Intro to Supply Chain Test 3

Chapter 7 - 9

Supplier relationship management

Planning for and managing interactions with the third party organizations supply goods

to have a strong supplier partnership you need

strategic perspective and a mutual commitment with extend time

keys to successful strategic partnerships

collaboration, shared vision, communication (formal and informal), compatible needs, support, manage change, have the right technology and capabilities, continuous improvement

the process utilized in continuous improvement

plan, do, check, act

total cost of ownership

all costs associated with the acquisition, use, and maintenance of a good of service

Supplier evaluation

process to identify the best and most reliable suppliers, with decisions made based on facts and the use of frequent feedback

Supplier performance evaluation

used to monitor visibility and feedback with price, cost, quality, delivery, etc.

key supplier selection is conducted by

a cross functional team using evaluation forms or scorecards

supplier evaluation: weighted criteria

select key dimensions, monitor and collect performance data, assign weights, evaluate performance, multiply dimension rating by weight and sum of overall score, classify suppliers (certified, preferred, acceptable, conditional, developmental, unacceptable), audit and perform certification review

Preferred weight criteria evaluation

work with these suppliers in maintaining a competitive position and on new product development

Acceptable weight criteria evaluation

require a plan from these suppliers outlining how they will achieve preferred status

Developmental weight criteria evaluation

require corrective actions from these suppliers on how they will achieve acceptable level, look for alternative suppliers if they do not achieve acceptability

performance measure formula

rating x weight = final value

Certified supplier

a source that can provide material of such quality that it needs little if an receiving inspection or testing before going into approved stock or into the product process

Benefits of supplier certification programs

reduced time and labor for incoming inspections, long-term relationships, recognized excellence, decreasing supplier base

Internal certification program criteria

no defects, no rejections, no significant quality related incidents, ISO 9000 certified, meets performance measures, fully documented process and quality system, stable

ISO 9000

management and quality standards in design, development, production, installation, and service

ISO 14000

a family of standards for environmental management

ISO 9000 quality management principles

customer focus, leadership, involvement of people, process approach, systems approach to management, continual improvement, factual approach to decision making, mutually beneficial supplier relationship

ISO suppliers are preferred because they

have a set of standards, initially qualify and periodically audit, open to sharing, continuously improve, and have to be recertified every 3 years

Supplier development

the technical and financial assistance given to existing and potential suppliers to improve quality and/or delivery performance

two important functions of a supplier development program

providing information about products, expect sales growth, etc. and training suppliers in the application of lean and six sigma/quality tools

early supplier involvement

key suppliers become more involved in the internal operations of the buyers company, particularly with respect to new product and process deign

value engineering

help the buyer’s company to reduce cost, improve quality and reduce new product development time beginning with the initial design

supplier recognition programs

program to recognize suppliers who achieve the high performance standards necessary to meet customer expectation

three attributes of supplier recognition programs

companies should recognize and celebrate achievements, award winners exemplify true partnership, and award winners serve as role models for other suppliers

benefits of supplier recognition programs

motivate suppliers, improve supplier loyalty, encourage suppliers to adapt to the company’s culture, helps create entry barriers, and encourage supplier participation in product innovation

the reason for a system to provide a more comprehensive and objective view of a supplier performance

it will help identify and address supplier performance issues and it can be used to help make sourcing decisions

5 key characteristics to consider in the development and implementation of a SRM system

automation, integration, visibility, collaboration, and optimization

operations management

managing the process to convert resources into goods and services, in alignment with the company’s business strategy as efficiently and effectively as possible, while controlling costs

manufacturing

to process or make raw materials or components into a finished product, especially by means of a large-scale industrial operation

Lean

an operating philosophy of waste reduction and value enhancement based on the toyota production system

six sigma

a disciplined, statistical-based, data-driven methodology of identifying and removing the cause of defects and minimizing variability in manufacturing and the business process

manufacturing strategies must

suit the type of products produced, suit their customer expectation, and their strengths

make to stock

manufacture products for stock based on demand forecasts (push system)

make to order

manufacturing strategy in which manufacturing starts only after a customers order is received

available to order

a manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent, hybrid strategy of MTS and MTO

engineer to order

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

intermittent processing

used to produce a large variety of products with different processing requirement in lower volumes

repetitive processing

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

Job Shop

intermittent manufacturing process with a very high variety, very low volume, ETO and MTO strategy, and very long lead time

Batch

intermittent manufacturing process with a high variety, low volume, MTO and ATO strategy, and a long lead time

line flow

repetitive manufacturing process with a limited variety, high volume, ATO and MTS strategy, and a short lead time

continuous flow

repetitive manufacturing process with a very limited variety, very high volume, MTS strategy, and very short lead time

Total cost of manufacturing

the complete cost of producing and delivering products: includes manufacturing and procurement, inventory and warehousing, and transportation

as volume goes up

manufacturing and procurement go down

inventory and warehousing go up

and transportation costs go down

quick response

the rapid replenishment of a customers stock by a supplier with direct access to data from the customers point of sale

efficient consumer response (ERC)

a strategy to increase the level of services to consumers through close cooperation among retailers, wholesalers, and manufacturers

Just In Time

an inventory strategy to decrease waste by receiving materials only when and as needed in the production process, thereby reducing inventory costs

keiretsu relationships

involves companies both upstream and downstream of a manufacturing process, remaining independent but working closely together for mutual benefit

lean regularly results in

large cost reductions, improved quality, increased customer service

value

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

value added process

process steps that transform or shape a product or service which is eventually sold to a customer

non-value added incidental waste

no value created but required by current thinking, process limitations, technology, and regulations

non value added pure waste

consumes resources but creates no value for the customer, could be stopped and it would be invisible to the customer

lean manufacturing

satisfying internal customer demand, communicating demand forecasts, quickly moving products, optimizing inventory levels, increase value, capabilities, and flexibility through cross training, and extended collaboration

elements of lean manufacturing

waste reduction, lean layouts, inventory setup time & changeover time reduction, small batch scheduling and uniform plant loading, lean supply chain relationships, workforce empowerment, and continuous improvement

before waste reduction

processes are often scattered, which can negatively affect your customers

after waste reduction

processes are more streamlined, resulting in more satisfied customers and more time and money saved

Waste categories

Defects, overproduction, waiting, non-utilized talent, transportation, inventory, motion, extra-processing: down time

LEAN layout

move people and materials when and where need, and as soon as possible (ex. set up of ingredients at a sandwich shop)

5 S’s

sort, set in order, shine, standardize, sustain

in the pull approach

each stage in the supply chain requests quantities needed from the previous stage, there’s no excess inventory, and reducing inventory levels can uncover production problems

steup time

the time taken to prepare and format the manufacturing equipment and systems for production, considered a waste

changeover time

the time taken to adapt and modify the manufacturing equipment and systems to produce a different product or a new batch of the same product, considered a waste

small batch production

creates a smooth workload as production can be synchronized with customer demand, facilitating a pull system

kanbans

signal for communication, used to facilitate small batch scheduling

uniform plant loading

smooths production flow through consistent scheduling, “front-loading or leveling”

workforce commitment

managers must support LEAN manufacturing by providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions

the role of management

create the cultural change needed for LEAN to succeed: provide atmosphere of cooperation, empower workers to take action, and develop incentive systems to recognize and reward LEAN behaviors

total quality management

management philosophy based on the principle that every employee must be committed to maintaining high standards if work in every aspect of a company’s operations

key principles of total quality management

management commitment, employee empowerment, fact based decision making, continuous improvement, and customer focus

voice of the customer

in-depth 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 - cost of good quality

associated with the evaluation of purchased materials, processes, products, and services to ensure that they conform to specifications

prevention costs - cost of good quality

related to the design, implementation, and maintenance of the quality management system, planned and experienced before actual products or materials are produced

internal failure costs - cost of poor quality

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 - cost of poor quality

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

supplier’s risk

the buyer rejects a shipment of good-quality units because the sample quality level did not meet the acceptance standard

buyer’s risk

the buyer accepts a shipment of poor-quality units because the sample falsely provides a positive result against the acceptance standard

acceptance sampling

when a shipment is received from a supplier, a statistically significant representative sample is taken and measured against the quality acceptance standard

Goal of six sigma

attain less than 3.4 defects per million opportunities

3 foundational aspects of six sigma

quality is defined by the customer, use of technical tools, and people involvement

root cause analysis

a collective term that describes a wide range of approaches, tools, and techniques used to uncover causes of problems

seven tools of quality control

check sheets, histograms, Pareto analysis, cause & effect diagrams, flow diagram, control charts, scatter diagrams

DMADV

define → measure → analyze → design → verify

when is DMADV used

when the company wants to create a new product design or business process

DMAIC

define → measure → analyze → improve → control

when is DMAIC used

used when the company wants to improve an existing product or business process

5 why’s

a questioning technique for identifying the root cause of a problem, repeatedly asking the quesrtion “why”

5 how’s

a questioning technique for drilling down into the details of a pontential solution to a known problem

people involvement

a company must involve all its employees in the six sigma program, and provide opportunities and incentives for employees to focus their talents on satisfying customers

LEAN and Six SIgma

complementary principles with significant overlap and are frequently implemented together

inbound logistics

move goods and materials from suppliers to buyers

material handling

move goods and materials between sites (internal and external)

customer logistics

move finished goods to the customer

warehousing

function that allows a company to receive, store, breakdown, repackage, and distribute items to a manufacturing location, or finished products to a customer

decisions driving warehouse management

number of warehouse facilities in the network, site selection, layout of the warehouse, and methods of receiving, storing, retrieving, and distributing products

primary functions of a warehouse

receiving, storing, picking, packing, and shipping (not including transportation)

secondary functions of a warehouse

quality inspections, repackaging, and assembly operation