MTTN60 - General questions

[L1] Functional orientation

Each department optimizes its own goals (sales=revenue, ops=cost, purchasing=price, SC=inventory), causing silos, hand-offs, and fragmented ownership between functions.

[L1] Process orientation

Cross-functional, end-to-end, customer-focused view of work; fewer hand-offs and higher quality when they do occur, since parties understand each other's needs.

[L1] Input-transformation-output model

Suppliers -> Inputs -> Transformation -> Outputs -> Customers, wrapped by a Management System (with a filter) and surrounded by Context. Management system plans/controls/measures/improves.

[L1] Undesired outputs

Defects, delays, waste, emissions - byproducts of a process that no one wants.

[L1] Sociotechnical systems

Systems have a hard part (machines, equipment, materials, tech) and a soft part (people, incentives, skills, motivation); performance depends on both jointly. Illustrated by the Hawthorne lighting experiments.

[L1] Product-process matrix

Matches process type to volume/variety: Project -> Job shop -> Batch -> Line -> Continuous, as volume rises and variety falls. Mismatch (off-diagonal) = poor fit.

[L1] Effectiveness

External view: does the process meet customer/market requirements (quality, cost, delivery)?

[L1] Efficiency

Internal view: how well resources are used relative to a standard or benchmark.

[L1] Productivity

Total outputs / total inputs - an absolute ratio, not relative to a benchmark.

[L1] Principle #1

All operations are composed of processes.

[L1] Principle #2

Variation is inherent in all process inputs, tasks, and outputs. (Can be buffered by time, inventory, or capacity.)

[L1] Principle #3

Work-in-process is determined by throughput rate and throughput time (Little's Law).

[L1] Principle #4

Complexity in process design amplifies managerial challenges.

[L1] Principle #5

Process choice requires fit between the task and external requirements.

[L1] Principle #6

No single measure can capture the performance of a process.

[L1] Principle #7

Process metrics can drive unintended behavior.

[L1] Principle #8

Processes are improved by reductions in throughput time or in undesired variation. (Subprinciple: unmanaged processes deteriorate over time.)

[L1] Principle #9

The rate of process improvement is subject to diminishing returns.

[L1] Principle #10

Processes do not operate in isolation. (Structure drives behavior.)

[L1] Process Change Cycle - 4 stages

Process Measurement -> Process Characterization -> Process Analysis -> Process Improvement (Baker & Maddux).

[L1] Process Change Cycle - alt names

Change Driver -> Change Description -> Change Dissection -> Change Delivery (same 4 stages as above, different framing).

[L1] Rummler & Brache 11 steps (in order)

1) Identify critical business issue 2) Select critical process 3) Select team 4) Train team 5) Develop is-map 6) Find disconnects 7) Analyze disconnects 8) Develop should-map 9) Establish measures 10) Recommend changes 11) Implement changes.

[L1] Internal interface: Operations-Marketing/Sales

Clash over production planning (forecast trust), capacity planning, quality (conformance vs market fit), and new product introduction pace.

[L1] Internal interface: Operations-Engineering

Clash over design for manufacturability, pace of new product introduction, and need for reserve capacity for test/experimental runs.

[L1] Internal interface: Operations-Finance

Clash over equipment utilization (finance wants high utilization to "justify" cost; ops sees idle capacity as fine) and inventory (finance sees cost; ops sees useful buffer).

[L2] Mapping rule: gemba

Go to the actual workplace to capture the real process, not the process as people think it works.

[L2] Mapping rule: vital few

Capture the main aspects and stages, not every possible detail - aim for useful, not exhaustive.

[L2] Mapping rule: consistent methodology

Apply the same mapping method throughout so results are comparable.

[L2] Flowchart (basic)

Shows the sequence of activities, decisions and flows; builds shared understanding of how a process works.

[L2] Value-stream mapping

Maps material and information flow with a timeline; good for repetitive operations, Lean improvement, current-vs-future state comparison. Limitation: static, linear, one product family at a time.

[L2] Spaghetti diagram

Maps the physical movement of people/materials; measures total distance traveled and number of times an item is handled. Captures empirical "as-is" reality, unlike a theoretical flow diagram.

[L2] IDEF0

Hierarchical mapping method; each box = a process, distinguishing Inputs, Outputs, Controls/constraints, Mechanisms/resources. Can decompose from Level 0 into more detail.

[L2] Measurement categories (Ch.7)

Quality (defects, complaints, rework), Quantity (inventory, output), Time (throughput time, lead time, lateness), Cost/resource use, Flexibility, Environmental/social effects.

[L2] Sandcone model

Process improvement must build in sequence: capable -> dependable/in control -> faster (swift, even flow). You can't skip layers and expect improvements to stick.

[L2] Backsliding

A process improvement slides back to its original performance level, wasting the investment; often caused by short-term metrics and lack of follow-up.

[L2] Bunny-hop

Repeated cycles of backsliding as each new manager launches a new improvement wave that quickly fades, causing "initiative fatigue" among staff.

[L3] Competitive priorities

Quality, delivery speed, delivery reliability, price/cost, volume flexibility, product-mix flexibility - the market-facing factors operations must support.

[L3] Order qualifier (OQ)

Minimum criteria required just to be considered by the customer; threshold-based; meeting it does not win the order, but falling below it removes you from consideration.

[L3] Order winner (OW)

Criteria that cause the customer to choose one qualified supplier over another; requires being relatively better than competitors, not just adequate.

[L3] Six decision categories

Process, Capacity, Facilities, Vertical integration/SCM, Organization, Planning & control systems.

[L3] Lead capacity strategy

Install capacity ahead of demand. Pro: short lead times, flexibility. Con: lower utilization, cost of excess capacity.

[L3] Lag capacity strategy

Install capacity only after demand is established. Pro: high utilization. Con: risk of under-capacity, lost orders.

[L3] Track capacity strategy

Increase capacity incrementally to follow demand closely; alternates between slight excess and slight shortfall.

[L4] Flow rate / throughput rate (R)

Average number of units completed per unit of time.

[L4] Flow time / throughput time (T)

Average time a unit spends in the process, start to finish.

[L4] Inventory / WIP (I)

Average number of units inside the process at a given time.

[L4] Little's Law

I = R x T (equivalently WIP=THCT, or L=lambdaW). Requires a stable process (consistent in/outflow) and consistent units.

[L4] Capacity (per resource)

Available resource time / time required per flow unit.

[L4] Bottleneck

The resource with the lowest effective capacity; determines the capacity of the whole process. Improving a non-bottleneck does not raise total output.

[L4] Flow-time efficiency

Theoretical flow time / Actual flow time. Low ratio = most elapsed time is non-value-adding (waiting, queuing, rework).

[L4] Utilization (rho)

rho = R / Rp, where R = actual throughput rate (= inflow rate when stable) and Rp = process/service rate (capacity).

[L4] Coefficient of variation (C)

Standard deviation / mean. Ca = for interarrival times, Cs = for processing times.

[L4] Single-server queueing formula

Iq = [rho^2 / (1-rho)] x [(Ca^2 + Cs^2) / 2]. Iq = avg inventory waiting in queue (not being served).

[L4] M/M/1 special case

When Ca = Cs = 1 (exponential arrivals & service), formula reduces to Iq = rho^2 / (1-rho).

[L4] Three buffers against variation

Capacity buffer (excess capacity), Inventory buffer (hold stock), Time buffer (longer lead times/queues). Substitutes for each other to a degree.

[L5] S&OP purpose

Long-term, aggregate planning process that balances demand and supply and links strategic planning to operational planning; ~1.5-2 year horizon, monthly periods, product-family level.

[L5] S&OP monthly process - 4 stages

1) Demand planning (marketing/sales forecasts) 2) Supply planning (purchasing/SC feasibility) 3) Balancing meeting (resolve demand-supply mismatch, capacity strategy, finance checks viability) 4) Decision meeting (executives finalize total volume).

[L5] Level strategy

Produce at a constant rate regardless of demand fluctuation; relies on inventory to absorb variation. Fits high-volume, standardized, stable products.

[L5] Chase strategy

Adjust production rate to match demand as closely as possible; relies on flexible capacity (overtime, hiring). Fits low-volume, customized, variable products.

[L5] Hybrid strategy

Mix of level and chase - partially adjusts production, partially uses inventory as buffer.

[L5] Grimson & Pyke S&OP maturity - 5 stages

1) No S&OP 2) Reactive 3) Standard 4) Advanced 5) Proactive. Progression: silos -> cross-functional/external collaboration; no ownership -> executive-supported teams; operational metrics -> forecast accuracy/profitability metrics; spreadsheets -> integrated ERP.

[L5] Grimson & Pyke key conclusion

Business-process maturity, collaboration, and leadership matter more than sophisticated IT - software enables S&OP but doesn't create it.