Operations Mgmt Final

• Third party logistics is the term used to describe outsourcing of logistics management.
• The serves can include:
• -transportation management
• -warehousing-packaging-
• customized final assembly

• The benefits of third-party logistics are:
• -Supply chain logistics is a core competency for 3PL providers
• -3PLs can have economies of scale for various operations

• Demand-drive supply chain
• -manufacture products and parts base don orders from the next stage in the supply chain
• -inventor pulled from one stage to the next based on real
• -time demand
• Level master production schedule and level supply chain schedules
• -include supply chain planning in S&OP
• -Just-in-time operations
• -time-phased view of inventory provides kanban signals
• Lean processes used throughout the supply chain

• Higher levels of order fulfillment
• Greater flexibility and agility
• Shorter lead times
• = greater customer loyalty

• Lower inventories and carrying costs
• Higher productivity
• =higher profits

Integrates separate organizations into a cohesive operating system

• A supply chain is the sequence of organizations – their facilties, functions, and activities – that are involved in producing and delivering a product or service.
• Facilities – include factories, warehouses, distribution centers, retail outlets, and transportation vehicles.
• Functions and activities – Include forecasting, purchasing, inventory management, information management, quality assurance, scheduling, production, distribution, delivery, and customer service.
• Optimizing a supply chain
• 1. Supply chain network design
• –locations for manufacturing facilities, suppliers, distribution centers
• -where various work packages will be performed
• 2. logistics design-transportation modes
• -logistics providers
• 3. inventory and service level optimization
• -inventory quantities and locations
• -the cost of balancing supply and demand

• supplier rating is based on their performance record
• -items from a certified supplier with a gold
• -level rating do not require receiving inspections.
• -Suppliers falling below the bronze-level rating require corrective action to improve performance to an acceptable level or they will be dropped.

• Implementing ERP required a culture change
• -new business processes
• -require complete and correct data
• Remarkable complexity for a relatively simple business
• H&B now ships 80% of orders on time, compared to 40% previously.

• -standardize, improve and automate business processes
• -integrate the company’s information systems-assure everyone has the same current information
• -comply with Sarbanes
• -oxley-integrate the supply chain=additional benefits derive from having a single instance of ERP in all locations

• ERP software provides a system to capture and make data available in real time to decision makers and other users in the organization.
• -integrates financial, manufacturing, and human resources data and transactions on a single computer system.
• -automates the sequential tasks business process-example: order entry, production, shipping, billing, and payment
• -Facilitates information sharing across the organization, with a single common database.ERP is the next step in an evolution that began with MRP and evolved into MRP II.
• Functional Models:
• Forecasting
• Master production
• Scheduling
• Material requirements planning
• Capacity requirements planning
• Sales and operations planning
• Inventory
• Bills of materials
• Purchasing and receiving
• Shop floor control
• Product costing
• Order entry and sales management
• Project resource planning
• Distribution requirements planning
• Service dispatch
• ERP Financials:
• Accounts payable
• Accounts receivable
• Payroll
• Fixed assets
• General ledger
• Human Capital Management:
• Personnel
• Business Intelligence:
• Performance scorecards

• -The process of determining short-term capacity requirements.
• -Apply MRP to determine material requirements. Then calculate the necessary resources to produce the material at each work center: Machine time and labor hours
• -Verify feasibility and adjust schedule and capacity as necessary.
• -also called “closed-loop MRP”

• It is a computer-based information system that translates master schedule requirements for end items into time-phased requirements for subassemblies, components, and raw materials.
• -MRP is designed to answer three questions:-what is needed?-how much is needed?-When is it needed?
• The three inputs are:
• -Master production schedule – which products are to be produced, when they are needed, and in what quantities
• .-The master production schedule covers the cumulative lead time necessary to produce the end item, from ordering of parts and raw materials to completion of final assembly.
• -Bill of materials (BOM) – a listing of all of the assemblies, subassemblies, parts and raw materials that are needed to produce one unit of the finished product.
• -The BOM a hierarchal structure, showing the quantity of each item needed to complete one unit of the next higher level of assembly.
• -Inventory records – data on the status of each item by time periods.
• -primary data includes gross requirements, scheduled receipts, expected amount on hand at the beginning of the time period, safety stock, and net requirements.-additional data incudes supplier, lead time, and lot size policy.

• Inventory holding costs –
• -interest
• – required to finance both inventory investment (purchases) and holding costs-storage
• – rent, utilities, security-material handling
• -insurance, taxes (in some states)
• -depreciation, obsolescence, deterioration, spoilage, pilferageInventory holding costs can range from 10 to 30% of cost of sales
• – situation dependent
• Ordering costs include:
• -planning and placing the order
• -shipping costs
• -receiving and inspecting the order
• -moving the order to storage
• -payment of invoice

• A set of policies and controls that:
• -monitor levels of inventory
• -establish what levels should be maintained-decide when stock should be replenished
• -determine how large orders should be

• -raw materials and purchased parts
• -work-in-progress (WIP)
• -Materials or components that have undergone change but are not yet completed.-Finished products
• – (for manufacturing firms), or merchandise available for sale (for retail firms)
• -pipeline (supply chain) inventory-materials, parts, and finished products in transit to or from the producer
• -spare parts for customer service
• -maintenance/repair/operating supplies (MRC)

• Siemens-Yazake is a joint venture of a German company and a Japanesecompany, located on Ford’s supplier campus in Chicago.
• • SY supports Ford and other Tier-1 suppliers on the campusCo-location of suppliers with Ford supports JIT
• • Assemblies delivered in vehicle sequenceCo-location improves response to changing demand
• • Lead time for delivery from Asia exceeds S&OP planning horizon

• • Achieve deeper understanding of selected emerging markets
• • Localize/ regionalize operations• Partner with local companies
• • Build and maintain global product platforms to preserve economies ofscale, but create custom features for local tastes
• • Identify and secure low cost labor or material sources
• • Pay attention to details– Supplier quality audits– Capacity may depend on electric power availability
• • Centrally manage operations to provide flexibility to balance speed ofdelivery and cost effectiveness

• Opportunities:
• -export current products and services into international markets
• -Source products, parts and services from lower cost countries
• -Direct investment in foreign countries to manufacture products for sale in international markets and or the U.S.
• -Sell products and services to foreign companies which are investing in operations in the U.S.
• -Take advantage of more favorable taxes, investment incentives, liability laws, and environmental regulations.
• Threats:
• -competition in U.S. markets from imports of low cost products, parts and services
• -When key customers invest in offshore production, suppliers may need to follow to stay in the game

• 1. Set a design capacity goal and a target date for launch
• 2. Establish two planning teams– Internal operations management team– External facility design team – architects, technical specialists
• 3. Select a location and acquire the site
• 4. Define the facility layout and workflow
• 5. Identify critical equipment and select process technology
• 6. Identify essential information technology requirements
• 7. Create a conceptual design for the facility
• 8. Obtain necessary regulatory approvals
• 9. Develop preliminary cost estimate for complete facility
• 10. Verify financial viability for a range of scenarios
• 11. Make GO/ NO GO decision
• 12. Perform detailed design
• 13. Construct the building
• 14. Procure and install equipment and information systems
• 15. Recruit and train staff
• 16. Dry run the operations
• 17. Launch operation

Aggregate demand you would use trend models is it is ran short to medium and you can get 10 30 observations. S&OP you would use casual regression model as it gets updated often and can be ran short, medium or long-term.

• Each new forecast is based on the previous forecast plus a percentage of the difference between that forecast and the actual value of the series at that point.
• The key is to select an appropriate smoothing factor.-for relatively stable demand or for moderate growth.

• To stimulate demand:
• Pricing and financing-price discounts, rebates and special financing promotions-less control over timing of demand
• Back orders-order taken in one period for delivery in another period
• New Demand-use excess capacity to provide new products or services during slack times
• To adjust supply capacity:
• Open or close plants and or change production mix
• Hire or layoff workers-possible constraints: union contracts, supply of qualified workers-additional cost of hiring and firing-many companies view workers as an asset, not a variable cost
• Overtime/slack time-increase hours or days worked to add capacity-reduce hours or days worked to reduce capacity
• Part-time workers-Depends on nature of the workInventories-
• Carrying costs
• Subcontracting-Temporary capacity

ISO 14001- INternational standards organization published the *environmental management systems. Provides a template for setting up an environmental management system.

• Requirements:
• Develop environmental policy
• Identify environmental impacts
• Audit and monitor

• Increase Revenue:
• 1. Develop new products energy efficient
• 2. Develop new ways to provide energy/environment solutions
• 3. Breakthrough products
• 4. Modify/improve current products
• 5. Leverage green image

• Decrease costs:
• 1. Comply with government mandates
• 2. Increase energy efficiency
• 3. Improve resource productivity
• 4. Digitize operations (decrease paper)
• 5. Reuse durable parts
• 6. Decrease potential environment costs
• 7. Decrease environment costs up and down stream
• 8. Eliminate hazardous materials
• 9. Use sustainable resources

• Sustainable strategies to enhance Reputation:
• 1. Obtain certification to environment standards
• 2. Decrease CO2 and GHG emissions
• 3. Utilize renewable energy resources
• 4. Decrease impact of waste disposal
• 5. Implement recycling

• Dimensions of sustainable operations:
• Resources: Energy, water, other natural resources

• Environmental Impacts: climate changes, water pollution, air pollution, toxic chemicals and heavy metals, waste management,
• ozone layer, oceans, deforestation, bio-diversity

• Empowered staff-decision making
• Spent 3 million for training
• Flattened hierarchy to 3 levels
• Group problem solving

• Content of everyone's work-
• Making cars
• making cars better
• teach everyone to make cars better
• improve the process by which it improves all the the other processes

• Implementing Lean-
• 1. Analyze value system
• 2. Design sequential flow process
• 3. Level production schedule
• 4. Implement kanban pull
• 5. Integrate suppliers
• 6. Continue to reduce inventory
• 7. Improve product design

Value Stream- the collection of steps (both value added and non value added) involved in producing and delivering a product or service to a customer.

• 3 types of process steps-
• 1) value creators0 create value for the customer
• 2) Enablers-don't create value but require it.
• 3) Waste-don't create value and can be eliminated

• Measurable Benefits-
• Reduce cycle time
• Increase profitability
• Increase customer satisfaction

• MRP vs JIT- push vs. pull
• They can coexist if you use MRP for planning and JIT for production.

• Lean Principles-
• Sequential Flow
• Pull System- production linked to orders
• JIT- produce one at a time
• Kanban-cards or signals to communicate demand
• Design for quality
• Rapid tool change and set up
• Good Housekeeping
• Simplify Process
• Make the system accurate
• Eliminate disruptions
• REduce set up times
• Eliminate waste
• Minimize work in process

Kanban is a system of cards or signals that communicate demand and provides the authorization to move or work on parts.

Jidoka- equipment stops tp prevent defects

Just in time- produce only what is needed

• -overproduction
• -time spent waiting
• -unnecessary transporting of units
• -excessive inventory

S&OP is a repetitive management process to efficiently match supply and demand, responding to continual change.It is typically performed monthly, but can be updated more frequently.The two outputs are a sales plan and a master production schedule.