Global Operations and Supply Chain Management Final Exam Notes

Transcription

1 Global Operations and Supply Chain Management Final Exam Notes Lecture One Operations Management: the process that effectively produce, transform and deliver a product or service. Inputs -> transformation -> outputs. Supply Chain Management is the organisation of supply chain activities that seek to maximize customer value and competitive advantage. Operations management refers to processes within a single framework where as supply chain management refers to processes and exchanges across multiple firms. Operations strategy within a single organisation : cost (eg. Low cost operations), quality (eg. Consistent quality, superior quality), time (on time delivery, delivery speed, product development speed), flexibility (range of products/ customizations, variety, volume flexibility). Competitive priorities are the relative rankings of what the company would like to achieve. Competitive capabilities are the relative effectiveness outcomes that the company is able to actually achieve. Operations strategy: 1. Cost: the first thing that companies think of when they are developing an operations strategy. Lowering prices will lead to reduced profits. Low cost operations seek to provide a product or service that is less expensive than similar products or services offered by competitors. 2. Quality: involves offering a product or service that is superior to alternatives in the eyes of the customer. Consistent quality - meeting the product specifications and the promises made to customers with high reliability. Superior quality a product or service that is clearly better than another in one or more aspect. 3. Time/ delivery: the gap between when a customer orders a product and when they receive it. On time delivery, delivery speed, product development speed time between major developments or changes to a product 4. Flexibility: differentiate their offerings from those of companies that emphasize low cost. Customization the ability to make a product to exactly fit customers needs. Mass customization the process in which products are produced in high volume at roughly the same cost as standard products, but are customized to individual customer tastes. Postponement keeping a product in standard format and then adding unique components for the individual customer at the last possible moment. a. Variety the ability to handle a wide range or assortment of products without undue costs. Volume flexibility the ability to adjust production volume either up or down to meet fluctuations in demand. Services: business processes can be categorized as primarily manufacturing or primarily services. Services are the application of competencies (knowledge, skill and experience) of the stakeholders, whereby customers provide Global Operations and Supply Chain Management 1 Notes by Jeremy Kofsky jeremykofsky@live.com.au

2 themselves, or provide significant inputs into the services production process and in the best case are transformed by the simultaneous consumption the experience) Distinguishing services from goods: Manufacturing refers to the production of goods that are tangible and can be stored in inventory. Services differentiate from this in four ways. 1. Inseparability services are created and consumed at the same time 2. Heterogeneity services are personalized to the clients nature 3. Permissibility any service that goes unused is perished 4. Intangibility services are ideas and concepts that are part of a process. Global Operations and Supply Chain Management 2 Notes by Jeremy Kofsky jeremykofsky@live.com.au

3 Lecture two quality management Quality: the ability of a product (good or service) to consistently meet or exceed customer s expectations. Why improve quality? To achieve goals such as cost reduction (from failures, prevention and appraisal), customer satisfaction enhancement, increased customer loyalty, increase in profitability and market share. Ritz Carlton video - > customers don t want to pay for waste/ mistakes from business. Therefore do the right thing the first time. Customers expectations influenced by personal needs, word of mouth, reputation of the company. A customer compares the objective quality of a product with his or her expectations and the perceived quality is thought to be higher or lower than expectations. Deming emphasized that improving quality means reducing the cost of rejects and reworks, reducing warranty expenses and loss of good will. In other words, he argues do the right thing the first time. Deming acknowledges four costs involved with quality: 1. Prevention costs 2. Appraisal costs 3. Internal failure costs 4. External failure costs By investing money in prevention and appraisal costs, a business will limit their failure expenses, which are more expensive than the costs involved in preventing a failure. Deming also emphasized the concept of continuous improvement, where the quest to quality is never ending -> plan, do, check, act. The six sigma approach is a way of thinking organised around DMAIC (define, measure, analyse, improve and control). The number six refers to the objective that no measure should be less than six standard deviations from the desired standard to achieve almost perfection ( %) error free rate. The six sigma approach can be summarized as understanding the needs and preferences of customers, management by fact, cooperation and collaboration to achieve team work, striving for perfection. Cost of quality: the more cost of quality, the less costs will arise from defects. Costs are highest when products get to external failure. Determents of good quality: Goods Performance Special features Reliability Conformance Durability Serviceability (after sale service) Aesthetics Brand equity/ reputation Services Reliability Responsiveness Competence Access Courtesy Communication Credibility Security Understanding/ knowing the customer Tangibles Crosby: quality is free. If management does not create a system in which zero defects are the objective, then employees are not to blame when things go wrong and defects occur. Benefits -> a dramatic decrease in wasted resources and time spent on producing goods that consumers do not want. He defined quality as containing four absolutes: 1. Quality is defined as conformance to requirements -> eg. Table will always have four legs Global Operations and Supply Chain Management 3 Notes by Jeremy Kofsky jeremykofsky@live.com.au

4 2. The system for causing quality is prevention and appraisal 3. The performance standard must be zero defects 4. The measurement of quality is the prices of non-conformance not indices TQM: 1. top management commitment 2. employees participation 3. customer focus 4. management by fact 5. continuous improvement ISO 9000: standard created to certify companies based on their adherence to quality management principles. ISO 14000: developed to certify companies based on their commitment to environmental quality management. Quality improvement methods: 1. customer feedback (satisfaction, choice analysis, complaints) 2. benchmarking comparing practices to the best practices in the industry 3. employee feedback specific tools and techniques are used to prioritize, analyse and address these issues systematically Quality improvement tools: 1. sampling (quality inspection) selecting a few products from the production line for inspection. If the sample met established specifications then the entire batch is assumed to be of good quality. 2. Check sheets 3. Pareto analysis and bar chars 4. Flowcharting (pinpointing single points of failure to point out any failures 5. Run charts 6. Scatter diagram true representatives of reality outliers are captured to prevent failure. 7. Cause and effect diagram (Ishikawa or Fishbone diagram) points out every possible scenario that will result in a quality failure. Failure modes and effects analysis: a systematic approach for identifying all possible failures in a design, a manufacturing process or a service process. A failure is any type of error or defect, especially one that affects the customer and it can be either potential or actual. The purpose is to take action to eliminate or reduce failures, starting with the highest priority ones. Mistake proofing: the use of any automatic device or method that either makes it impossible for an error to occur or makes the error immediately obvious once it has occurred. Statistical process control: upper customer specification -> original process upper control limit -> original process mean ->original process lower control limit-> Lower customer specification Global Operations and Supply Chain Management 4 Notes by Jeremy Kofsky jeremykofsky@live.com.au

5 Week three new product development NPD a good or service that was previous not available to customers. The NPD process involves strategy, organisations, concept/idea generation, product and marketing (creation/ evaluation), commercialisation. Reasons are unsatisfied needs, to expand into different markets, previous products are obsolete or to respond to competition. Why new process/services fail? Poor market research, problem or defects, inferior design, poor timing of their introduction, poor communication to market, competitions, ineffective operations. Why develop new process? Competitive advantage Gain market share (first into new market Higher profitability -> less competition Corporate image and brad equity -> the monetary or relative value of a brand perceived in the marketplace by it customers Operating cost and capacity utilization Product lifecycle demand for some products decline when new ones arise. Aristocrat case study: Gate /Decision Stage 0 Focal point Idea 1 Idea screen Concept score 2 Go to prototype feasibility Prototype feasibility 3 Go to development Develop/ build and test 4 CVC recommendation trial 5 Go to launch Market release Trade offs in NPD: Global Operations and Supply Chain Management 5 Notes by Jeremy Kofsky jeremykofsky@live.com.au