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Understand what is meant by “the cost of quality”.
Joseph Juran is credited as one of the first to measure the cost of quality, and he demonstrated the potential for increased profits that would result if the costs of poor quality could be reduced.
Understand what is meant by external and internal failure costs.
Internal failure costs - Costs incurred to fix problems that are detected before the product/service is delivered to the customer.
external failure costs - All costs incurred to fix problems that are detected after the product/service is delivered to the customer.
Understand what is meant by “TQM”.
Created 50 years ago by W. Edwards Deming. Quality goes upstream, it has spread from mfg to HR, support services, etc. It's part of an overall continuous improvement strategy.
Understand what a process flowchart is and how it is used.
A flowchart is a diagram of the steps in a process. As a problem-solving tool, a flowchart can help investigators in identifying possible points in a process where problems occur.
The diamond shapes in the flowchart represent decision points in the process, and the rectangular shapes represent procedures. The arrows show the direction of “flow” of the steps in the process.
Know what a fishbone (Ishikawa) diagram is and how is used.
A diagram used to search for the cause(s) of a problem; also called fishbone diagram. offers a structured approach to the search for the possible cause(s) of a problem. Aka Fishbone diagram, named after Japanese professor, developed the approach to aid workers overwhelmed by the number of possible sources of problems when problem solving. This tool helps to organize problem-solving efforts by identifying categories of factors that might be causing problems. Often this tool is used after brainstorming sessions to organize the ideas generated.
Understand the concept of employee empowerment as it relates to managing people in a factory environment.
Giving workers the responsibility for improvements and the authority to make changes to accomplish them provides strong motivation for employees. This puts decision making into the hands of those who are closest to the job and have considerable insight into problems and solutions.
Know the definition of a control chart.
A control chart is a statistical chart of time-ordered values of a sample statistic, and can be used to monitor a process to see if the process output is random. It can help detect the presence of correctable causes of variation. Figure 9.11 illustrates a control chart. Control charts also can indicate when a problem occurred and give insight into what caused the problem.
Understand what an x-bar chart measures and why it is used.
Used to monitor the central tendency of a process.
Aka, mean control chart - control chart used to monitor the central tendency of a process. Or sometimes referred to as an (“x-bar”) chart, is based on a normal distribution. It can be constructed in one of two ways. The choice depends on what information is available.
Understand what is meant by upper and lower control limits when they are used in conjunction with control charts.
A control chart is a time-ordered plot of sample statistics. It is used to distinguish between random variability and nonrandom variability.
It has upper and lower limits, called control limits, that define the range of acceptable (i.e., random) variation for the sample statistic.
Control charts have two limits that separate random variation and nonrandom variation. The larger value is the upper control limit (UCL), and the smaller value is the lower control limit (LCL).
A sample statistic that falls between these two limits suggests (but does not prove) randomness, while a value outside or on either limit suggests (but does not prove) nonrandomness.
Understand what is meant by random and non-random variation as a relates to process control.
If nonrandom variations are present, the process is considered to be unstable. Corrective action will need to be taken to improve the process by eliminating the causes of nonrandomness and achieve a stable process.
The natural or inherent process variations in process output are referred to as chance or random variation. Such variations are due to the combined influences of countless minor factors, each one so unimportant that even if it could be eliminated, the impact on process variations would be negligible. In Deming's terms, this is referred to as common variability.
A second kind of variability in process output is called assignable variation, or nonrandom variation. In Deming's terms, this is referred to as special variation. Unlike natural variation, the main sources of assignable variation can usually be identified (assigned to a specific cause) and eliminated. Tool wear, equipment that needs adjustment, defective materials, human factors (carelessness, fatigue, noise and other distractions, failure to follow correct procedures, and so on) and problems with measuring devices are typical sources of assignable variation.
In a general sense know what the optimum level of inspection is a typical factory environment.
The amount of inspection can range from no inspection whatsoever to inspection of each item numerous times. Low-cost, high-volume items such as paper clips, roofing nails, and wooden pencils often require little inspection because (1) the cost associated with passing defective items is quite low and (2) the processes that produce these items are usually highly reliable, so that defects are rare. Conversely, high-cost, low-volume items that have large costs associated with passing defective products often require more intensive inspections (ie. cars).
The majority of quality control applications lie somewhere between the two extremes. Most require some inspection, but it is neither possible nor economically feasible to critically examine every part of a product or every aspect of a service for control purposes. The cost of inspection, resulting interruptions of a process or delays caused by inspection, and the manner of testing typically outweigh the benefits of 100 percent inspection. Note that for manual inspection, even 100 percent inspection does not guarantee that all defects will be found and removed.
Traditional view: The amount of inspection is optimal when the sum of the costs of inspection and passing defectives is minimized. When human interaction is involved, more inspection is needed.
Know what is meant by the term “logistics” and what activities in a factory environment are considered logistical activities.
- Refers to the movement of materials, services, cash, and information in a supply chain
- Movements within a facility
- Incoming/Outgoing shipments of goods and raw mats
- Information flow throughout the supply chain
Understand the definition of the bullwhip effect.
Inventory oscillations that become increasingly larger looking backward through the supply chain. Consequently, shortages and surpluses occur throughout the chain, resulting in higher costs and lower customer satisfaction, unless preventive action is taken.
The bullwhip effect: demand variations begin at the customer end of the chain and become increasingly large as they radiate backward through the chain
Understand what a RFID device is and the benefits associated with using them.
A technology that uses radio waves to identify objects, such as goods in supply chains
The tag has an integrated circuit and an antenna that project information or other data to network-connected RFID readers using radio waves. RFID tags can be attached to pallets, cases, or individual items. They provide unique identification, enabling businesses to identify, track, monitor, or locate practically any object in the supply chain that is within range of a tag reader. These tags are similar to bar codes, but they have the advantage of conveying much more information, and they do not require a line-of-sight for reading that bar codes require.
Understand what is meant by E-business.
The use of electronic technology to facilitate business transactions. Many of the problems that occur with Internet selling are supply related because orders are quickly creates, sometimes supply is delayed or cannot meet demand.
- Applications include:
- Internet buying and selling
- Order and shipment tracking
- Electronic data interchange
- Product and service promotion
- Provide information about products and services
Know what the function of a purchasing or procurement department is within a company.
The purchasing department is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service.
The goal of procurement: Develop and implement purchasing plans for products and services that support operations strategies
Know what is meant by strategic and operational decisions as they relate to supply chain management.
The strategic coordination of business functions within a business organization and throughout its supply chain for the purpose of integrating supply and demand management
- Effective supply chains are necessary for organizational success
- Requires integration of all aspects of the chain
- Supplier relationships are a critical component of supply chain strategy
- Lean operations and six sigma are being employed to improve supply chain success
Understand the pros and cons of centralized versus decentralized purchasing functions.
Centralized - may be able to obtain lower prices than decentralized units if the higher volume created by combining orders enables it to take advantage of quantity discounts offered on large orders. Centralized purchasing may also be able to obtain better service and closer attention from suppliers. In addition, centralized purchasing often enables companies to assign certain categories of items to specialists, who tend to be more efficient because they are able to concentrate their efforts on relatively few items instead of spreading themselves across many items.
Decentralized - has the advantage of awareness of differing “local” needs and being better able to respond to those needs. Decentralized purchasing usually can offer quicker response than centralized purchasing. Where locations are widely scattered, decentralized purchasing may be able to save on transportation costs by buying locally, which has the added attraction of creating goodwill in the community.
The location of inventories is an important factor for effective material flow through the chain and for order fulfillment. Often trade-offs must be made. One approach is to use centralized inventories, which generally results in lower overall inventory than there would be if decentralized inventories were used, because with decentralized inventories, one location may be understocked while another location is overstocked. Conversely, decentralized locations can provide faster delivery and generally lower shipping costs.
Understand what is meant by a “vendor audit” sometimes called a vendor analysis.
Vendor audit involves picking the right supplier. A company considers price, quality, the supplier's reputation, past experience with the supplier, and service after the sale.
vendor analysis - Evaluating the sources of supply in terms of price, quality, reputation, and service
Be sure and understand what is meant by tolerances and/or specifications and how they differ from upper and lower control limits.
Under Process capability. Once the stability of a process has been established (i.e., no nonrandom variations are present), it is necessary to determine if the process is capable of producing output that is within an acceptable range.
Three commonly used terms refer to the variability of process output. Each term relates to a slightly different aspect of that variability, so it is important to differentiate these terms:
Specifications, or tolerances are established by engineering design or customer requirements. They indicate a range of values in which individual units of output must fall in order to be acceptable.
Control limits are statistical limits that reflect the extent to which sample statistics such as means and ranges can vary due to randomness alone.
Process variability - reflects the natural or inherent (i.e., random) variability in a process. It is measured in terms of the process standard deviation.
Know what is meant by the term “assignable variation”.
- Assignable (special cause) variation:
- A variation whose cause can be identified.
- A nonrandom variation
The main sources of assignable variation can usually be identified (assigned to a specific cause) and eliminated.
For example: Tool wear, equipment that needs adjustment, defective materials, human factors
Understand what is meant by “quality of conformance”.
Quality control is concerned with the quality of conformance (A product or service conforms to specifications) of a process: Does the output of a process conform to the intent of design?
Statistical process control (SPC) is used to evaluate process output to decide if a process is “in control” or if corrective action is needed.
Review Deming's 14 points.
- 1. Create constancy of purpose towards improvement". Replace short-term reaction with long-term planning.
- 2. Adopt the new philosophy". We are in a new economic age. We can no longer live with commonly excepted levels of delays, mistakes, defective materials & workmanship.
- 3. Cease dependence on inspection". Require, instead, statistical evidence that quality is built in.(Prevent defect rather than detect defects).
- 4. End the practice of awarding business on the basis of price tag. Instead on meaningful measures of quality along with price. (Qualify suppliers on statistical evidence of quality)
- 5. Find problems. Managers job to work continually on the system (design, incoming inspection, composition of material, maintenance, improved processes, training, etc
- 6. "Institute training on the job". If people are inadequately trained, they will not all work the same way, and this will introduce variation.
- 7. The responsibility of foremen must be changed from sheer number to quality. This will automatically improve productivity. Take immediate action on reports of quality issues like inherent defects, machines not maintained, etc
- 8. "Drive out fear". So that everyone my work effectively for the company. (Workers might be afraid to point out problem for fear of retaliation etc.)
- 9. "Break down barriers between departments". People in research, design, sales, and production must work as a team to foresee problems related to process, specs, or materials.
- 10. "Eliminate numerical goals, posters and slogans for the work force, asking for new levels of productivity without providing methods.
- 11. Eliminate work standards that prescribe numerical quotas.
- 12."Remove barriers that stand between the hourly workers and his right to pride of workmanship.
- 13. "Institute education and self-improvement".
- 14. Create a structure in top management that will push every day on the above 13 points.
Review the philosophies and concepts presented by Crosby.
Crosby - Quality is free; zero defects. Spent money on prevention costs and eventually costs will decrease.
Crosby and Juran, believe that as the costs of defect prevention are increased, the costs of appraisal and failure decrease by much more. What this means, if true, is that the net result is lower total costs, and, thus, as Crosby suggests, quality is free.
Crosby: “Do it right the first time.” He stressed prevention, and he argued against the idea that “there will always be some level of defectives.” The quality-is-free concept is that the costs of poor quality are much greater than traditionally defined. According to Crosby, these costs are so great that rather than viewing quality efforts as costs, organizations should view them as a way to reduce costs, because the improvements generated by quality efforts will more than pay for themselves.
Understand what is meant by ISO 9000 standards and in what part of the world it is most often a necessary certification to do business.
The International Organization for Standardization (ISO) promotes worldwide standards for the improvement of quality, productivity, and operating efficiency through a series of standards and guidelines.
ISO 9000 - a set of international standards on quality management and quality assurance, critical to international business.
It concerns what an organization does to ensure that its products or services conform to its customers' requirements.
Review the concept of continuous improvement and be sure and understand its basic philosophy.
Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs
Kaizen - Japanese word for continuous improvement.
Understand what a PDSA cycle is.
Plan-Do-Study-Act (PDSA) Cycle - also referred to as either the Shewhart cycle or the Deming wheel, is the conceptual basis for problem-solving activities.
There are four basic steps in the cycle:
. Begin by studying the current process. Document that process. Then collect data on the process or problem. Next, analyze the data and develop a plan for improvement. Specify measures for evaluating the plan.
. Implement the plan, on a small scale if possible. Document any changes made during this phase. Collect data systematically for evaluation.
. Evaluate the data collection during the do phase. Check how closely the results match the original goals of the plan phase.
. If the results are successful, standardize the new method and communicate the new method to all people associated with the process. Implement training for the new method. If the results are unsuccessful, revise the plan and repeat the process or cease this project.
Employing this sequence of steps provides a systematic approach to continuous improvement.
Be familiar with the concept of “process mapping” and why it is used.
Understand what the overall goal of supply-chain management.
The goal of SCM is to match supply to demand as effectively and efficiently as possible
Know what is meant by delayed differentiation.
Production of standard components and subassemblies which are held until late in the process to add differentiating features
For example, an automobile producer may produce and ship cars without radios, allowing customers to select from a range of radios that can be installed by the dealer, thereby eliminating that variety from much of the supply chain.
Know what is meant by the term reverse logistics.
To make a determination as to the appropriate disposition of returned items, the items must be sorted, inspected, or tested and directed to the appropriate destination for repair and reuse, recycling, or disposal.
Reverse logistics - The process of transporting returned items.
Understand what is meant by statistical process control.
Statistical process control (SPC) is used to evaluate process output to decide if a process is “in control” or if corrective action is needed.
Review what is meant by a six Sigma process.
The higher the sigma, the less variation, meaning less defects created.
Example: 6 million produced before a defect, but 3mill before a defect. 6 sigma has better safety and better specifications, tighter and more controlled process because of smaller deviation.