assignment-example2.xlsx - Operations Manamgement...

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Unformatted text preview: Operations Manamgement - Spreadshet Overview Process Analysis - Lead Time - Can we reduce lead time? - Process Throughput - C an we increase output? - Process Inventory? - Can we reduce inventory (and therby inc reas flexibility)? Process Management - Variability - Can we increase our skiil set? - Stabilitry - Can we improve our consistency? - Conformity - Can we improve alignment with the custiomer? ew ? (and therby inc rease consistency and the custiomer? Process Analysis |---> Company - department Customer production order acceptance rate is related to but different from the demand rate - that is of the total amount asked for how many do we accept production order acceptance rate gather requirements Units 10 9 8 7 6 5 4 3 2 1 Production Capacity (units/month) Dedicated Resources (FTE's) Productivity per resource (unit/month) Back log (orders) Order Rate Backlog/ Inventory 9 Gather Requirements 8.6 9 1.0 8 Process Variability Range FPY (First past yeild) Processing Time (days/units) Wait time (days) Customer interaction time (days) 1 21 7 --- Process name ---> prep work procurement install/build test/validation Bottleneck Process (CCR) Backlog/ Inventory Prep Work Backlog/ Inventory 6.7 9 0.7 3 Procurement 4.8 15 0.3 6 27 7 Install/Build 63 6 38 7 2 Backlog/ Inventory 6.3 12 0.5 6 7 0 Backlog/ Inventory 7 0 --->| test/validation test/ validation Backlog/ Inventory 8.6 6 1.4 go live/ turn-up Backlog/ Inventory 10.0 4 2.5 3 14 Demand Rate 8 3 8 3 0 Customer go live/turn-up 3 3 1 Process Capability Cust/Bus Expectation Improvement Target VOP VOC/VOB Supply Capacity vs. Customer Demand 5 8 3 units/month Customer demand vs. Market Demand 8 10 2 units Process Cycle Time vs. Customer Takt Time 206 45 161 days Customer Interaction Time 10 2 8 days Backlog/Inventory 35 10 25 orders Process Cost 55 40 15 FTE's/month Process Variability 20 10 10 unit/month 1.58 4 2.5 Sigma Assessment Process Sigma Impact question Key metric Can we meet customer demand Volume Can we improve customer demand (remove 'buy' constraint) Volume Can we consistently meet delivery expectations Price Can we reduce customer interaction time Price Can we reduce invenory/back log Cost Can we improve productivity Cost Can we reduce the variability of the process Can we improve conformance with customer requirements Spread Quality Potential actions Imrove productivity/increase capacity at bottlenecks Reduce customer transaction costs (understand, find, negotiate, acquire, maintain, dispose) to improve ability to buy Realign CCR, unbalance line, institute DBR management to ensure Six Sigma delivery consistency and tactical dynamic pricing opportunities Reducing customer cost provides opportunity to capture more value by raising prices or sustaining value through price protection Reduce backlog/inventory to just before the CCR to reduce holding costs, waste and improve morality and tactical flexibility Reduce non value-added costs, reduce valu-added costs, improve valueadd Reduce variability of activities through reengineering and training, reduce variability through better protection of CCR and order mgmt Reengineer activities to reduce spread and move the 'mean' to that of thecustomer Rolling 30 period totals # Time Period Output X 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 Assess either lead time or capacit (output) Sep 2015 Sep 2015 Sep 2015 Nov 2015 Nov 2015 Mar 2016 Mar 2016 Apr 2016 May 2016 Jun 2016 Jul 2016 Jul 2016 Jul 2016 Aug 2016 Aug 2016 Aug 2016 Sep 2016 Sep 2016 Sep 2016 Oct 2016 Oct 2016 Oct 2016 Nov 2016 Nov 2016 Nov 2016 8 6 5 1 12 10 9 4 14 12 3 2 6 7 10 4 11 4 1 12 8 4 12 9 5 mR Process Management Assessment (predictable an 2 1 4 11 2 1 5 10 2 9 1 4 1 3 6 7 7 3 11 4 4 8 3 4 Individual Value - Capacity Based 20 18 16 14 C 12 10 8 6 4 2 0 0 5 10 15 20 Moving Range 16 14 12 10 8 6 4 2 25 30 14 12 10 8 Nov 2016 Nov 2016 Dec 2016 Feb 2017 Mar 2017 26 27 28 29 30 Average Std Deviation 4 4 12 8 10 1 0 8 4 2 7.2 3.73 4.4 6 4 2 0 0 5 10 15 20 Management expects below how many monthly output is considered a 'defect'? Individual Values Process Stability Assessment Upper Natural Process Limit Ave X + (Ave mR x 2.66) 19.0 Lower Natural Process Limit Ave X - (Ave mR x 2.66) -4.5 Upper Range Limit 3.27 x mR 14.4 Assessment - effectictively - we can expect between 19 and zero from our team - though we will ask them for 7 month since that is the average therefore we will always be in chaos since we are making commitments we can't keep - since we don't understand the process each month will seem random - inventory (backlog) will accumulate and 'orders' will start to be processed by who 'yells' the loudest not by who generates the most money for the company Process Conformance Assessment Defects: Units: Opportunities per Unit: Failure Rate Accuracy Rate DPMO: Sigma Level: 14 30 1 47% 53% 466,667 1.58 25 Assessment - effectively - ths is how to estimate the profit drain - these are industry averages - look to internal/ external failure costs - appriasal costs - returns processing - 'make good' costs to 'visualize' the impact - in this case a sigma of 1.58 means an additional +40% increase in unnecssary cost this takes the form of increased concessions to customers for missed expectations - also uncessary oversight and 'problem solving' for variation that is actually 'normal' - the attention should have been focused on fixing the process 30 thomas mazzone©2018 0 35 mean sd 7 7 0 35 7.233333333 3.729503372 0.10473282 0.10127723 0.08941101 0.02646502 0.04726527 0.08123807 0.09561653 0.07345927 0.02062674 0.04726527 0.05616667 0.03996568 0.10127723 0.10676013 0.08123807 0.07345927 0.06423366 7.2 7.2 0.07345927 0.02646502 0.04726527 0.10473282 0.07345927 0.04726527 0.09561653 0.08941101 0.07345927 0.07345927 0.04726527 0.10473282 0.08123807 Process Capability - R 0.12 Probability t (predictable and conforming) apacity Based 0.08 0.06 upper process control limit 0.04 0.02 0 process average lower process control limit 25 30 35 lower customer tolerance limit ge Green Line - Average Below Red Line - Defect Focus here is on assessing 'Voice of the Process' vs. 'Voice of the Business' - that is tjis is aProcess Capacity Analysis Chart 0 2 4 6 8 Outpu Process Capability Analysis - wider curve mean m potential a less capable process - this means the or amount to produce is less reliable Process Capacity - Alignmen upper process range limit 0.12 Probability 20 0.1 0.1 0.08 0.06 20 Probability 0.12 s case a ary cost missed ' for been 0.08 0.06 25 30 0.04 35 0.02 is considered a 'defect'? ero from our average mmitments month will ers' will enerates the 0.1 7 0 proc ess stabi lity (pre dicta bility ) yes process is stable and predictable and is performing as designed process is out of conformance and needs to be reengineered to be in conformance with customer expectations no no 0 2 4 6 Process Alignment Analysis - this compares th customer preference curve to understand how representation of the 'process sigma' or the p expectations either in terms of lead time or o yes process conformance (with customer expectations) Recommendatuions should be focused on improving those Value Process Blocks that Have the Most Variability - lowest FPY Assessment - effectively - ths is how to esti drain - these are industry averages - look to external failure costs - appriasal costs - retu processing - 'make good' costs to 'visualize sigma of 1.58 means an additional +40% i this takes the form of increased concessio expectations - also uncessary oversight an variation that is actually 'normal' - the att focused on fixing the process external failure costs - appriasal costs - retu processing - 'make good' costs to 'visualize sigma of 1.58 means an additional +40% i this takes the form of increased concessio expectations - also uncessary oversight an variation that is actually 'normal' - the att focused on fixing the process 0 35 19.0 19.0 5 8 1 0.1 0.04 0.04 Analysis focus - two Voice of the Process Assessments should be done - one for capacity (Voice of the Busine the other Lead Time (Voice of the Customer) Process Capability - Range of Output if we can increase throughput (capacity) we make more money if we can reduce lead time we make our customers happier this analysis focuses on capacity- that is the total amount that is produ each month - the other relevant metric could have been cycle time - w the amount of time it takes to produce an output of 100% quality con - if there is a defect and it must be reprocessed then mean less 'good produced thar month for the analysis first assess stability then assess conformance - this is foundation for process improvements 2 4 6 8 10 12 14 16 Output once stable and conforming then protecting the CCR and unbalancing enables profitability sustainability and forms a foundation for further improvements pability Analysis - wider curve mean more variability and therefore less capable process - this means their out put in terms of time to produce to produce is less reliable 12 .1 08 06 Process Capacity - Alignment with Customer Expectations Analysis steps 1 - develop the process map - identify the key capacity metr this case it is completed orders per month 2 - constrain data collection to that metric 12 Analysis steps .1 1 - develop the process map - identify the key capacity metr this case it is completed orders per month 08 06 2 - constrain data collection to that metric 04 3 - for the output measure identified track at least 20 period (this example includes 30) - rename the table to refect the p and output type 02 0 0 2 4 6 8 10 12 14 Alignment Analysis - this compares the process capability curve with the r preference curve to understand how closely they align. this is a visula ntation of the 'process sigma' or the probablity that we will meet customer tions either in terms of lead time or output sment - effectively - ths is how to estimate the profit - these are industry averages - look to internal/ nal failure costs - appriasal costs - returns ssing - 'make good' costs to 'visualize' the impact - in this case a a of 1.58 means an additional +40% increase in unnecssary cost akes the form of increased concessions to customers for missed tations - also uncessary oversight and 'problem solving' for tion that is actually 'normal' - the attention should have been ed on fixing the process 16 4 - calculate the Ave and Upper/Lower Natural Process Limit formulas are already set up 5 - on the graph re-position the blue process capability bars assess stability - move blue solid line to the ave for the sample - move blue hash lines to upper and lower process limits 7 - identify upper and lower delivery tolerance level of custo (in this case there is only a lower) and assess conformance - reposition green hash lines accordingly - identify all completed orders that are too low (below 7and mark in red as defects - calculate sigma level (formula has already been set up) 8 - complete the matrix and assign the process capability/conformance to a box - comment on the implica (e.g. here we have a stable process that is non-conforming) 9 - review the average output, the upper and lower control and comment on the implications for the business 10 - review the computed sigma level - locate it in the char nal failure costs - appriasal costs - returns ssing - 'make good' costs to 'visualize' the impact - in this case a a of 1.58 means an additional +40% increase in unnecssary cost akes the form of increased concessions to customers for missed tations - also uncessary oversight and 'problem solving' for tion that is actually 'normal' - the attention should have been ed on fixing the process capability/conformance to a box - comment on the implica (e.g. here we have a stable process that is non-conforming) 9 - review the average output, the upper and lower control and comment on the implications for the business 10 - review the computed sigma level - locate it in the char identify the 'cost of poor quality' - comment on the implica for your process -how do these costs manifest themselves he Process Assessments ity (Voice of the Business) he Customer) Proces Chart Analysis we make more money customers happier the total amount that is produced ould have been cycle time - which is n output of 100% quality conformance cessed then mean less 'good output' is C assess conformance - this is the ting the CCR and unbalancing the line orms a foundation for further tify the key capacity metric - in r month t metric tify the key capacity metric - in r month t metric ed track at least 20 periods e the table to refect the periods wer Natural Process Limits - the ue process capability bars and e for the sample r and lower ry tolerance level of customer and assess conformance ccordingly that are too low efects a has already been n the process comment on the implications s that is non-conforming) e upper and lower control limits for the business evel - locate it in the chart and comment on the implications s that is non-conforming) e upper and lower control limits for the business evel - locate it in the chart and - comment on the implications sts manifest themselves ...
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  • Spring '10
  • Test, Process capability

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