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Introduction to P/OM
Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
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Demand Management
Supply Management
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Capacity Management
Production Management
Transportation Management
Quality Management
POM ToolsForecastingLean Manufacturing
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Simulation
Statistical Process Control
Production/Operations
Management
Dr. Eliot Elfner
St. Norbert College
Spring 2009
Lean Manufacturing and
Quality Processes
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Introduction to P/OM
Management
P/OM and SCM
DSS
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Theory of Constraints
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SCMDistribute
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Quality Management
POM ToolsForecastingLean Manufacturing
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2
TOPICS
Discussion of topics Lean Manufacturing
Quality Processes
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Introduction to P/OM
Management
P/OM and SCM
DSS
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SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM ToolsForecastingLean Manufacturing
Project Management
Simulation
Statistical Process Control
3
Lean Production
Lean Production can be defined as anintegrated set of activities designed toachieve high-volume production usingminimal inventories (raw materials, work
in process, and finished goods) Lean Productionalso involves the
elimination of waste in production effort
Lean Productionalso involves the timing
of production resources (i.e., parts arriveat the next workstation just in time)
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Management
P/OM and SCM
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Webster Chapters
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Quality Management
POM ToolsForecastingLean Manufacturing
Project Management
Simulation
Statistical Process Control
4
The Toyota Production System
Based on two philosophies: 1. Elimination of waste
2. Respect for people
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5
Elimination of Waste
1. Focused factory networks2. Group technology
3. Quality at the source
4. JIT production
5. Uniform plant loading
6. Kanban production controlsystem
7. Minimized setup times
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SCMDistribute
Webster Chapters
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Supply Management
Inventory Management
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Quality Management
POM ToolsForecastingLean Manufacturing
Project Management
Simulation
Statistical Process Control
6
Minimizing Waste:
Focused Factory
Networks
CoordinationSystem
Integration
These are small
specialized plants that
limit the range of
products produced
(sometimes only one
type of product for an
entire facility)
Some plants
in Japan
have as few
as 30 and as
many as1000
employees
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7
Minimizing Waste:
Group Technology (Part 1)
Using Departmental Special izationfor plant layout
can cause a lot of unnecessary material movement
Note how the flow lines are going backand forth
Saw Saw
Lathe PressPress
Grinder
LatheLathe
Saw
Press
Heat Treat
Grinder
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8
Minimizing Waste:
Group Technology (Part 2)
Revising by using Group Techno logy Cel lscan reducemovement and improve product flow
Press
Lathe
Grinder
Grinder
A
2
BSaw
Heat Treat
LatheSaw Lathe
PressLathe
1
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9
Minimizing Waste:
Uniform Plant Loading (heijunka)
Suppose we operate a production plant that produces a single
product. The schedule of production for this product could be
accomplished using either of the two plant loading schedules below.
Not uniform Jan. Units Feb. Units Mar. Units Total
1,200 3,500 4,300 9,000
Uniform Jan. Units Feb. Units Mar. Units Total
3,000 3,000 3,000 9,000
How does the uniform loading help save labor costs?
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10
Minimizing Waste: Inventory
Hides Problems
Work in
process
queues
(banks)
Change
orders
Engineering design
redundancies
Vendor
delinquencies
Scrap
Design
backlogs
Machine
downtime
Decision
backlogs
Inspection
backlogs
Paperwork
backlog
Example: Byidentifying defective
items from a vendor
early in the
production process
the downstream workis saved
Example: Byidentifying defective
work by employees
upstream, the
downstream work is
saved
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POM ToolsForecastingLean Manufacturing
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Statistical Process Control
11
Minimizing Waste: Kanban Production
Control Systems
Storage
Part AMachine
CenterAssembly
Line
Material Flow
Card (signal)Flow
Withdrawal
kanban
Once the Production kanban
is received, the Machine
Center produces a unit to
replace the one taken by the
Assembly Line people in the
first place
This puts the
system back
were it was
before the item
was pulled
The process begins by the Assembly
Line people pulling Part A fromStorage
Production kanban
Storage
Part A
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12
Determining the Number of
Kanbans Needed
Setting up a kanban system requiresdetermining the number of kanbanscards (or containers) needed
Each container represents the
minimum production lot size
An accurate estimate of the lead timerequired to produce a container is key
to determining how many kanbansare required
I t d ti t P/OM
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13
The Number of Kanban Card Sets
k = Number of kanban card sets (a set is a card)
D= Average number of units demanded over sometime period
L = lead time to replenish an order (same units oftime as demand)
S= Safety stock expressed as a percentage ofdemand during leadtime
C= Container size
k =Expected Demand During Lead Time + Safety Stock
Size of the Container
k =
DL(1+S)
C
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14
Example of Kanban Card
Determination: Problem Data
A switch assembly is assembled in batches
of 4 units from an upstream assemblyarea and delivered in a special container to adownstream control-panel assemblyoperation
The control-panel assembly area requires 5switch assemblies per hour
The switch assembly area can produce acontainer of switch assemblies in 2 hours
Safety stock has been set at 10% of neededinventory
I t d ti t P/OM
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15
Example of Kanban Card
Determination: Calculations
Always round up!
k =Expected Demand During Lead Time + Safety Stock
Size of the Container
k =DL(1+S)
C=
(5)*(1)*(1.1)
4= 2.75, or 3
Introd ction to P/OM
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16
Respect for People
Level payrolls
Cooperative employee unions
Subcontractor networks
Bottom-round management style
Quality circles (Small GroupInvolvement Activities or SGIAs)
Introduction to P/OM
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17
Toyota Production Systems
Four Rules
1. All work shall be highly specified as tocontent, sequence, timing, and outcome
2. Every customer-supplier connection must bedirect, and there must be an unambiguous
yes-or-no way to send requests and receiveresponses
3. The pathway for every product and servicemust be simple and direct
4. Any improvement must be made inaccordance with the scientific method, underthe guidance of a teacher, at the lowestpossible level in the organization
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18
Lean Implementation Requirements:
Design Flow Process
Link operations
Balance workstation capacities
Redesign layout for flow
Emphasize preventive maintenance
Reduce lot sizes
Reduce setup/changeover time
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Demand Management
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Production Management
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POM ToolsForecasting
Lean Manufacturing
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19
Lean Implementation Requirements:
Total Quality Control
Worker responsibility
Measure SQC
Enforce compliance
Fail-safe methods
Automatic inspection
Introduction to P/OM
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20
Lean Implementation Requirements:
Stabilize Schedule
Level schedule
Underutilize capacity
Establish freeze windows
Introduction to P/OM
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POM ToolsForecasting
Lean Manufacturing
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Simulation
Statistical Process Control
21
Lean Implementation Requirements:
Kanban-Pull
Demand pull
Backflush
Reduce lot sizes
Introduction to P/OM
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22
Lean Implementation Requirements:
Work with Vendors
Reduce lead times
Frequent deliveries
Project usage requirements
Quality expectations
Introduction to P/OM
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Management
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Demand Management
Supply Management
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Production Management
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Quality Management
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23
Lean Implementation Requirements:
Reduce Inventory More
Look for other areas
Stores
Transit
Carousels
Conveyors
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24
Lean Implementation Requirements:
Improve Product Design
Standard product configuration
Standardize and reduce numberof parts
Process design with productdesign
Quality expectations
Introduction to P/OM
L I l i R i
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25
Lean Implementation Requirements:
Concurrently Solve Problems
Root cause
Solve permanently
Team approach
Line and specialist responsibility
Continual education
Introduction to P/OM
L I l t ti R i t
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Simulation
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26
Lean Implementation Requirements:
Measure Performance
Emphasize improvement
Track trends
Introduction to P/OM
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Lean Manufacturing
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Simulation
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27
Lean in Services (Examples)
Organize Problem-SolvingGroups
Upgrade Housekeeping
Upgrade Quality
Clarify Process Flows
Revise Equipment and ProcessTechnologies
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Management
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28
Lean in Services (Examples)
Level the Facility Load
Eliminate Unnecessary Activities
Reorganize PhysicalConfiguration
Introduce Demand-Pull
Scheduling
Develop Supplier Networks
Introduction to P/OM Quality Processes
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29
Quality Processes
A little history
Post WWII Japanalmost a clean slate
Limited resources, low volumes new approach
Influences
TWIemployees involved in process improvement
Deming & Juran
Poor quality is responsibility of management
Tools for process improvement
Formative years of TQM & JIT
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30
Total Quality Management
TQM is an organization-wide effort
directed towards the continuous
improvement of quality
One simple definition of high quality
is: exceeds customers
expectations Key pointquality is tied to view of
customer (e.g., not specifications)
In brief
Introduction to P/OM
Putting TQM principles
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31
Putting TQM principles
into practice
Customer focus
Employee empowerment
Data-based decisionmakingmanagement by
fact
Continuous improvement in qualityhow?
Introduction to P/OM
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32
Definitions of Quality
Quality as Excellence
Quality as Conformance toSpecifications
Quality as Fitness for Use
Quality as Value for the Price
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33
Total Quality Management
Philosophy of management Part of mission/vision/purpose
Implemented through long range
strategic planning
Introduction to P/OM
Quality Related
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34
Quality Related
Product Characteristics
Reliability
Durability
Serviceability
Introduction to P/OM
Quality Related
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Management
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DSS
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Theory of Constraints
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Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM ToolsForecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
35
Quality-Related
Service Characteristics
Reliability
Tangibles
Responsiveness
Assurance
Empathy
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM ToolsForecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
36
Quality Specifications
Design quality: Inherent value of theproduct in the marketplace
Dimensions include: Performance
Features Reliability/Durability
Serviceability
Aesthetics
Perceived Quality. Conformance quality: Degree to which the
product or service design specificationsare met
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM ToolsForecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
37
Costs of Quality
External Failure
Costs
Appraisal Costs
Prevention Costs
Internal FailureCostsCosts of
Quality
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM ToolsForecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
38
Series of standards agreed upon bythe International Organization forStandardization (ISO)
Adopted in 1987 More than 100 countries
A prerequisite for global
competition?
ISO 9000 directs you to "documentwhat you do and then do as youdocumented"
ISO 9000
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM ToolsForecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
39
Six Sigma Quality
A philosophy and setof methodscompanies use toeliminate defectsin their productsand processes
Seeks to reduce
variation in theprocesses thatlead to productdefects
The name, sixsigma refers to
the variation thatexists within plusor minus threestandarddeviations of theprocess outputs
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
Forecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
40
Six Sigma Quality (cont)
Six Sigma allows managers to readilydescribe process performance using acommon metric: Defects Per MillionOpportunities (DPMO)
1,000,000x
No. of unitsx
Number of defects
=DPMO
Number ofopportunitiesfor error perunit
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
Forecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
41
Example of Defects Per Million
Opportunities (DPMO) calculation.Suppose we observe 200 lettersdelivered incorrectly to the wrongaddresses in a small city during asingle day when a total of 200,000letters were delivered. What is the
DPMO in this situation?
000,1== 1,000,000x
200,000x1
200DPMO
So, for every onemillion lettersdelivered thiscitys postalmanagers canexpect to have1,000 letters
incorrectly sentto the wrongaddress.
Cost of Quality: What might that DPMO meanin terms of over-time employment tocorrect the errors?
Six Sigma Quality (cont)
Introduction to P/OM
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
Forecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
42
Six Sigma Quality:
DMAIC Cycle
Define, Measure, Analyze, Improve, andControl (DMAIC)
Developed by General Electric as ameans of focusing effort on quality
using a methodological approach Overall focus of the methodology is to
understand and achieve what thecustomer wants
A 6-sigma program seeks to reduce thevariation in the processes that lead tothese defects
DMAIC consists of five steps.
Introduction to P/OM
M t Six Sigma Quality:
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
Forecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
43
Six Sigma Quality:
DMAIC Cycle (cont)
1. Define (D)
2. Measure (M)
3. Analyze (A)
4. Improve (I)
5. Control (C)
Customers and their priorities
Process and its performance
Causes of defects
Remove causes of defects
Maintain quality
Introduction to P/OM
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster Chapters
Information TechnologyFoundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
Forecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
44
Total Quality Requirements
Strategic Quality Planning Clear Focus on Customer Satisfaction
Continuous Improvement of KeyProcesses
Effective Collection & Analysis ofInformation
Effective Use of Teamwork and
Training Effective Design of Products and
Services
Effective Leadership
Introduction to P/OM
Management Components of an
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster ChaptersInformation Technology
Foundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
Forecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
45
Components of an
OPI Culture
OPI as Central
Focus of
Mission Statement
Stakeholder
Linkages
Passionate
Commitment
to Continuous
Improvement
Commitment to
Education/Training
Team Development
Bias Toward
Evidence Based
Decision
Making
CULTURE OF
ONGOING
PROCESS
IMPROVEMENT
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Management Characteristics of
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster ChaptersInformation Technology
Foundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
Forecasting
Lean Manufacturing
Project Management
Simulation
Statistical Process Control
46
Characteristics of
OPI Systems
Vision/mission/purpose for quality Focus on supplier/customer
linkages
PASSIONATEcommitment tocontinuous improvement
Commitment to teaming/training
Bias for data based decisionmaking
Introduction to P/OM
Management Strategic Quality
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster ChaptersInformation Technology
Foundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
ForecastingLean Manufacturing
Project Management
Simulation
Statistical Process Control
47
Strategic Quality
Management
Using the quality of products
and services to increase a
companys share of the market
Introduction to P/OM
Management Implementing TQM
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster ChaptersInformation Technology
Foundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
ForecastingLean Manufacturing
Project Management
Simulation
Statistical Process Control
48
Implementing TQM
Identify Critical Business Issues
Secure top management commitment
Provide initial training
Identify customer requirements
Identify key processes
Provide specific skills training
Collect and analyze data
Change the process
Reqmts
met?
Continue to improve processes
no
yes
Introduction to P/OM
Management Lean Manufacturing and
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Management
P/OM and SCM
DSS
QMS/OPI
Theory of Constraints
The Goal
Introduction to Supply
Chain Management
SCMAcquisition
SCMMaintain
SCMTransform
SCMDistribute
Webster ChaptersInformation Technology
Foundations
Demand Management
Supply Management
Inventory Management
Capacity Management
Production Management
Transportation Management
Quality Management
POM Tools
ForecastingLean Manufacturing
Project Management
Simulation
Statistical Process Control
Production/OperationsManagement
Dr. Eliot ElfnerSt. Norbert College
Spring 2009
Lean Manufacturing and
Quality Processes
The End