Supply chain chp 8

Operations Management refers to managing the process of converting resources into goods and services, in alignment with the company's

business strategy, as efficiently and effectively as possible while also controlling costs

Manufacturing

To make or transform raw materials and components into a finished product

Manufacturing Management

the management of all the processes and resources involved in manufacturing.

LEAN

an operating philosophy of waste reduction and value enhancement (improves the supply chain “flow” by eliminating waste)

Six Sigma

statistical based, data driven methodology for identifying and removing the causes of

defects and minimizing variability in manufacturing and business processes (improves the supply chain “process” by reducing variation)

4 Major Manufacturing Strategies

Make-to-Stock (MTS)

Make-to-Order (MTO)

Assemble-to-Order (ATO)

Engineer-to-Order (ETO)

Make-to-Stock (MTS) manufacturing products for stock based on demand forecasts (push system).

Most daily necessities such as foods, sundries, and textiles are MTS-type products

The challenge of MTS is to

avoid having excess inventory

Make-to-Order (MTO)

a manufacturing strategy that starts the manufacturing process only after a customer's order is received

The MTO strategy relieves

the problems of excessive inventory that is common with the Make-to-Stock strategy.

Assemble-to-Order (ATO)

a manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent

Dell Laptop Computers (ATO)

a hybrid strategy, that attempts to combine the benefits of both Make-to-Stock and Make-to-Order strategies, getting products into customers' hands quickly while allowing for some customization to take place.

Engineer to Order (ETO)

a manufacturing strategy in which the product is designed, engineered, and built to the customer’s specifications after receipt of the order.

ETO involves

building a unique product every time. There may be standard components from one product to another, but the finished product differs each time.

Intermittent Processes

used to produce many products with different processing requirements in lower volumes.

Repetitive Processes

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

Types of Manufacturing Processes

Job shop production, batch production, line flow production, continuous flow production

Job Shop Production

One off or small number of items produced, generally one unit manufactured at a time for a customer

Batch Production

Manufacturing a small fixed quantity of an item in a single production run.

Line Flow Production

Product moves on an assembly line through various stages of production, for standardized products with a limited number of variations

Continuous Flow Production

Involves a series of processes through which raw materials flow, these processes are very inflexible. High capital investment – frequently dedicated to one specific product

Machine Learning

subfield of AI, it involves using computer systems that can learn and adapt without following explicit instructions by using algorithms and statistical models to analyze and draw inferences from patterns in data.

Automation

using technology and machines to perform specific tasks without requiring humans to intervene.

Smart Manufacturing

using advanced, connected technologies to coordinate physical and digital processes within factories and across the supply chain, aiming to improve performance.

Internet of Things (IoT)

Network of physical objects connected to the Internet that can communicate with each other and the cloud. These objects are embedded with sensors, software, and other technologies, creating a vast network of interconnected devices that can collect and exchange data and perform various tasks autonomously.

IoT devices can be used in manufacturing to monitor

machine performance, detect equipment failures, and optimize production processes

3D Printing

an additive manufacturing process in which a physical object is created from a digital design by printing thin layers of material in liquid or powdered plastic, metal, or cement and then fusing the layers.

Total Cost of Manufacturing

Aggregate cost of producing and delivering products to your customers. (Cost per unit)

TCM includes:

Manufacturing, Procurement, Inventory, Warehousing, Transportation activities

As the volume goes up . . .

Manufacturing, Procurement, Inventory, Warehousing, Transportation costs go up

The goal of LEAN

elimination of waste and the minimization of the amount of all resources used in the operation of a company

Value

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

Components of LEAN

A. LEAN Manufacturing

B. Respect for People

C. Total Quality Management

1)Waste Reduction

Firms reduce costs and add value by eliminating waste from the production system.

2)LEAN Layout

Move people and materials when and where needed and as soon as possible. Are very visual (lines of visibility are unobstructed), with operators at one processing center able to monitor work at another

3)Setup Time and Changeover Time

both considered wastes as they are times when the equipment is not performing its intended function or producing a product.

4) Small Batch Scheduling & Uniform Plant Loading

The ideal schedule is to produce every product as quickly as possible and at the same rate as customer demand. Large batches can exacerbate the Bullwhip Effect as production in large batches creates an uneven workload

Uniform Plant Loading Problem

Matching the production plan to follow demand exactly can contribute to inefficiency and waste, including excess inventory or shortages

5) LEAN Supply Chain Relationships

an ideal LEAN supply chain relationship, customers and suppliers connect in ways that allow them to easily exchange information, demand data, and the visibility of status.

6) Workforce Commitment

employees are cross-trained on various production processes to adjust capacities as needed when machines break down or when workers are absent.

Continuous Improvements

A system involving every employee based on making little changes regularly, anywhere changes can be made, to reduce process, delivery, and quality problems.

Respect for all people must exist for an organization to be at its best

involves a flatter hierarchy than traditional organizations. Ordinary workers are given greater responsibility

The Role of Management

Provide an atmosphere of cooperation. Empower workers to take action based on their ideas. Develop incentive systems to recognize and reward LEAN behaviors.

The Role of Suppliers

have the fewest high-quality suppliers possible without unnecessarily increasing risk

Total Quality Management (TQM)

a management philosophy based on the principle that employees must maintain high work standardsstandards in every aspect of a company's operations.

TQM combines quality and management tools designed to

Increase business and reduce losses resulting from wasteful practices.

Kaoru Ishikawa

developed one of the first tools in the quality management process, the Cause-And-Effect Diagram, also called the "Ishikawa" or "fishbone" diagram

W. Edwards Deming

widely considered the father of TQM. He is the creator of the Plan-Do-Check-Act model. He developed 14 points to guide companies in quality improvement

Philip Crosby

He introduced the concepts of zero defects and the focus on prevention, not inspection. Demonstrated what a powerful tool the cost of quality could be to raise awareness of the importance of quality.

Voice of the Customer (VOC)

A term used in business to describe the process of capturing internal and external customer's expectations, preferences, likes, and dislikes

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.

Appraisal Costs

are associated with evaluating purchased materials, processes, products, and services to ensure they conform to specifications.

Prevention Costs

are related to the quality management system's design, implementation, and maintenance. They are planned and experienced before products or materials are acquired or produced

Internal Failure Costs

occur when the product or service does not meet the designed quality standards and are identified before the product or service is delivered to the customer.

External Failure Costs

occur when the product or service does not meet the designed quality standards, but they are only detected after the product or service is delivered to the customer.

What is Six Sigma?

focuses on improving the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.

The goal of Six Sigma is to attain less than

3.4 Defects Per Million Opportunities (DPMO)

3 foundational aspects of Six Sigma:

1. Quality is Defined by the Customer

2. The Use of Technical Tools

3. People Involvement

Quality is Defined by the Customer

Customers want quality that is appropriate to the price that they are prepared to pay and the level of competition in the market.

The Use of Technical Tools

Six Sigma provides a statistical approach to solving any problem and thereby improves the quality level of the product and the company. And is concerned with the permanent fix to quality problems and seeks to identify and correct the root cause of the issue through the use of Root Cause Analysis.

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 DMADV Methodology

Define --> Measure --> Analyze --> Design -->Verify: a data-driven quality strategy for designing products & processes.

DMAIC Methodology:

Define --> Measure --> Analyze --> Improve -->Control: a data-driven quality

strategy for improving products & processes.

The 5 Hows Technique

a questioning technique for drilling down into the details of a potential solution to a known problem. You go up the ladder by asking "why" and down it by asking "how."