Supply Chain Management - Chapter 8 Operations Management with LEAN and Six Sigma

Histogram

another form of a bar chart where the measurements represent a range of values of some parameter besides central tendency and spread of data, shape of histogram can be of interest

Combination of Six Sigma and LEAN

creates faster and better supply chain

Brown Belt

green belt who has passed black belt certification exam but not yet completed second six sigma project

Respect for People

people are most valuable resource in any company. business won't succeed without good people when people don't respect themselves, they can lose respect for the company

Total Cost of Manufacturing (TCM)

all costs associated with production, procurement, inventory, warehousing, and transportation all costs impacted by manufacturing strategy TCM results from functional integration of manufacturing, procurement, and logistics important for companies to design a supply chain strategy (and adopt a manufacturing strategy) that achieves the lowest TCM across entire process

Goal of Six Sigma

attain less than 3.4 defects per million opportunities (DPMO)

Voice of the Customer (VOC)

in-depth process of capturing internal and external customers' stated and unstated expectations, preferences, likes, and dislikes

Cost of Poor Quality

internal failure costs and external failure costs

Line Flow Characteristics

somewhat inflexible, limited variety of products, short lead times, high volumes products standardized allow better organization of resources than with job shop or batch processing sequence of operations in line flow is generally fixed, and production orders are not linked to customer orders as is typical in job shop and batch processing ex: automobiles, computers, appliances, house goods ATO or MTO

Most Common and Successful Implementations

start with LEAN (reducing waste, using value stream mapping) to make workplace as efficient and effective as possible followed by implementing more technical six sigma tools to resolve process problems both require strong management support to incorporate these principles into standard way of doing business

Nonvalue Added Process

steps that take time, resources, and/or space, but don't actually add value to the product or service ex: process step of moving component parts to assembly equipment doesn't add value to product. overall process would be better and more efficient if this step could be minimized or eliminated

Efficient Consumer Response

strategy to increase level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers

Cost of Quality

supports 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 helps company determine the benefits and savings generated by potential process improvements

Changeover Time

time taken to adapt and modify manufacturing equipment and systems to produce a different product or a new batch of the same product

Green Belt

trained individual that can work as a team member on complex project and lead small, carefully defined six sigma projects complex six sigma projects, works closely with black belt team leader to assist with data collection and analysis, and to keep team functioning through all phases of prject

Job Shop

used to produce items to each customer's specifications. production operations designed to handle wide range of product designs and small lots of a variety of products, which require a unique setup and sequence of process steps to create a custom product for each customer

Quality Gurus

W. Edwards Deming Philip Crosby Joseph Juran Kaoru Ishikawa

Pareto Chart

bar graph lengths of bars represent frequency that specific defects occur and are arranged with longest bars on left and shortest bars on right will visually depict which defects are more significant

TQM about meeting or exceeding customer expectations

capturing VOC is essential for TQM to be successful

Control and Sustain the Improvement Solutions

ensures that the process stays fixed. "bake" the solutions into the process permanently

Job Shop Characteristics

highly flexible, large variety of products, very long lead times, low volumes, low labor requirements, low fixed costs, high variable costs ex: metal fabrication shops, print shops, custom cabinet making MTO or ETO

Quality Planning

identify internal/external customers and needs - develop products satisfying those needs - managers must set goals, priorities, and compare results

Analyze the Data and the Process

identify the root cause(s) of the problems and defects. determine why, when, and where defects occur

Value Added Process

steps that transform or shape a product or service that is eventually sold to a customer ex: process step that assembles component items into finished product, adds value to product

Philosophies and Practices of LEAN

- quick response - efficient consumer response (ecr) - just in time (jit) - keiretsu relationships

Benefits of Eliminating Waste

- reduced cycle times - grater throughput - better productivity - improved quality - reduced costs

3 Elements of LEAN

- LEAN manufacturing - total quality management - respect for people

Cost of Good Quality

prevention and appraisal costs

DOWNTIME

waste mnemonic D = defects (anything that doesn't meet acceptance criteria O = overproduction (production before it's needed, or in excess of customer requirements. providing service that is not needed) W = waiting (elapsed time between processes when no work is being done) N = non-utilized talent (underutilizing people's talents, skills or knowledge. de-motivating workforce by not asking for input or recognizing success) T = transportation (unnecessary movement of materials or products) I = inventory (excess products or materials not being processed) M = motion (unnecessary movement of people. multiple hand-offs) E = extra-processing (unnecessary steps in a process. redundancies between processes. more work or higher quality than required by customer)

Cause-and-Effect Diagram

(ishikawa or fishbone diagram) tool used to aid in brainstorming and isolating the cause(s) of a problem function = identify the factor(s) that are causing a defect so that improvement actions can be taken potential facts are identified by those familiar with process involved but major factors could be grouped using the 4 Ms: materials, machinery, methods, and manpower commonly used in combination with the 5 Whys and 5 Hows technique to help identify the root cause

Six Sigma Important Elements

1) producing only 3.4 defects for every 1million opportunities or operations 2) process improvement initiatives striving for six sigma-level performance

History of LEAN

1940s - toyota executives created Toyota Production System (TPS) which incorporated Ford's production system (continuous assembly and line flow systems) and other techniques 1988 - john krafcik first coined term and definition expanded in book "Machine that Changed the World"

Quality Tools

making quality management decisions based on facts

Philip Crosby

- "quality is free" as defects are costly - zero defects, and focus on prevention and not inspection - demonstrated what a powerful tool cost of quality could be to raise awareness of importance of quality -"price of non-conformance" - argued that org choose to pay for poor quality - "quality is the result of a carefully constructed cultural environment. it has to be the fabric of the org, not part of the fabric"

LEAN and Six Sigma compliment one another

- LEAN focuses on eliminating wastes and improving efficiency - six sigma focues on reducing defects and variations

Overlap between LEAN and Six Sigma

- LEAN focuses on waste reduction, whereas Six Sigma emphasizes variation reduction and elimination of defects - LEAN achieves its goals by using lean layouts, continuous improvement, and respect for people, whereas Six Sigma uses root cause analysis, statistical process control, and DMAIC

Joseph Juran

- quality is "fitness for use" - developed concept of cost of quality - "without a standard, there is no logical basis for making a decision or taking action" - proponent of concepts of quality planning, quality control, and quality improvement

TCM Key Points

- complete cost of producing and delivering products to customers - incorporates both fixed and variable costs - generally expressed as cost per unit of each product

W. Edwards Deming

- considered father of TQM - creator of Plan-Do-Check-Act model - stressed management's responsibility for quality, and developed 14 points to guide companies in quality improvement -"in god we trust, all others bring data"

How VOC can be captured

- direct discussion or customer interviews - market surveys - focus groups - customer specifications - observation - warranty data - field reports - complaint logs data used to identify quality attributes needed for process or product

Basic Framework of TQM

- discipline and philosophy of management institutionalizes planned and continuous improvement - quality is outcome of all activities that take place within an org - all functions and all employees must participate in improvement process - organizations need both quality systems and a quality culture

ETO characteristics

- essence is building unique product every time. there may be components that are common from one product to another, but not in same quantity as in repetitive manufacturing - more dramatic evolution of MTO supply chain - cost of poor quality can be very high. warranty costs and cost of rework to replace an item in a complex assembly can have a serious negative effect on profit margins. quality must be part of entire process, and not just part of purchasing and manufacturing (typical focus of repetitive manufacturer) - used when products are unique and extensively customized for specific needs of individual customers

External Failure Costs

- incurred to fix defects discovered by customers - occur when product or service doesn't meet designed quality standards are not detected until after the product or service is delivered to the customer - all work and costs associated with handling and responding to customer complaints - all work and costs associated with failed products that must be replaced or services that are repeated under warranty - all work and costs associated with the repair and servicing of returned products and products still in the field - all work and costs associated with handling and investigation of rejected or recalled products, including return transportation costs

Prevention Costs

- incurred to prevent or avoid quality problems - associated with design, implementation, and maintenance of quality management system - planned and experienced before actual products or materials are acquired or produced - establishment of specifications for incoming materials, processes, products, and services - creation of quality plans - quality training (development, preparation, and maintenance of programs) - creation and maintenance of quality system

4 Basic Manufacturing Processes

- job shop - batch - line flow - continuous flow

How SCM incorporates LEAN

- satisfying internal and external customer demand - communicating demand forecasts and production schedules up and down supply chain, to reduce/eliminate bullwhip effect - quickly moving products into and through production process - optimizing inventory levels across supply chain (internally and externally) - increasing value, capabilities, and flexibility of workforce through cross-training - extending collaboration and alliances beyond just first-tier suppliers and customers to include second and third-tier suppliers and customers

Roles

- senior leader = defines goals and objectives in six sigma initiative - implementation leader = supervises six sigma initative - coach = six sigma expert or consultant who sets a schedule, defines result of project, and who mediates conflict, or deals with resistance to program - sponsor = high-level individual within company that acts as a problem solver for six sigma initiative - team leader = oversees work of six sigma team and acts as liaison between sponsor and team members - team member = executes specific six sigma assignments - process owner = takes responsibility for process after six sigma team has completed its work

SCP allows firms to

- visually monitor process performance - compare the performance to desired levels or standards - take corrective action

7 Most Common Quality Tools

1) cause-and-effect diagram 2) check sheet 3) control chart 4) flow chart 5) historgram 6) pareto chart 7) scatter diagram

Crosby's 4 Absolutes of Quality

1) definition of quality is conformance to requirements 2) system of quality is prevention 3) performance standard is 0 defects 4) measure of quality is price of nonconformance

Six Sigma 2 Key Methodologies

DMADV and DMAIC

Small Batch Scheduling

attempts to reverse large batch by leveling demand and reducing setup/changeover times so that smaller batches will facilitate producing at the same rate as customer demand production in small batches creates a smooth workload as production can be synchronized with customer demand, and a smooth demand fro upstream processes, facilitating a pull system increases flexibility allowing the company to respond to changes in customer demands more quickly throughput times in manufacturing go down, and work-in-process inventory goes down, eliminating or minimizing waste in system and company can get product to customer more quickly reduces cost of inventory, while also increasing flexibility to meet customer demand

Six Sigma Training and Certification Levels

based on training, knowledge, and experience yellow belt, green belt, brown belt, black belt, master black belt

Yellow Belt

basic understanding of methodology and tools in DMAIC problem-solving process reviews processes and process improvements in support of Six Sigma process improvement project has passed green belt certification exam but not yet completed a six sigma project

Setup Time and Changeover Time

both considered waste as they are intervals when the equipment is not performing its intended function (producing product) if setup time can be minimized, difference will be more time available to product. both setup and changeover are non-value added operations and should be minimized as much as possible

Reducing Inventory

can uncover production problems end result will be smoother running supply chain with less inventory investment

Master Black Belt

career path successfully led 10+ teams through complex projects proven change agent, leader, facilitator, and technical expert in six sigma seasoned individual with proven mastery of process variability reduction, and waste reduction acts as an adviser to executives, and a coach and mentor on projects that are led by black and green belts functions as keeper of process, and can effectively provide training at all levels

Cooperation

collaborative relationships like supplier and customer partnerships and strategic alliances

People Involvement

company must involve its employees in Six Sigma program, and provide opportunities and incentives for them to focus their talents and ability to satisfy customers all employees are responsible to identify quality problems important that all Six Sigma team members have a well-defined role with measurable objectives members must follow specific assigned "roles"

Goal of Operations Management

convert materials and labor into goods and services as efficiently as possible control costs to maximize profit of company

Lean Supply Chain Relationships

cooperative supplier and customer relationships that balance cooperation with competition developed with key supplier and key customers partners must work together to remove waste, reduce cost, and improve quality and customer service. mutual dependency and benefits occur among these partners

Quality is Defined by the Customer

customers expect performance, reliability, competitive prices, on-time delivery, good service, clear and correct transaction processing, and more vital to provide what customers need to achieve customer satisfaction

DMADV

define, measure, analyze, design, and verify data-driven quality strategy for designing products and processes used when company wants to create a new product design or process that is more predictable and defect free

DMAIC

define, measure, analyze, improve, control data-driven quality strategy for improving processes used when company wants to improve an existing business process. most widely adopted and recognized methodology in use

Kaoru Ishikawa

developed first tools of quality management process, cause-and-effect diagram (Ishikawa/fishbone diagram) emphasized use of all 7 basic quality tools father of quality circles and helped bring this concept into mainstream proponent of continuous customer service, meaning that a customer should continue receiving service even after receiving product

Operations Management Focus

efficiency and effectiveness of processes including measurement and analysis of those processes

Large Batches

exacerbate the bullwhip effect as production in large batches creates an uneven workload as production is not synchronized with customer demand, and an uneven demand for upstream processes, making pull system impossible throughput times in manufacturing go up and work-in-process inventory goes up, creating more waste in system ex: snake trying to swallow large mean

Inventory, Setup Time, and Changeover Time Reduction

excess inventory is waste - takes up space, costs money to hold and maintain, costs money to protect/secure/insure, and it ties up financial capital which could be used for other aspects of business reducing inventory levels can free up capital and reduce holding costs; less likelihood of waste being created by obsolescence, expiry, spoilage, or damage with lower inventory levels

Improve the Process

find solutions to fix or reduce the root cause(s) of the problems, and prevent problems from occurring. implement and verify the solution(s)

Basic ways a company can ensure their people know they're respected

frequent communication, actively listening to their ideas, praising good performance, and providing help and support when necessary

Black Belt

full-time quality professional who has a thorough knowledge of six sigma philosophies and principles, and possesses technical and managerial process improvement/innovation skills leads six sigma project team and problem-solving efforts identifies projects and selects project team members trains and coaches project teams. mentored by master black belt

Continuous flow Characteristics

inflexible, very limited variety of products, very short lead times, very high volumes, high fixed costs, and low variable costs involves standardized production with rigid line flows and tightly linked process segments often operated 24/7 to maximize and to avoid expensive stops and starts ex: gasoline, laundry detergent, chemicals MTS

Value

inherent worth of product as judged by customer and reflected in its selling price and market demand defined as anything for which customer is willing to pay

Just In Time (JIT)

inventory strategy to decrease waste by receiving materials only when and as needed in production process, thereby reducing inventory costs requires and accurate demand forecast to be effective

Keiretsu Relationships

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

Role of Suppliers in LEAN Manufacturing

key element = build lean supply chain relationships with suppliers over long time suppliers expected to help improve process quality and share information goal = have fewer but more strategic supply partners

Batch Characteristics

less flexible (that job shop), more narrow variety of products, long lead times, slightly higher volumes, moderate labor requirements, and moderate fixed and variable costs some components of final product may be produced in advance ex: manufacturing component parts of production line, manufacturing clothing or furniture MTO or ATO

LEAN Manufacturing

management has the responsibility for motivating and engaging large numbers of people to work together toward a common goal defining and explaining what that goal is, sharing a path to achieving it, motivating people to take the journey, and assisting them by removing obstacles are management's reason for being

Continuous Improvement

method for identifying opportunities for streamlining work and reducing waste can be viewed as formal practice or an informal set of guidelines helps to streamline workflows; efficient workflows save time and money, allowing company to reduce wasted time and effort helps reduce process, delivery, and quality problems such as machine breakdown problems, setup problems, and internal quality problems

Manufacturing Strategies

must suit company's strengths to establish and maintain effective supply chain - make to stock (mts) - make to order (mto) - assemble to order (ato) - engineer to order (eto)

Waste Reduction

number 1 objective of LEAN expenditure of one or more resources for no purpose or value companies can reduce costs and add value by eliminating waste from production system

LEAN Definition

operating philosophy of waste reduction and value enhancement originally created as part of Toyota Production System (TPS)

Six Sigma History

originated by Motorola in 1980 by Bill Smith (engineer) early-mid-1980s: motorola developed new standard, created the methodology, and copyrighted it (documented >$16b in savings as a result) 1995: became famous when Welch made it central to his business strategy at General Electric (GE reported $200m in savings in 1st year if implementation)

LEAN

philosophy of production that emphasizes minimization of amount of all resources (including time) used in various activities of enterpris involves identifying and eliminating non-value-adding activities in design, production, scm, and dealing with customers producers employ teams of multiskilled workers at all levels of org and use highly flexible, increasingly automated machines to produce volumes of products in potentially enormous variety contains set of principles and practices to reduce cost through processes

Before waste is removed

processes less efficient, generally take longer to complete, and are often scattered, which can negatively affect customers

After waste is removed

processes more efficient, streamlined, and take less time to complete, resulting in more satisfied customers

Ideal Schedule

produce every product as quickly as possible and at the same rate as customer demand

Batch

produce items with similar designs and that may cover wide range of order volumes. typically items ordered are repeat nature, and production may be for specific customer order or for stock replenishment

Major Activities in Operations Management

product development, managing purchases, inventory control, production operations, quality control, storage, and logistics

what is six sigma?

quality management process that seeks to improve quality of process outputs by identifying and removing the causes of defects (errors) and minimizing the variability in manufacturing and business processes structured and data-driven approach to drive a near-perfect quality goal (ie "zero defects")

5 Whys and 5 Hows Technique

questioning process designed to drill down into the details of a problem or solution to find the root cause and best corrective measure originally developed by Sakichi Toyoda ("by repeating why 5 times, the nature of the problem as well as its solution becomes clear") Whys = reach root cause of problem Hows = develop details of root solution to problem both designed to bring clarity and refinement to problem statement or potential solution used in conjunction with cause-and-effect diagram

Quick Response

rapid replenishment of customer's stock by supplier with direct access to data from customer's point of sale emphasizes speed and flexibility

Acceptance Sampling

selection of set of items from product lot to test as a representative sample of entire lot useful when cost of testing is high compared to cost of passing a defective item, or when testing is impractical or destructive compromise between doing 100% inspection and doing no inspection at all

Six Sigma

set of concepts and practices that key on reducing variability in processes and reducing deficiencies in product business process that permits organizations to improve bottom-line performance, creating and monitoring business activities to reduce waste and resource requirements while increasing customer satisfaction emphasizes commitment toward excellence, encompassing suppliers, employees, and custoemrs

Quality Improvement

show need for improvement - identify projects for improvement - implement remedies - provide control to maintain improvement

Check Sheet

simple way of gathering data so that decisions can be based on facts commonly used to determine the frequencies for specific problems but could also be used to correlate the number of defects to other variables such as the day of the week or month of the year, to see if there is any significant variation or pattern data gathered can also be used as input for pareto chart for analysis

Concept of 5-S

systematic process of workplace organization discipline designed to help build a quality work environment, both physically and mentally considered part of visual control, visual workplace, or visual factory

Setup Time

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

In a LEAN manufacturing environment

- flatter hierarchy that traditional organizations is embraced - ordinary workers are given greater responsibility - supply chain members work together in cross-functional teams - goal regarding workforce is NOT to reduce number of people in organization, but to use people resources more wisely and more efficiently

Lean Supply Chain Relationship Principles

- focus on value stream - eliminate waste - synchronize flow of products and information - minimize transactional costs and production costs - balance cooperation and competition - ensure visibility and transparency - develop quick response capabilities - manage uncertainty and risk - align core competencies and complementary capabilities - foster innovation and knowledge-sharing

Companies

- gather process performance data - create control charts to monitor process variability - then collect sample measurements of the process over time and plot on charts

ATO characteristics

- hybrid between MTS (products fully produced in advance) and MTO (products manufactured once order has been received). attempts to combine benefits of both strategies: getting products into customers' hands quickly while allowing for product to be customizable - requires that basic parts of product are already manufactured but not yet assembled. once order received, parts are assembled quickly and sent to customer - base components made, stocked to a forecast, but products not assembled until customer order received

Internal Failure Costs

- incurred to fix defects discovered before the product or service is delivered to the customer - costs occur when the product or service doesn't meet the designed quality standards, and are identified before the product or service is delivered to the customer - defective product or material that cannot be used, sold, or repaired - correction of defective material or errors (network and repairs) - unnecessary work or inventory resulting from errors, poor organization, or poor communication - analysis activities to establish the root causes of internal product or service failures

Implementing LEAN Results in

- large cost reductions - improved quality - increased customer service LEAN is a culture; provides value for customers through most efficient use of resources possible

Key Principles of TQM

- management commitment - employee empowerment - fact-based decision making - continuous improvement - customer focus

MTS characteristics

- manufacture products for stock based on demand forecasts. more accurate forecast is, less likely excess inventory will be created, and less likely a stockout will occur (forecast demand accuracy is critical) - most daily necessities such as foods, sundries, and textiles are MTS-type products - issue is potential to have excess inventory; struggle to make correct product at correct time in correct quantities - features economies of scale, large volumes, long production runs, low variety, and multiple distribution channels

Acceptance Sampling Errors

- manufacturer's risk: buyer rejects shipment of good quality units because sample quality level did not meet standards (type i error) - consumer's risk: buyer accepts shipment of poor quality units because sample falsely provides a positive answer (type ii error)

Appraisal Costs

- measuring and monitoring of activities related to quality - associated with evaluation of purchased materials, processes, products, and services to ensure that they conform to specification - testing, evaluating, and inspecting the quality of incoming materials, process setups, and products, against agreed upon specifications - quality assessment and approval of suppliers - performing audits to confirm that the quality system is operating properly

Total Cycle Time / Lead Time

- mts: product already produced and available in warehouse when customer order is received, so customer will only experience delivery lead time - ato: product design complete and components/materials have already been procured when customer order received, so customer will experience manufacturing (assembly) ad customer delivery lead times - mto: product design only element complete when customer order received, so customer will experience procurement, manufacturing, and customer delivery lead times - eto: no supply chain elements have been completed when customer order is received, customer experience full cumulative supply chain lead time

MTO characteristics

- only manufactures end product once customer places order, creating additional wait time for consumer to receive product but allowing for more flexible customization - relieves problems of excessive inventory that is common with the traditional MTS strategy - not appropriate for all types of products; appropriate for highly configured products like computer servers, aircraft, ocean vessels, bridges, automobiles, or products that are very expensive to keep in inventory - relies on relatively small quantities, but more complexity

Relationship of TCM Elements to Volume and Manufacturing Strategy

- per unit procurement and production costs go down as volume goes up (step function applies as more capital/fixed cost will be required to produce more as volume grows beyond existing output capabilities) - per unit inventory and warehousing costs go up as volume goes up. company will produce and manage more inventory and therefore will likely need more warehouse storage space, insurance, and potentially pay more inventory taxes, among other things - per unit transportation costs go down as volume goes up, but level off at high volumes (economies of scale in transportation until container/conveyance is filled up)

Deming's 14 Points

1) create constancy of purpose to improve product and service 2) adopt new philosophy 3) create dependence on inspection to improve quality 4) end practice of awarding business on basis of price 5) constantly improve production and service system 6) institute training on job 7) institute leadership 8) drive out fear 9) break down barriers between departments 10) eliminate slogans and exhortations 11) eliminate quotas 12) remove barriers to pride of workmanship 13) institute program of self-improvement 14) put everyone to work to accomplish transformation

3 Main Foundational Aspects of Six Sigma

1) quality is defined by the customer 2) use of technical tools 3) people involvement

5-S Steps

1) sort = keep only necessary items in workplace, eliminate the rest 2) straighten = organize and arrange items to promote an efficient workflow 3) shine = clean work area so it's neat and tidy 4) standardize = schedule regular cleaning and maintenance 5) sustain = stick to rules. maintain and review standards a place for everything, and everything should be in its place

Elements of LEAN

1) waste reduction 2) lean layouts 3) inventory, setup time, and changeover time reduction 4) small batch scheduling and uniform plant loading 5) lean supply chain relationships 6) workforce empowerment and respect for people 7) continuous improvement

Operations Management

design, execution, and control of operations that convert resources into desired goods and services, aligned with company's business strategy business function responsible for managing process to create goods and services

Quality Control

determine what to control - establish standards of performance - measure performance, interpret the differences, and take action

Define the Problem

focus should be on customers' expectations of process

Role of Workers in LEAN Manufacturing

given greater responsibility and their expanded duties include improving production process, monitoring quality, and correcting quality problems workers often work in teams and form quality circles to facilitate these expanded responsibilities

Scatter Diagram

graphical method of observing whether or not 2 parameters are related to each other data plotted with 1 variable on each axis variables are correlated, data points will fall along line or curve tigher the points hig the line, the better the correlation of relationship, and one can be used to predict the other

Line Flow

machines and operators handle standard, uninterrupted, material flow. operators perform same operations for each production run. flow shop often referred to as mass production shop or continuous manufacturing layout plant layout (arrangement of machines, benches, assembly lines) designed to facilitate product "flow" each product (though variable in material specification) uses same flow of pattern through shop production set at a given rate, and products are generally manufactured in bulk

Fundamental Element of LEAN Manufacturing

management must be totally committed to the "customer-first" philosophy promotes view that each succeeding process, workstation, or department is the customer management's responsibility to ensure that all members and all departments realize their dual role: they are both customers of previous operation and suppliers of next operation downstream

Total Quality Management (TQM)

management philosophy based on principle that every employee must be committed to maintaining high standards of work in every aspect of company's operations, focused on meeting customer needs and organizational objectives combination of quality and management tools designed to increase business and reduce losses resulting from wasteful practices

Workforce Commitment

managers must support its principles by providing subordinates with the skills, tools, time, and other resources necessary to identify problems and implement solutions

Measure the Problem and Process

map out current process. determine the frequency of defects

Statistical Process Control (SPC)

method for monitoring, controlling, and improving a process through statistical analysis application of statistical methods and procedures (like control charts) to analyze that inherent variability to achieve and maintain a state of statistical control variations can be natural (expected and random which cannot be controlled), or assignable (having a specific cause which can potentially be controlled) sometimes processes exhibit excessive variation that produces undesirable or unpredictable results, and spc is used to reduce variation to improve process capability

Kanban

method of just-in-time production that uses standard containers or lot sizes with single card attached to each means billboard in japanese and used synonymous for the specific scheduling system developed and used by Toyota in Japan

Lean Layouts

moving people and materials when and where needed, and asap very visible, meaning that lines of visibility are unobstructed, with operators at one processing station or work center able to monitor progress of work at another work center incorporates manufacturing cell model where sets of machines are grouped together or in close proximity to one another based on products or component parts they produce, saving duplication of equipment and labor U-shaped to facilitate easier operator and material movements

Role of Management in LEAN Manufacturing

must create the cultural change needed for LEAN to succeed provide atmosphere of cooperation, empower workers to take action based on their ideas, and develop incentive systems to encourage and reward lean behaviors

Flowchart

picture of process steps in sequential order comprised of annotated boxes representing process steps to show the flow of products or customers helps users understand how a process progresses toward completion and to identify where process improvements can be made

Control Chart

plots representative samples of selected values from a process, in sequence over time used to study how a process changes over time has a median line for average, upper line for upper control limit, and lower line for lower control limit (lines determined from historical data) comparing current data to these lines, conclusions can be drawn regarding whether the process variation is in control or out of control sample measurement outside control limits indicate that the process is no longer stable, and is usually a reason for corrective action

Assemble-to-Order (ATO)

production environment where g/s can be assembled after receipt of customer's order key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchased, packing, etc.) used in assembly or finishing process are planned and usually stocked in anticipation of customer order receipt of an order initiates assembly of customized product useful where large number of end products (based on selection of options and accessories) can be assembled from common components

Make-to-Order (MTO)

production environment where g/s can be made after receipt of customer's order final product usually combination of standard items and items custom-designed to meet special needs of customer

Make-to-Stock (MTS)

production environment where products can be, and usually are, finished before receipt of customer order orders filled from existing stock, and production orders are used to replenish stock

Continuous Flow

productive equipment is organized and sequenced according to steps involved to produce product denotes that material flow is continuous during production process routing of jobs is fixed and setups are seldom changed

Engineer-to-Order (ETO)

products whose customer specifications require unique engineering design, significant customization, or new purchased materials each customer order results in unique set of part numbers, bill of material, and routings

Use of Technical Tools

provides statistical approach for solving any problem and thereby improves the quality level of product as well as the company all employees should be trained to use technical tools (statistical quality control and 7 tools of quality) concerned with permanent fix to quality problems and seeks to identify and correct the root cause of problem

Uniform Plant Loading

shifting planned production forward and planning production up to the available capacity in earlier time periods, in order to meet demand in later time periods, where production necessary to meet demand would have otherwise exceeded the available capacity