Supply Chain Management Exam Chapter 12 - 15

Project managers are responsible for:

- Achieving the project's objective (performance) - Finishing the project on time (schedule) - Completing the project within budget (cost)

Kanban Ground Rules

- Do not pass defective parts to the next process - Subsequent process withdraws from preceding process - The # of parts in a container should match the information on the Kanban - The quantity of parts produced must equal the quantity of parts withdrawn - Parts should not be produced or created without a Kanban

Consequences of too much variation

- Parts don't fit correctly - Products don't function properly - The company gets a reputation for poor quality

Service Quality Dimensions

- Tangibles - Service reliability - Responsiveness - Assurance - Empathy

Garvin's 8 Dimensions of Quality

- performance - features - reliability - conformance - durability - serviceability - aesthetics - perceived quality

Types of Benchmarking

-Process -Financial -Performance -Product -Strategic -Functional

Corrective Action for Out of Control Process

1. Carefully identify the quality problem. 2. Form correct team to evaluate and solve problem. 3. Use structured brainstorming with fishbone or affinity diagrams to identify causes of problems. 4. Brainstorm to identify potential solutions. 5. Eliminate the cause. 6. Restart the process. 7. Document the problem, root causes, and solutions. 8. Communicate results of the process to all personnel so that process becomes reinforced and ingrained in the organization..

Project Planning Steps

1. Charter the the project with identifiable deliverables and metrics. 2. Create a work breakdown structure (WBS) to identify tasks and precedence relationships. 3. Estimate task times using beta distributions. 4. Model the project using specific methods, including the program evaluation and review technique (PERT) and critical path method (CPM). 5. Find the critical path. 6. Establish a completion time with a high probability of success. 7. Install necessary controls to monitor the progress of the project.

Project Team Stages of Development

1. Forming 2. Storming 3. Norming 4. Performing 5. Mourning

How to Build a Process Chart

1. Identify critical operations in the process where inspection might be needed. Such operations are those in which, if the operation is performed improperly, the form, fit, or function of the product will be negatively affected. 2. Identify critical product characteristics. They are the aspects of the product that will result in either good or poor functioning of the product. 3. Determine whether the critical product characteristic is a variable or an attribute. 4. Select the appropriate process control chart from among the many types of control charts. 5. Establish the control limits and use the chart to continually monitor and improve the process. 6. Update the limits when changes have been made to the process.

Objectives of PERT/CPM

1. Map out plan visually to better understand where the project team is going. 2. Determine project completion time. 3. Perform mental exercise of visualizing what needs to be done. 4. Find out which tasks require tight control. 5. Find out which tasks critical for completion time.

Order of Use of Quality Tools

1. Process Map 2. Check Sheet 3. Histogram, Scatter Plot, Run Chart 4. Fishbone Diagram 5. Pareto Chart

Seven Basic Quality Tools

1. Process Maps 2. Check Sheets 3. Histograms 4. Scatter Plots 5. Run Charts 6. Fishbone Diagrams 7. Pareto Diagrams

Elements of a Pull Systems

1. Selection of parts for the supermarket - depends on analysis based on customer use/frequency 2. Size of supermarket - must ensure there's enough inventory to cover the demand during replenishment lead time, plus safety stock (typically 20% of demand during replenishment lead time). 3. Production information from and to supermarket - deals with the Kansan information flow loops, the order size and lead time restrictions, and the physical location of the supermarket.

The 5 S's

1. Sort: organizing by getting rid of the unnecessary. 2. Set in Order: neatness by straightening offices/work areas. 3. Shine: cleaning equipment to eliminate dirtiness that can hide problems. 4. Standardize: standardizing locations for tools, materials, etc. 5. Sustain: discipline in maintaining the prior 4 S's.

Critical path

1. the longest path through the PERT network. 2. the path in the PERT network wth no slack. Slack = amount of time a task can be delayed without delaying the entire project.

Kanban system

A communication device so that inventory can be pulled through a process only when it is needed. - A signboard to signal production that often uses cards (although can be anythingL ball, empty space, light, container, electronic) - Information transfer for production - A visual management system - A transparent, shop-floor-controlled process - A subcomponent of a pull system

Lean philosophy

A continual thinking that anything a customer is not willing to pay for is considered a waste or non-value add and all wastes should be continually evaluated to see if their costs can be eliminated or reduced.

Attribute

A defect is either present or it's not (motor starts or is doesn't).

Process Maps

A flowchart, or "picture," of a process used to improve. First develop one of the current system, then brainstorm to develop a map of a proposed improved system.

Histograms

A graphical presentation of data using bar charts. Rule 1: width of bars must be consistent (cover the same range). Rule 2: grouping must be mutually exclusive and all-inclusive.

Customer-Driven Excellence

A quality management approach that focuses on understanding the customer and striving to satisfy his/her needs. Basic Precepts: - customer has the final say on your product's quality - focus on customer retention and loyalty based on trust - cater to customer's current and future needs - don't just meet basic needs but differentiate yourself

Pull System

A system where an information signal controls and improves the flow of materials and information and allocates resources based on actual consumption not a forecasted demand. Replace what was just taken off shelves and purchased by customers. Developed by Toyota after recognizing the benefits of replenishment systems used by supermarkets in America.

Six Sigma

A well thought to approach to improving product and process through emphasis on a system and product design... better designs, fewer defects, and lower cost. Started by Motorola in 1982. Sigma = greek symbol for one standard deviation, 𝜎 Six Sigma = # of standard deviations a processes' mean is from its specification limit. You shouldn't focus a lot of effort on six sigma (basic tools of quality = 90%, six sigma < 10%, outside specialist < 2%). A general rule of thumb is that you take care of low hanging fruit before you start thinking about six sigma.

Process Tampering

Adjusting a process when it only exhibits a random variation... this introduces nonrandom variation, which is bad.

Attributes Control Charts

Attributes deal with defects and defectives instead of continuous measurements. Defects (irregularity or problem) are countable and there could be many within the same unit. A defective unit = a unit that, as a whole, doesn't meet performance requirements.

Statistical Thinking

Based on 3 main concepts: 1. a production system focuses on interconnectedness of processes and variables. 2. variation is everywhere. 3. firms need to understand variation to reduce it.

Malcolm Baldridge National Quality Award

Best-known mechanism for self-assessment combined with external assessment. Created by the U.S. government. Applicant companies are assessed in 7 categories: 1. leadership 2. strategic planning 3. customer focus 4. measurement, analysis, and knowledge management 5. workforce focus 6. operations focus 7. results

Process Stability

If a process's variation is random and doesn't have an assignable cause.

Empathy

Caring and individualized attention. Examples: - beloved teachers - nice dentists

Fishbone Diagrams

Cause and effect diagrams used to identify underlying causes of problems. Sometimes the "problem is just a symptom of the problem. By continuously brainstorming and asking "why" (5 whys), managers and their teams can understand underlying causes.

Random Variation (Common Cause Variation)

Centers on a mean and occurs with a somewhat consistent amount of dispersion. Normally occurring; rarely a negative. Amount of variation can be large or small. Our statistical tools are NOT designed to detect random variation... hard to eliminate; takes design changes (product or process).

Financial Benchmarking

Comparing business results and accounting information.

Performance Benchmarking

Comparing costs structures, speed, quality levels, etc.

Strategic Benchmarking

Comparing firm competitiveness along several dimensions.

Functional Benchmarking

Comparing or learning how another firm performs a particular function such as call centers.

Process Benchmarking

Comparing processes such as how another company performs receiving or purchasing.

Product Benchmarking

Comparing product attributes and functionality.

Kaizen

Continual improvement of fine details using the plan, do, check, act cycle (Deming).

Variable

Continuous measurement such as weight, height, or value.

5 phases of Six Sigma

DMAIC 1. Define - define project goals and customer deliverables. 2. Measure - measure the process to establish current performance levels. 3. Analyze - analyze and determine the root causes of the defects. 4. Improve - improve the process by eliminating defects. 5. Control - control future process performance.

Shingo's Seven Wastes

DOTWIMP Defects Overproduction Transportation Waiting Inventory Motion Processing

Serviceability

Ease of repair for products. - no-question-asked guarantees - on-site repair - 100,000-mile warranties, bumper-to-bumper warranties

Lean/Six Sigma Mindset

Focus on renewal and renovation which result from removing anything wasteful. E.g. exercising, eating better, getting rid of fat.

Process Control Charts

Graphs designed to determine if a process has stability... visually see what a process is doing, how it is behaving. Can be based on variables or attributes. Don't apply to all situations; services are a tough fit for control charts because of customer-induced variation.

Pareto Diagrams

Pareto's Law: based on the 80/20 rule which states that 80% of quality problems are caused by 20% of causes. Helps identify and prioritize problems that need to be solved. Fixing a few problems can have a large impact.

Tangibles

Physical appearance and appropriateness of service facility and other related material attributes. Examples: - clean hotel rooms - attractive stage settings at a concert - nice looking brochures

CpK

Process capability index, a comparative measure of the extent to which individual products meet specification. The higher the index the better, or more capable, a process is in producing products that meet specification. Uses specifications limits in its calculations. 2.0 = world-class

Features

Product attributes that supplement the product's basic functionality. - Self-cleaning oven - Keyless entry to an auto - 4G on an iPad

Reliability

Propensity for a product to function over its useful life. - Long-life lightbulbs - Steelcase desks that last nearly forever

Perceived Quality

Quality assessment based on customer opinion. - most luxury goods - products that have reputations for reliability

Lean Management

Reducing waste in a methodical manner to optimize processes. Viewpoints: 1. Anything that doesn't add value for the customer should be eliminated. (philosophical) 2. Lean is a group of techniques or systems focused on optimizing quality processes. (systems) ***Combining the two viewpoints provides this combined definition of a lean system as a productive system whose focus is on optimizing processes through the philosophy of waste reduction.

Natural work group

Scope = customer or region centered Nature = people who normally work together are bound by a need to improve work in their area.

Process improvement team

Scope = local or single department Nature = involves improving existing projects and improving customer service.

Cross-functional team

Scope = multiple departments Nature = the project involves a variety of areas of expertise and has a big impact.

Self-directed work team

Scope = narrow or broad Nature = a team of peers works together to make needed improvements without a specified leader or top-down guidance.

Virtual team

Scope = narrow or broad Nature = people are dispersed around the country or world and work together over the Internet.

Tiger team

Scope = organization-wide Nature = specialists are assigned full-time to a project that needs to be completed quickly.

Project

a one-time, temporary endeavor with a defined beginning and ending.

SERVQUAL

a set of comparison surveys used to perform gap analysis in service firms and based on the notion that customers are more satisfied when their perceptions of a service are closely aligned with the service design of the service provider.

Critical Path Method (CPM)

plans projects using shortest paths.

Project Charter

project document that outlines: - primary deliverables - objective - parameters and includes: - resources allocated - project team members - measurable outcomes - budget allocation - signatures from top management Basically establishes boundaries. Can help guard against a scope creep (allowing the deliverables of a project to expand over time).

Qualifying Projects

projects are qualified prior to their initiation. Prioritize projects based on: 1. financial and strategic impact (return) 2. project difficulty and resources required (risk)

Nonrandom Variation (Special Cause Variation)

results from a specific event, which may be a shift in a process mean or an unexpected occurrence. Inconsistent mean and dispersion.

Program Evaluation and Review Technique (PERT)

uses networks for planning and controlling projects.

Performing

when a mutually supportive steady state is achieved.

Norming

when the team becomes a cohesive unit and interdependence, trust, and cooperation develop.

Forming

when the team is composed and the project objective is set.

Storming

when the team members begin to get to know each other and agreements have not yet been made that facilitate smooth interaction between team members.

x- and R charts

x- charts track the average/mean of the characteristic being measured. R charts track the dispersion/range of the process. The control limits are based on what the process is providing and don't represent specification limits.

International Organization for Standardization (ISO)

Trusted organization that ensures a quality system is in place and has been audited. - ISO 9000 = most significant quality standard for quality - Industry-specific standards = adaptations of the ISO 9000 standard to specific industries and situations

Statistical Process Control (SPC) Charts

Used to monitor process variation. Each point represents data from samples that are plotted sequentially over time. The Upper Control (UCL), Central Line (CL), and Lower Control Limit (LCL) are computed statistically.

Run Charts

Used to plot time series data, useful in identifying trends.

Scatter Plots

Used to study relationship between variables. Indicates variable can predict other variables

Check Sheets

Used to tally defects/problems by occurrence; serves as a data source for histograms and Pareto analysis.

Plan, Do, Check, Act (PDCA) Cycle

W. Edwards Deming's improvement cycle based on the scientific method. 1. Plan = process development; managers identify problems, assess root causes, and propose new and better methods for processing. 2. Do = process implementation; managers perform a trial experience to test their improvements. 3. Check = quality assurance; managers review their implementation to see if they achieved the desired results and make adjustments as necessary. 4. Act = process enhancement; managers make the improvements permanent.

Collaborative Supplier Relationships

Working with suppliers to provide value to customers. - long-term relationship with few suppliers - select & reward suppliers based on quality - train & develop suppliers - involve suppliers in design & troubleshooting

Work Breakdown Structure (WBS)

a brainstorming tool used to determine the required tasks for completing a project. It captures milestones/phases in projects.

Benchmarking

a comparison between your firm and an exemplar one in a given category... must be mutually for both companies.

Situational Leadership Model

a graph by Hersey and Blanchard that illustrates the correlation between task behavior, relationship behavior, and leadership behavior. telling: providing and following up on directions. selling/coaching: exhibits more emotional support. participating delegating

Assurance

The ability of service providers to inspire trust and confidence. Examples: - a reassuring president during a crisis

Service Reliability

The ability of the service provider to perform her job dependably and accurately. Examples: - trusted doctors - authors who write books with few errors

Statistical Process Control

The application of statistical concepts to the production process to see if your processes display stability (only random variation is present in the process).

Durability

The degree to which a product tolerates stress or trauma without failing. - Fisher-Price toys - Corelle nonbreaking dishes - Projects made with titanium alloys

Performance

The efficiency with which a product achieved its intended purpose. - Low product carbon footprint - Distortion level of speaker

Conformance

The extent to which products meet specifications. - Mating parts that fit together well - On-time delivery

Control Chart Evidence for Investigation

Indicators of an out-of-control situation: - one data point out, above. Investigate for cause of poor performance. - one data point out, below. Investigate for cause of variation. - two data points near UCL (beyond 2 standard deviations from the mean). Investigate for cause of variation. - two data points near LCL (beyond 2 standard deviations from the mean). Investigate for cause of variation. - 5 successive data point above CL. Investigate for cause of sustained process run. - 5 successive data points below CL. Investigate for cause of sustained below-mean performance. - 7 successive data points on increasing or decreasing line. Investigate for cause of progressive change. - Erratic behavior - Sudden change (drop/spike) in level ***In all instances, the reaction is to investigate, not adjust the process. If investigation doesn't turn up anything unusual, measure another sample. If after investigating you deem appropriate, you then adjust the process.

Philip Crosby

Known for: - "Quality is Free" book (quality = improved financial performance) - DRIFT principle ("Do it Right the First Time") - 14 steps for quality improvement

Kaoru Ishikawa

Known for: - Foremost Japanese leader in quality improvement - 7 basic tools of quality - Democratized statistics (anyone can use them) - Company-wide quality control

W. Edwards Deming

Known for: - Statical thinking (data-driven) - Focus on a system for quality improvement - Taught the Japanese about quality - Plan, Do, Check, Act (PDCA) Cycle - 14 points of management; the underpinnings for modern quality thinking

Joseph Juran

Known for: - Strategic Approach - Juran's Trilogy (planning, control, improvement) - Big Q Quality (strategic quality issues), Little Q Quality (tactical quality issues)

Sigma Levels and Defects

Level 1 = 691,462 defect (in parts per million) 2 = 308,538 3 = 66,807 4 = 6,210 5 = 233 6 = 3.4

Aesthetics

Subjective sensory attributes of a product such as taste, feel, sound, look, and smell. - cashmere socks - gold-plated faucets - plasma TVs

Responsiveness

The willingness of a service provider to be prompt and helpful. Examples: - short waiting times in doctors' offices - fast service at the DMV - quick and friendly service at a restaurant

Lean Iceberg

Tip of iceberg = excess inventory Below the surface there are other wasteful practices or hidden costs. It takes attention to detail to reduce these types of issues.

Quality

a subjective term for which each person or sector has its own definition. In technical usage, quality can have two meanings: 1. the characteristics of a product or service that bear on its ability to satisfy states or implied needs. 2. a product or service free of deficiencies.

Supply Chain Quality Management

a systems-based approach to performance management that leverages opportunities created by upstream and downstream linkages with suppliers and customers. A supply chain's product quality is limited by its weakest supplier. International suppliers present their own set of problems: - examples = loss of control, poor communication, fluctuation of order times - causes = volcano in Iceland, tsunami in Asia, bureaucratic snafu in India

Rapid Kaizen (Kaizen Event)

short-term event (days to multiple weeks) where a team focuses on solving a specific problem or an approach.

Process Capability

the ability of a process to produce a product that meets the specification. Once it's stable, make sure it's capable.

Project Management

the act of leading and directing the people and other resources in a project.