140 terms

Supply Chain Management Exam Chapter 12 - 15


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5 phases of Six Sigma
1. Define - define project goals and customer deliverables.
2. Measure - measure the process to establish current performance levels.
3. Analyze - analyze and determine the root causes of the defects.
4. Improve - improve the process by eliminating defects.
5. Control - control future process performance.
Six Sigma
A well thought to approach to improving product and process through emphasis on a system and product design... better designs, fewer defects, and lower cost.
Started by Motorola in 1982.
Sigma = greek symbol for one standard deviation, 𝜎
Six Sigma = # of standard deviations a processes' mean is from its specification limit.
You shouldn't focus a lot of effort on six sigma (basic tools of quality = 90%, six sigma < 10%, outside specialist < 2%). A general rule of thumb is that you take care of low hanging fruit before you start thinking about six sigma.
Types of Benchmarking
a comparison between your firm and an exemplar one in a given category... must be mutually for both companies.
Process Benchmarking
Comparing processes such as how another company performs receiving or purchasing.
Financial Benchmarking
Comparing business results and accounting information.
Performance Benchmarking
Comparing costs structures, speed, quality levels, etc.
Product Benchmarking
Comparing product attributes and functionality.
Strategic Benchmarking
Comparing firm competitiveness along several dimensions.
Functional Benchmarking
Comparing or learning how another firm performs a particular function such as call centers.
Seven Basic Quality Tools
1. Process Maps
2. Check Sheets
3. Histograms
4. Scatter Plots
5. Run Charts
6. Fishbone Diagrams
7. Pareto Diagrams
Lean Management
Reducing waste in a methodical manner to optimize processes.
1. Anything that doesn't add value for the customer should be eliminated. (philosophical)
2. Lean is a group of techniques or systems focused on optimizing quality processes. (systems)
***Combining the two viewpoints provides this combined definition of a lean system as a productive system whose focus is on optimizing processes through the philosophy of waste reduction.
Project Management
the act of leading and directing the people and other resources in a project.
Project managers are responsible for:
- Achieving the project's objective (performance)
- Finishing the project on time (schedule)
- Completing the project within budget (cost)
Process improvement team
Scope = local or single department
Nature = involves improving existing projects and improving customer service.
Cross-functional team
Scope = multiple departments
Nature = the project involves a variety of areas of expertise and has a big impact.
Tiger team
Scope = organization-wide
Nature = specialists are assigned full-time to a project that needs to be completed quickly.
Natural work group
Scope = customer or region centered
Nature = people who normally work together are bound by a need to improve work in their area.
Self-directed work team
Scope = narrow or broad
Nature = a team of peers works together to make needed improvements without a specified leader or top-down guidance.
Virtual team
Scope = narrow or broad
Nature = people are dispersed around the country or world and work together over the Internet.
a one-time, temporary endeavor with a defined beginning and ending.
Project Planning Steps
1. Charter the the project with identifiable deliverables and metrics.
2. Create a work breakdown structure (WBS) to identify tasks and precedence relationships.
3. Estimate task times using beta distributions.
4. Model the project using specific methods, including the program evaluation and review technique (PERT) and critical path method (CPM).
5. Find the critical path.
6. Establish a completion time with a high probability of success.
7. Install necessary controls to monitor the progress of the project.
Situational Leadership Model
a graph by Hersey and Blanchard that illustrates the correlation between task behavior, relationship behavior, and leadership behavior.

telling: providing and following up on directions.
selling/coaching: exhibits more emotional support.
Project Team Stages of Development
1. Forming
2. Storming
3. Norming
4. Performing
5. Mourning
when the team is composed and the project objective is set.
when the team members begin to get to know each other and agreements have not yet been made that facilitate smooth interaction between team members.
when the team becomes a cohesive unit and interdependence, trust, and cooperation develop.
when a mutually supportive steady state is achieved.
Qualifying Projects
projects are qualified prior to their initiation.
Prioritize projects based on:
1. financial and strategic impact (return)
2. project difficulty and resources required (risk)
Project Charter
project document that outlines:
- primary deliverables
- objective
- parameters
and includes:
- resources allocated
- project team members
- measurable outcomes
- budget allocation
- signatures from top management

Basically establishes boundaries.
Can help guard against a scope creep (allowing the deliverables of a project to expand over time).
Work Breakdown Structure (WBS)
a brainstorming tool used to determine the required tasks for completing a project. It captures milestones/phases in projects.
Program Evaluation and Review Technique (PERT)
uses networks for planning and controlling projects.
Critical Path Method (CPM)
plans projects using shortest paths.
Objectives of PERT/CPM
1. Map out plan visually to better understand where the project team is going.
2. Determine project completion time.
3. Perform mental exercise of visualizing what needs to be done.
4. Find out which tasks require tight control.
5. Find out which tasks critical for completion time.
Critical path
1. the longest path through the PERT network.
2. the path in the PERT network wth no slack.

Slack = amount of time a task can be delayed without delaying the entire project.
a subjective term for which each person or sector has its own definition. In technical usage, quality can have two meanings:
1. the characteristics of a product or service that bear on its ability to satisfy states or implied needs.
2. a product or service free of deficiencies.
Garvin's 8 Dimensions of Quality
- performance
- features
- reliability
- conformance
- durability
- serviceability
- aesthetics
- perceived quality
The efficiency with which a product achieved its intended purpose.
- Low product carbon footprint
- Distortion level of speaker
Product attributes that supplement the product's basic functionality.
- Self-cleaning oven
- Keyless entry to an auto
- 4G on an iPad
Propensity for a product to function over its useful life.
- Long-life lightbulbs
- Steelcase desks that last nearly forever
The extent to which products meet specifications.
- Mating parts that fit together well
- On-time delivery
The degree to which a product tolerates stress or trauma without failing.
- Fisher-Price toys
- Corelle nonbreaking dishes
- Projects made with titanium alloys
Ease of repair for products.
- no-question-asked guarantees
- on-site repair
- 100,000-mile warranties, bumper-to-bumper warranties
Subjective sensory attributes of a product such as taste, feel, sound, look, and smell.
- cashmere socks
- gold-plated faucets
- plasma TVs
Perceived Quality
Quality assessment based on customer opinion.
- most luxury goods
- products that have reputations for reliability
W. Edwards Deming
Known for:
- Statical thinking (data-driven)
- Focus on a system for quality improvement
- Taught the Japanese about quality
- Plan, Do, Check, Act (PDCA) Cycle
- 14 points of management; the underpinnings for modern quality thinking
Plan, Do, Check, Act (PDCA) Cycle
W. Edwards Deming's improvement cycle based on the scientific method.
1. Plan = process development; managers identify problems, assess root causes, and propose new and better methods for processing.
2. Do = process implementation; managers perform a trial experience to test their improvements.
3. Check = quality assurance; managers review their implementation to see if they achieved the desired results and make adjustments as necessary.
4. Act = process enhancement; managers make the improvements permanent.
Joseph Juran
Known for:
- Strategic Approach
- Juran's Trilogy (planning, control, improvement)
- Big Q Quality (strategic quality issues), Little Q Quality (tactical quality issues)
Philip Crosby
Known for:
- "Quality is Free" book (quality = improved financial performance)
- DRIFT principle ("Do it Right the First Time")
- 14 steps for quality improvement
Kaoru Ishikawa
Known for:
- Foremost Japanese leader in quality improvement
- 7 basic tools of quality
- Democratized statistics (anyone can use them)
- Company-wide quality control
Supply Chain Quality Management
a systems-based approach to performance management that leverages opportunities created by upstream and downstream linkages with suppliers and customers.
A supply chain's product quality is limited by its weakest supplier.

International suppliers present their own set of problems:
- examples = loss of control, poor communication, fluctuation of order times
- causes = volcano in Iceland, tsunami in Asia, bureaucratic snafu in India
Collaborative Supplier Relationships
Working with suppliers to provide value to customers.
- long-term relationship with few suppliers
- select & reward suppliers based on quality
- train & develop suppliers
- involve suppliers in design & troubleshooting
International Organization for Standardization (ISO)
Trusted organization that ensures a quality system is in place and has been audited.
- ISO 9000 = most significant quality standard for quality
- Industry-specific standards = adaptations of the ISO 9000 standard to specific industries and situations
Service Quality Dimensions
- Tangibles
- Service reliability
- Responsiveness
- Assurance
- Empathy
Physical appearance and appropriateness of service facility and other related material attributes.
- clean hotel rooms
- attractive stage settings at a concert
- nice looking brochures
Service Reliability
The ability of the service provider to perform her job dependably and accurately.
- trusted doctors
- authors who write books with few errors
The willingness of a service provider to be prompt and helpful.
- short waiting times in doctors' offices
- fast service at the DMV
- quick and friendly service at a restaurant
The ability of service providers to inspire trust and confidence.
- a reassuring president during a crisis
Caring and individualized attention.
- beloved teachers
- nice dentists
a set of comparison surveys used to perform gap analysis in service firms and based on the notion that customers are more satisfied when their perceptions of a service are closely aligned with the service design of the service provider.
Customer-Driven Excellence
A quality management approach that focuses on understanding the customer and striving to satisfy his/her needs.
Basic Precepts:
- customer has the final say on your product's quality
- focus on customer retention and loyalty based on trust
- cater to customer's current and future needs
- don't just meet basic needs but differentiate yourself
Process Maps
A flowchart, or "picture," of a process used to improve. First develop one of the current system, then brainstorm to develop a map of a proposed improved system.
Check Sheets
Used to tally defects/problems by occurrence; serves as a data source for histograms and Pareto analysis.
Order of Use of Quality Tools
1. Process Map
2. Check Sheet
3. Histogram, Scatter Plot, Run Chart
4. Fishbone Diagram
5. Pareto Chart
A graphical presentation of data using bar charts.
Rule 1: width of bars must be consistent (cover the same range).
Rule 2: grouping must be mutually exclusive and all-inclusive.
Scatter Plots
Used to study relationship between variables. Indicates variable can predict other variables
Run Charts
Used to plot time series data, useful in identifying trends.
Fishbone Diagrams
Cause and effect diagrams used to identify underlying causes of problems.
Sometimes the "problem is just a symptom of the problem.
By continuously brainstorming and asking "why" (5 whys), managers and their teams can understand underlying causes.
Pareto Diagrams
Pareto's Law: based on the 80/20 rule which states that 80% of quality problems are caused by 20% of causes.
Helps identify and prioritize problems that need to be solved. Fixing a few problems can have a large impact.
Malcolm Baldridge National Quality Award
Best-known mechanism for self-assessment combined with external assessment. Created by the U.S. government.
Applicant companies are assessed in 7 categories:
1. leadership
2. strategic planning
3. customer focus
4. measurement, analysis, and knowledge management
5. workforce focus
6. operations focus
7. results
Statistical Process Control
The application of statistical concepts to the production process to see if your processes display stability (only random variation is present in the process).
Statistical Thinking
Based on 3 main concepts:
1. a production system focuses on interconnectedness of processes and variables.
2. variation is everywhere.
3. firms need to understand variation to reduce it.
Consequences of too much variation
- Parts don't fit correctly
- Products don't function properly
- The company gets a reputation for poor quality
Random Variation (Common Cause Variation)
Centers on a mean and occurs with a somewhat consistent amount of dispersion.
Normally occurring; rarely a negative.
Amount of variation can be large or small.
Our statistical tools are NOT designed to detect random variation... hard to eliminate; takes design changes (product or process).
Nonrandom Variation (Special Cause Variation)
results from a specific event, which may be a shift in a process mean or an unexpected occurrence.
Inconsistent mean and dispersion.
Process Stability
If a process's variation is random and doesn't have an assignable cause.
Process Control Charts
Graphs designed to determine if a process has stability... visually see what a process is doing, how it is behaving.
Can be based on variables or attributes.
Don't apply to all situations; services are a tough fit for control charts because of customer-induced variation.
Continuous measurement such as weight, height, or value.
A defect is either present or it's not (motor starts or is doesn't).
Statistical Process Control (SPC) Charts
Used to monitor process variation. Each point represents data from samples that are plotted sequentially over time.
The Upper Control (UCL), Central Line (CL), and Lower Control Limit (LCL) are computed statistically.
How to Build a Process Chart
1. Identify critical operations in the process where inspection might be needed. Such operations are those in which, if the operation is performed improperly, the form, fit, or function of the product will be negatively affected.
2. Identify critical product characteristics. They are the aspects of the product that will result in either good or poor functioning of the product.
3. Determine whether the critical product characteristic is a variable or an attribute.
4. Select the appropriate process control chart from among the many types of control charts.
5. Establish the control limits and use the chart to continually monitor and improve the process.
6. Update the limits when changes have been made to the process.
x- and R charts
x- charts track the average/mean of the characteristic being measured.
R charts track the dispersion/range of the process.
The control limits are based on what the process is providing and don't represent specification limits.
Attributes Control Charts
Attributes deal with defects and defectives instead of continuous measurements.
Defects (irregularity or problem) are countable and there could be many within the same unit.
A defective unit = a unit that, as a whole, doesn't meet performance requirements.
Control Chart Evidence for Investigation
Indicators of an out-of-control situation:
- one data point out, above. Investigate for cause of poor performance.
- one data point out, below. Investigate for cause of variation.
- two data points near UCL (beyond 2 standard deviations from the mean). Investigate for cause of variation.
- two data points near LCL (beyond 2 standard deviations from the mean). Investigate for cause of variation.
- 5 successive data point above CL. Investigate for cause of sustained process run.
- 5 successive data points below CL. Investigate for cause of sustained below-mean performance.
- 7 successive data points on increasing or decreasing line. Investigate for cause of progressive change.
- Erratic behavior
- Sudden change (drop/spike) in level

***In all instances, the reaction is to investigate, not adjust the process. If investigation doesn't turn up anything unusual, measure another sample. If after investigating you deem appropriate, you then adjust the process.
Corrective Action for Out of Control Process
1. Carefully identify the quality problem.
2. Form correct team to evaluate and solve problem.
3. Use structured brainstorming with fishbone or affinity diagrams to identify causes of problems.
4. Brainstorm to identify potential solutions.
5. Eliminate the cause.
6. Restart the process.
7. Document the problem, root causes, and solutions.
8. Communicate results of the process to all personnel so that process becomes reinforced and ingrained in the organization..
Process Tampering
Adjusting a process when it only exhibits a random variation... this introduces nonrandom variation, which is bad.
Process Capability
the ability of a process to produce a product that meets the specification.
Once it's stable, make sure it's capable.
Process capability index, a comparative measure of the extent to which individual products meet specification. The higher the index the better, or more capable, a process is in producing products that meet specification.
Uses specifications limits in its calculations.
2.0 = world-class
Lean/Six Sigma Mindset
Focus on renewal and renovation which result from removing anything wasteful.
E.g. exercising, eating better, getting rid of fat.
Sigma Levels and Defects
Level 1 = 691,462 defect (in parts per million)
2 = 308,538
3 = 66,807
4 = 6,210
5 = 233
6 = 3.4
Lean philosophy
A continual thinking that anything a customer is not willing to pay for is considered a waste or non-value add and all wastes should be continually evaluated to see if their costs can be eliminated or reduced.
Shingo's Seven Wastes
Lean Iceberg
Tip of iceberg = excess inventory
Below the surface there are other wasteful practices or hidden costs. It takes attention to detail to reduce these types of issues.
Continual improvement of fine details using the plan, do, check, act cycle (Deming).
Rapid Kaizen (Kaizen Event)
short-term event (days to multiple weeks) where a team focuses on solving a specific problem or an approach.
Pull System
A system where an information signal controls and improves the flow of materials and information and allocates resources based on actual consumption not a forecasted demand. Replace what was just taken off shelves and purchased by customers.
Developed by Toyota after recognizing the benefits of replenishment systems used by supermarkets in America.
Elements of a Pull Systems
1. Selection of parts for the supermarket - depends on analysis based on customer use/frequency
2. Size of supermarket - must ensure there's enough inventory to cover the demand during replenishment lead time, plus safety stock (typically 20% of demand during replenishment lead time).
3. Production information from and to supermarket - deals with the Kansan information flow loops, the order size and lead time restrictions, and the physical location of the supermarket.
Kanban system
A communication device so that inventory can be pulled through a process only when it is needed.
- A signboard to signal production that often uses cards (although can be anythingL ball, empty space, light, container, electronic)
- Information transfer for production
- A visual management system
- A transparent, shop-floor-controlled process
- A subcomponent of a pull system
Kanban Ground Rules
- Do not pass defective parts to the next process
- Subsequent process withdraws from preceding process
- The # of parts in a container should match the information on the Kanban
- The quantity of parts produced must equal the quantity of parts withdrawn
- Parts should not be produced or created without a Kanban
The 5 S's
1. Sort: organizing by getting rid of the unnecessary.
2. Set in Order: neatness by straightening offices/work areas.
3. Shine: cleaning equipment to eliminate dirtiness that can hide problems.
4. Standardize: standardizing locations for tools, materials, etc.
5. Sustain: discipline in maintaining the prior 4 S's.
Single Sourcing
Purchasing from a single supplier to reduce variation and further develop a supplier.
Change Management
Process of transitioning an organization from an existing state to a desired state through skilled management of transitioning processes... aka a transformation.
Change needed can be strategic, operational, cultural, technological, or organizational... it is most often ALL of these.
Keys to Manage Change Effectively
- Align needs of workers, managers, and stakeholders
- Establish organizational structure
- Create communication systems to update employees about changes in process
- Set adequate budgets and training programs to see change to fruition
- Overcome fear of change through counseling and guidance (more communication)
- Walk the walk, not just talk the talk
- Try to always explain why, the benefits of the change, and the consequences of not changing
According to the situational leadership​ model, if there is a low need for emotional support but a high need for​ guidance, the leader must engage in
A. telling.
B. selling.
C. participating.
D. delegating.
A. telling
According to the situational leadership​ model, if there is a low need for emotional support and a low need for​ guidance, the leader must engage in
A. participating.
B. telling.
C. delegating.
D. selling.
C. delegating
What stage in team development is characterized by achievement of a mutually​ supportive, steady​ state?
A. storming
B. mourning
C. norming
D. performing
D. performing
What risk and return factors characterize an​ "excellent candidate" for a​ project?
A. low return and high risk
B. high return and low risk
C. low return and low risk
D. high return and high risk
B. high return and low risk
What is a brainstorming tool used to plan​ projects?
A. multiple project assignment matrix
B. work breakdown structure​ (WBS)
C. program evaluation and review technique​ (PERT)
D. None of the above.
B. work breakdown structure (WBS)
All of the following are objectives of​ PERT/CPM EXCEPT
A. find out which tasks require tight control and which can more easily be delegated
B. brainstorm project ideas
C. determine how long it should take to finish a project
D. help map out a plan of the project to better understand where the project team is going visually
B. brainstorm project ideas
In statistical process​ control, if a machine breaks due to poor​ maintenance, the process will likely display what kind of​ variation?
A. special cause
B. common cause
C. random
D. abnormal
A. special cause
Statistical thinking is based on all of the following concepts​ EXCEPT:
A. firms need to understand variation to reduce it
B. variation is everywhere
C. statistics can explain every problem
D. a system of production focuses on the interconnectedness of processes and variables
C. statistics can explain every problem
Systematic samples are taken according to
A. time or sequence.
B. time or size.
C. size or sequence.
D. None of the above.
A. time or sequence
Process capability studies are used to determine whether a process is in need of monitoring through process control charts.
A. True
B. False
A. True
A​ world-class, or Six​ Sigma, capability index is
A. 1.0.
B. 1.33.
C. 1.25.
D. 2.0.
D. 2.0
If a process has​ stability, its variation is​ ________ and does not have an​ _______ cause.
A.​ random; unassignable
B. ​non-random; assignable
C.​ non-random; unassignable
D. random; assignable
D. random; assignable
Which of the following is NOT a type of attributes control​ chart?
A. R​ (range)
B. np​ (number defective or number​ nonconforming)
C. u​ (number defects per​ unit)
D. p​ (proportion defective)
A. R (range)
Which of the following is NOT cause for investigation in a control​ chart?
A. two data points near the lower control limit​ (2 standard deviations beyond the​ mean)
B. four successive points on a decreasing line
C. five successive data points above the central line
D. one data point above the upper control limit
B. four successive points on a decreasing line
Which of​ Garvin's dimensions of product quality describes the propensity for a product to function over its useful​ life?
A. serviceability
B. reliability
C. performance
D. durability
B. reliability
All of the following are definitions of quality EXCEPT
A. conformance to requirements.
B. a product or service free of deficiencies.
C. the characteristics of a product that bear on its ability to satisfy stated or implied needs.
D. All of the above are definitions of quality.
D. All of the above are definitions of quality.
What quality expert advocated statistical​ thinking, or looking at quality problems from a​ data-driven perspective?
A. Crosby
B. Ishikawa
C. Juran
D. Deming
D. Deming
What quality expert taught that​ quality, as a managed​ process, can be a source of improved financial performance for any​ firm?
A. Ishikawa
B. Crosby
C. Juran
D. Deming
B. Crosby
Which quality expert emphasized the differences between tactical and strategic quality​ considerations?
A. Ishikawa
B. Crosby
C. Deming
D. Juran
D. Juran
Which quality expert coined the phrase​ "company-wide quality​ control"?
A. Ishikawa
B. Crosby
C. Juran
D. Deming
A. Ishikawa
What is the definition of the quality dimension service
A. the ability of the service provider to perform her job dependably and accurately
B. the ability of service providers to inspire trust and confidence
C. the willingness of a service provider to be prompt and helpful
D. caring and individualized attention
A. the ability of the service provider to perform her job dependably and accurately
What service quality is the ability of service providers to inspire trust and​ confidence?
A. empathy
B. assurance
C. responsiveness
D. service reliability
B. assurance
Which of​ Garvin's dimensions of product quality describes the extent to which products meet​ specifications?
A. durability
B. conformance
C. perceived quality
D. serviceability
B. conformance
Which of the following is NOT a quality dimension of collaborative supplier​ relationships?
A.​ long-term relationships with few suppliers
B. more suppliers to choose from
C. training and developing suppliers
D. selecting and rewarding suppliers based on quality considerations
B. more suppliers to choose from
According to the U.S. National Institute of Standards and Technology​ (NIST), who judges the performance and quality provided by a​ company?
A. company management
B. vendors
C. customer service team
D. customers
D. customer
Which is a brainstorming tool used for identifying underlying causes to a​ problem?
A. fishbone diagram
B. check sheet
C. tree diagram
D. histogram
A. fishbone diagram
A Six Sigma process allows for how many defective parts per​ million?
A. 233
B. 6,210
C. 3.4
D. 1.2
C. 3.4
​Low-hanging fruit Six Sigma projects have what risk and return​ profile?
A. high risk and low return
B. low risk and high return
C. low risk and low return
D. high risk and high return
C. low risk and low return
A high risk and low return Six Sigma project is categorized as
A​. low-hanging fruit.
B. a dog.
C. a home run.
D. None of the above.
B. a dog
All of the following are phases of Six Sigma EXCEPT
A. measure.
B. define.
C. investigate.
D. analyze.
C. investigate
All of the following are one of​ Shingo's seven wastes EXCEPT
A. motion.
B. inspecting.
C. waiting.
D. inventories.
E. transportation.
B. inspecting
What is the lean or Japanese word for continual​ improvement?
A. kanban
B. jidoka
C. kaizen
D. heijunka
C. kaizen
All of the following were mentioned as methods for managing organizations and improving them EXCEPT
A. Six Sigma.
B. supply chain management.
C. lean.
D. All of the above methods were mentioned.
D. All of the above methods were mentioned
What is the visible tip of the Lean Iceberg of​ wastes?
A. transportation costs
B. administration
C. energy
D. inventory
D. inventory
Which of the following is NOT an example of poka​ yoke?
A. a smoke detector​ can't be mounted on the wall until a battery is installed
B. a stove burner turns off automatically when a pot or pan is removed
C. the restricter in your gas tank that​ won't let you put the wrong kind of fuel in the tank
D. car headlights that turn on when the driver flips a switch
D. car headlights that turn on when the drive flips a switch
Strategic change often follows an​ S-shaped pattern where new changes are​ launched, they​ flourish, and then
A. stabilize.
B. die off.
C. sharply take off.
D. accelerate.
A. stabilize
Single-Minute Exchange of Dies
a system for dramatically reducing the time it takes to complete equipment changeovers. The essence of SMED system is to convert as many changeover steps as possible to "external" (performed while the equipment is running), and to simplify and streamline (continually improve) the remaining steps.

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