A bottleneck is the term used for any function, department, resource or facility whose needed capacity is less than the demand being placed upon it.
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Demand is an economic principle that describes a consumer's desire or willingness 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. Demand can also be defined as a quantity of a commodity or service which is either wanted or needed.
A countermeasure is a measure or action that is taken to counter or offset another one.
Internal Move kanbans are essentially permission to retrieve or move materials or information. The move kanban authorizes one point of a process to get what they need and move it. Many cards will show the consuming location and the supplying location so that the person moving the tagged item knows where to move too. Let’s look at a very basic example of how the move kanban works.
Seasonality is the characteristic of data that is predictable and more often than not can be seen in predictable and repetitive patterns. The patterns can occur: annually (or longer), monthly, weekly, daily, hourly, by the minute, second or less if you can measure it.
A make to order production environment is one in which manufacturing or in the case of a service, service, starts only after receiving a customer's order.
Risk tolerance is the degree of risk or uncertainty that is acceptable to an organization. It can also be defined as the level of risk that you are willing to accept in pursuit of strategic goals and objectives.
First time yield is a metric used to determine how a process is performing in relation to the number of good parts or services it produces. In other words FTY measures the percent of non-defective units that are successfully produced from a process the first time through. The metric is more specifically used to measure the ratio of parts made correctly the first time through. First time through yield can help gauge whether or not a cell is making parts correctly the first time through.
We’ve all heard that Lean and the Just in Time System are the Same. And, while there are some similarities, the two systems are in fact, different. Generally speaking, the Just In Time System makes up one pillar of a Lean Organization and although the principles and techniques can be applied to service environments, the Just In Time philosophy is mainly used in manufacturing. The philosophy helps an organization achieve three main focuses:
A primary metric or a primary process metric is used to measure process level performance. The metric is generally reported in a time series format showing the baseline or current state data, target or future state data and actual performance data. The primary metrics must be aligned and consistent with the problem statement the team defines and these types of metrics can be used to track progress towards your project goals and objectives as defined in the project charter. The primary metric will ultimately measure or determine your level of success as it pertains to your project.
When a Kanban system is running internally, the transfer of classical kanbans into different areas can be established fairly easily. But, what if you have parts that are made by suppliers and need to be transferred externally? In this case a supplier kanban is used in place of a withdrawal or a move kanban. A supplier Kanban process is usually described as a connection between your external vendors and the internal kanban system. This can also work with different locations of the same company. The companies can be linked together into a supply-chain process via Kanban and replenish effectively.
The Economic order quantity or EOQ is the ideal, or most “economic” quantity of units that should be purchased or ordered, to meet demand while simultaneously attempting to minimize the costs of carrying inventory, ordering inventory and stocking out of inventory.
A baseline refers to a measurement that establishes a basis for other future state measures. The baseline is usually the initial set of measurements, observations or data collected which is used for a comparison or a benchmark for improvements. It is sometimes referred to as as a current state.
The future state is a reference to the aim of an individual, team or organization. It can be seen as technical, organizational or philosophical.
Job rotations allow employees to experience different jobs and their responsibilities. They are oftentimes used to help people develop their skill set and advance. Rotations can be temporary assignments or an employee may rotate for longer periods of times as their skills develop.
Order Cost is defined as; a direct labor cost that is incurred when an order is placed. Ordering costs are different from the “Order Costs”.
Inventory shrinkage occurs when actual inventory levels are less than what is recorded. In general, this means something has gone wrong. Formally defined, inventory shrinkage is the depletion of the actual quantities of inventory that is on hand, in process or in transit. This may be caused by regular reductions, scrap, deterioration or even theft.
Ordering costs can skyrocket when managing inventory. On one hand you want to keep your inventory levels low so that you don’t tie up cash and on the other hand you want to have inventory on hand so that you are placing a high volume of orders. Both have their positives and negatives. One of the more common ways to go about lowering ordering costs is to use an approach known as joint replenishment.
A gemba walk is the term used to describe a walk where employees go to observe work at the gemba, which is where the work is done.
One element of holding costs is risk. Risk costs are the risk that is assumed when inventory is acquired. In addition to this risk costs refer to loss of inventory value. This is often referred to as the shrinkage that occurs within inventory.
Storage costs are another important element of your holding costs. When you think of storage costs you should think of any of the resources that you use to handle and store your inventory. These costs may be direct or indirect money spent on the storage of your goods. Storage costs can include costs for warehousing, warehouse equipment, space, rent, electricity, software, depreciation and warehouse personnel.
Capital costs are the costs required to purchase raw material or inventory items along with financing fees, loan maintenance fees, and interest. They refer to the money that is invested in your inventory.
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April 2024
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