operations and supply chain management Flashcards
Logistics
the movement of supplies and materials through the supply chain
Reverse Logistics
the return of defective products to the manufacturer for repair or replacement; includes efforts to reuse and recycle materials
vertical integration
owning multiple assets within the supply chain
backward vertical integration
the company owns its suppliers; promotes coordination
forward vertical integration
the company owns the distribution systems and retail outlets that sell their products
agile supply chain
members are selected based on their speed/flexibility, capacity to transmit information reliably, accurately, and quickly from the market place to supply chain members.
—attempts to assess in great detail the needs of its customers so it can provide customized products that better meet the customer’s expectations
Lean supply chain
members are chosen based upon their ability to keep costs down and minimize inventory in the system
- –these products have long product life cycles, stable and predictable demand, and minimal innovation
- –low profit margins
- –supply chain must focus on operating efficiency to minimize costs
Bottlenecks
- -three primary constraints in a system: market (demand), process (throughput), and product (supply)
- -constraint: any resource whose capacity is less than or equal to demand for that resource; a bottleneck is the most limiting constraint on the system
- -occurs at the point in the process that requires the longest time or has the slowest rate (a process bottleneck). increased inventory in front of a process and insufficient flow of products after a process is evidence of a process bottleneck
- -determine the operational throughput performance of a supply chain
regulatory bottlenecks
with respect to imports, exports, and U.S. customs or pollutant emissions and EPA
labor bottlenecks
available skills or work shift availability
technology bottlenecks
different information exchange protocols
decision-making bottlenecks
caused by procrastination or by not aligning management authority with management responsibility
physical bottlenecks
under investment, under utilization, weather, road construction or accidents, or physical location/geographical limitations
process bottlenecks
occur when the production process itself- its capacity, flexibility, or activities- is its own biggest limitation
financial bottlenecks
finite budgets or credit availability
crosby
- -do it right the first time
- -book 1979 “quality is free” and concept of zero defects as a measurable object
- -emphasized the importance of considering all costs of quality
Juran
- -customer’s perception of quality
- -quality must be built on 3 elements: planning, control, improvement
- -focused on fitness for use and pareto principle
Taguchi
- -robust design and parabolic quality loss function
- -perfecting of experiments to create higher quality products and processes
- -argues that quality must be designed into a product
deming
- -14 point quality plan and focused on statistical process control (SPC)
- -system caused defects, not employees and endorsed the elimination of fear in the organization
- -modified Walter Shewart’s plan-do-check-act (pdca) to plan-do-study-analyze (PDSA)
ishikawa
- -developed fishbone chart
- -teamwork is essential for quality leadership
- -developed quality circles to solve problems lead by a champion (sr. manager) to oversee and approve
employee empowerment
defined as involving employees in every step
continuous improvement
- -deming, juran, and crosby all include the concept of continuous improvement
- -key components: assign teams to identify areas for improvement, use methods analysis and problem solving tools, document improved procedures
six sigma
- -continuous improvement
- -uses qualitative and quantitative techniques/tools
- -follows five steps: define, measure, analyze, improve, control (dmaic)
- -DMADV (define, measure, analyze, design, verify): specifically for new products/processes
Plan-do-check-act
- -deming wheel or shewart cycle
- -shape of a wheel embodies the philosophy of continuous improvement; the cycle is repeated over and over without end
ishikawa diagram
- -cause and effect diagrams, fishbone diagrams, ishikawa diagrams
- -show the impact of various inputs into the result of a process
- -help organizations isolate the root causes of problems such as bottlenecks
check sheets
- -the means used to record data points in real time at the site where data is generated
- -often the first tool used to assess a process and often the data is raw meaning it’s straight from the source and without any interpretation
control charts
- -graphical depictions of process output where the raw data is plotted in real time within upper (ucl) and lower control limits (lcl)
- -as each data point is collected, it’s recorded on the control chart in relation to the process mean and the ucl and lcl
- -the process operator can instantly determine whether the process is stable or trending toward instability and take corrective action before variations result in non-conforming products
run charts
- -another form of control plotted in real time for processes that might have common features, a common scale, or some form of central tendency
- -central tendency includes:
- –mean: average value
- –median: midpoint value
- –mode: most frequent value
histogram
- -box chart
- -demonstrate the frequency of data observation within a preset range of values
- -the data is continuously collected and each data value will match one of the preset range values
pareto chart
–descending order to visualize the most frequent occurances
scatter plot
- -displays data as a relationship to show the correlation between two variables
- -correlation will show a positive, negative, or no relationship at all
system capacity
determined by the department within the process with the lowest output or slowest time
lead strategy
- -adds capacity with the anticipation of an increase in demand
- -aggressive; primarily used in an effort to obtain customers from competitors by reducing the amount of lead time and improving service levels
- -ensures adequate capacity is available to meet all demands during high growth periods
lag strategy
- -more conservative approach to capacity planning
- -entails adding capacity only after an organization is running at a full capacity or is beyond due to increase in demand
- -this is the opposite of lead capacity strategy
design capacity
maximum achievable output of a system or process
–what a firm can produce under ideal conditions
effective capacity
max capacity given product mix, equipment changeovers, and scheduled downtime
capacity utilization
- -how much capacity is actually being used on an average basis
- -capacity utilization = actual output / design capacity
efficiency rate
- -how much effective capacity is actually being used to achieve output
- -efficiency rate = actual output/effective capacity
total cost
total cost = (variable cost)(number of units) + fixed costs
ratio = fixed / variable
assembly line
process selection most appropriate to produce high volume with little to no variation. Uses product facility layout (i.e. car manufacture)
continuous flow
process selection most appropriate to produce high volume with no variation. Uses product facility layout (i.e. oil refinery). Also called continuous inventory flow
batch flow
process selection most appropriate to produce high volume with some variation. Uses product facility layout: requires equipment or tool changes
job shop
process selection most appropriate to produce low volume with little to high variation. Uses process facility layout (i.e. customized furniture)
theory of constraints
5-step thinking process which helps a firm achieve optimal throughput, or the maximum rate of output possible in the current system, by identifying the bottleneck and coordinating the system around the bottleneck’s capacity.
o Identify the system’s constraint(s). Determine the bottleneck of improvement opportunity
o Exploit the system’s constraint. Ensure the bottleneck is at 100% capacity utilization or throughput.
o Subordinate everything else to the above decision. Communicate the bottleneck
o Elevate the system’s constraint. Determine how to increase the bottleneck’s capacity
o If a constraint has been broken, go back to step 1. Do not allow inertia to cause a system’s constraint.
simple moving average
- Simple moving average each time period has the same weight
* The purpose of the simple moving average is to smooth out the peaks and valleys in the data.
weighted moving average
• With a weighted moving average, it is possible to assign different weights to each period
aggregate planning
• the combining of individual end items into groups or families of parts for planning purposes.
master production schedule
- The master schedule—or master production schedule (MPS)—is based on the “aggregated” plan.
- The master production schedule “dis-aggregates the aggregate plan” because it is a specific statement of exactly what will be produced and a specific date for production.
- The master production schedule usually states individual end items or product models.
- The master schedule planning horizon is as long as the cumulative lead time of the product or product with the longest lead time.
- The MPS is usually between 12 and 16 weeks.
time fences
boundaries between periods in the planning horizon
time bucket
a period of time, usually one week, in which demand and requirements are grouped for master scheduling and material requirements planning
lead time
the amount of time it takes to plan, produce, and deliver a product
peak demand
sufficient capacity will be available at any time to meet the peak expected demand
chase demand
there are two methods that companies can use to adjust production rates to match demand-varying the workforce and using overtime
techniques for successful scheduling
• Continuous flow processes: materials flow in a continuous, or nearly continuous, stream from beginning to end.
o Such production processes are generally characterized by a few different finished products, only a few possible routings, and low work-in-process inventories.
• Assembly line processes: instead of the products flowing continuously, such as a stream of gasoline or a roll of paper, the products are discrete, individual items such as automobiles.
o usually produces a limited number of products, and the routings are the same.
• Sequencing processes: determining the order for making different products.
• Batch processes: the number of possible products is greater than the number that can be produced in line-flow processes. As a result, each product is made in a group or batch. The process is stopped; the equipment is changed over; and the next product is made.
Perpetual inventory system
continuously monitors inventory levels and is also called continuous review system. Requires human input (i.e. cashier) and the ordering of more inventory is triggered by reorder point.
o Used for inventory that requires an exact inventory balance at all times
o Most suitable for big businesses, large retail stores and/or Banks
o Most appropriate for high value and high volume items
o Best for accurate financial statements
o Expensive to implement and maintain
periodic inventory system
randomly monitors inventory levels and is also called the fixed order interval system. Not expensive to implement or maintain.
o Requires a physical count to know exact inventory balances
o Used when a supplier will only deliver at specific time intervals (during open window)
o Most appropriate for low value and low volume items
o Most appropriate for small businesses
o Inexpensive to implement and maintain
quantity discount model
A discount offered in price for ordering above a specified amount. The more you buy, the more you save
transportation discounts
A discount offered on shipping cost for ordering above a specified amount
revenue sharing
When two or more companies partner and divides the profits received based on an agreement between all parties involved
reserve capacity
When a company stores, or pays another company to store, excess inventory to be used for unexpected demand.
just in time
manufacturing methodology aimed primarily at reducing flow times within production systems as well as response times from suppliers and to customers by receiving ordering and receiving inventory when ready for use or just in time for use.
• JIT allows materials to flow in an assembly process similar to a continuous flow process
–uses kanban cards
value stream mapping
a technique used to analyze the flow of materials, ideas, and information to understand how processes function
kanban
Japanese word that can refer to a sign or a marker and means “visible record.”
o Most often associated either with the movement of a container of parts or with the production of parts to fill an empty container.
cycle time
cycle time = working time per day / units required per day
