Lean Production

Waste Reduction (Muda) Continuous Improvement (Kaizen) Workforce empowerment/commitment Lean Layouts Inventory and Set up time Reduction Small Batch Scheduling

Which one of the following is among the most important elements of the LEAN manufacturing philosophy?

Waste reduction and continuous improvement

According to Phillip Crosby, the performance standard for quality is:

Zero Defects

Producer's risk (Type I error)

a buyer rejects a shipment of good quality units because the sample quality level did not meet standards

Lean Six Sigma (Lean Six)

describes the melding of lean production and Six Sigma quality practices -both using high quality input materials, WIP, and finished goods, and continuous improvement -COMPLIMENTARY tool sets without competing philosophies

Waste(Muda) Reduction

firms reduce costs and add value by eliminating waste from the productive system -waste encompasses wait times, inventories material and people movement, processing steps, variability, and other non-value- adding activity

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

Continuous Improvement (Kaizen)

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

In 1990s, Supply Chain Management combined -Quick Response -Efficient Consumer Response (ECR) -Just in Time (JIT) -Keiretsu Relationships

-Quick Response (QR) for the textile industry -Efficient Consumer Response (ECR) for speed and flexibility -Just in Time (JIT) focused on continuous reduction of waste in the supply chain -Keiretsu Relationships- cooperative coalitions w/ cross financial dependence *emerged as philosophies and practices known as Lean Production or Lean Manufacturing

Inventory and Setup Time Reduction

-excess inventory is a waste and hides other problems (safety stock overs inefficiencies) -by reducing inventory levels you can highlight production problems to be solved -the end result is a smoother running production process with less inventory investment

3rd Stage: Internal Integration

-integration of flow in firm -lean activities for goods and information -measurement of supplier performance and customer service -firm links suppliers/customers w/ firm's processes

4th Stage: External Integration

-integration w/ suppliers and customers -integration explored w/ 2nd and 3rd tier suppliers and customers -alliance development -broadens supply chain influence beyond immediate or first-tier suppliers and customers

2nd Stage: Functional Integration

-internal flow of goods -emphasis on cost reduction -efficiencies gained by internal integration

Lean Layouts

-lines of visibility are unobstructed with operators at one processing center able to monitor work at another - a quality or bottleneck can quickly be identified and corrected -move people and materials when and where needed to achieve smooth product flow **Manufacturing cells- sub assembly process for similar parts or components saving duplication of equipment and labor; positioned close to manufacturing line to feed the line directly vs. building inventories to be stored

The Seven Wastes

-over production- unnecessary production to maintain high utilizations -waiting times- excess idle machine and operator and inventory wait time -transportation- excess movement of materials and multiple handling -over-processing- non-value adding manufacturing, handling, inspection, and other activities -excess inventory- storage of excess inventories -excess movement- unnecessary movements of employees in when working -scrap and rework- scrap materials and rework due to poor quality

Philip Crosby's 4 Absolutes of Quality

-the definition of quality is conformance to requirements- do it right the first time -the system of quality is prevention- take preventative action -performance standard is zero defects - commit to eliminate defects -the measure of quality is the price of nonconformance - the loss from poor materials and workmanship

Stages of SCM Evolution

1) Internal Focused(Silo effect) 2) Functional Integration 3) Internal Integration 4) External Integration

Statistical Tools of Quality

Flow Diagrams; Check Sheets (determine frequencies for specific problems;statistics) ; Pareto Charts (presents data in an ORGANIZED fashion; process problems from most to least severe); Cause and Effect Diagrams/Fishborne or Ishikawa Diagrams (brainstorming aid and isolating the cause of the problem; 4M's - Material, Machinery, Methods, Manpower); Statistical Process Control (allows firms to visually monitor process performance, compare performance to desired levels or standards, take CORRECTIVE action)

Which one of the following is NOT a quality tool of Six Sigma? a) flow diagrams b)hysterical charts c) cause and effect diagrams d)check sheets

Hysterical Charts

Elements of Quality Management: W. Edwards Deming's 14 points for Management

Important: -adopt the new philosophy -end the practice of awarding business on the basis of price lone -eliminate quotas -remove barriers to pride of workmanship

LEAN manufacturing emphasizes all of the following EXCEPT:? a) Continuous improvement b) large batch sizes c) reduction of waste d) workforce empowerment

Large Batch Sizes

Key Concepts incorporatde in Toyota Production Systems (TPS): -Muda -Kanban -Statistical Process Control (SPC) -Poka-Yoke

Muda- waste in all aspects of production Kanban- signal card and part of JIT Statistical process control (SPC) Poka-Yoke - error or mistake- proofing

Variations in Process Can be:

Natural; expected and random(can't control) and Assignable; have a specific cause(can control)

All of the following are included in the seven wastes EXCEPT:? a) over producing b) over processing c) waiting d) over spending

Over Spending

Lean productions Impact on Supply Chain Management

SCM seeks to incorporate Lean elements -eliminating waste in the SC, satisfying consumer demand -extending alliances to suppliers and customers' customers (channel integration) -quickly moving products through the system' communicating demand forecasts and production schedules up the supply chain -OPTIMIZING inventory levels across the SC Lean SCM relationships -firms develop lean SC relationships w/ key customers; mutual dependency and benefits; reserve greater level of capacity for their larger, steady customers Impact on the environment ^-reduce waste and lead to Lean Green practices -adopt improved environmental management processes -improve environmental management performance -develop SUBSTAINABILITY programs for more advances environmental management

Five S's of Industrial Housekeeping

Seiri --> organization(sort) eliminate searching for parts or tools Seiton --> tidiness(set in order) avoid using wrong tool/extra movement Seiso --> purity(sweep) clean and maintain Seiketsu --> cleanliness(standardize) reduce process variability Shitsuke --> discipline(self-discipline) develop work habits Safety has been added as a component key

Training Levels for Six Sigma: Yellow belt Green belt Black belt Master Black belt

Yellow belt- basic understanding of Six Sigma methodology and tools in the DMAIC problem solving process; team member on process improvement project Green belt- a trained team member allowed to work on small, carefully defined Six Sigma projects, requiring less than a Black belt's full-time commitment Black belt- thorough knowledge of Six Sigma philosophies and principles; coaches successful project teams; identifies projects and selected project team members Master Black belt- a proven mastery of process variability reduction, waste reduction and growth principles, and can effectively present training at all levels

Consumer's risk (Type II error)

buyer accepts a shipment of poor quality units because the sample falsely provides a positive answer

Workforce empowerment/commitment

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

near QUALITY perfection; the statistical likelihood of non-defects 99.999966% of the time, or 3.4 defects in every million opportunities; brought statistics into the world of quality -pioneered by Motorola in 1987 -designed to make significant quality improvements in value-adding processes -useful in manufacturing with a large number of parts

Lean Production or Manufacturing

operating philosophy of waste reduction and value enhancement and was originally created as Toyota Production Systems (TPS) by key Toyota executives -early versions were based on Ford assembly plants and U.S. supermarket distribution systems

Acceptance Sampling

when shipments are received from suppliers, samples are taken and measured against the quality acceptance standard -shipment is assumed to have the same quality -sampling is less time consuming