A raw material is any purchased or supplied item that is in some way transformed via a manufacturing process. The raw material is generally converted into a component or a finished product.
What examples of raw materials can you think of?
Work sequence is the order in which work is performed. The work sequence is generally made up of the best possible method of performing a task or producing a product. Work sequences should be established with the absolute minimum amount of waste in the sequence.
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Digitization is the adoption of digital, real-time and networked products and services and related information. In real terms, digitization is about choice, efficiency, and responding to customer needs. All of this digitization requires the skills of operations managers to implement and oversee.
Reference - Kettering University, 01/12/2017, Operations Management and Technology.
One of the best sources to learn about the different manufacturing environments is APICS. With more than 50 years of development and a community of professionals all over the world Apics offers fantastic educational courses in production, inventory and supply chain. The Apics learn it app offers the following definition for the term engineer to order; Products whose customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, routings.
Discussion - What types of work environments can you think of that are engineer-to-order or design-to-order environments?
Inventory is listed as an asset on a firm's balance sheet and consists of the stocks or items needed to maintain production, support activities such as maintenance and repair, and provide customer service. Inventory typically is categorized based on its flow through the production cycle, using such designations as raw materials, work in process, and finished goods. Maintenance, repair, and operating supplies also are stocked to support the functionality of the firm.
For planning and forecasting purposes, inventory is classified based on the source of its demand as either independent or dependent. Independent demand items are requested directly by the customer and thus must be forecasted. Demand for dependent items can be derived or calculated based on relationships to independent items, usually noted by higher levels in the bill of material.
Reference - Inventory (APICS OMBOK Framework 5.2).
Variance is the difference between what is expected and what is actually happening. In statistics variance is a measurement of dispersion of data.
Reference: Apics Dictionary, 2015.
* What are some examples of variance that you see each day?
Key performance indicators are the performance measurements that help us understand how we are performing. An Effective KPI is tied to the organization's strategy with stakeholders assigned to monitor them. KPI's should be well-defined and quantifiable, thoroughly communicated to everyone, understood by everyone and cover one or more of the 4 general areas of a balanced scorecard.
A huddle is an action by a team to strategize, support and motivate one another towards accomplishing or aligning objectives and goals. Huddles are typically held before an activity takes place. Huddles can be held in any area or department of an organization, they do not need specific rooms just a format to conduct the huddle. The main difference between a huddle and a meeting is both how it is conducted and the amount of time the huddle takes compared to a meeting. Huddles can be performed in under 7 minutes.
How to perform a huddle:
Organizations should work to establish the most effective format for huddles. This format is a good starting point to begin holding huddles.
Share with the community:
What tactics/tools do you use in your organization that help create an effective and efficient value adding method of communication?
The current state is the as is, or present circumstances. When looking at the current state it is very important that the review is done not as it should be happening but as it is happening.
Obeya or Oobeya refers to a form of project management and is a component of lean manufacturing. Even more specifically, the Toyota Production System. The obeya is a similar concept to a "bridge room" or a "war room."
During the product and process development, all individuals involved in managerial planning meet in Obeya to speed communication and decision-making. This is intended to reduce "departmental thinking" and improve other methods of communication which tend to introduce forms of waste into the process.
Conceptually akin to traditional “war rooms,” an Obeya will contain: visually engaging charts, graphs, milestones, progress, countermeasures and any other forms of critical information for attendees to make decisions accurately and efficiently.
Reference: Wikipedia - Obeya
The Sales and Operations or S&OP processes mission is to balance supply and demand at an aggregate level, to align operational planning with financial planning, and to link strategic planning with tactical/operational planning. It does this through a series of meetings which are designed to guide a group of individuals towards consensus of "ONE" plan. The plan ultimately lays out an agreement between demand and production and makes all parties aware of what needs to be done to influence any constraints so that the plan can be met. In the book Sales & Operations Planning: The How-To-Handbook, authors, Wallace and Stahl list the 5 step process:
Later in a book entitled Demand Management Best Practices, authors, Crum and Palmatier add two additional steps to the process:
Reference: APICS Certified Supply Chain Professional CSCP: Learning System. Chicago, IL.: APICS the Association for Operations Management, 2014. Print.
The bullwhip effect can be described as an extreme change in the supply chain upstream that is normally triggered by a small change in demand downstream. This often affects inventory levels which can shift from being on backorder to being in excess of the needed demand. The general cause of these fluctuations within the supply chain is almost always related to communication. As communication travels up the supply chain with various forms of waste and delay amounts, times and the accuracy tend to "whip" further from the actual need. The one sure fire way to eliminate the bullwhip effect is to align supply with demand, including completely transparent communication and synchronization of the supply chain perfectly.
Reference: Apics Dictionary 2015 - Bullwhip effect.
Demand is an economic principle that describes a consumer's desire and willingness to pay a price for a specific good or service. Holding all other factors constant, an increase in the price of a good or service will decrease demand, and vice versa.
Reference : Investopedia - Demand
Safety stock is used to help meet or mitigate the risks associated with stockouts. Organizations often hold excessive inventory as a result of safety stock which in the most general sense is held to protect against uncertainties in supply and demand. Safety stock is sometimes referred to as fluctuation inventory.
Cycle stock is the average amount of inventory a business needs to meet customer demand. The stock will generally deplete gradually as a business or organization receives orders from customers and replenish according to a cycle as suppliers provide the necessary orders.
The term decoupling is defined by dictionary.com as: to cause to become separated, disconnected, or divergent; uncouple. It also defines decoupling as: to separate or diverge from an existing connection; uncouple. When we apply this definition to the concept of inventory it becomes much easier to understand decoupling. The Apics dictionary 14'th edition defines decoupling as "creating independence between supply and use of material."
When you buff a car you place a thin layer of wax on the paint of the car. This glossy wax helps protect the car's paint and body against elements like wind, weather and changes in environmental conditions. Similarly buffer inventory is meant to help keep productions lines steady when changes in demand occur. Some common examples of buffer inventory are:
Reference: Apics Dictionary 14'th Edition
In both lean and six sigma it is important to understand all aspects of waste, including inventory. One form of inventory is anticipation inventory. Anticipation inventory is built according to "anticipated" or some future demand. It is additional inventory that is created above and beyond the actual demand of customers according to forecasts, projections or trends. Some examples of anticipation inventory might be:
Reference: Apics Dictionary 14'th edition.
Total quality management (TQM) consists of organization-wide efforts to install and make permanent a climate in which an organization continuously improves its ability to deliver high-quality products and services to customers. While there is no widely agreed-upon approach, TQM efforts typically draw heavily on the previously developed tools and techniques of quality control.
Reference: Wikipedia - Total Quality Management
The 8'th form of waste is the underutilization of skills and talents in both people and machines.
A spaghetti diagram is a tool used to track the amount of movement or distance traveled by a worker or materials. You can then use your spaghetti diagram to analyze what you tracked and improve the flow. The name spaghetti diagram comes from the reference of laying spaghetti noodles out to show the flow of materials or workers.
Vendor Managed Inventory programs are a powerful way to leverage an organization's strengths and focus on your core competencies. Vendor Managed Inventory places the responsibility of selected services and or items on a chosen supplier. In most cases the supplier will handle all agreed upon aspects, Which would include:
Poka Yoke is a series of techniques used to error proof, mistake proof or create a fail safe process that is designed to prevent errors, defects or mistakes. Even more specifically a poka-yoke is any mechanism in a lean manufacturing process that helps an equipment operator avoid (yokeru) mistakes (poka). Its purpose is to eliminate product defects by preventing, correcting, or drawing attention to errors as they occur. The concept was formalised, and the term adopted, by Shigeo Shingo as part of the Toyota Production System.
Reference: Wikipedia - Poka-Yoke
The scatter diagram graphs pairs of numerical data, with one variable on each axis, to look for a relationship between them. If the variables are correlated, the points will fall along a line or curve. The better the correlation, the tighter the points will hug the line.
Reference: ASQ - Scatter Diagram
Quality Control is a system of verification and maintenance that is used to meet a desired level of control/quality in an existing product, service or process. Optimum control is often achieved through:
Discussion Opportunity (Comment below please)
The ABC's of