OM323 Midterm
Phases in design service process
-Conceptualize -Identify service package components needed -Determine performance specs -Tanslate performance specs into design specs -translate design specs into delivery specs
Service and Retail locations
-Customer access -Profit and revenue focused -Demographics -Near center of market -Clustering
Managing Global Operations
-other languages -different norms and customs -work force management -unfamiliar laws and regulations -unexpected cost mix
Target Costing - Six Basic Principles
-Price led costing -Focus on customers -Focus on design -Cross functional involvement -Value Chain involvement -Life cycle orientation
Processes to evaluate CSR
-Product/Service Positioning -Costs/ Feasibility -Product/Service Price -Segment Size -Purchase Intent
Difference between service design and product design
-Tangibility -Perishability -Services not inventoried -Visibility -Barriers of entry and exit -Location -Customer contact -Demand variability
Quality Function Deployment (QFD)
An approach that integrates the "voice of the customer" into both product and service development
value analysis
An examination of the function that each purchased part serves, done in order to find lower-cost alternatives
The Importance of Transportation
-transportation can represent as much as 25% of product cost -importance of transportation cost has grown with: increasing globalization, growth in e-commerce/home delivery, rising fuel prices
Taguchi's Approach
Parameter design -Determine specific settings for both processes and products that will result in robust design
New Product Development
Product development is a challenging, cross-functional process with big cost and time implications
Component Commonality
When products have a high degree of similarity in features and components, a part can be used in multiple products
Failure
When the product, part or system does not function as intended
Standardization
extent to which a product, service, or process lacks variety
the determinants of product cost should come from a clear strategic vision of
1) the target markets in which the organization needs to compete, 2) the wants and needs of the target customer in terms of quality and price, and 3) the target profit and returns required by investors.
Do It In-house or Outsource It
1. Available capacity 2. Expertise 3. Quality considerations 4. The nature of demand 5. Cost 6. Risks
Closed-loop supply chain
A manufacturer controls both the forward and reverse shipment of product.
Service blueprint
A special flowchart of a service process that shows which steps have high customer contact
Operations Management
A specialized area in management that converts or transforms resources (including human resources) into goods and services.
Product Life Cycle Management
A systematic approach to managing the series of changes a product goes through, from its conception to end of life
Cross-docking
A technique whereby goods arriving at a warehouse from a supplier are unloaded from the supplier's truck and loaded onto outbound trucks, thereby avoiding warehouse storage.
bullwhip effect
occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain
research and development
organized efforts to increase scientific knowledge or product innovation
Scrap rate
percent of bad items ( = 1 - yield )
Facilitating Factors in Global locations
Trade agreements - Barriers = Tariffs/quotas -Benefits = trade agreement Technology -The internet allows us to reach all over the world
Disadvantages of global locations
Transportation cost Security cost Unskilled labor Import restrictions Criticism Productivity
strategic partnering
Two or more business organizations that have complementary products or services join so that each may realize a strategic benefit.
Services
activities that provide some combination of time, location, form, and psychological value
Capacity cushion
amount of capacity in excess of expected demand when uncertainty in demand capacity - expected demand
Development
Converts the results of applied research into useful commercial applications
Why companies recycle
Cost savings Enviro concerns Enviro regulations
Capacity decisions are strategic
Critical for org Real impact on ability of organization to meet future demands -capacity essentially limits rate of output Affects operating costs -capacity and demand will be matched -> minimize ops cost -In practice, not always achieved -> actual demand differs from expected demand or tends to vary -Decision might be made to attempt balance costs Major detriment for initial cost -> greater capacity of the productive unit, greater cost Involve long term commitment of resources -> hand to modify without major costs Affect competitiveness Ease of management Globalization increased importance and complexity of capacity decisions
Improving reliability
Improve component design Improve production and/or assembly techniques Improve testing Use backups Improve preventative maintenance procedures Improve user education Improve system design
Global locations
Increasing dispersion of manufacturing and service options outsourcing
Three aspects of supply chain management that are a concern to small businesses
Inventory management Reducing risk International trade
Key questions for product and service design
Is there demand for it? Can we do it? What level of quality is appropriate? Does it make sense from an econ standpoint?
Why in 2018 would Apple consider a domestic sourcing option?
It could influence the American economy Give more jobs back to the middle class
Direct Shipment
Items are shipped directly from suppliers to retail stores
Warehousing
Items are stocked in warehouses (aka distribution centers) and shipped to stores as required.
Trade-offs in Distribution Network Design
Key decisions §Choice of transportation mode(s) §Number and location of warehouses §Extent to which orders are aggregated over time before shipping
Benefits of Global locations
Markets expanding Cost savings Legal and Regulatory Financial
Trends in Supply Chain Management
Measuring supply chain ROI. • "Greening" the supply chain. • Reevaluating outsourcing. • Integrating IT. • Adopting lean principles. • Managing risks. Being agile Adopting blockchain tech Establish transparency Adopting new delivery modes
The Center of Gravity Method
Method for locating a distribution center that minimizes distribution cost.
Goods
Physical items that include raw materials, parts, subassemblies and final products
Market Area Plant Strategy
Plants are designated to serve a particular geographic segment of the market Plants produce most, if not all, of a company's products
Objectives of product and service design
Primary: Customer satisfaction Secondary: Cost or profit, quality, ability to produce or provide a service, ethics/safety, sustainability
Assemble-to-Order (ATO)
Products that are customized only at the very end of the manufacturing process.
Make-to-Stock (MTS)
Products that require no customization
Risks of Global locations
Protecting IP Politics Terrorism Economics Legal Ethical Cultural Quality
Grave to Cradle assessment
The assessment of the environmental impact of a product or service throughout its useful life
supply chain
The sequence of organizations that are involved in producing and delivering a product or service
traffic management
overseeing the shipment of incoming and outgoing goods
general purpose plant strategy
plants are flexible and capable of handling a range of products
Make-to-Order (MTO)
products that have similar designs but are customized during production
centralized purchasing
purchasing handled by one special department
Service package
the physical resources needed to perform the service, the accompanying goods, and the explicit and implicit services included
Indifference point
the quantity that would make two alternatives equivalent
Inventory velocity
the speed at which goods move through a supply chain
Information velocity
the speed at which information is communicated in a supply chain
Capacity
the upper limit or ceiling on the load that an operating unit can handle
computer-aided design
the use of computers in the design of products
Engineer to Order (ETO)
unique, customized products
How to manage suppliers
use reliable suppliers determine critical suppliers measure performance recognize signs of issues have plans to manage problems
Radio Frequency Identification (RFID)
uses electronic tags and labels to identify objects wirelessly over short distances
E-business
using the internet to facilitate every aspect of running a business
Eppinger's Key Points
§Analogy with quality movement - shift conversations from "sustainability costs more" to "we can save money" §Companies often start with operations, then realize most of the wastes are designed in - it's a materials problem! §It's not only about how much material you use; it's what materials you use - "cradle to cradle" thinking §Not necessary to start with a detailed life cycle assessment - you know where the biggest problems are! §It doesn't need to happen all at once - try to get a little better with each design
What problems did "offshoring" and "outsourcing" create?
§Did not consider "hidden costs" - it did not truly improve cost competitiveness §Caused commoditization of products - without continuing investment to differentiate §Products eventually lost competitiveness - lack of improvement, commoditization, and inability to innovate (because you don't even remember how to manufacture it)
decentralized purchasing
individual departments or separate locations handle their own purchasing requirements
Product liability
involves holding a firm and its officers responsible when a product causes injury, death, or damage
How can Braun reduce its KF40 cost to 23 DM?
Minimal assembly polypropylene
Efficiency
actual output/effective capacity x100
Capacity utilzation
(Capacity required)/(capacity available) = capacity utilization
Utilization
(actual output/design capacity) x 100%
Capacity in units
(time available)/(cycle time) = capacity in units
General procedure for making location decisions
- Determine criteria for evaluation - Identify important factors - Develop alternatives --country --regional --community-site - Evaluate alternatives and make decision
Target costing principles
- Price-led costing - Focus on customer - Focus on Design - Cross-functional involvement - Value-chain involvement - Life-cycle orientation
Kano Model
- basic quality - performance quality - excitement quality
Disadvantages of concurrent engineering
-Boundaries between design and manufacturing difficult to overcome -Communication problems
Target costing for startups
-Estimate the retail price for your product -Estimate the channel margin for your channels of distribution. -Estimate the gross margin required for your product to be profitable -the difference between net sales and the cost to make the product -Compute the target cost by subtracting the channel margin and gross margin from the retail price. -Begin the process of identifying the actual COGS (material, labor, and overhead costs) required to manufacture your current product design. -Compare your actual costs with the target cost. Work to close any gap between your estimates of actual and target costs. -Conduct research on markets, customers, competition, and channels of distribution.
The transportation model
-Finds amount to be shipped from several points of supply to several points of demand -Solution will minimize total production and shipping costs -A special class of linear programming problems
Strategic Importance of Location Decisions
-Impact capacity and flexibility -Space constraints -Local restrictions -Locating near highway/railway -> benefit ships -Long term commitment -Impact investment requirements, ops costs, revenues -Result: Excessive transport costs, shortage of qualified worker, lose competitive advantage, lack of raw materials
Identifying a region
-Location of RM -Necesity, perishability and transportation costs -Location of markets -Distribution costs/perishability -competitors -labor factors -availability, wage rate, labor productivity, attitude to work and unions -taxes -Climate
Advantages of concurrent engineering
-Manufacturing personell able to identify production capabilities and capacities -Design or procurement of critical tooling occur early -Feasibility figured out early on -Problem resolution rather than conflict resolution
The Insourcing Boom
-Many companies insourcing their goods -insourcing is better because you don't separate design, engineers, manufacturers -GE Insourcing -Less sketchy -quality problems -lack of communication, knowledge gets lost, more opportunity to screw up -long lead times
Why Make Location Decisions?
-New company -Expand markets or adjust to shifts -Accommodate growth in demand -Reduce costs -Depletion of resources -Mergers and acquisitions
Possible CSR Initiatives for 323 Projects
-Product and Service Design/Packaging/Recycling -Responsible manufacturing/supply chains -Cause-related marketing -Corporate philanthropy/community initiatives -Made in the USA -Product/Service Donations -Reducing Negative Behavior/ Promoting responsible behavior -Fair trade
Designer problems in design
-Reduce customer choices and annoy them -Standardize too many features -Employing less skilled workers
Strategic Responsibilities
-Supply chain strategy alignment -Network configuration -Information technology -Products and services -Capacity planning -Strategic partnerships -Distribution strategy -Uncertainty and risk reduction
What does product and service design do
-Translate customer wants and needs into product and service requirements -Refine existing products and services -Develop new products and services -Formulate quality goals -Formulate cost targets -Construct and test prototypes -Document specifications -Translate product and service specifications into process specifications
Process for Making Location Decisions
-decide on the criteria -identify the important factors -develop location alternatives --identify a country, a general region a small number of community alternatives, site alternatives -evaluate and make a selection
Four critical questions for successful NPD
1.Is it needed by customers? 2.Can we make it? 3.What level of quality and performance? 4.Can we make profit?
Characteristics of well designed service systems
1. Consistent with the organization mission. 2. User friendly. 3. Robust. 4. Easy to sustain. 5. Cost effective. 6. Value to customers. 7. Effective linkages between back operations. 8. Single unifying theme. 9. Ensure reliability and high quality.
Four activities solved in process analysis
1. Creating a process flow diagram, 2. Analyzing the operating unit structure, 3. Analyzing the work flow, and 4. Evaluating the overall process.
Disadvantages of standardization
1. Designs may be frozen with too many imperfections remaining. 2. High cost of design changes increases resistance to improvements 3. Decreased variety results in less consumer appeal
Steps in the Capacity Planning Process
1. Estimate future capacity requirements. 2. Evaluate existing capacity and facilities and identify gaps. 3. Identify alternatives for meeting requirements. 4. Conduct financial analyses of each alternative. 5. Assess key qualitative issues for each alternative. 6. Select the alternative to pursue that will be best in the long term. 7. Implement the selected alternative. 8. Monitor results.
Phases in New Product Design and Development
1. Feasibility analysis 2. Product specifications 3. Process specifications 4. Prototype development 5. Design review 6. Market test 7. Product introduction 8. Follow-up evaluation
Advantages of Standardization
1. Fewer parts to deal with in inventory and in manufacturing 2. Reduced training costs and time 3. More routine purchasing, handling, and inspection procedures 4. Orders fillable from inventory 5. Opportunities for long production runs and automation 6. Need for fewer parts justifies expenditures on perfecting designs and improving quality control procedures
How to Assess NPD Performance?
1. Product / Service quality 2. Product / Service cost 3. Development time 4. Development cost 5. Development capability
Objectives of Location Decisions
1. Profit-oriented organizations base their decisions on profit potential. 2. Nonprofit organizations strive to achieve a balance between cost and the level of customer service they can provide. 3. Most organizations hope to find a number of acceptable locations from which to choose. 4. Retail end of the chain, site tends to focus on accessibility, consumer demographics, traffic patterns, and local customs. 5. Middle of the chain, may locate near suppliers or near their markets. 6. Those businesses involved in storing and distributing goods often choose a central location to minimize distribution costs. 7. Web-based retail businesses are much less dependent on location decisions; they can exist just about anywhere.
Key questions in capacity planning
1. What kind of capacity is needed? 2. How much is needed to match demand? 3. When is it needed?
Sustainable Operations Options
1.Efficient use of resources §Energy, Water, Materials 2.Reduction of waste by-products §Metal shavings, VOC (volatile organic compound), oils 3.Control of emissions §Carbon monoxide and dioxide §Sulfur dioxide and mercury 4.Reduced use of resources for logistics §Reduce transportation, handling, weight §
Additional Challenges of Planning Service Capacity
3 important factors -Maybe a need to be near customers -Inability to store services -Degree of volatility of demand
Strategy formulation
3 primary strategies -leading -> building cap in anticipation of increased demand -following -> building cap when demand exceeds current cap -tracking -> adding cap in small increments
Geographic Information System (GIS)
A computer system that stores, organizes, analyzes, and displays geographic data.
Bottleneck Operation
An operation in a sequence of operations whose capacity is lower than that of the other operations
Strategic Sourcing
Analyzing the procurement process to lower costs by reducing waste and non-value-added activities, increase profits, reduce risks, and improve supplier performance.S
3 phases of PLM Management
Beginning of life, includes design and development Middle of life, working with suppliers, managing info and warranties End of life, strategies for product discontinuance, disposal and recycling
Other than lower wages, what advantages did Apple find for its operations in China when compared to the U.S.?
Better economies of scale More capable workers Faster
Points of comparison for different operations
Degree of customer contact Labor content of jobs Uniformity of inputs Measurement of productivity Quality assurance Inventory Wages Ability to patent
What to do with CSR evaluation
Demand: -Advertising Message -ACV Supply: -You may consider the relevance of your CSR initiatives while establishing your firm's location and staffing (hiring and firing) policies. -Your team may decide to restructure a part of your supply chain to take advantage of a recycling or remanufacturing opportunity -When armed with fixed/variable costs, and the projected lift in the annual demand, your team may rerun a relevant make/buy analysis.
Effective capacity
Design capacity minus allowances such as personal time and maintenance Less than design cuz -changing prod mix -maintenance -breaks -problems scheduling Actual output can't exceed effective capacity and often less because machine breaksdown
Developing Capacity Strategies
Design flexibility into systems Take stage of life cycle into account Take a big picture approach to capacity changes Prepare to deal with capacity chunks Attempt to smooth out capacity requirements Identify the optimal operating level Choose strategy if expansion is involved
Design for disassembly
Designing a product so that when it becomes obsolete it can easily and economically be taken apart, the components reused or repaired, and the materials recycled.
Reasons for product and service redesign
Economic Social and Demographic Political, Liability, or Legal Competitive Cost or Availability Technological
Major steps in service blueprinting
Establish boundaries Identify customer and serv interactions Time estimates Potential failure points
vendor analysis
Evaluating the sources of supply in terms of price, quality, reputation, and service
Location options
Expand an existing facility Add new locations while retaining existing facilities Shut down one location and move to another Do nothing
Detriments of effective capacity
Facilities -Layout of work area determines capacity Prod/Serv factors -More uniform output -> more opps for standardization -> greater capacity Process factors -Quantity capability of process -Output quality Human factors Policy Factors Ops Factors Supply Chain factors External factors
Choosing Suppliers
Factors include... §Price (including quantity discounts) §Quality §Delivery (lead time) §Flexibility (including minimum order quantities) §Technology §Reputation and stability §Certifications
Factor rating
General approach to evaluating locations that includes quantitative and qualitative inputs -Determine which factors are relevant -Assign weight to each factor -Common scale and minimum acceptable score -Score each alternative -Multiply factor by each weight -Choose alternative
Identifying a Country
Govt -Policies on foreign ownership of prod facilities -Stability laws Cultural differences Customer preferences labor resources financial technology market safety TOP 3: Talent, labor cost and energy cost
Applied research
Has the objective of achieving commercial applications
Basic research
Has the objective of advancing the state of knowledge about a subject without any near-term expectation of commercial applications Generally underwritten by government or big companies
forecasts
Key inputs used to answer questions of capacity needed -How much will this cost, how funded, and what is the expected return? -Risks and benefits? -Are these sustainability issues that need to be addressed? -Should capacity be changed all at once or through several small changes -Can the supply chain handle changes?
Key elements of successful risk management
Know your suppliers Provide supply chain visibility Develop event-response capability
Identifying site
Land (cost, conditions) Room for future expansion Transportation access (access roads, rail spurs) Zoning restrictions Customer-presence (especially for service) Convenience, distance Parking Driving, transportation Attractiveness Crime, disorder, etc
Lessons from Braun
Link strategy to design Surface design conflicts early Cross-functional interaction is key Challenge people to be creative Target costing is one technique to accomplish this
Forecasting Capacity Requirements
Long-term considerations relate to overall level of capacity requirements -example: facility size -Needs require forecasting demand over time horizon and coverting into capacity requirements -When trends identified, issues: -how long trend might persist -slope -length of cycles -amplitude Short-term considerations relate to probable variations in capacity requirements -example: Seasonal, random and irregular fluctuations
How producers deal with mass customization
Losing the benefits of standardization Incurring host of problems linked to variety
Automation in terms of global locations
Main market is domestic Low labor costs in foreign countries -> key reason against
Why does Braun want to develop a new coffee machine?
Make a cheap coffee maker that would go into other markets but also have the quality associated with Braun
Feasibility Analysis
Market analysis, econ analysis and technical analysis Does it fit with the mission?
Price-led costing
Market prices are used to determine allowable--or target--costs. Target costs are calculated using a formula similar to the following: market price - required profit margin - other costs = target cost
Constraint Management
Market: Insufficient demand Resource: Too little of one or more Material: Too little of one or more Financial: Insufficient funds Supplier: Unreliable, long time lead, standard quantity Knowledge/Competency: Need it Policy: Laws or regs interfere RESOLVED BY -identify most pressing constraint -change operations to achieve max benefit -make sure other portions are supportive to constraint -explore and evaluate ways to overcome constraint -Repeat
The Five M's of Operations
Minds and Muscles (aka Man) - People; internal workers and consultants, advisors, etc. Materials - Inventory; raw material, work-in-process, finished goods Machinery - Equipment; machines and tools Methods - Processes and policies; how work is done Money - Capital; budgets
Product can change into new if
Modification of existing prod or serv Expansion of existing product line or serv offering Clone of competitors prod or serv New prod/serv
Order Fulfillment for Online Sales
More complicated than selling through the retail channel Process and bill orders from individuals (many more and less predictable than retailer orders) Pick, pack, and ship one or two units at a time (as opposed to pallets of goods) Many companies use 3rd party fulfillment operators like Shipwire, Webgistix, and Amazon to... Reduce labor and IT costs Take advantage of their network of warehouses (shorter delivery times) Focus on core competencies and building the company
Who Designs and Develops Products and Services?
New Product Development (NPD) requires contributions from nearly all functions, but three are central: §Marketing §Design §Manufacturing / Operations
purchase cycle
Purchasing receives requisition Purch selects supplier Places order with vendor Monitor order Recieve order
Supply Chain considerations for location
Retail focus -Accessibility -Demographics -Traffic patterns -Local customs Suppliers -Near RM Centralized Distribution -Scale economies -Tighter control -Higher transport costs
Defining and Measuring Capacity
Select measure that doesnt need updating When there is only 1 prod/serv -> expressed in terms of item When multiple prod/serv -> capacities in term of each prod -Use measure that refers to availability of inputs
Design for Operations (DFO)
Taking into account the ease of producing and delivering the service, or the fabrication and/or assembly in product design
Identifying community
Taxes and environmental regulations Enticements (tax abatements, low cost loans) Attitude toward type of business Quality of life (schools, cost of living, recreation) Services (medical, fire, police) Cost and availability of utilities Want to attract new businesses that offer incentives Don't want firms that bring pollution, traffic and noise Desirability of location to employees
Locational Cost-Profit-Volume Analysis
Technique for evaluating location choices in economic terms. Determine fixed/variable costs with each location alt Plot total cost lines for all location alts on graph Determine which location has lowest cost -> alt:highest profit Method assumes -Fixed costs are constant -Variable cost linear -Required level closely estimated -1 product Cost analysis: Total cost = FC + v x Q Profit Analysis: Q(R - v) - FC Break even: FC/(R-v)
Resiliency
The ability for a business to recover from a supply chain issue
Reliability
The ability of a product, part or system to perform under different conditions
Operations
The science of getting things done
Design capacity
The maximum output rate or service capacity an operation, process, or facility is designed for
Conversion system
The operations function involves the conversion of inputs into outputs
3 PL third party logistics
The outsourcing of logistics management (e.g., warehousing, distribution, etc.)
Delayed Differentiation
The process of producing, but not quite completing, a product or service until customer preferences are known
Reverse engineering
The process of taking something apart and analyzing its workings in detail.
order fulfillment
The processes involved in responding to customer orders.
Remanufacturing
The rebuilding of a product to specifications of the original manufactured product using a combination of reused, repaired and new parts.
Cost-Volume-Profit Analysis
The relationship between cost, revenue and volume of output Estimate income of organization under different operation conditions Total Cost = Fixed cost + Variable Cost VC = Q x variable cost per unit Total revenue = revenue per unit x quantity Profit = Q(Revenue per unit-variable cost per unit)-FC Quantity = Profit + FC/ R-v Quantity Breakeven = FC/R-v
normal operating conditions
The set of conditions under which an item's reliability is specified
Is that kind of resource-efficiency thinking related to what you call "design for environment"?
The way to think of environmental sustainability when it comes to design and product innovation is by framing it as a materials problem. It's about the materials that we use in the products and the materials that are used to run the processes that make the products. The reason that product design has a big impact is that's where the materials decisions are made.
Why does working up from cost plus not work?
They don't realize that this approach puts the designer and the investors first and the customer and considerations of competition last.
Why is design important? How did they come up with 23 DM?
They would have to be at 1/3 less in direct costs of the 70 DM retail price
Order Qualifiers (or the Basic)
Those attributes necessary for customer to purchase the product/service, without which the customer will not buy (Order Loser)
Order Winners (or the Excitement)
Those attributes that "excite" the customer to want to purchase the product/service
postponement
a hybrid production method whereby basic units of a finished good are manufactured in advance of actual demand and held in strategic form or location until demand occurs, when final customization takes place
reverse logistics
a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal
Uniform Commercial Code
a product must be suitable for its intended purpose
mass customization
a strategy that uses technology to deliver customized services on a mass basis
Product specifications
a written description of what is needed to meet customer wants
vendor managed inventory
an approach for improving supply chain efficiency in which the manufacturer is responsible for maintaining the retailer's inventory levels in each of its stores
Prototype
an approximation of the product used for learning and communication
Concurrent Engineering
bringing engineering design and manufacturing personnel together early in the design phase
end of life programs
deal with products that have reached the end of their useful lives
process specifications
describe the logic of the processes occurring within the lowest levels of a data flow diagram
design for recycling
design that facilitates the recovery of materials and components in used products for reuse
Design for assembly
design that focuses on reducing the number of parts in a product and on assembly methods and sequence
Robust design
design that results in products or services that can function over a broad range of conditions
Process Plant Strategy
different plants concentrate on different aspects of a process
Product Plant Strategy
entire products or product lines are produced in separate plants, and each plant usually supplies the entire domestic market
avoidance
finding ways to minimize the number of items that are returned
Primary factors for products and services
forecasting and capacity planning to match supply and demand, process management, managing variations, monitoring and controlling costs and productivity, supply chin management, location planning, inventory management, quality control, and scheduling
supply chain management
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, resellers, and final consumers §Involves coordinating and integrating these flows within and among companies §Goal is efficiency and effectiveness: "meeting end-customer needs with as little cost and inventory as possible"
gatekeeping
screening returned goods to prevent incorrect acceptance of goods
Clustering
similar types of businesses locate near each other
Constraint
something that restricts or limits
Event-response capability
the ability to detect and respond to unplanned events
supply chain visibility
the ability to view all areas up and down the supply chain in real time
procurement
the buying and reselling of goods that have already been produced
Manufacturability
the capability of an organization to produce an item at an acceptable profit
Product bundle
the combination of goods and services provided to a customer
Modular Design
the creation of an item in self-contained units, or modules, that can be combined or interchanged to create different products
Design for manufacturing
the designing of products that are compatible with an organization's capabilities
Value-added
the difference between the cost of inputs and the value or price of outputs
Service delivery system
the facilities, processes, and skills needed to provide a service
cycle time
the interval between successive outputs coming off the assembly line
Logistics
the movement of goods, services, cash, and information in a supply chain 1.Incoming shipments 2.Movement within a facility 3.Outgoing shipments
transformation processes
the organization's capabilities in management, internal processes, and technology that are applied to converting inputs into outputs
fill rate
the percentage of demand filled by the stock on hand
Yield rate
the percentage of units successfully produced as a percentage of inputs
Reasons for Product & Service Design or Redesign - "Market opportunities or threats"
§Economic (e.g., grow business, improve profitability) §Social & demographic (e.g., target aging baby boomers) §Political, liability, or legal (e.g., satisfy new regulations) §Competitive (e.g., respond to competitor product) §Cost or availability (e.g., reduce costs, improve availability) §Technological (e.g., utilize new product or process technologies)
Business Reasons for "Change"
§Enhance corporate image and revenue §Reduce costs through more efficient use of resources §Avoid liability and negligence penalties §Comply with government regulations §Improve community relations §Improve employee health, safety, and morale
Global Sourcing / Outsourcing potential disadvantages
§Increased transportation costs and lead times §Increased inventories and decreased customer responsiveness §Language and cultural differences §Loss of control and business knowledge §Political and intellectual property risks §Possibly lower productivity and quality §Tariff - costs and uncertainty
Why has reshoring become an attractive alternative?
§Increasing oil price - increased transportation cost §Discovery of natural gas in the US - cheaper energy cost §Rise of wages of Chinese workers §Change in the US union culture §Rise of productivity of American workers
Global Sourcing / Outsourcing potential advantages
§Lower labor costs and taxes §Focus on core strengths and take advantage of supplier expertise §Frees up firm's capital and shift risk
Why do we need the Funnel, Stages, and Gates in NPD
§Offers a structured process to manage innovation §Only one out of four new product development (NPD) projects is a winner §50% of resources spent on NPD are commercial failures §Used by GM, Du Pont, ExxonMobil, 3M, and many more companies around the world
What is the impact of "reshored" factories on the "manufacturing renaissance?"
§Rediscover how to manufacture - improve the design for manufacturability §Faster time to market §No hidden cost §Ability to compete effectively in the "faster product life cycle" environment §Appreciation for US labor and its flexibility - enhanced even by the empowerment practices §Facilitate investment in Lean Manufacturing §"Factory is a laboratory!"
House of Quality
§The basic design tool of QFD (Quality Function Deployment) §Captures the voice of the customer and aligns them with the design characteristics §Helps with cross-functional planning and communication
What are the challenges in managing NPD?
§Trade-offs §Dynamics §Details §Time pressure §Economics
Why do companies develop new products?
§Unmet customer needs §Opportunities from technological innovation §Regulatory requirements
Sustainable Design - More fundamental solution
§Value Analysis: Dematerialize, simplify, replace §Design for Recycling: recovering materials for future use §Design for Remanufacturing: refurbishing used products by replacing worn-out or defective components §Design for Disassembly (DFD): designing products so that they can be easily taken apart
ISO 14000
§Voluntary set of worldwide standards on environmental management §Objective: "... global consensus on good environmental practice in the international context that can be applied pragmatically by organizations ..." §Compatible with ISO 9000 quality standards §Requires periodic inspection by outside auditors to maintain certification
Target costing questions to consider
§Will this product be viable? §Can you design the functionality needed at this cost? §Is the target market and your expected share big enough to support a realistic marketing effort and organization?
