Supply Chain - Chapter 10 & 12

Quality

the characteristics of a product that influences its ability to satisfy implied need

Customer Satifaction

meeting or exceeding customer expectations

Total Quality Management

managing the entire organization so that it excels in all dimensions of products and services that are important to the customer

1 Careful design of the product or service

2 Ensuring that the organization’s systems can consistently produce the design

2 fundamental operational goals

Performance: basic operating characteristics

Features: extras beyond the basics

Reliability: length of time before a failure

Durability: useful life

Conformance: meets specifications

Aesthetics: appeal to the senses

Serviceability: easy to repair

Perceived Quality: reputation

Product Quality Dimensions

Reliability: the ability to perform the promised service dependency

Assurance: knowledge and courtesy of employees and their ability to inspire trust

Tangibles: physical facilities, equipment, and appearance of personnel

Empathy: caring, individualized attention the firm provides its customers

Responsiveness: willingness to help customers and provide prompt service

Service Quality Dimensions

Prevention Costs: costs an organization incurs to actually prevent defects from occurring to begin with

Appraisal Costs: costs a company incurs for assessing its quality levels

Internal Failure Costs: costs caused by defects that occur prior to delivery to the customer

External Failure Costs: costs incurred by defects that are not detected until a product or service reaches the customer

Total Cost of Quality

Six Sigma

• a philosophy and set of methods companies use to eliminate defects in their products and processes

• seeks to reduce variation in the processes that leads to product defects

• the goal of no more than 3.4 defects per million opportunities

• a metric used to describe the variability of the process

• requires three pieces of data:

  • Unit - the item produced

  • Defect - any item that does not meet the customer’s requirements

  • Opportunity - a chance for a defect to occur

Defects per Million Opportunities

Define: identify customers and their priorities

Measure: determine how to measure the process and how it is performing

Analyze: determine the most likely causes of defects

Improve: identify means to remove the causes of defects

Control: determine how to maintain the improvements

DMAIC Cycle

Flowchart

shows a sequence of operations

Run Chart

depicts trends in data over time

Pareto Chart

help to break down a problem into components

Checksheet

basic form to standardize data collection

Cause-and-effect diagram

show relationships between causes and problems

Opportunity flow diagram

used to separate value-added from non-value-added

Process control chart

used to assure that processes are in statistical control

Statistical Quality Control (Statistical Process Control)

the application of statistical techniques to determine whether a process is delivering what the customer wants

Statistical Process Control

Statistical Quality Control is also referred to as…

Common causes of Control Charts

random, unidentifiable variation that cannot be limited

Assignable causes of Control Charts

variation that can be identified and eliminated

Variables

product characteristics that can be measured

• X-chart and R-chart

Attributes

product characteristics that can be counted

• P-chart and C-chart

Sampling

using carefully selected samples to get a fairly good idea of how well a process is working

Control Charts

a chart to help an organization to track changes in key measures over time

• one of more points is outside of the limits

• trend, sudden change, position of points

A process is considered “out of control” when…

Lean

maximize customer value while minimizing waste; creating more value for customers with fewer resources

Lean Production

integrated activities designed to achieve high volume production using minimal inventories

Value Chain

each step in the supply chain should create value

Customer Value

something for which the customer is willing to pay

Value Stream

the value-adding and non-value-adding activities required to design, order, and provide a product or service

Waste

anything that does not add value from the customer’s perspective

Waste Reduction

the optimization of the value-adding activities and the elimination of non-value-adding activities

Defects: failure to meet the requirements of internal or external customers

Overproduction: producing at a rate that exceeds demand

Waiting: time spent in queues between steps in a process

Non-utilized Resources: people are seen as a source of labor only and are told what to do and not to think; they are not consulted for improvement ideas.

Transportation: movement of materials or information from one place to another. movement does not create value, and each handling step entails a potential for error

Inventory: inventory held in excess of the quantity demanded. nothing good happens to excess inventory: it gets damaged, lost, stolen, or becomes obsolete

Motion: inefficient workstation design requiring excess bending, walking, reaching, handling, lifting, or awkward grasping

Excessive Progressing: using the wrong process, including over-automating or under-automating; inspection that does not take place at the source

8 forms of Lean Waste

Value Stream Mapping

a special type of flowcharting tool used to analyze where value is or is not being added as material flows through a process

Creating of lean processes…

requires a full understanding of the business, including production process, material flows, and information flows

• able to respond to changes

• prices are lower due to efficiency

• higher quality

Lean Suppliers

• key is automation

• suppliers must be able to “see” into the customer operations and customers must be able to “see” into their suppliers operations

Lean Procurement

• produce what the customers want, in the quantity they want, when they want it, and with minimum resources

Lean Manufacturing

• eliminate non-value-added steps and waste in the product storage processes

• functions include: receiving materials, putting away/storing, replenishing inventory, picking inventory, packing for shipment, and shipping

Lean Warehousing

• optimized mode selection and pooling orders

• combined multistep truckloads

• optimized routing

• cross docking

• Import/export transportation processes

• backhaul minimizations

Lean Logistics

• understand their business needs

• specify meaningful requirements

• value speed and flexibility

• establishing effective partnerships with suppliers

• expect value from the products they purchase

Lean Customers

Pull Method of Work Flow - LEAN

a method in which customer demand activates production of the service or item

Push Method of Work Flow - NOT LEAN

a method in which the production of the items begins in advance of customer needs

Kanban

a signaling device used to control production