Ops Final

What is strategic sourcing, and what does it align?

systematic, long-term approach to selecting and managing suppliers which aligns purchasing decisions with a firm's competitive strategy, cost structure, risk tolerance, and operational priorities.

T or F: Strategic sourcing sits upstream in the supply chain

True

Why is the Purchasing team described as having Bridge Role?

Because the role is both inward-facing (understanding internal requirements from engineering, finance, etc.) and outward-facing (managing and resolving issues with external suppliers).

How does Supply Chain Management impact Return on Assets (ROA)?

By reducing costs (increasing Net Income) and reducing inventory levels (using fewer Total Assets), a firm can significantly drive up its ROA.

What is the Bullwhip Effect?

small changes in customer demand ripple through to create larger and larger changes as orders move through the supply chain

How can the Bullwhip Effect be mitigated?

Through communication strategies and sharing real-time demand data across all levels of the supply chain.

What are two common causes of the Bullwhip Effect mentioned in class?

1. Demand signal processing

2. Forward buying

What is the main difference between Zara's Markdown rate and a traditional retailer's?

Zara's markdown rate is much lower (15%) compared to traditional retailers (30%), leading to higher operating margins.

How does Zara use Vertical Integration differently than its competitors?

Zara owns much of its production and distribution and uses local factories for trendy items to stay responsive, rather than relying solely on far-away global factories.

What is a primary risk of Just-In-Time (JIT) inventory?

Increased vulnerability to supply chain disruptions (like natural disasters or supplier strikes) because there is no safety stock "buffer."

In supply chain design, what is the trade-off for using Global Factories?

They offer lower manufacturing costs but result in much longer lead times and less flexibility to react to changing trends.

What type of products are best to be produced in local factories?

Trendy products

What are the 3 primary goals of project management?

1. Scope

2. Cost of resources

3. Time schedule

What are the 4 defining traits of a project?

1. Temporary

2. Time-bound

3. Unique purpose

4. Requires resources

T or F: Team membership is directly correlated with team success

False, team membership does not predict team success

What are the 2 components of psychological safety?

1. Conversational turn-taking

2. Ostentacious listening

What is the single greatest correlate of team success?

psychological safety

What is the Critical Path?

The longest sequence of activities in a project network that determines the earliest the project can be completed

What is Slack, and how is it calculated?

The amount of time an activity can be delayed without delaying the project. Formula: Slack=LS−ES or LF−EF.

What is the definition of Crashing?

Shortening the duration of a project by reducing the time of one or more "critical" activities at an additional cost.

How do you determine which activity to crash first?

You crash the activity on the Critical Path that has the lowest crash cost per day.

When should you stop crashing a project?

When the cost to crash the next day is greater than the potential savings

Besides psychological safety, what are 4 other traits of a good team mentioned in the notes?

1. Belief that work matters

2. Work is personally meaningful

3. Clear goals and defined roles

4. Dependability

What is a network diagram?

A visualization of activities, sequence, dependencies, and time

T or F: there will never be any slack on the critical path

True

What are the 3 components of total project cost?

1. Indirect costs

2. Direct costs

3. Penalty costs

What are the four categories of the Cost of Quality?

1. Prevention Costs: Costs to prevent defects (training, planning).

2. Appraisal Costs: Costs to inspect and test products.

3. Internal Failure Costs: Defects found before the customer sees them (scrap, rework).

4. External Failure Costs: Defects found by the customer (warranty, loss of goodwill).

Which of the four Costs of Quality is generally the most expensive?

External Failure Costs

What does DMAIC stand for in Six Sigma?

Define

Measure

Analyze

Improve

Control

What are the 4 operational excellence principles, and what are their methodologies?

1. TQM, Improve quality

2. Six Sigma, Reduce variation

3. TPS/Lean, Remove waste

4. TOC, Manage constraints

What is the PDCA Cycle?

Plan, Do, Check, Act. It is a four-step iterative management method used for the control and continuous improvement of processes.

What is the statistical definition of Six Sigma performance?

A process that produces only 3.4 Defects Per Million Opportunities (DPMO).

What is the difference between Accuracy and Precision in a process?

Accuracy: Being "on target" (centered).

Precision: Having low variation (consistency)

T or F: Six sigma focuses mostly on improving accuracy

False, Six Sigma primarily focuses on improving Precision (reducing the spread).

What are the 3 rules about defects under TQM?

1. Do not accept defects

2. Do not make defects

3. Do not pass on defects

What is the fundamental objective of Lean Thinking?

To create the most value while consuming the fewest resources.

How is "Waste" defined in a Lean System, and what acronym is used to define it?

Anything other than the minimum amount of equipment, materials, parts, space, and worker's time that are absolutely essential to add value to a product. DOWNTIME

What are the three criteria for a "Value-Added" process?

1. The customer recognizes the value

2. It physically changes the product in a desired manner

3. The process is done right the first time.

What is the main focus of Lean compared to Six Sigma?

Lean focuses on Flow and removing waste, while Six Sigma focuses on reducing variation and improving quality

What does DOWNTIME stand for when defining waste in a lean system?

Defects

Overproduction

Waiting

Not using people properly

Transportation

Inventory

Motion

Extra processing

What does Transportation waste refer to?

The unnecessary movement of things.

What is the difference between "Motion" and "Transportation" waste?

Motion refers to the unnecessary movement of people, while Transportation refers to the movement of things.

What is "Overproduction" waste?

Producing too much of a product or producing it too soon

What is "Extra Processing" waste?

Performing extra work on a product that does not actually add value.

What are the five steps of 5S?

1. Sort

2. Straighten

3. Shine

4. Standardize

5. Sustain

Which of the 5S steps is considered the hardest to achieve?

Sustain

What is the purpose of a "Shadow Board"?

It is a visual management tool used to ensure there is a "place for everything" by showing exactly where tools should be stored

What is another name for a Cause & Effect Diagram?

Fishbone Diagram or Ishikawa Diagram.

What is the primary purpose of a Cause & Effect Diagram?

To allow a team to identify, explore, and graphically display all possible causes of a problem to discover its root cause(s).

How are "defectives" viewed in a Lean (Toyota) environment?

Defects are viewed as "treasures" because they provide opportunities to find and fix root causes

How does the role of supervisors differ in a Lean factory?

Lean factories have fewer indirect workers/supervisors; instead, they use work teams and leaders promoted from within.

What is a Value Stream?

A set of activities that produce a product or a service.

What 3 things does value stream mapping aim to identify?

1. Flow

2. Waste

3. System constraints

What are the five Lean Principles mentioned in this chapter?

1. Specify value from a customer perspective

2. Understand the value stream

3. Ensure smooth flow without waste

4. Let customers pull

5. Strive for perfection.

What are the five major components of a Value Stream Map?

1. Customer

2. Main Fulfillment Processes

3. Suppliers

4. Info Control Center (Production Control)

5. Timeline Calculation.

What is the difference between Processing Time and Lead Time on a VSM timeline?

Processing Time is the actual "touch time" or how long work is being done on an item; Lead Time is the sum of the days of inventory (raw material + WIP + finished goods).

What does the "Gemba" refer to in process mapping?

It is the actual place where the work happens ("Go See!").

When drawing a Value Stream Map, where should you always start?

Start with the Customer and their demand rate.

What is the Lead Time Ladder?

A visual representation at the bottom of a VSM that compares the value-added processing time to the non-value-added lead time (waiting in inventory).

What is the primary definition of Statistical Process Control (SPC)?

A methodology using statistical tools and charts to monitor, control, and improve a process over time

What are the two basic assumptions (tenets) of Process Quality Control?

1. Every process has random variation 2. Production processes are not usually found in a "state of control"

What is the difference between "Precision" and "Accuracy"?

Precision refers to results being close together (low variability), while Accuracy refers to results being on target (hitting the mean)

What is the difference between "Attribute" and "Variable" data?

Attribute data is counted (e.g., yes/no, pass/fail, number of defects), while Variable data is measured (e.g., time, weight, temperature)

What is "Common Cause" variation?

Random variation that is present in every process and is produced by the process itself

What is "Special Cause" variation?

Unpredictable, non-random variation caused by unique "assignable" disturbances

According to the Normal Distribution, what percentage of data falls within ±3 standard deviations (sigma) of the mean?

99.73%.

What two pieces of information are required to completely describe a normal distribution?

1. Mean

2. Standard Deviation

When is a process considered "Stable" or "In-Control"?

When only Common (random) Cause variation exists in the process.

Which chart should be used for attribute data to track the ratio of defects?

The p-chart

What are the two components of variable data control charts?

The x-bar chart (to monitor the mean) and the R-chart (to monitor the range/variability)

What are the 2 tests to identify a process that is out of control?

1. One point is outside the UCL to LCL zone

2. Any apparent pattern that repeats itself

What is the primary purpose of Sales and Operations Planning (S&OP)?

To coordinate manufacturing, logistics, service, and marketing plans to determine the resources needed to meet demand

In what planning range does S&OP typically live?

Intermediate-range planning, which covers a horizon of 3 to 18 months.

What are the three types of planning horizons and their typical durations?

1. Long-range (greater than 1 year, usually 2-5 years)

2. Intermediate-range (3-18 months)

3. Short-range (1 day to 6 months)

Name 4 inputs to the production planning system that are not in a firm's control.

1. Market demand

2. economic conditions

3. competitors' behavior

4. raw material availability.

Name 4 inputs to the production planning system that are within a firm's control.

1. Current physical capacity

2. Current workforce (and skills)

3. Inventory levels

4. Activities required for production

What is a "Level Strategy"?

A strategy that maintains a constant, steady workforce and keeps production levels the same even as demand changes.

What is a "Chase Strategy"?

A strategy that matches production to demand by month by changing resource levels (like hiring/firing) based on that demand.

What is a "Mixed Strategy"?

A strategy that pursues one approach (like level production) most of the time but switches or uses buffers like higher inventory in certain circumstances.

What is a major "Pro" and a major "Con" of a Level Strategy?

Pro: Stability of workforce and predictable production.

Con: Increased inventory carrying costs and risk of stockouts

What is a major "Pro" and a major "Con" of a Chase Strategy?

Pro: Lower inventory and less overproduction.

Con: High hiring/firing costs and low employee morale

How is "Yield Management" defined?

The process of allocating the right type of capacity to the right type of customer at the right price and time to maximize revenue

In what industries is Yield Management most commonly applied?

Service industries with limited capacity, such as airlines (SABRE system) and hotels

List three conditions under which Yield Management is most successful.

1. Demand can be segmented

2. Fixed costs are high while variable costs are low

3. Inventory is perishable

How does Yield Management help manage demand?

It uses pricing to make demand more predictable, often employing surge pricing during high demand and lower rates during low demand.

What is an ERP system?

A comprehensive software system designed to integrate all business units of an organization through information sharing.

What are 4 typical modules included in an ERP system?

1. Finance

2. Manufacturing and Logistics

3. Sales and Marketing

4. Human Resources

What is the "Functional Silo" approach?

An approach where departments like Purchasing, Manufacturing, and Distribution work independently, often focusing on their own classic metrics (like lowest material cost or high inventory for lower unit costs) rather than the whole system

How does an ERP system improve operational excellence?

It integrates various business units (Finance, Supply Chain, Manufacturing, Sales, HR) to ensure they work together rather than as independent silos

What are the 3 major functional cycles that make up an internal supply chain?

1. Procurement cycle

2. Manufacturing cycle

3. Sales and distribution cycle

What is the core definition of Industry 4.0?

The integration of technologies to create facilities where machines, products, and people work together and communicate effortlessly

What is considered a primary "driving force" behind Industry 4.0?

The Internet of Things (IoT)

What are the 6 pillars of the "Industry 4.0 Scope"?

1. Smart Manufacturing

2. Technology Integration

3. Cyber-Physical Systems

4. Human/Machine Collaboration

5. Sustainability/Efficiency

6. Security/Data Integrity.

What is the Internet of Things (IoT)

A network of physical objects with sensors and software, connected with other devices over the internet