SCM (MIDTERM)

• Quality


  An overriding concern of all organizations in a competitive marketplace. It is in the eyes of customers and how they perceive an organization, its products and its services.
• Dimensions of Product Quality

  • Performance
  • Reliability
  • Durability
  • Features
  • Aesthetics
  • Serviceability
  • Perceived Quality
  • Conformance
• Performance


  How well the product actually performs in comparison to how it was designed to perform
• Reliability


  Likelihood that a product will perform throughout its expected life and the number of breakdowns or repairs that a customer experiences after purchase
• Durability


  The actual life expectancy of a product
• Features


  The number of functions or tasks that a product performs independent of reliability or durability
• Aesthetics


  The style, materials and visual appeal of a product
• Serviceability


  The ease of fixing or repairing a product that fails
• Perceived Quality


  Customers' experience before, during, and after they purchase a product
• Conformance


  Whether a firm's products actually meet the precise description or specifications as designed
• Total product quality is a combination of the eight dimensions, how they are blended by an organization, and how that blend is perceived by the customer
• Total Quality Management (TQM)


  A philosophy supported by a managerial system focused on meeting customer expectation with respect to all needs, from all departments or functions of an organization, whether the customer is internal or external, a supply chain partner, or a customer
• Elements of TQM


  • Top management commitment and support
  • Maintaining a customer focus in product, service, and process performance
  • Integrated operation within and between organizations
  • Commitment to continuous improvement
• Total in TQM


  A product's quality is ultimately determined by the customer's acceptance and use of the product, and quality management is a total, organization wide activity rather than a technical task
• Quality-related costs


  • Appraisal costs
  • Internal failure costs
  • External failure costs
  • Prevention costs
• Quality Standards


  The International Organization for Standardization (ISO) has issued a series of quality standards, such as ISO 9000 and ISO 14000, that provide basic definitions for quality assurance and quality management
• Manufacturing Perspectives


  • Brand power
  • Volume
  • Variety
  • Constraints
  • Leadtime requirements
• Brand Power


  The measure of a customer's purchase preference based on a manufacturer's reputation, product quality, and supply chain capabilities
• Economy of Scale


  The principle that the average cost of producing a product declines as its manufacturing volume increases
• Economy of Scope


  Manufacturing processes that can rapidly switch production from one product to another while retaining efficiency
• Manufacturing Constraints


  • Capacity
  • Equipment
  • Setup/changeover
• Leadtime


  The elapsed time between release of a work order to the shop floor and completion of all work necessary to achieve ready-to-ship product status
• Basic Manufacturing Processes


  • Job Shop
  • Batch
  • Line Flow
  • Continuous
• Job Shop Process


  Provides high flexibility to produce a variety of different products, but limited in volume. Each customer order or "job" can involve different materials and inputs.
• Batch Process


  A higher-volume job shop, in which the same or similar products are produced repetitively. The variety of products is significantly lower than in a job shop, but too large for resources to be dedicated to a single product or family of products.
• Line Flow Process


  Can produce high volumes of relatively standardized products. The workflow is organized around a single product, with steps arranged in sequence and broken up into the smallest steps possible.
• Continuous Process


  Used for high-volume products where the demand is very large and can justify the capital investment necessary. They are very inflexible and extremely capital-intensive, but tremendously efficient.
• Volume


  Relationship of costs per unit to output
• Traditional perspective on volume


  • Treat volume in terms of the well-established principle of economy of scale
• Economy of scale


  The average cost of producing a product declines as its manufacturing volume increases
• Product quantity should be increased as long as increases in volume decrease the average per unit manufactured
• Economy of scale


  • Results from efficiencies by specialization of process, workforce, fixed assets utilization, procurement economies, and reduced need for process changeover
• Economy of scale is extremely important when high-fixed cost machinery is used to convert raw material into finished product
• Volume sensitive industries


  • High capital investment coupled with high cost of changeover tends to encourage extremely long production runs
• Logistical support considerations related to volume


  • Supply chain logistics must accommodate the number of times a product is manufactured during a planning period
  • The quantity or lot size typically produced during a manufacturing run determines the subsequent volume that must be handled and warehoused in a supply chain logistics measure
• Variety


  Manufacturing processes characterized by relatively frequent product runs and high repetition of small lot sizes
• Economy of scope


  Manufacturing processes that can rapidly switch production from one product to another while retaining efficiency
• Scope


  A manufacturing process can use varied combinations of overhead support, materials, equipment, and labor to produce a variety of different products
• Variety


  The range of product variations that are capable of being manufactured by using a given process
• All manufacturing processes reflect a balance between economy of scale and economy of scope