used to make everything that we buy ranging from the apartment building in which we live to the ink pens with which we write.
Customer Order Decoupling Point
The place where inventory is positioned to allow processes or entities in the supply chain to operate independently. Selection of these is a strategic decision that determines customer lead times and can greatly impact inventory investment.
A production environment where the customers are served "on-demand" from finished goods inventory. Essential issue in satisfying customers is to balance the level of inventory against the level of customer service. Examples: Televisions, Clothing, Packaged food products
A production environment where the preassembled components, subassemblies, and modules are put together in response to a specific customer order, Examples: Dell computers, Subway subs
A production environment where the product is built directly from raw materials and components in response to a specific customer order
Here the firm works with the customer to design the product, which is then made from purchased materials, parts, and components. Boeing's process for making commercial aircraft is an example
The attempt to achieve high customer service with minimum levels of inventory investment
Total average value of inventory
The total average investment in raw material, work-in-process, and finished goods inventory. This is valued at the cost to the firm. Commonly tracked in accounting systems and reported in financial statements
The cost of goods sold (COGS) divided by the total average value of inventory.
The number of days of inventory of an item. If an item were not replenished, this would be the number of days until the firm would run out of the item (on average). Also, the inverse of inventory turn expressed in days... = 365/Inventory turn
A mathematical expression that relates inventory, throughput, and flow time. There is a long-term relationship between the inventory, throughput, and flow time of a production system in steady state. Inventory = Throughput rate x Flow time
A long-term AVERAGE rate that items flow through a process
The time it takes a unit to flow through a process from BEGINNING to END
These are types of ___:
Project layout, work center, manufacturing cell, assembly line, continuous process
The product, because of its sheer bulk or weight, remains fixed in a location. Equipment is moved to the product rather than vice versa
A process structure suited for low-volume production of a great variety of nonstandard products. These sometimes are referred to as a departments and are focused on particular type of orientation
An area where simple items that are similar in processing requirements are produced
A process structure designed to make discrete (separate) parts. Parts are moved through a set of specially designed workstations at a controlled rate.
-The steps are done in areas referred to as stations, and typically the stations are linked by some form of material handling device.
An often automated process that converts raw materials into a finished product in one continuous process that follows a predetermined sequence of steps. Such structures are usually highly automated and, in effect, constitute one integrated machine that may operate 24 hours a day to avoid expensive shutdowns and start-ups.
Shows the relationship between different production units and how they are used depending on product volume and the degree of product standardization.
For example: if we produce nonstandard products at relatively low volumes, work-centers should be used. A highly standardized product (commodity) produced at high volumes should be produced using an assembly line or a continuous process, if possible.
The problem of assigning all the tasks to a series of workstations so that each workstation has no more that can be done in the workstation cycle time and so that idle time across all workstations is minimized
A standard approach to choosing among alternative processes or equipment. Involves variable costs and fixed costs.
Service Processes (organizations):
-We cannot inventory services
-capacity becomes the dominant issue, must meet demand as it rises (unlike in manufacturing)
-Too much capacity leads to excessive costs
-not enough capacity leads to lost customers
The flowchart of a service process emphasizing what is visible and what is not visible to the customer. The standard tool for service process design. A unique feature of this is the distinction made between the high customer contact aspects of the service and those activities that the customer does not see (This is called the Line of Visibility)
Procedures that prevent mistakes from becoming defects. Common in factories. must be applied to fail-safing the actions of the customer as well as the service worker.
Waiting Line Problem
-Management of this is a central problem in many service settings, manager must weigh the added cost of providing more rapid service (more traffic lanes, additional landing strips, more checkout stands) against the inherent cost of waiting. Reducing waiting time costs money
-When people waiting are employees, it is easy to value their time. When people waiting are customers, it is more difficult to value their time. We can affect service time by using faster or slower servers
Consists of three major components: (1) the source population and the way customers arrive at the system, (2) the servicing systems, and (3) how customers exit the system
A probability distribution often associated with inter-arrival times
Probability distribution often used to describe the number of arrivals during a give time period
-First come first served, -Shortest processing time, -reservations first, -emergencies first, -Limited needs, -Other
Single channel single phase, -Single channel multiphase, -Multiple channel single phase, -Multiple channel multiphase, -Mixed
Single channel single phase:
This is the simplest type of waiting line structure, and straightforward formulas are available to solve the problem for standard distribution patterns of arrival and service. A typical example is the one-person barbershop
Single channel multiphase:
One line for multiple services (Get served for one thing and then head to the next thing) Ex: A car wash is an illustration because a series of services (vacuuming, wetting, washing, rinsing, drying, window cleaning, and parking) is performed in a fairly uniform sequence
Multichannel single phase:
Multiple lines for customers to do the same thing. Ex: Tellers windows in a bank and checkout counters in high-volume department stores
This case is similar to the multichannel single phase except that two or more services are performed in sequence. -Example: The admission of patients in a hospital follows this pattern because a specific sequence of steps is usually followed: initial contact at the admissions desk, filling out forms, making identification tags, obtaining a room assignment, escorting the patient to the room, and so forth.
Under this general heading we consider two subcategories: -(1) multiple-to-single channel structures and...-(2) alternative path structures.
A series of related jobs usually directed toward some major output and requiring a significant period of time to perform. The key resource is often our employees time
A structure for organizing a project where a self-contained team works full time on the project
A structure where team members are assigned from the functional units of the organization. The team members remain a part of their functional units and typically are not dedicated to the project
Each project uses people from different functional areas. A dedicated project manager decides what tasks need to be performed and when, but the functional managers control which people to use. A structure that blends the functional and pure project structures.
Advantages of pure projects:
-The project manager has full authority, -Team members report to one boss, -Shortened communication lines, decisions are made quickly, -Team pride, motivation, and commitment are high,
Disadvantages of pure projects:
-Duplication of resources, -Organizational goals and policies are ignored, -Lack of technology transfer due to weakened functional divisions, -Team members have no functional area "home", they worry about life-after the project and project termination is delayed,
Advantages of Functional Projects:
-A team member can work on several projects, -Technical expertise maintained in functional area even if individuals leave the project or organization, -Functional area is "home" after project completed, -Critical mass of specialized knowledge creates synergistic solutions to a projects technical problem.
Disadvantages of functional projects:
-Aspects of the project that are not directly related to the functional area get short changed, -Motivation of team members is often weak, -Needs of the client are secondary and are responded to slowly,
Advantages of matrix projects:
-Better communications between functional areas, -Project manager held responsible for success, -Duplication of resources is minimized, -Functional "home" for team members so they're less worried about life-after-project than if they were a pure project organization, -Policies of the parent organization are followed
Disadvantages of matrix projects:
-Too many bosses often the functional manager will be listened to before the project manager, -Depends on project manager's negotiating skills, -Potential for sub-optimization PM's hoard resources for their own project thus harming other projects,
A specific event in a project. Examples of this might be the completion of the design, the production of a prototype, the completed testing of the prototype, and the approval of a pilot run. The best place to locate these is at the completion of a major activity
Work Breakdown Structure (WBS):
The hierarchy of project tasks, subtasks, and work packages. Completion of one or more work packages results in the completion of a subtask; completion of one or more subtasks results in the completion of a task; and finally, the completion of all tasks is required to complete the project.
Statement of work (SOW):
a written description of the objectives to be achieved, with a brief statement of the work to be done and a proposed schedule specifying the start and completion dates. It also could contain performance measures in terms of budget and completion steps (milestones) and the written reports to be supplied.
a further subdivision of a project, -Usually shorter than several months, -Performed by one group or organization
a group of activities combined to be assignable to a single organizational unit. This provides a description of what is to be done, when it is to be started and completed, the budget, measures of performance, and specific events to be reached at points in time
Pieces of work within a project that consume time. The completion of all of these of a project marks the end of the project
Shows in a graphic manner the amount of time involved and the sequence in which activities can be performed. Often referred to as a bar chart
The sequence of activities in a project that forms the longest chain in terms of their time to complete and provides a wide range of scheduling information useful in managing a project
Critical path method (CPM):
Based on the assumption that project activity times can be estimated accurately and that they don't vary.Was developed for scheduling maintenance shutdowns at chemical processing plants.
Extension of the critical path models that considers the trade-off between the time required to complete an activity and cost. This is often referred to as crashing the project.
Steps for this are:
1-Prepare a CPM-type network diagram,
2-Determine the cost per unit of time to expedite each activity (activity direct costs),
3-Compute the critical path,
4-Shorten the critical path at the least cost,
5-Plot project direct, indirect, and total-cost curves and find the minimum-cost schedule
The high-level view of what is required to make something can be divided into three simple steps:
1-The first step is (sourcing) the parts we need
2-followed by actually (making) the item
3-and then sending (delivering) the item to the customer
Characteristics of this firm:
-Easy with unlimited inventory but inventory costs money
-Trade-off between the costs of inventory and level of customer service must be made
-Trade-offs can be improved by better knowledge of customer demand, by more rapid transportation alternatives, by speedier production, and by more flexible manufacturing.
-Uses lean manufacturing to achieve higher service levels for a given inventory investment
Characteristics of this firm:
-Kept at work in progress level
-A primary task is to define a customer's order in terms of alternative components since these are carried in inventory
-One capability required is a design that enables as much flexibility as possible in combining components
-There are significant advantages from moving the customer order decoupling point from finished goods to components
this provides a relative measure that has some comparability across similar firms. Not particularly useful for evaluating the performance of a process
This can be applied to single work stations, multistep production lines, factories, or even entire supply chains. Further, it applies to processes with variability in the arrival rate (or demand rate) and processing time. It can be applied to single or multiple product systems. It even applies to nonproduction systems where inventory represents people, financial orders, or other entities. Works when there is inventory at every step, the process stabilizes, and then the relationship holds.
Organization of these are: Project layout, work center, manufacturing cell, assembly line, continuous process
type of process structure where a high degree of task ordering is common and project layout may be developed by arranging materials according to their assembly priority. Areas on the site will be designated for various purposes, such as material staging, subassembly construction, site access for heavy equipment, and a management area.
A process structure where the most common approach to developing this type of layout is to arrange these in a way that optimizes the movement of material. Example: a low-volume toy factory might consist of shipping and receiving, plastic molding and stamping, metal forming, sewing, and painting. Optimal placement often means placing these with large interdepartmental traffic adjacent to each other
A Process structure designed to perform a specific set of processes, and it's dedicated to a limited range of products. A firm may have many different stations in a production area, each set up to produce a single product or a similar group of products efficiently. These are typically scheduled to produce as needed in response to current customer demand.
Steps for developing a ____:
1.Group parts into families that follow a common sequence of steps
2. Identify dominant flow patterns for each part family
3 Machines and the associated processes are physically regrouped into cells
This process is similar to an assembly line except that the product continuously moves through the process.
-Examples: Conversion and processing of undifferentiated materials such as petroleum, chemicals, and drugs.
-Often the item being produced by this process is a liquid or chemical that actually flows through the system; this is the origin of the term, an example is a gasoline refinery
Ways to apply ____:
1-Specify the sequential relationships among tasks, 2-Determine the required workstation cycle time, 3-Determine the theoretical minimum number of workstations, 4-Select a primary and secondary assignment rule, 5-Assign tasks, 6-Evaluate the efficiency of the balance, 7-Rebalance if needed
This model seeks to determine the point in units produced where we will start making profit on the process and where total rev and total cost are equal
-The method is most suitable when processes and equipment entail a large initial investment and fixed cost, and when variable costs are reasonably proportional to the number of units produced.
Service Processes (organizations):
are classified according to whom is the customer (ex: individuals or other businesses) and the service they provide (financial services, health services, transportation services, and so on).
-Useful in presenting aggregate economic data, but are not particularly appropriate for OSM purposes because they tell us little about the process.
-applications of these include: Warning methods and Physical or visual contact methods
-The Three T's:
1. Task to be done (Was the car fixed right?)
2. Treatment accorded to the customer (Was the service manager courteous?)
3. Tangible features of the service facility (Was the waiting area clean and comfortable?)
-Ex: height bars at amusement parks, chains to configure waiting lines and turnstiles
managing waiting times (managing queues):
-Segment the customer: (if a group of customers need something that can be done very quickly, give them a special line),
-Train your servers to be friendly,
-Inform your customers of what to expect,
-Divert customer's attention when waiting,
-Encourage customers to come during slack periods
a priority rule or set of rules for determining the order of service to customers in a waiting line
Multichannel single phase:
-A difficulty with this line structure is that the uneven service time given each customer results in unequal speed or flow among the lines. This results in some customers being served before others who arrived earlier,
-major problem of this is that it requires rigid control of the line to maintain order and to direct customers to available servers. assigning numbers to customers in order of their arrival helps alleviate this problem.
-The vital big-picture decision is what mix of these is best for the organization. A firm should have the right mix of these that best support a company's strategy
-These People are involved in these and critical to the success of the firm are often the most valuable managers, consultants, and engineers
these should be selected from the following types:
-DERIVATIVE (incremental changes such as new product packaging or no-frills versions),
-BREAKTHROUGH (major changes that create entirely new markets), and
-PLATFORM (fundamental improvements to existing products)
these can be categorized in four major areas:
-product change,-process change,-research and development, and, -alliance and partnership
Three structures of this include: Pure Project, Functional project, and Matrix project
Planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project
Work Breakdown Structure (WBS):
This breaks the project down into manageable pieces. The # of levels will vary depending on the project. How much detail or how many levels to use depends on the following:
-The level at which a single individual or organization can be assigned responsibility and accountability for accomplishing the work package, and...-The level at which budget and cost data will be collected during the project.
-Able to relate activities to time in a usable fashion for small projects
-The interrelationship of activities, when displayed in this form, becomes extremely difficult to visualize and to work with for projects that include more than 25 activities.
-Provides no direct procedure for determining more than 25 activities or for determining the critical path
Critical path method (CPM):
-Determining scheduling information about each activity in the project is the major goal of this technique. The techniques calculate when an activity must start and end, together with whether the activity is part of the critical path.
-If a single time estimate is not reliable, then use three time estimates: 1-Minimum 2-Maximum 3-Most like. This allows us to obtain a probability estimate for completion time for the project
Critical Path Method (CPM):
Steps for this include:
1-Identify each activity to be done and estimate how long it will take, 2-Determine the required sequence and construct a network diagram, 3-Determine the critical path, 4-Determine the early start/finish and late start/finish schedule
Production Process Mapping:
a high-level map of a supply chain process that's useful to understand how material flows and where inventory is held. First step in analyzing the flow of material through a production process (source, make, deliver). Contains two states: "in-transit", and "buffer"
Workstation Cycle Time
A uniform time interval in which a moving conveyor passes a series of workstations, or the time between successive units coming off the end of an assembly line
Workstation Cycle Time
- At each workstation, work is performed on a product either by adding parts or by completing assembly operations. The work performed at each station is made up of many bits of work, termed tasks.
-The total work to be performed at a workstation is equal to the sum of the tasks assigned to that workstation.
ways to accommodate this into a cycle:
1. Split the task
2. Share the task
3. Use parallel workstations
4. Use a more skilled worker
5. Work overtime
Service System Design Matrix
Identifies six common alternatives of how service encounters can be configured: 1.Mail Contact
2. Internet or On-Site technology
3. Phone contact
4. Face-to-Face tight specs
5. Face-to-Face loose specs
6. Face-to-Face total customization
The top of this matrix shows these three areas: the buffered core, the permeable system, and the reactive system
Service System Design Matrix
-The left side of this matrix shows what we believe to be a logical marketing proposition, namely, that the greater the amount of contact, the greater the sales opportunity;
-The right side of this matrix shows the impact on production efficiency as the customer exerts more influence on the operation.
-Production efficiency decreases as the customer has more contact (and therefore more influence) on the system.
-high degree of personalization often required, the speed of delivery needed, the direct customer contact, and the inherent variability of service encounters
-The buffering and scheduling mechanisms that a manufacturing operation has is often not available to this operation
-require much higher levels of capacity relative to demand.
-meets demand as it rises,
-imposes a greater need for flexibility on the workers involved in providing the services.
refers to the compression or shortening of the time to complete the project. On one hand it costs money to expedite an activity, and on the other hand it costs money to sustain the project