OM Final Exam

Operations and Supply Chain Management

The design, operation, and improvement of the systems that create and deliver the firm’s primary products and services

Operations

Manufacturing and service processes used to transform resources into products

Supply Chain

Processes that move information and material to and from the firm

Planning

Processes needed to operate an existing supply chain. How to meet anticipated demand with available resources to deliver high quality and value to the customer

Sourcing

Selection of suppliers that will deliver the goods and services needed to create the firm’s product

Making

Producing the major product or service

Delivering

Logistics processes such as selecting carriers, coordinating the movement of goods and information, and collecting payments from customers

Returning

Receiving worn-out, excess, and/or defective products back from customers

Supply Chain Process Activities

Planning, sourcing, making, delivering, and returning

Operations Management

Management of the process which transforms inputs (e.g. raw material, capital, information & labor) into outputs (finished goods and services)

Goods

Can be stores, tangible output with physical dimensions, generally produced in a facility separate from the customer

Services

Perishable and time dependent, intangible process, can’t be measures or patented, requires some degree of interaction with the customer

Supply Chain Risk

The likelihood of a disruption that would impact the ability of a company to continuously supply products or services (involved with day to day management)

Operations and Supply Chain Strategy

The setting of broad policies and plans that will guide the use of the resources needed by the firm to implement its corporate strategy

Operations Effectiveness

Performing activities in a manner that best implements strategic priorities at a minimum cost

Sustainable Strategy

Strategy that meets value goals without compromising the ability of future generations to meet their own needs

Triple Bottom Line

Evaluating the firm against social, economic, and environmental criteria

Social Responsibility

Fair and beneficial business practices toward labor, the community, and the region in which a firm conducts its business

Operations Strategy

Concerned with the strategic decisions and actions that relate to the role, objectives and activities of the Operations to support the Business Strategy such as facilities, work force, tech, processes, quality

Competitive Dimensions

Price, quality, delivery speed, delivery reliability, coping with changes in demand, flexibility and new product introduction speed

Order Qualifiers

Those dimensions that are necessary for a firm’s products to be considered for purchase by customers

Order Winners

Criteria used by customers to differentiate the products and services of one firm from those of other firms

Manufacturing Processes

Used to make tangible goods

Lead Time

The time needed to respond to a customer order

Customer Order Decoupling Point

Where inventory is positioned to allow entities in the supply chain to operate independently

Lean Manufacturing

A means of achieving high levels of customer service with minimal inventory investment

Make to Stock

Serve customers from finished goods inventory

Assemble to Order

Combine a number of preassembled modules to meet a customer’s specifications

Make to Order

Make the customer’s product from raw materials, parts, and components

Engineer to Order

Work with the customer to design and then make the product

Project Layout

The product remains in a fixed location and manufacturing equipment is moved to the product

Workcenter (Job Shop)

Similar equipment or functions are grouped together

Manufacturing Cell

A dedicated area where products that are similar in processing requirements are produced

Assembly Line

Work processes are arranged according to the progressive steps by which the product is made

Continuous Process

Assembly line only the flow is continuous such as with liquids (mass production)

Process

Any part of an organization that takes inputs and transforms them into output

Cycle Time

The average successive time between completions of successive units

Utilization

The ratio of the time that a resource is actually activated relative to the time that it is available for use

Theory of Constraints

The maximum throughput of a system is that of the slowest operation (constraint or bottleneck)

Bottleneck Time

The time of the slowest workstation (the one that takes the longest) in a production system

Throughput Time

The time it takes a unit to go through production from start to end

Buffer

A storage area between stages where the output of a stage is placed prior to being used in a downstream stage

Blocking

Occurs when the activities in a stage must stop because there is no place to deposit the item

Starving

Occurs when the activities in a stage must stop because there is no work

Bottleneck

Stage that limits the capacity of the process

Process Flowcharting

The use of a diagram to present the major elements of a process

Rectangle

Tasks or operations (flow chart)

Triangle

Storage areas or queues (flow chart)

Diamond

Decision points

Arrow

Flows of material or customers

Push System

Produce based on a best guess about what the customer will order

Pull System

Produce based on what the customer orders

Benchmarking

Comparing the metrics of one company to another

Productivity

The ratio of output to input

Efficiency

A ratio of the actual output of a process relative to some standard

Little’s Law

Inventory = Throughput Rate * Throughput Time

Classic Accommodation

Extra employees, or additional skills to compensate for variations among customers

Low Cost Accommodation

Low-cost labor, outsourcing, self-service

Classic Reduction

Customers engage in more self-service, use reservation system, adjust their expectations

Uncompromised Reduction

Target a homogenous customer base avoiding costs and inefficiency of accommodating to diverse and variable customers

Instrumental Controls

Approach to influence behavior of customers that involves tangible costs and rewards

Normative Controls

Approach to influence behavior of customers that uses values and beliefs called norms-social-approval or disapproval

Customer Journey

The sum of experiences the customer has over time during the purchase cycle across multiple touchpoints

Principle of Waiting #1

Unoccupied time feels longer that occupied time

Principle of Waiting #2

Pre-process waits feel longer that In-Process waits

Principle of Waiting #3

Anxiety Makes waiting seem longer

Principle of Waiting #4

Uncertain waits are longer than finite waits

Principle of Waiting #5

Unexplained waits are longer than explained waits

Principle of Waiting #6

Unfair waits are longer than equitable waits

Principle of Waiting #7

The more valuable the service, the longer we will wait

Principle of Waiting #8

Solo waiting feels longer than group waiting

Quantifiable Costs of Waiting

Salaries paid to employees, cost of space of waiting, loss of business

Unquantifiable Costs of Waiting

Loss of customer goodwill, loss of social welfare

Queue Discipline

A priority rule or set of rules for determining the order of service to customers in a waiting line

Single Channel, Single Phase

Simplest type of waiting line structure

Single Channel, Multiphase

One line, multiple steps

Multichannel, Single Phase

More than one line going through a single, identical server

Multichannel, Multiphase

More than one line going through multiple servers

Mixed

Multiple-to-single channel structures

Capacity

The ability to hold, receive, store, or accommodate

Optimal Capacity

Must minimize cost and wear and tear, and maximize output

Capacity Utilization Rate

A measure of how close the firm is to its best possible operating level

Flexible Plants

Ability to quickly adapt to change (Circus tents, Toyota flex assembly) with low-changeover time

Flexible Processes

Flexible manufacturing systems (3Dprint, LEGO,), simple, easily set up equipment

Flexible Workers

Ability to switch from one kind of task to another quickl (multiple skills)

Design Capacity

Refers to the maximum designed capacity or output rate

Effective Capacity

The design capacity minus personal and other allowances

Lead Strategy

Involves upfront investment in more capacity that is needed, aggressive strategies

Lag Strategy

Waits until the current capacity is stretched to its limits before adding more capacity

Match Strategy

involves monitoring the market for demand increases and decreases on a regular basis and adjusts capacity to match demand.

Sharing Capacity

Firms may borrow or share existing capacity from another firm

Agile Workforce Management

Workforce that can adapt to changing production requirements, flexible work arrangements, cross training, continuous learning, collaboration

Scalable Production Infrastructure

Modular, flexible, technologies (robotics, automation) fast adjustments

User Based Quality

Better performance, more features, durable

Manufacturing Based Quality

Conformance to standards, making it right the first time

Product Based Quality

Specific and measurable attributes of the product

Quality

The degree to which a product or service meets or exceeds customer´s needs and expectations

Quality of Design

Inherent value of the product in the marketplace

Quality of Conformance

Degree to which the product or service meets design specifications

Total Quality Management

A commitment by management to have a continuing company-wide effort toward excellence in all aspects of products and services that are important to the customer