SCM 301 Exam 2 Self made

The primary objectives of a good facility layout are:

Reduce congestion

Minimize material handling

Provide for flexibility in operation

Layouts need to

devote as much space as possible to value adding activities.

Good facility layouts lead to

a safer work space.

Service operations are classified based on their

degrees of labor intensity and customization.

Manufacturing Process decisions impact

people, facilities, physical layouts and information systems,

Quality

is defined as "conformance to a specification".

External failure costs are

high in terms of dollars and reputation.

ISO 9000

a series of certifications often sought by manufacturing companies.

Several of the early Quality Gurus stressed that

if you can measure a process, then you can improve it.

Suppliers have a direct impact on

both quality and cost. Supplier quality needs to be measured and reported.

High warranty costs result from

poor quality levels.

The Six Sigma DMAIC Process is

widely used in industry.

Six Sigma is the mathematical equivalent of

3.4 defects per million.

Six Sigma is much more statistically rigorous than

Total Quality Management

When the root cause of a defect is removed or corrected,

the defect is eliminated.

The primary purpose of inventory is to

decouple supply and demand

Cycle Counting is a best practice for

increasing inventory accuracy.

ABC Inventory Classification

assigns differing degrees of control over parts being held in inventory.

Quantity discount models seek to

balance order cost and holding costs.

The EOQ formula is seldom used due to

flaws in its assumptions (ex. instantaneous replenishment) and because it does not consider volume purchasing discounts.

Inventory Management decisions

require trade-offs between inventory investment and customer service levels.

Inventory Turnover, Days Sales Outstanding, and Percent Slow Moving

are commonly used inventory metrics.

Work-In-Process and In-Transit inventories may be

difficult to measure at the end of a financial reporting period.

Inventory Carrying Costs (capital, taxes, storage, insurance, pilferage) can be as high as

35 to 40 percent.

Inventory write-offs can have a

very negative impact on the balance sheet.

Improved forecasting and demand management practices can help to

prevent excess and obsolete inventory.

Changes in inventory levels impact

Return on Asset (ROA) metrics.

Product line Advantages/Disadvantages

Advantages:

- reduces material handling

- results in smaller WIP inventories

- simplifies Production Control tasks

- Tasks are simplified (unskilled labor)

Disadvantages:

- Lack of Process Flexibility

- Lack of flexibility in Timing

- Larger capital investment in equipment

- Worker fatigue

Process Layout (Job Shop) Advantages/Disadvantages

Advantages:

- Flexibility

- Smaller Capital Investment in Equipment

- Expertise of Workers

- Diversity of tasks

Disadvantages:

- Increased material handling costs

- Production Control’s task is more complicated

- Lack of timing efficiency

- Workers tend to be highly paid

Batch Manufacturing

A type of manufacturing process where items are moved

through the different manufacturing steps in groups or batches.

• Fits between job shops and lines in terms of production volumes and flexibility

and strikes a balance between the flexibility of a job shop and the efficiency of a

line.

• It is the most common type of manufacturing process.

• The sequence of steps is not as tightly linked as in a production line.

• Flexible Manufacturing Systems – Highly automated batch processes that can

reduce the cost of making groups of similar products.

Fixed-Position Layout

A type of manufacturing process in which the position of

the product is fixed.

• Materials, equipment, and workers are transported to and from the product.

• Used in industries where the products are bulkier, massive, or heavy and

movement is problematic.

• Examples include shipbuilding, construction projects, and traditional home

building

Continuous-Flow Processes

A type of manufacturing process that produces highly

standardized products using a tightly linked, paced sequence of steps.

• Closely resembles the production line process.

• Form of product usually cannot be broken into discrete units.

• Process Flow Industry

• Examples include yarns and fabric, food products, and chemical products such

as oil and gas

3D Printing

An additive manufacturing process that creates a physical object from a digital

design.

• A digital model is turned into a solid three-dimensional physical object by

adding material layer by layer.

• It allows manufacturing to occur when and where the item is needed, which can

be a real advantage when time is of the essence or when shipping an item from

a plant to its final destination is difficult.

• can be a good fit for bottleneck quadrant items because they are hard to get and this process makes it available whenever you need it

four levels of customization

Make-to Stock, Make-to-Order, Engineer-to-Order, Assemble-to-Order

Make-to-stock (M T S)

Products that require no customization.

Assemble-to-order (A T O)

Products that are customized only at the very end of the manufacturing process.

Make-to-order (M T O)

Products that use standard components but have customer-specific final configuration of those components.

Engineer-to-order (E T O)

Products are designed and produced from the start to meet unusual customer needs or requirements.

Quality Engineering

prevent defects (good costs) spend money to prevent them.

designing better processes, better product specs, better methods, training, prevention, etc.

Quality Control (bad costs)

detects defects (bad costs) spend money to check and deal with defects

inspection, testing, rework, scrap, warranty issues, and so on.

8 Dimensions of Quality

• Performance

• Features

• Reliability

• Durability

• Conformance

• Aesthetics

• Serviceability

• Perceived Quality

Performance

How well does it do its main job?

• Example: towing capacity of a truck

Features

What extra things does it have?

• Example: accessories or an extended warranty.

Reliability

How consistently does it work without problems?

• Example: how often a car needs repairs.

Durability

How long does it last?

• Example: expected life of an engine.

Conformance

Does it meet the specifications/requirements?

• Example: number of defects or recalls.

Aesthetics

How does it look or feel?

• Example: styling and interior appearance.

Serviceability

How easy is it to repair/service?

• Example: availability and cost of mechanics.

Perceived Quality

What reputation/perception does it have?

• Example: whether customers view a brand as high quality

importance of Process Capability

Reductions in process variance lead to higher process capabilities.

Total Quality Management (TQM)

Management of an entire organization so that it excels in all quality

dimensions that are important to customers. TQM is as a business

philosophy that is based around seven core ideas or principles:

• Customer focus

• Leadership involvement

• Continuous improvement

• Employee empowerment

• Quality assurance

• Strategic partnerships

• Strategic quality plan

Lean Six Sigma

is a combination of Six Sigma and Lean

Definition of ISO 9000

A family of standards supported by the International Organization for Standardization representing an international consensus on good quality management practices.

Consumer’s risk

The probability of accepting a lot with quality worse than the LTPD level.

Producer’s Risk

The probability of rejecting a good lot.

Acceptable quality level (AQL)

The maximum defect level at which a consumer would always accept a lot.

Lot tolerance percent defective (LTPD)

The highest defect level a consumer is willing to tolerate

7 Basic Quality Tools

Process Flow Diagram
Cause and Effect Diagram (Fishbone Diagram)
Pareto Chart
Run Chart
Scatter Diagram
Histogram
Control Chart

Six Sigma

A customer and process focused, data-driven, cross-functional approach to process improvement and problem solving aimed at the near-elimination of defects from products, process, and transactions.

• The goal is to improve processes to meet or exceed customer requirements and eliminate waste from processes

• It is relevant to all functional groups within the organization.

• Six Sigma is both a philosophy and a toolbox.

The DMAIC process

Define

Measure

Analyze

Improve

Control

A items

most important/highest value → tightest control

B items

medium importance → moderate control

C items

least important/lower value → simplest control

Cycle Counting

- train a limited number of personnel the procedure

- select items for counting each day

- count the selected items, compare counts to inventory records, then determine causes of any errors

Real World Classifications of Inventory

Raw Materials

Work In Process (WIP)

Finished Goods

In-Transit

Supply uncertainty

The risk of interruptions in the flow of components from upstream suppliers.

Demand uncertainty

The risk of significant and unpredictable fluctuations in downstream demand.

Independent demand inventory

Inventory items whose demand levels are beyond a company’s complete control.

• demand external to the company (end items and spares)

Ex: Kitchen table – Need 500 tables for 5 weeks from now

Dependent demand inventory

Inventory items whose demand levels are tied directly to a company’s planned production of another item.

• demand internal to the company (raw materials,parts and sub-assemblies)

Ex: Kitchen table legs – Need 4 per table or 2,000 legs

Bullwhip Effect

an extreme change in the supply position upstream in a supply chain generated by a small change in demand downstream in the supply chain.