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100 Cards in this Set

  • Front
  • Back

a business process is...

any activity or group of activities that takes an input, adds value to it, and provides an output to an internal or external customer

processes use an organization's resources to provide definitive results

What are keys to managing from afar as it applies to business processes?

the larger the customer base for a company the more important the standardized processes that make up its operations

ex: mcdonalds, dell, walmart

Block Diagram

scope inflation is...

the smarter you are the more likely you are to fall into scope inflation

focus on a small narrow scope otherwise it will get too big and overwhelming


Task, operation, data collection


decision point where multiple flow paths possible

Terminator: depicts start/end or entrances/exits to process


depicts flow of customer/material within the process

Rectangle inside rectangle

Process: depicts an entire process;

Likely depicted in another flowchart

Movement, Transportation

ex: delivering furniture to customer

Inspection requirement

ex: employee compares order ticket to items in customers bag

Delay in process

ex: wait for approval

connector: output leads to another flow chart or into another flowchart

process analysis is...

the documentation and detailed understanding of how work is performed and how it can be redesigned

process analysis steps

  1. identify opportunities
  2. define the scope
  3. document the process
  4. evaluate performance
  5. redesign the process
  6. implement changes

identify opportunities (process analysis steps)

first step; look for gaps or better ways of doing things to improve the process

define the scope (process analysis steps)

2nd step; establishes the boundaries of the process to be analyzed; a process's scope can be too broad or narrow

a design team...

consists of knowledgeable, team-oriented individuals who work at one or more steps in the process, conduct the process analysis, and make the necessary changes; mainly for broad scope, major core processes

document the process (process analysis steps)

step 3; includes making a list of the process's inputs, suppliers (internal or external), outputs, and customers (internal or external); this info can then be shown as a diagram with a more detailed breakdown given in a table

evaluate performance (process analysis steps)

step 4; analyst creates multiple measure of quality, customer satisfaction, time to perform each step or the whole process, cost, errors, safety, environmental measure, on-time delivery, and flexibility

redesign the process (process analysis steps)

step 5; analysis team creates list of ideas for improvement>justifiable ideas put into new design; gives clear before and after pictures; shows how revised process will benefit using established metrics

implement changes (process analysis steps)

widespread participation in process analysis is essential bc it builds commitment from everyone

5 techniques for documenting and evaluating processes

  1. flowcharts
  2. swim lane flowcharts
  3. service blueprints
  4. work measurement techniques
  5. process charts

a flowchart is...

a diagram that traces the flow of info, customers, equipment, or materials through the various steps of a process

cow path theory is...

New cow is expected to follow path of old cow even though new cow sees faster and more effective way to reach water.

swim lane flowcharts are...

a visual representation that groups functional areas responsible for different sub-processes into lanes. It is most appropriate when the business process spans several department boundaries.

a visual representation that groups functional areas responsible for different sub-processes into lanes. It is most appropriate when the business process spans several department boundaries.

service blueprints are...

a special flowchart of a service process that shows which steps have high customer contact

a special flowchart of a service process that shows which steps have high customer contact

4 work measure techniques

  1. time study method
  2. elemental standard data approach
  3. the predetermined data approach
  4. work sampling

time study method (4 work measure techniques)

a work measurement method using a trained analyst to perform 4 basic steps in setting a time standard for a job or process: selecting the work elements (or nested processes) within the process to be studied, timing the elements, determining the sa...

a work measurement method using a trained analyst to perform 4 basic steps in setting a time standard for a job or process: selecting the work elements (or nested processes) within the process to be studied, timing the elements, determining the sample size, and setting the final standard

elemental standard data approach (4 work measure techniques)

a database of standards compiled by a firm's analysts for basic elements that they can draw on later to estimate the time required for a particular job, which is most appropriate when products or services are highly customized, job processes prevail, and process divergence is great

predetermined data approach (4 work measure techniques)

a database approach that divides each work element into a series of micromotions that make up the element. The analyst then consults a published database that contains the normal times for the full array of possible micromotions

work sampling method (4 work measure techniques)
a process that estimates the proportion of time spent by people or machines on different activities, based on observations randomized over time.
a process that estimates the proportion of time spent by people or machines on different activities, based on observations randomized over time.
best when processes are highly divergent with flexible flows

learning curve analysis

takes into account that learning takes place on an ongoing basis, such as when new products or services are introduced frequently

a learning curve is...

a line that displays the relationship between processing time and the cumulative quantity of a product or service produced.

a process chart is...

an organized way of documenting all the activities performed by a person or group of people, at a workstation, with a customer, or on materials.

an organized way of documenting all the activities performed by a person or group of people, at a workstation, with a customer, or on materials.

performance measurement

  • is vital to managing for both consistency and improvement;
  • companies measure both inputs (materials, money invested, employee hours) and outputs (units produced, defects, customer satisfaction);
  • influence managers' decisions about employee promotions and terminations, machine and employee scheduling, project management, etc that impact how companies utilize their resources

Performance metric

  • (PM); a single performance measurement used to evaluate, motivate and improve performance
  • temp, time, weight, speed, length, ROI are all examples of metrics we routinely use to make decisions

system of metrics

  • a group of metrics that collectively attempt to provide a multi-dimensional view of a resource or outcome
  • you need to know many metrics to make most decisions

reasons organizations utilize performance metrics

  • helps establish and support standards (weeder classes)
  • motivate good behavior (low satisfaction ratings = no bonus)
  • identify trends (if customer buys A, they'll probably buy B)
  • manage from afar (companies have many locations and need to decide who to promote among all employees)
  • managing large numbers of resources (with so many people, numbers are only way to promote)
  • performance data can facilitate decision making and planning (higher probabilities of success dependent on performance measurement data)

consequences of poor metrics

  • SC goals are not met
  • poor output
  • waste
  • undesirable employee behaviors
  • managers may make poor decisions
  • employee victimization
  • undeserved winners
  • lack of contentment

requirements of a good metric

  • measureable
  • easily understood
  • attainable
  • strategically oriented
  • easy to measure
  • provides value
  • provides guidance
  • cheater proof

SMART metrics

specific, measureable, attainable, relevant, and timely

3 key measurement system attributes

  • effective - were desired goals met?; IF goals were met
  • efficient - a measure of the resources used in the process; HOW goals were met
  • adaptable - a measure of the conditions under which the tasks were completed; road games, rainy days, small class, etc
  • if you don't have all 3, could mislead managers

keys to designing a system of metrics

  • stakeholders and goals - plan that revolves around them
  • good metrics - EVERY metric needs to be good
  • simplicity - keep it easy to understand
  • completeness - be sure system accounts for effectiveness, efficiency, and adaptability
  • redundancy - be sure multiple metrics aren't measuring the same thing
  • continuous improvement - motivate to improve while boosting morale; good employees should feel rewarded
  • leadership - must be explained and fully supported by leaders at every level


key performance indicators

  • individual performance metrics identified by the company as being imperative to achieving the organization's most important goals
  • early warning system of problems starting to emerge
  • can signal when things are going well too

executive dashboards

  • a computer-generated visual representation of a company's performance that is often available to executives on nearly any digital device
  • KPIs and more
  • real-time and historical data
  • color-coded help managers quickly spot positive, negative or neutral output

managerial paralysis

a situation where managers are flooded with data which slows decision-making and may result in managers stalling or avoiding decision-making

common measurement pitfalls in business

  • managers fail to use the data
  • blind belief in institutional metrics
  • incomplete measurements
  • utilizing too many metrics
  • driving toward perfection may waste resources

shared metrics

  • a metric that is impacted by 2 related parties
  • example: student giving bad report of professor because of poor grade


  • balanced scorecard
  • a performance management tool that focuses on strategic activity and strategic outcomes
  • some companies alter the 4 elements but similar to:

  1. financial results - utilizes basic financial metrics related to cost, revenues, and profits
  2. customer-related results - measure if company is meeting customers' product/service requirements as well as customer satisfaction expectation
  3. internal business process results - measure if processes in the SC are running efficiently and effectively
  4. learning and growth results - measure work environment, dedication to continuous improvement, and other issues related to the company's HR

BSC explained

BSC is used to proactively look for problems before they impact the financial results

ex: catching customer-related issues earlier than a traditional system that only tracks financial results

SCOR model
Supply Chain Operations Reference Model
a measurement tool to track performance, communicate progress, and develop opportunities for improvement
connects SC activities from suppliers all the way to customers
5 primary SC processes are:

Supply Chain Operations Reference Model
a measurement tool to track performance, communicate progress, and develop opportunities for improvement
connects SC activities from suppliers all the way to customers
5 primary SC processes are:plan
source - purchasing process
make - manufacturing process
deliver - logistics and transportation
return - reverse logistics

total SCM costs

the cost of every process, material, fee, defect, etc. that runs through the SC

also explained as the cost to plan, source, and deliver products/services

*relationship between 3 of the 5 in the SCOR model

Cash-to-cash cycle

  • a measure of the number of days between the time a company pays their supplier for inventory and the time that company is paid for the same inventory by their customers
  • formula: (days of inventory on hand) + (days of accounts receivable owed to your company by your customers) - (days of accounts payable your company owes to suppliers)
  • having a low cash-to-cash cycle is ideal
  • can have negative cash-to-cash cycles if customers pay before receiving and you don't have to pay your supplier for a while

capacity utilization

  • a ratio of the amount of product produced by a manufacturing process versus the maximum capacity of that facility
  • formula: (actual factory output) / (factory design capacity)
  • typically a high capacity utilization would be desired, but if too high, the company may experience issues with growth OR can't keep up with demand due to defects?

process velocity

  • a measure of how long a unit sits in a process versus the amount of work time that is expended on the unit
  • formula: (total time spent in the system) / (value added time)
  • ideal process velocity would be 1.0 because that would mean there was no waiting time

perfect order fulfillment

  • the percentage of orders that are full, arrive on time, and are damage free
  • takes into account accuracy, speed and quality

quality is...

  • the ability of a product/service to meet a consumer's expectations
  • may be related to: design, durability, performance, materials used, aesthetics, delivery, consistency, and associated service

dimensions of quality (product)

  • performance
  • reliability
  • durability
  • features
  • aesthetics
  • reputation/brand
  • service response - ease to get service
  • serviceability - ease of use
  • maintenance and repair

dimensions of quality (service)

  • time - from arrival to service completion; waiting in lines
  • timely - was service received when expected?
  • complete - fulfill all expectations?
  • accurate - were requests fulfilled?
  • responsive - did they see, acknowledge, and fix the problem promptly?
  • courtesy - friendly and professional?
  • consistent
  • accessible - location, hours, website availability, 800 numbers
  • convenient - hours, user-friendly, paperwork

costs of quality

  • the longer you wait to address a problem, the more expensive
  • as internal failure costs are increased, external failure costs should decrease
  • as prevention costs increase, both internal and external failure costs should decrease

  1. internal failure costs
  2. external failure costs
  3. appraisal costs
  4. prevention costs

internal failure costs (costs of quality)

  • problems found and fixed within the supply chain before they reached the customer
  • helps managers discover that internal quality improvements could help decrease or eradicate these costs
  • these costs include:

  1. resources wasted to produce the item
  2. disposal of the damaged good
  3. costs of work and materials required to repair the item

external failure costs (costs of quality)

  • problems that reach the consumer
  • worst-case scenario; have highest potential for losses
  • costs associated with repairing damage caused from delivering substandard items or services

  1. reverse logistics costs
  2. warranty costs
  3. replacement costs

  • customer may not purchase from the company again, tell others, brand damaged
  • if defective items caused injury or death, legal fees, fines and penalties would be external failure costs
  • late shipment would be an external failure cost

appraisal costs (costs of quality)

  • aka assurance costs
  • costs associated with monitoring quality in stable systems or the costs of researching when systems are producing sub-standard quality
  • could include:

  1. process inspections
  2. inspector and consultant fees
  3. labs time/fees
  4. system interruptions
  5. interviewing employees about the process

prevention costs (costs of quality)

  • fix present problems, prevent future problems
  • costs associated with efforts to eliminate any identified quality related problems or costs related to reducing the potential for quality problem in the future
  • could include:

  1. improving product/service/process design
  2. increase or improve training
  3. changing hiring policies to attract better employees
  4. choosing better suppliers
  5. premium raw materials, parts, and components
  6. machine maintenance/upgrades
  7. improved packaging
  8. corporate quality programs
  9. improving buyer-supplier relationships

quality gurus

  • study of quality management well over 100 years
  • W. Edwards Deming
  • Joseph Juran
  • Phillip Crosby

Deming (quality guru)

  • Deming's Fourteen Points
  • was champion of continuous improvement

Juran (quality guru)

  • Quality Trilogy
  • emphasized 3 things:

  1. quality planning
  2. quality improvement
  3. quality control

Crosby (quality guru)

  • Quality is Free
  • argued that a lack of quality may have lower costs, but would eliminate any value

Other gurus

  • Genichi Taguchi
  • Armand Feigenbaum
  • James Harrington
  • Kaoru Ishikawa
  • Shigeo Shingo
  • Walter Shewart

calculating reliability

  • reliability is a measure of the percentage of time a system or product operates successfully
  • formula: (reliability of component 1) * (reliability of component 2) * ...(reliability of component n)
  • ex: .98 * .89 * .98 * .98 = 82%
Total backup reliability formula example
1 - (1-.89) ^ 3 = .9986

reliability - .96 * .9986 * .98 * .98 = 92.1%


  • total quality management
  • seeks to address the management of quality at all levels of an organization/SC
  • no single explanation of TQM is accepted
  • International Organization of Standardization (ISO) definition - "a management approach for an organization, centered on quality, based on the participation of all its members and aiming at long-term success through customer satisfaction, and benefits to all member of the organization and to society."
  • commonly used TQM principles:

  1. Customer focus
  2. involvement
  3. continuous improvement

customer focus (TQM)

  • customer defines quality so all attention should be focused on the customer and their evolving definition of quality
  • customer is the guide for employees, management, SC partners, and all continuous improvement efforts

involvement (TQM)

  • must involve everyone involved in the SC to design, produce and deliver quality to the customer
  • managers must develop relationships with SC partners to collaborate and share in an effort to maintain their customer focus
  • managers must keep employees engaged in the quest for quality

continuous improvement (TQM)

  • Quality evolution is never ending
  • managers must reward continuous improvement efforts and achievements to be sure customer focus is maintained


  • a process where companies compare their practices and performance with other companies
  • the benchmarking process typically has 4 key steps:

  1. identify area to benchmark - not whole company but processes/programs
  2. identify leaders - find who is best in the category being benchmarked
  3. contact leaders and gather data - find out how these leaders act and perform; identify weaknesses
  4. analyze, act, follow-up - plan, initiate change, measure, assess progress

other types of benchmarking

  • competitive benchmarking - comparing to direct competitors; ex: Honda comparing Toyota
  • functional benchmarking - comparing to an organization that is successful in an area where processes reflect similar inputs, outputs, or values; ex: Boeing comparing quality control techniques to Toyota
  • internal benchmarking - big (or small) organizations that compare internal departments; ex: GE energy group comparing hiring practices to GE healthcare group's

six sigma

  • a quality program developed by Motorola in the 80's; widely used around the world sing the 90's
  • strives for complete elimination of defects
  • teams from diff parts of a company work to ID root causes and develop solutions
  • one key way to maintain such strict quality standards is that it demands processes that are extremely consistent, thus very little variation
  • levels of certification: green, black, master black belts, and Six Sigma Champion

DMAIC (Six Sigma)

  • 5 step process for finding, fixing, and contolling quality issues
  • Define, Measure, Analyze, Improve, Control

  1. define the problem
  2. measure the performance of the process
  3. analyze the data measured in an effort to find a root cause
  4. improve the process. develop and implement solutions
  5. control the process. monitor progress and measure levels of improvement

quality certifications and awards

  • ISO 9000
  • The Malcolm Baldrige National Quality Award (MBNQA)
  • Deming Prize

ISO 9000 (quality certifications and awards)

  • international quality certification
  • helps organizations understand the basics of quality management, to measure their present state of quality, and to identify areas for improvement
  • can signal a commitment to quality to an organization's SC partners as well as their customers

The Malcolm Baldrige National Quality Award

  • awarded in the US to companies based in the US that are deemed to demonstrate the very best in the area of performance excellence

Deming Prize (quality certifications and awards)

a Japanese quality award given to companies or individuals that have contributed to the field of quality

cause and effect diagrams (fishbone charts)

  • used to ID possible causes to quality problems
  • single arrow pointing right
  • 4 other cause arrows point into arrow representing a category of issues that may be causing the problem; usually: labor, process, machine, material
  • environmental issues DON'T appear on the chart because they're not in our control

scatter diagrams

  • diagrams that show a possible relationship/correlation between 2 sets of data
  • ex: defects vs hours of training

pareto charts

when a company has a number of different quality problems, Pareto charts can help managers ID which categories of problems are the most prevalent
  • when a company has a number of different quality problems, Pareto charts can help managers ID which categories of problems are the most prevalent


  • similar to pareto charts; tries to categorize output
  • data falls into quantitative categories (Pareto uses qualitative)

control chart

  • a chart that plots sample data over a period of time; has a center line (goal), an upper and lower control limit
  • if data point is outside of control limits, it requires attention


planning and control activities and info systems that link a firm with its downstream customers


planning and control activities ant info systems that link a firm with its upstream suppliers

Internal supply chain management

the information flows between higher and lower levels of planning and control systems within an organization

ERP systems

enterprise resource planning systems - large, integrated, computer-based business transaction processing and reporting systems. ERP systems pull together all of the classic business functions such as accounting, finance, sales, and operations into a single, tightly integrated package that uses a common database


decision support systems - computer-based information systems that allow users to analyze, manipulate, and present data in a manner that aids higher-level decision making

map of supply chain management information systems

network design applications

logistics info systems that address such long-term strategic questions as facility location and sizing, as well as transportation networks. These applications often make use of simulation and optimization modeling.

cloud computing

5 essential characteristics:

  1. on-demand self-service - users can automatically access applications and storage space whenever they need them
  2. broad network access - can access from many platforms: cell phones, laptops, and PDAs
  3. resource pooling - the provider's computing resources are pooled to serve multiple consumers, with diff physical and virtual resources dynamically assigned and reassigned according to consumer demand
  4. rapid elasticity - capabilities can be rapidly and elastically provisioned, in some cases automatically, to quickly scale out, and scale in. To the consumer, provisioning often appear unlimited and can be purchased in any quantity at any time.
  5. measured service - resource usage can be monitored, controlled, and reported, providing transparency for both the provider and consumer of the utilized service.


  • represents the most basic function of info in the SC
  • allows managers to see the physical and monetary flows in the SC and better manage them
  • ex: forecasts, point-of-sales data, inventory levels, and status of jobs in the production system


  • takes visibility a step further; seeks to replace certain physical processes with virtual ones
  • ex: Boeing being able to design new engine housings virtually

creation of new customer relationships

  • involves taking raw info and organizing, selecting, synthesizing, and distributing it in a manner that creates whole new sources of value
  • ex: creating virtual, customized textbooks with hotlinks to websites and spreadsheets