Transcript Chapter 11
Class 7
Resource
Planning
Enterprise Resource
Planning (ERP)
Organizes and manages a
company’s business processes by
sharing information across
functional areas
Connects with supply-chain and
customer management
applications
Largest ERP provider SAP
ERP’s Central Database
Finance &
Accounting
Sales
&
Marketing
ERP Data
Repository
Human
Resources
Production &
Materials
Management
ERP Implementation
First step is to analyze business
processes
Which processes have the biggest
impact on customer relations?
Which process would benefit the
most from integration?
Which processes should be
standardized?
Customer Relationship
Management (CRM)
Plans and executes business
processes that involve customer
interaction
Changes focus from managing
products to managing customers
Point-of-sale data is analyzed for
patterns used to predict future
behavior
Supply Chain Management
Supply chain planning
Supply chain execution
Supplier relationships
Distinctions between ERP and
SCM are becoming increasingly
blurred
ERP and MRP
MRP (material requirements planning)
was the precursor to ERP
Primarily a production planning and
control system
MRP evolved to MRP II (manufacturing
resource planning)
ERP and ERP II continue to extend the
links through all business processes
Material Requirements
Planning
Computerized inventory control &
production planning system
Schedules component items when
they are needed - no earlier and no
later
When to Use MRP
Dependent and discrete items
Complex products
Job shop production
Assemble-to-order environments
Material
Requirements
Planning
Product
structure
file
Master
production
schedule
Material
requirements
planning
Item
master
file
Planned
order
releases
Work
orders
Purchase
orders
Rescheduling
notices
Master Production
Schedule
Drives MRP process with a schedule of
finished products
Quantities represent production not
demand
Quantities may consist of a combination of
customer orders & demand forecasts
Quantities represent what needs to be
produced, not what can be produced
Basic MRP
Processes
1. Exploding the bill of material
2. Netting out inventory
3. Lot sizing
4. Time-phasing requirements
MRP Outputs
Planned orders
Work orders
Purchase orders
Changes to previous plans or
existing schedules
Action notices
Rescheduling notices
Capacity Requirements
Planning (CRP)
Computerized system that projects
load from material plan
Creates load profile
Identifies underloads and overloads
Capacity Terms
Load profile
Compares released and planned
orders with work center capacity
Capacity
Productive capability; includes
utilization and efficiency
Utilization
% of available working time spent
working
More Capacity Terms
Efficiency – how well the
machine or worker performs
compared to a standard output
Load
The standard hours of work
assigned to a facility
Load percent
The ratio of load to capacity
Load % = (load/capacity)x100%
Scheduling
Scheduling
Specifies when labor,
equipment, facilities are needed
to produce a product or provide
a service
Last stage of planning before
production occurs
Objectives in Scheduling
Meet customer due dates
Minimize job lateness
Minimize response time
Minimize completion time
Minimize time in the system
Minimize overtime
Maximize machine or labor utilization
Minimize idle time
Minimize work-in-process inventory
Efficiency
Shop Floor Control
Scheduling and monitoring day to day production of a job
1. Loading - Check availability of
material, machines & labor
2. Sequencing - Release work orders
to shop & issue dispatch lists for
individual machines
3. Monitoring - Maintain progress
reports on each job until it is
complete
Loading
Allocate work to machines
(resources)
Perform work on most efficient
resources
Use assignment method of linear
programming to determine
allocation
Sequencing
Prioritize jobs assigned to a
resource
If no order specified use first-come
first-served (FCFS)
Many other sequencing rules exist
Each attempts to achieve to an
objective
Sequencing Rules
FCFS - first-come, first-served
LCFS - last come, first served
DDATE - earliest due date
CUSTPR - highest customer priority
SETUP - similar required setups
SLACK - smallest slack
CR - critical ratio
SPT - shortest processing time
LPT - longest processing time
Theory of Constraints
Not all resources are used evenly
Concentrate on the” bottleneck”
resource
Synchronize flow through the
bottleneck
Use process and transfer batch sizes
to move product through facility
Theory of Constraints
• What to Change
• What to Change to
• How to cause the change
Chapter 4
Quality
Management
Quality is a measure of goodness that is
inherent to a product or service.
Bottom line: perspective has to be from the
Customer – fitness for use
What Is Quality?
“The degree of excellence of a
thing” (Webster’s Dictionary)
“The totality of features and
characteristics that satisfy needs”
(ASQ)
Fitness for use
Quality of design
Quality
• Quality Management – not owned by
any functional area – cross
functional
• Measure of goodness that is inherent
to a product or service
FedEx and Quality
• Digitally Assisted Dispatch System –
communicate with 30K couriers
• 1-10-100 rule
1 – if caught and fixed as soon as it
occurs, it costs a certain amount of time
and money to fix
10 – if caught later in different
department or location = as much as 10X
cost
100 – if mistake is caught by the
customer = as much as 100X to fix
Product Quality
Dimensions
• Product Based – found in the
product attributes
• User Based – if customer satisfied
• Manufacturing Based – conform to
specs
• Value Based – perceived as
providing good value for the price
Dimensions of Quality (Garvin)
1. Performance
Basic operating characteristics
2. Features
“Extra” items added to basic features
3. Reliability
Probability product will operate over
time
Dimensions of Quality (Garvin)
4. Conformance
Meeting pre-established standards
5. Durability
Life span before replacement
6. Serviceability
Ease of getting repairs, speed &
competence of repairs
Dimensions of Quality (Garvin)
7. Aesthetics
Look, feel, sound, smell or taste
8. Safety
Freedom from injury or harm
9. Other perceptions
Subjective perceptions based on
brand name, advertising, etc
Service Quality
1. Time & Timeliness
Customer waiting time, completed
on time
2. Completeness
Customer gets all they asked for
3. Courtesy
Treatment by employees
Service Quality
4. Consistency
Same level of service for all customers
5. Accessibility & Convenience
Ease of obtaining service
6. Accuracy
Performed right every time
7. Responsiveness
Reactions to unusual situations
Quality of
Conformance
Ensuring product or service
produced according to design
Depends on
Design of production process
Performance of machinery
Materials
Training
Quality Philosophers
Walter Shewhart – Statistical Process
Control
W. Edwards Deming
Joseph Juran – strategic and planning based
Philip Crosby
Armand Fiegenbaum – total quality control
“entire business must be involved in quality
improvement”
Deming’s 14 Points
1.
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Create constancy of purpose
Adopt philosophy of prevention
Cease mass inspection
Select a few suppliers based on
quality
5. Constantly improve system and
workers
6. Institute worker training
Deming’s 14 Points
7. Instill leadership among
supervisors
8. Eliminate fear among employees
9. Eliminate barriers between
departments
10. Eliminate slogans
11. Remove numerical quotas
Deming’s 14 Points
12. Enhance worker pride
13. Institute vigorous training and
education programs
14. Develop a commitment from top
management to implement these
13 points
The Deming Wheel
(or PDCA Cycle)
4. Act
1. Plan
Institutionalize
improvement;
continue the
cycle.
Identify the
problem and
develop the
plan for
improvement.
3. Study/Check
2. Do
Assess the plan;
is it working?
Implement the
plan on a test
basis.
Also known as the Shewart Cycle
Six Sigma
• Quality management program that
measures and improves the
operational performance of a
company by identifying and
correcting defects in the company’s
processes and products
Six Sigma
Started By Motorola
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Define
Measure
Analyze
Improve
Control
Made Famous by
General Electric
40% of GE executives’
bonuses tied to 6 sigma
implementation
Malcolm Baldrige
National Quality Award
• Category 3 – determine
requirements, expectations,
preferences of customers and
markets
• Category 4 – what is important to the
customer and the company; how
does company improve
Total Quality Management
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Customer defined quality
Top management leadership
Quality as a strategic issue
All employees responsible for quality
Continuous improvement
Shared problem solving
Statistical quality control
Training & education for all employees
Strategic Implications of
TQM
Quality is key to effective strategy
Clear strategic goal, vision, mission
High quality goals
Operational plans & policies
Feedback mechanism
Strong leadership
TQM in Service Companies
Inputs similar to manufacturing
Processes & outputs are different
Services tend to be labor intensive
Quality measurement is harder
Timeliness is important measure
TQM principles apply to services
Cost of Quality
Cost of achieving good quality
Prevention
Planning, Product design,
Process, Training, Information
Appraisal
Inspection and testing,
Test equipment,
Operator
Cost of Quality
Cost of poor quality
Internal failure costs
Scrap, Rework, Process failure,
Process downtime, Pricedowngrading
External failure costs
Customer complaints,
Product return,
Warranty, Product
liability, Lost sales
Employees and
Quality Improvement
Employee involvement
Quality circles
Process improvement teams
Employee suggestions
Cause-and-Effect Diagram
Measurement
Faulty
testing equipment
Inadequate training
Environment
Old / worn
Quality
Problem
Defective from vendor
Not to specifications
Dust and Dirt
Tooling problems
Lack of concentration
Improper methods
Machines
Out of adjustment
Poor supervision
Incorrect specifications
Inaccurate
temperature
control
Human
Materialhandling problems
Materials
Poor process design
Ineffective quality
management
Deficiencies
in product design
Process
Also known as Ishikawa Diagram or Fish Bone
Hot House Quality
Lots of Hoopla and no
follow through
ISO 9000:2000
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Customer focus
Leadership
Involvement of the people
Process approach
Systems approach to management
Continual process improvement – GAO
Factual approach to decision making
Mutually beneficial supplier relationships
Implications Of ISO 9000
Truly international in scope
Certification required by many foreign
firms
U.S. firms export more than
$150 billion annually to Europe
Adopted by U.S. Navy,
DuPont, 3M, AT&T, and others
ISO Accreditation
European registration
3rd party registrar assesses quality program
European Conformity (CE) mark authorized
United States 3rd party registrars
American National Standards Institute (ANSI)
American Society for Quality (ASQ)
Registrar Accreditation Board (RAB)
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