Supply Chain FINAL - chapter 7-9

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

intermittent

Job Shop and Batch

The role of workers

Perform tasks and actively pursuing company goals: - Improve production process - Correct quality problems - Monitor quality

Continuous Movement Cycle is called

Plan Do Check & Act

scatter diagrams

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

Jospeh Juran

defined quality as "fitness for use". He developed the concept of the cost of quality

Karoru Ishikawa

developed one of the first tools in the quality management process, the cause and effect diagram, which is also called the "Ishikawa" or "fishbone" diagram.

Cost of Poor Quality (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.

Total Cost of Manufacturing (TCM)

the complete cost of producing and delivering products to your customers

C. Developmental

(0-69) require corrective actions from these suppliers on how they will achieve acceptable level. if not achieved within 3 months look for another supplier

B. Acceptable (The Weighted-Criteria Evaluation System)

(70-89)require a plan from these suppliers outlining how they will achieve preferred status

A. Preferred (The Weighted-Criteria Evaluation System)

(90-100)work with these suppliers in maintaining a competitive position and on new product development

LEAN Approach and Tools

- A wide range of LEAN tools are available - Learn-by-doing approach to performance improvement and capability-building

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

Components of LEAN

- LEAN manufacturing - Total Quality Management - Respect for People

Key principles of Total Quality Management

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

LEAN focus and scope

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

Supplier Evaluation Metics

- price and cost performance - product quality - delivery performance

Two most important functions of supplier development program

- providing information about products, expected sales growth - training suppliers in the application of lean and six sigma/quality tools

Total Cost of Manufacturing (TCM) includes

1. Manufacturing and Procurement activities 2. Inventory and Warehousing activities 3. Transportation activities

5 key characteristics of Supplier Relationship Management (SRM)

1. automation 2. integration 3. visibility 4. collaboration 5. optimization

Keys to Successful Strategic Partnership

1. building trust 2. having a shared vision and objectives 3. developing personal relationships 4. establishing mutual benefits and needs 5. continuous improvement

3 attributes of Supplier Recognition Programs

1. companies should recognize and celebrate the achievements of their best suppliers 2. award winners exemplify true partnerships, continuous improvement, organizational commitment, and excellence 3. award-winning suppliers serve as role models for other suppliers.

ISO 9000 - 8 Quality Management Principles

1. customer focus 2. leadership 3. involvement of people 4. process approach 5. systems approach to management 6. continual improvement 7. factual approach to decision making 8. mutually beneficial supplier relationship

Warehouse

A facility used to store purchases, work-in-process (WIP), and finished goods inventory.

Supplier Evaluation

A process to identify best and most reliable suppliers - made on facts not perception

Supplier Recognition Programs

A program to recognize suppliers who achieve the high performance standards necessary to meet customer expectations.

Information Sharing and Establishing Lines of Communication

Both formal and informal lines of communication should be set up to facilitate the free flow of information

Objectives of Shared Vision

Both partners must share the same vision. The focus must move beyond tactical issues and towards a more strategic plan.

Cost of Good Quality (prevention costs)

Cost incurred in the process of establishing specifications for incoming materials, processes, products, and services are

Six Sigma Methodology

DMADV Methodology: DMAIC Methodology:

DMADV Methodology:

Define --> Measure --> Analyze --> Design -->Verify This methodology is used when the company wants to create a new product design or process that is more predictable and defect free.

DMAIC Methodology:

Define --> Measure --> Analyze --> Improve --> Control This methodology is used when the company wants to improve an existing product or business process.

The Pull System

Each stage of the system is tightly linked. no excess inventory is generated. Can uncover production problems by reducing inventory

warehousing

Function that allows a company to receive, store, breakdown, repackage, and distribute items to a manufacturing location, or finished products to a customer

Two ISO standards commonly used for supplier certification are:

ISO 9000 and ISO 14000

Plan (continuous improvement cycle)

Identify improvements needed, and changes needed to make the improvement and then plan for the change

Do (continuous improvement cycle)

Implement the change on a small scale to see if it improves the process before moving forward with full implementation

Early Supplier Involvement (ESI)

Key suppliers become more involved in the internal operations of the buyer's company, particularly with respect to new product and process design, concurrent engineering, and design for manufacturability.

Understanding Capibilities

Key suppliers must have the right technologies and capabilities to meet cost, quality, and delivery requirements in a timely manner. (current and in the future)

repetitive

Line flow and continuous flow

Major Manufacturing Strategies

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

Kanbans

Means "signal" or "card" in Japanese and is used for communication between workstations. used for facilitating small batch scheduling. facilitated through software program like ERP system.

Benefits of Supplier Recognition Programs

Motivate Suppliers to Perform Better and Improve Supplier Loyalty and Commitment

The concept of Six Sigma originated from

Motorola

receiving

Physical receipt of material, identification, inspection for conformance with the purchase order (quantity and damage), put-away, and preparation of receiving reports

Benefits of Supplier Certification Programs

Reducing the amount of time and resources necessary for the buyer to conduct incoming inspections of products and materials from certified suppliers.

flow diagram

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

Voice of Customer (VOC)

Term used in business to describe the in-depth process of capturing internal and external customer's expectations, preferences, likes, and dislikes.

Supplier Relationship Management (SRM)

The discipline of strategically planning for, and managing, all interactions with the third party organizations that supply goods and/or services to an organization in order to maximize the value of those interactions.

manufacturing

The process of making a raw material or components into a finished product, especially by means of a large-scale industrial operation, i.e., mass production

T or F : LEAN and Six Sigma complement one another

True

Check (continuous improvement cycle)

Use data to analyze the results to see if the change made a positive impact

Assemble-to-Order (ATO)

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

Root Cause Analysis (RCA)

a collective term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems.

Six Sigma

a disciplined, statistical-based, data-driven methodology for identifying and removing the causes of defects and minimizing variability in manufacturing and in business processes. Improves supply chain PROCESS

histograms

a graphical display where the data is grouped into ranges

Total Quality Management (TQM)

a management philosophy based on the principle that every employee must be committed to maintaining high standards of work in every aspect of a company's operations. Sigma is the internal part of TQM

lean manufacturing

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.

The 5 How's technique

a questioning technique for drilling down into the details of a potential solution to a known problem

The 5 Why's technique

a questioning technique for identifying the root cause of a problem.

certified supplier

a source that through prior experience and qualification can provide material of such quality that it needs little if any receiving inspection or testing before going into approved stock or into the product process

Efficient Consumer Response (ECR)

a strategy to better the flow of supply chain. increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers. improves the efficiency of supply chain by getting rid of unnecessary costs

Value Engineering

activities help the firm to reduce cost, improve quality & reduce new product development time beginning with the initial design

Total Cost of Ownership (TCO)

all costs associated with the acquisition, use and maintenance of a good or service

Just-in-time (JIT)

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

LEAN

an operating philosophy of waste reduction and value enhancement. Based on toyota production system (TPS) Improves supply chain FLOW

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

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.

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

Job Shop Production (project production)

creates a custom product for each customer. usually produced in small units. (architects, ship builders, road builders)

LEAN objective

eliminate everything that does not add value (waste) in the customer's eyes

LEAN Supply Chain Relationships

firms develop lean supply chain relationships with key customers and key suppliers

Pareto analysis

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

Line Flow Production (Mass production)

for standardized products with a limited number of variations, product moves on an assembly line through the stages. (Automobile Assembly, cell phones, toilet paper)

control charts

graph to study how a process changes over time

continous flow production

high capital investment - frequently dedicated to one specific product.Involves a process which raw materials flow through and are inflexible. (cement, laundry detergent, chemicals)

Act (continuous improvement cycle)

if change is successful, implement it on a wider scale and continuously assess your results. If it was a fault, begin the cycle again until you find the root cause.

Benefits for buyers in strategic partnerships with suppliers

increased operating efficiencies (lower cost, better service, better revenue, better quality)

Benefits for suppliers in strategic partnerships with suppliers

increased operating efficiencies (lower cost, better service, better revenue, better quality)

Keirestsu relationships

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

Make-to-Stock (MTS)

manufacture products for stock based on demand forecasts (push system)

Batch production

manufacturing of a small fixed quantity of an item in a single production run. (bakeries, textiles, furniture, pharmaceuticals)

Make-to-Order (MTO)

manufacturing starts only after a customer's order is received (pull system)

Operations Management

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 costs.

The Five S's

sort, set in order, shine, standardize, sustain

Value

the inherent worth of a product as judged by the customer, and reflected in its selling price and market demand

Manufacturing Management

the management of all the processes which are involved in manufacturing

Engineer-to-Order (ETO)

the product is deigned, engineered, and built to the customer's specifications after receipts of the order

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

Supplier Development

the technical and financial assistance given to existing and potential suppliers to improve quality and/or delivery performance. (buyer's activities to improve a suppliers capabilities)

changeover time

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

International Organization for Standardization (ISO)

the world's largest developer of voluntary international standards. has members from 163 countries

Setup Time

time taken to prepare and format the manufacturing equipment and systems for production

Key Supplier Selection

typically conducted by a cross functional team using evaluation forms or scorecards.

cause and effect diagrams

used to aid in brainstorming and isolating the causes of a problem

check sheets

used to determine frequencies for specific problems

Intermittent Processes

used to produce a large variety of products with different processing requirements in lower volumes

repetitive processes

used to produce one, or a few, standardized products in high volumes

W. Edwards Deming

widely considered the father of TQM. He is the creator of the Plan-Do-Check-Act model.