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| Any set of activities performed by an organization that takes inputs and transforms them into outputs ideally of greater value to the organization than the original inputs. |
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| The average time between completions of successive units in a process. |
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| The ratio of the time that a resource is actually activated relative to the time that it is available for use. |
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| A storage area between stages where the output of a stage is placed prior to being used in a downstream stage. Buffering allows the stages to operate independently. |
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| The activities in the stage must stop because there is no place to deposit the item just completed. |
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| The activities in a stage must stop because there is no work. |
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| A resource that limits the capacity or maximum output of the process. |
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| A process that is activated only in response to an actual order. |
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| A process that produces standard products that are stored in finished goods inventory. The product is delivered quickly to the customer from the finished goods inventory. |
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| Combines the features of both make-to-order and make-to-stock. Typically, a generic product is made and stocked at some point in the process. These generic units are customized in a final process to meet actual orders. |
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| Movement of items through a process is coordinated through a timing mechanism. Most processes are not paced, but assembly lines usually are paced. |
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| The ration of output to input. Taking the dollar value of the output and dividing by the dollar value of the inputs usually measures total factor productivity. Alternatively, partial factor productivity is measured based on an individual input and often is not calculated using dollar values (an example would be units/person). |
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| A ratio of the actual output of a process relative to some standard. |
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| The time required to produce a batch of parts. |
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| The time required to prepare a machine to make a particular item. |
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| The sum of the setup time and run time for a batch of parts that are run on a machine. |
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| The average time that it takes a unit to move through an entire process. Usually the term lead time is used to refer to the total time that it takes a customer to receive an order (includes time to process the order, throughput time, and delivery time). |
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| The output rate that the process is expected to produce over a period of time. |
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| Process Velocity or Throughput Ratio |
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| The ratio of the total flow time to the value-added time. |
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| The time in which useful work is actually being done on the unit. |
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| Total Average Value of Inventory |
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| The total average investment in raw material, work-in-process, and finished goods in inventory. This is valued at the cost to the firm. |
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| The cost of goods sold divided by the total average value of the inventory. |
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| The number of days of inventory of an item. If an item were not replenished, this would be the numbers of days until the firm would run out of the item (on average). Also, the inverse of inventory turn expressed in days. |
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| States a mathematical relationship between throughput rate, flow time, and the amount of work-in-process divided by the throughput rate. |
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| The time needed to respond to a customer order. |
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| Customer Order Decoupling Point |
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| The place where inventory is positioned to allow processes or entities in the supply chain to operate independently. |
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| A production environment where the customer is served "on-demand" from finished goods inventory. (ex: cd's) |
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| A production environment where preassembled components, subassemblies, and modules are put together in response to a specific customer order |
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| A production environment where the product is built directly from raw materials and components in response to a specific customer order. |
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| Here the firm works with the customer to design the product, which is then made from purchased materials, parts, and components. |
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| The attempt to achieve high customer service with minimum levels of inventory investment. |
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| The product, because of its sheer bulk or wight, remains fixed in a location. Equipment is moved to the product rather than vice versa. |
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| A process structure suited for low-volume production of a great variety of nonstandard products. Workcenters sometimes are referred to as departments and are focused on a particular type of operation. |
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| An area where simple items that are similar in processing requirements are produced. |
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| A process structure designed to make discrete parts. Parts are moved through a set of specially designed workstations at a controlled rate. |
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| An often automated process that converts raw materials into a finished product in one continuous process. |
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| Shows the relationships between different production units and how they are used depending on product volume and the degree of product standardization. |
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| Total Quality Management (TQM) |
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| Managing the entire organization so that it excels on all dimensions of products and services that are important to the customer |
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| Malcolm Baldrige National Quality Award |
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Definition
An award established by the U.S. Department of Commerce and given annually to companies that excel in quality.
-Created in 1987
-Companies prepare and submit detailed package documenting quality management processes and results
-Examiners visit top sites
-Award criteria can also be used for self-assessment by companies not applying for the award
-An investment portfolio of Badldrige award winners outperformed S&P 500 by 3 to 1 from 1991-2000 |
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| The inherent value of the product in the marketplace. |
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| The degree to which the product or service design specifications are met. |
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| The person who does the work is responsible for ensuring that specifications are met. |
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Criteria by which quality is measured.
1.) Performance
2.) Aesthetics
3.) Features
4.) Reliability/Durability
5.) Serviceability
6.) Perceived Quality |
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| Expenditures related to achieving product or service quality such as the costs of prevention, appraisal, internal failure, and external failure. |
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| 4 Classes of Quality Associated Costs |
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Definition
1.) Appraisal Costs
-Costs incurred in the process of
uncovering defects (Inspections,
tests, audits, etc.)
2.) Prevention Costs
- Costs incurred in the process of
preventing poor quality
(Planning, training, upfront
design, etc.)
3.) Internal Failure Costs
- Costs associated with
discovering poor product quality
before it reaches the customer.
(Rework(fixing the defect),
scrap, equipment downtime, etc.)
4.) External Failure Costs
- Costs associated with product
quality problems that occur
AFTER the product reaches the
customer. (Recall logistical
costs, repair costs, brand
loyalty, litigation) |
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Definition
| A statistical term to describe the quality goal of no more than 4 defects out of every 1,000,000 units. Also refers to a quality improvement philosophy and program. |
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| Key Concepts of Six-Sigma |
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Definition
1.) Quality is delivering what the
customer wants
2.) Customers perception of quality is
not just driven by the average
quality but by the variation in
quality each time the customer
interacts with the company
3.) Customers value consistent
predictable interactions
4.) Processes need to be designed to
minimize variability |
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| DPMO (defects per million opportunities) |
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| A metric used to describe the variability of a process. |
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Definition
1.) Define
-Identify customers and their
priorities
-Define problem statement, goals,
and benefits
2.) Measure
-Determine defect metrics
-Collect Data
3.) Analyze
-Identify sources of variation
-Determine root cause(s)
4.) Improve
-Develop potential solutions
-Correct/re-evaluate potential
solution
5.) Control
-Develop standards and procedures
-Implement statistical process
control
-Verify benefits |
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Definition
| Also called the "Deming cycle or wheel"; refers to the plan-do-check-act cycle of continuous improvement. |
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| The philosophy of continually seeking improvements in processes through the use of team efforts. |
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| Japanese term for continuous improvement. |
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| Combines the implementation and quality control tools of Six Sigma with the materials management concept of lean manufacturing with a focus on reducing cost by lowering inventory to an absolute minimum. |
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| Coach or actually lead a Six-Sigma improvement team |
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| Receive in-depth training on statistical tools and process improvement. (they perform many of the same functions as black belts for a larger number of teams.) |
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| Employees who have received enough Six-Sigma training to participate in a team or, in some companies, to work individually on a small-scale project directly related to their own job. |
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Definition
Looking outside the company to examine what excellent performers inside and outside the company's industry are doing in the way of quality.
Includes the following 2 steps:
1.) Identify processes needing
improvement
-Identify a firm that is a leader
-Contact the managers of that
company and make a personal visit
to interview managers and
workers.
2.) Analyze data
-Look at gaps between what your
company is doing and what the
benchmarking company is doing
-2 aspects to the study:
1. Comparing actual processes
2. Comparing the performance of
these processes according to
a set of measures |
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| Tools of Six-Sigma: DMAIC |
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Definition
Define
1. Process charts (flow diagrams)
2. Check sheet
Measure
1. Histograms
2. Pareto charts
3. Scatter diagrams
Analyze
1. Cause & effect diagram (fishbone)
Improve
1. Opportunity flow diagrams
Control
1. Statistical process control chart |
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| Deviation in the output of a process that can be clearly identified and managed. |
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| Deviation in the output of a process that is random and inherent in the process itself. |
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| Upper and Lower Specification or Tolerance Limits |
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| The range of values in a measure associated with a process that are allowable given the intended use of the product or service. |
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| The ratio of the range of values produced by a process divided by the range of values allowed by the design specification. |
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| Statistical Process Control (SPC) |
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Techniques for testing a random sample of output from a process to determine whether the process is producing items within a prescribed range.
Control charts are useful tools in statistical process control |
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Definition
1.) Alert management to assignable
variations
2.) Measure the amount of variation in
the process, creating an objective
measure of consistency
3.) Assign causes to variation that
currently is perceived as pure
randomness |
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Definition
Quality characteristics that are classified as either conforming or not conforming to specification.
-Classify as either 'good' or 'bad', or count the # of defects
-Categorical or discrete random
variables |
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Definition
Quality characteristics that are measured in actual weight, volume, inches, centimeters, or other measure.
-May be in whole or fractional numbers
-Continuous random variables |
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Variable Charts
-R chart
-X-bar chart
Attribute Charts
-p Chart |
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