5S - A method of creating a clean and orderly workplace that exposes
waste and errors. Originally summarized by 5 Japanese words beginning
with S, 5S is widely translated as Sort, Shine, Set in Order,
Standardize and Sustain.
Absenteeism - (Actual
hours lost through unscheduled job absence - actual hours worked ) x
100. Include all unscheduled absences during normal work hours,
including scheduled overtime.
Activity-based costing system - A
system that tracks costs based on the activities that are responsible
for driving costs in the production of manufactured goods
Advanced planning and scheduling system - Planning and optimization tool that balances demand
with plant capacity, thus allowing manufacturers to identify
bottlenecks and divert workload to alternative production cells.
Advanced product quality planning - A structured method of defining and establishing the steps
necessary to ensure that a product satisfies the customer. By moving
quality efforts into planning and prevention, this multistage process
identifies and anticipates potential problem areas.
Agile
manufacturing - Tools,
techniques, and initiatives that enable a plant or company to thrive
under conditions of unpredictable change. Agile manufacturing not only
enables a plant to achieve rapid response to customer needs, but also
includes the ability to quickly reconfigure operations - and strategic
alliances - to respond rapidly to unforeseen shifts in the marketplace.
In some instances, it also incorporates "mass customization" concepts
to satisfy unique customer requirements. In broad terms, it includes
the ability to react quickly to technical or environmental surprises.
Annual total inventory turns - A
measure that is calculated by dividing the value of annual plant
shipments at plant cost (for the most recent full year) by the total
average daily inventory value at plant cost. Total average daily
inventory includes raw materials, work in process, and finished goods.
Plant cost includes material, labor, and plant overhead.
Asset
turnover - A
measure of how efficiently assets are used to produce sales. The ratio
shows how many dollars of sales were generated by each dollar of
assets. Calculate by dividing net sales by average total assets.
Benchmarking - Formal
programs that compare a plant's practices and performance results
against "best-in-class" competitors or against similar operations.
Bottleneck - Any
point at which movement is slowed because demand placed on a resource
is greater than capacity.
Cellular manufacturing - A
manufacturing approach in which equipment and workstations are
arranged to facilitate small-lot, continuous-flow production. In a
manufacturing "cell," all operations necessary to produce a component
or subassembly are performed in close proximity, thus allowing for
quick feedback between operators when quality problems and other
issues arise. Workers in a manufacturing cell typically are
cross-trained and, therefore, able to perform multiple tasks as
needed.
Changeover - the
time required to modify a system or workstation, including teardown
and setup time.
Computer-aided design (CAD) - Computer-based
systems for product design that may incorporate analytical and
"what-if" capabilities to optimize product designs. Many CAD systems
capture geometric and other product characteristics for
engineering-data-management systems, producibility and cost analysis,
and performance analysis. In many cases, CAD-generated data is used to
generate tooling instructions for computer-numerical-control (CNC)
systems.
Computer-aided manufacturing (CAM) - Computerized
systems in which manufacturing instructions are downloaded to
automated equipment or to operator workstations.
Computer-aided process planning (CAPP) - Software-based systems that aid manufacturing engineers in
creating a process plan to manufacture a product whose geometric,
electronic, and other characteristics have been captured in a CAD
database. CAPP systems address such manufacturing criteria as target
costs, target leadtimes, anticipated production volumes, availability
of equipment, production routings, opportunity for material
substitution, and test requirements.
Computer-integrated manufacturing (CIM) - A
variety of approaches in which computer systems communicate or
interoperate over a local-area network. Typically, CIM systems link
management functions with engineering, manufacturing, and support
operations. In the factory, CIM systems may control the sequencing of
production operations, control operation of automated equipment and
conveyor systems, transmit manufacturing instructions, capture data at
various stages of the manufacturing or assembly process, facilitate
tracking and analysis of test results and operating parameters, or a
combination of these.
Computerized maintenance management systems (CMMS) - Software-based systems that analyze operating
conditions of production equipment - vibration, oil analysis, heat,
etc. - and equipment-failure data, and apply that data to the scheduling
of maintenance and repair inventory orders and routine maintenance
functions. A CMMS prevents unscheduled machine downtime and optimizes
a plant's ability to process product at optimum volumes and quality
levels.
Computerized process simulation - Use
of computer simulation to facilitate sequencing of production
operations, analysis of production flows, and layout of manufacturing
facilities.
Computerized SPC - See
"statistical process control."
Concurrent engineering - A
cross-functional, team-based approach in which the product and the
manufacturing process are designed and configured within the same time
frame, rather than sequentially. Ease and cost of manufacturability,
as well as customer needs, quality issues, and product-life-cycle
costs are taken into account earlier in the development cycle. Fully
configured concurrent-engineering teams include representation from
marketing, design engineering, manufacturing engineering, and
purchasing, as well as supplier - and even customer companies.
Continuous-replenishment programs - Arrangement
with supplier companies in which the supplier monitors the customer's
inventory and automatically replaces used materials, eliminating the
need for purchase orders and related paperwork.
Core
competency - The
processes, functions, and activities in a plant or company that are
its "life blood" - typically those activities for which the enterprise
derives the greatest return for its investments or those that
intrinsically align the enterprise with its core market.
Cost
of quality - The
sum of all costs associated with conformance and nonconformance. Cost
of conformance includes prevention costs (employee training, tooling
maintenance, planned preventive maintenance, suggestion awards) and
appraisal costs (inspection, testing, gages and instrumentation, audit
expenses). The cost of nonconformance includes internal costs
(unscheduled maintenance, pre-shipment scrap and rework, workers'
compensation) and external costs (warranty, customer complaint
investigation, rework of returned goods, and product liability
insurance.)
Cpk - A
statistical calculation of process capability based on the
relationship between process variability and design specifications. A
good Cpk value indicates that the process is consistently under
control - i.e., within specification limits - and also is centered on the
design target value. A Cpk value of 1.33 typically is considered a
minimum acceptable process capability; as the Cpk value approaches
2.0, the process approaches Six Sigma capability (3.4 defective units
per million).
Cross-functional teams - Teams
of employees representing different functional disciplines and/or
different process segments that tackle a specific problem or perform a
specific task, frequently on an ad hoc basis.
Cross-training - Skill-development
practices that require or encourage production workers and other
employees to master multiple job skills, thus enhancing workforce
flexibility.
Customer leadtime - The
time elapsed from receipt of an order until the finished product is
shipped to the customer.
Customer reject rate - A
quality measure - expressed in parts per million - reflecting the number
of completed units rejected or returned by external customers.
Calculation should include parts reworked by customers. Applies to all
shipped units, including parts.
Customer retention rate - the
number of customers active three years ago and still active, divided
by the total number of customers active three years ago.
Cycle
time - See
"manufacturing cycle time."
Days of inventory - Calculate
days of inventory by dividing the average inventory on hand
(raw-materials inventory, work-in-process inventory, finished-goods
inventory, or total inventory) by average daily usage.
Demand flow scheduling systems - Software
systems designed to optimize demand-based manufacturing techniques.
Design for assembly - The
practice in which ease and cost of assembly is emphasized during the
product-design stage.
Design for logistics - The
practice in which physical handling and distribution of a manufactured
product are emphasized during the product-design stage.
Design for manufacturability - The
practice in which ease and cost of manufacturing, as well as
quality-assurance issues, are emphasized during the product-design
stage.
Design for procurement - A
practice in which product designers work effectively with suppliers
and sourcing personnel to identify and incorporate technologies or
designs that can be used in multiple products, facilitating the use of
standardized components to achieve economies of scale and assure
continuity of supply.
Design for quality - The
practice in which quality assurance and customer perception of product
quality are emphasized as an integral part of the design process.
Design for recycling/disposal - The
practice in which ultimate disposal and recycling of the manufactured
product are considered during the product-design stage.
Design of experiments - An
experimental design methodology that enables process designers to
determine optimum product/process parameters by conducting a limited
number of experiments involving combinations of variables. The usual
objective is to determine which variables in a complex process are
most critical for quality control - or those that can be most easily
changed to reduce overall process variance.
Discrete manufacturing - The
production or assembly of parts and/or finished products that are
recognizable as distinct units capable of being identified by serial
numbers or other labeling methods - and measurable as numerical
quantities rather than by weight or volume.
Economic Value Added (EVA)
- a
measurement of shareholder wealth created by an investment center. A
trademark of Stern Stewart & Company, calculating EVA can be very
complex but is basically net operating profit after taxes (NOPAT)
minus an appropriate charge for the opportunity cost of all capital
invested in an enterprise.
Electronic data interchange (EDI)
- Information-system
linkages, based on communication protocols and document formats, that
permit intercompany computer-to-computer communications. It not only
speeds communication, but also eliminates re-keying of information and
reduces the opportunity to introduce errors. A typical EDI application
might speed information exchange between a customer and supplier
company for purchase orders, invoices, or other transactions. EDI
communications are often facilitated through "electronic mailbox"
systems on third-party value-added networks or over the Internet.
Empowered natural work teams - Teams
that share a common workspace and/or responsibility for a particular
process or process segment. Typically such teams have clearly defined
goals and objectives related to day-to-day production activities, such
as quality assurance and meeting production schedules, as well as
authority to plan and implement process improvements. Unlike
self-directed teams, empowered work teams typically do not assume
traditional "supervisory" roles.
Enterprise integration (EI) - A
broad implementation of information technology to link various
functional units within a business enterprise; on a wider scale, it
may also integrate strategic partners in an inter-enterprise
configuration. In a manufacturing enterprise, EI may be regarded as an
extension of CIM that integrates financial or executive
decision-support systems with manufacturing tracking and inventory
systems, product-data management, and other information systems.
Enterprise resource planning (ERP) - An
extension of MRP II software designed to operate on enterprise-wide
computing platforms. ERP systems typically claim the ability to
achieve tighter (or "seamless") integration between a greater variety
of functional areas, including materials management, supply-chain
management, production, sales and marketing, distribution, finance,
field service, and human resources. They also provide information
linkages to help companies monitor and control activities in
geographically dispersed operations.
Expert systems - Software-based "artificial-intelligence" systems that capture
the knowledge and experience of experts in a specialized field and
make that expertise available to less-skilled personnel.
Extranet - An exclusionary Internet-like network that securely connects
customers and suppliers to a corporate or plant intranet in order to
access information deemed sharable by the intranet operators.
Finished-goods turn rate - A
measure of asset management that typically is calculated by dividing
the value of total annual shipments at plant cost (for the most recent
full year) by the average finished-goods inventory value. Plant cost
includes material, labor, and plant overhead.
Finite capacity scheduling - Software-based
systems that enable simulation of production scheduling (and
determination of delivery dates) based on actual unit/hour capacity at
each step in the production routing. Finite scheduling systems,
running on desktop computers, often compensate for the "infinite
capacity" assumptions built into capacity-planning modules in
traditional MRP II systems.
Finite element analysis (FEA) - A
mathematical method for analyzing stress. FEA is used in
product-design software to conduct graphical on-screen analysis of a
model's reactions under various load conditions.
First-pass yield - The
percentage of finished products that meet all quality-related
specifications at a final test point. When calculating yield for
components, the percentage that meets all quality-related
specifications at a critical test point without being scrapped, rerun
or reworked. In process industries, yield often is calculated as the
percentage of output that meets target-grade specifications (excluding
saleable "off-grade" product).
Flexible assembly systems - Automated
assembly equipment and/or cross-trained work teams that can
accommodate a variety of product configurations in small lots.
Flexible machining centers - Automated
machining equipment that can be rapidly reprogrammed to accommodate
small-lot production of a variety of product or component
configurations.
Flexible manufacturing system (FMS)
- Automated
manufacturing equipment and/or cross-trained work teams that can
accommodate small-lot production of a variety of product or part
configurations. From an equipment standpoint, an FMS is typically a
group of computer-based machine tools with integrated material
handling that is able to produce a family of similar parts.
Focused-factory production - A
plant configuration and organization structure in which equipment and
manpower are grouped to create essentially self-contained
"mini-businesses," each with a specific product line or customer
focus. A single plant may be divided into several focused-factory
units, designed around process flows, each of which has control over
such support activities as maintenance, manufacturing engineering,
purchasing, scheduling, and customer service.
Forecast/demand management software - A
class of software that provides front-end input to master production
scheduling systems and helps optimize inventory planning. Such
software not only takes into account historical demand trends, but
also may calculate the impact of planned sales promotions, price
reductions, and other factors that cause spikes in demand levels.
In-plant defect rate - The
fallout rate, parts per million (ppm), of all components in
manufacturing and assembly that fail quality tests at any point in the
production process.
Intranet - A secure, internal, corporate Internet-based network.
Inventory turn rate - A
measure of asset management capability (see "annual total inventory
turns").
ISO
9000 - An international quality-process auditing program, based on a
series of standards published by the International Standards
Organization in Geneva, Switzerland, through which manufacturing
plants receive certification attesting that their stated quality
processes are adhered to in practice.
ISO
14000 - Standards and guidelines defined by the International Standards
Organization for environmental management systems.
JIT/continuous-flow production - Implementation
of "just-in-time" techniques to reduce lot sizes, reduce setup times,
slash work-in-process inventory, reduce waste, minimize
non-value-added activities, improve throughput, and reduce
manufacturing cycle time. JIT production typically involves use of
"pull" signals to initiate production activity, in contrast to
work-order ("push") systems in which production scheduling typically
is based on forecasted demand rather than actual orders. In many pull
systems, a customer order/shipment date triggers final assembly, which
in turn forces replenishment of component WIP inventory at upstream
stages of production.
JIT
delivery - Delivery of parts and materials in small lots - and on a frequent
basis - timed to the needs of the production system.
Kaizen - The systematic, organized improvement of processes by those who
operate them, using straightforward methods of analysis. It is a
"do-it-now" approach to continuous improvement.
Kaizen event - A concentrated effort, typically spanning three to five days,
in which a team plans and implements a major process change or changes
to quickly achieve a quantum improvement in performance. Participants
generally represent various functions and perspectives and may include
non-plant personnel.
Kanban signal - A method of signaling suppliers or upstream production
operations when it is time to replenish limited stocks of components
or subassemblies in a just-in-time system. Originally a card system
used in Japan, kanban signals now include empty containers and even
electronic messages.
Labor turnover rate - A
measure of a plant's ability to retain workers, expressed as a
percentage of the production workforce that annually departs,
regardless of reason (layoff, quit, retirement, buyout, transfers,
etc.). High turnover rates often indicate employee dissatisfaction
with either working conditions or compensation.
Machine availability rate - The
percentage of time that production equipment is available for use,
divided by the maximum time it would be available if there were no
downtime for repair or unplanned maintenance.
Machine vision - Optical systems in which video equipment is used to guide
robotic or automated equipment during production operations; also,
computerized visual inspection systems used for quality control.
Manufacturing cost - Includes
quality-related costs, direct and indirect labor, equipment repair and
maintenance, other manufacturing support and overhead, and other costs
directly associated with manufacturing operations. It does not include
purchased-materials costs or costs related to sales and other
non-production functions.
Manufacturing cycle time - The
time of actual production from when a customer order is released to
the plant floor for a particular product through to the completion of
all manufacturing, assembly, and testing for that specific product.
(Does not include front-end order-entry time or engineering time spent
on customized configuration of nonstandard items, or time in finished
goods inventory.)
Manufacturing execution system (MES)
- A
software-based system that provides a link between planning and
administrative systems and the shop floor. It can link MRP
II-generated production schedules to direct process-control software.
An element of computer-integrated manufacturing, MES encompasses such
functions as planning and scheduling, production tracking and
monitoring, equipment control, maintaining product histories
(verifying and recording activities at each stage of production), and
quality management.
Mean
time between equipment failure - the
mean (or average) time in hours expected between failures of a given
device.
MRP
II - Software-based Manufacturing Resources Planning systems that
translate forecasts into master production schedules, maintain bills
of material (lists of product components), create work orders for each
step in the production routing, track inventory levels, coordinate
materials purchases with production requirements, generate "exception"
reports identifying expected material shortages or other potential
production problems, record shop-floor data, collect data for
financial reporting purposes, and other tasks depending on the
configuration of the MRP II package.
NAICS - The North American Industry Classification System (NAICS) is a
coding system of the U.S., Mexican, and Canadian governments that
identifies specific economic sectors. It replaces the U.S. Standard
Industrial Classification (SIC) system. Coding for most manufacturers
encompasses the 6-digit subsets of numbers 31 through 33.
Natural work team - A
team of employees, often hourly personnel, who share a common
workspace and have responsibility for a particular process or process
segment.
Online order entry system - A
computer-based system that enables distributors, field-sales
representatives, and even customers to place orders directly, over the
Internet or a corporate intranet, without intervention by an inside
salesperson. An Internet-based transaction might be initiated by
accessing a Web page, then choosing a sales-order-entry option. The
software often includes a product configurator and pricing "engine,"
and may be linked to production scheduling systems.
On-time delivery rate - The
percentage of time that products ordered by customers are received by
the specified time or date.
Operating equipment efficiency or effectiveness (OEE)
- The percentage of time that equipment, when running or required
for production, is producing good-quality products at an acceptable
rate. It is the product of three ratios, availability, performance and
quality. OEE equals machine availability as a percentage of scheduled
uptime x quality yield percentage of all products for a given line x
percentage of optimal production rate at which equipment operates.
Order-to-shipment leadtime - The
time from when a specific order is released to the shop floor until
that order is shipped to the customer, including any storage time in
finished goods inventory.
Order-to-delivery leadtime - The
time from when a specific customer order is received by the plant
until product is delivered to customer, including any warehousing,
cross-docking and transportation time.
OSHA-reportable
incident rates - Should
be calculated as the number of injuries (N) divided by total hours
worked by all employees in a calendar year (EH) multiplied by 200,000
(base for 100 equivalent full-time employees working 40 hours per
week, 50 weeks per year): (N divided by EH) x 200,000. A separate
calculation must be made for more serious injuries and illnesses that
result in employees taking time off from their jobs, being transferred
to another job or doing lighter or re-stricted duties..
Operating equipment efficiency or effectiveness (OEE) - The percentage of time that equipment, when running or required
for production, is producing good-quality products at an acceptable
rate. It is the compilation of three ratios: availability, quality and
performance. OEE equals machine availability as a percentage of
scheduled uptime, times the quality yield percentage of all products
for a given line, times percentage of optimal production rate (design
capacity) at which the equipment operates..
Order
fill rate - Annual
sales orders filled completely divided by the total annual number of
sales orders.
Pick-to-ship cycle time - Pick-to-ship
begins when an order is released to be picked from inventory and ends
at the time the order is shipped.
Planning and scheduling technologies - A
variety of software-based advanced planning, scheduling, and
optimization systems.
Poka-yoke - "Fail-safing" techniques to eliminate errors or quality-related
production defects as far upstream in the process as possible.
Example: requiring completed components to pass through a customized
opening to ensure that dimensions do not exceed tolerance limits. Also
includes methods to check equipment operating conditions prior to
making a part. A major objective is to minimize the need for rework.
Predictive maintenance - Practices
that seek to prevent unscheduled machinery downtime by collecting and
analyzing data on equipment conditions. The analysis is then used to
predict time-to-failure, plan maintenance, and restore machinery to
good operating condition. Predictive maintenance systems typically
measure parameters on machine operations, such as vibration, heat,
pressure, noise, and lubricant condition. In conjunction with
computerized maintenance management systems (CMMS), predictive
maintenance enables repair-work orders to be released automatically,
repair-parts inventories checked, or routine maintenance scheduled.
Premium freight - air
or other expedited shipment method that increases the standard cost of
filling a customer order.
Preventive maintenance - Maintenance
activities, often performed by machine operators at regularly
scheduled intervals, to keep equipment in good working condition.
Proactive environmental practices - The
efforts of plant management to adopt, at its own fiscal and
chronological pace, leading-edge environmental practices that reduce
pollutants, emissions, etc., prior to regulatory actions that
necessitate these actions.
Problem-solving methodologies - A
variety of approaches to problem solving, including the Deming Circle
(Plan-Do-Check-Act), used by all persons working in the same team or
organization. Considered fundamental to teamwork.
Process manufacturing - The
manufacture of products such as chemicals, gasoline, beverages, and
food products that typically are produced in "batch" quantities rather
than discrete units. Many process operations require inputs such as
heat, pressure, and time (for thermal or chemical conversion).
Product data management (PDM) - Enabling
software-based systems that link, manage, and organize product-related
data from various sources - both internally and externally with
suppliers - across various computer platforms, divisions, departments,
and geographic locations. PDM incorporates CAD files, manufacturing
data, and documents to reduce engineering design times; ensures timely
access to consistent, up-to-date product information; and improves
information flow and cross-functional communications.
Product-development cycle - Sometimes
called "time to market," this is the period of time from the start of
design/development work to commercial product availability.
Productivity change - The
plantwide change in annual value-added per employee, based on total
employment in the plant, not just direct labor. Value-added should be
calculated by subtracting cost of purchased materials, components, and
services from value of shipments. The Best Plants entry form also
includes a secondary calculation, which many manufacturers prefer to
use: "increase in sales per employee."
Pull
system - A system for controlling work flow and priorities whereby the
processes needing materials (or attention) draw them from the feeding
processes or storage areas as needed, typically using "kanban"
signals - in contrast to "push" systems in which material is processed,
then pushed to the next stage whether or not it is really needed.
Quality function deployment (QFD) - A
customer-focused approach to quality improvement in which customer
needs (desired product or service characteristics) are analyzed at the
design stage and translated into specific product- and process-design
requirements for the supplier organization. Targeted customer needs
may include product features, cost, durability, and other product
characteristics.
Quick-changeover methods - A
variety of techniques, such as SMED (single-minute exchange of dies),
that reduce equipment setup time and permit more frequent setups, thus
improving flexibility and reducing lot sizes and leadtimes.
QS
9000 - A common quality certification program for auto industry
suppliers that includes ISO 9000 as a base-line.
Rapid prototyping - A
variety of techniques for quick conversion of CAD-generated product
designs into useful, accurate physical models, typically using
computer-controlled systems. In the stereolithography approach,
controls based on CAD designs guide laser beams that create precise
plastic models by polymerizing and fusing liquid resins into a
laminated composite of very thin slices.
Raw-materials turn rate - A
measure of asset management that typically is calculated by dividing
the value of total annual shipments at plant cost (for the most recent
full year) by the average raw-material value at plant cost. Plant cost
includes material, labor, and plant overhead.
Real-time feedback - Instantaneous
(or nearly instantaneous) communication of electronically captured
data (typically quality data) to process operators or equipment to
enable rapid or automated adjustments that keep production processes
operating within quality parameters.
Return on invested capital (ROIC) - A
measure of how effectively a company uses the money (borrowed or
owned) invested in its operations. ROIC = net operating profit after
taxes (NOPAT) divided by capital invested (total assets less excess
cash minus non-interest-bearing liabilities). Total assets = fixed
assets + current assets + intangible assets + investments. For plants
that are cost centers, net operating profits after taxes = annual
value of shipments - direct costs, indirect costs, depreciation and
taxes.
Rolled-throughput yield - Also
known as "multiple-point yield," this measure is calculated by
multiplying together quality yield values at various points in a
production process, not only at the end of the line. The purpose is to
make problem areas within a process more visible.
Safety-improvement programs - Practices
intended to constantly improve safety within a plant or across a
company, including, but not limited to, safety teams, safety awareness
programs and communications, safety "days," safety training, and
setting of continuous-improvement goals targeting safety metrics, such
as OSHA incidents or lost-workday rates.
Scrap/rework costs - Parts
or materials wasted in the production process, plus the cost of fixing
defective products so that they pass final inspection.
Self-directed natural work teams - Nearly
autonomous teams of empowered employees, including hourly workers,
that share a common workspace and/or responsibility for a particular
process or process segment. Typically such teams have authority for
day-to-day production activities and many supervisory
responsibilities, such as job assignments, production scheduling,
maintenance, materials acquisition, training, quality assurance,
performance appraisals, and customer service. Often called
"self-managed" work teams. All self-directed teams are empowered.
Shop-floor data collection - Automated
collection of data on factory-production activities, including units
produced, labor hours per unit or customer order, time and date of
specific production activities, and maintenance and quality data.
Six
Sigma - A program that originated at Motorola where the objective is
customer satisfaction through continuous improvement in quality. Six
Sigma means products and processes will experience only 3.4 defects
per million opportunities or 99.99966% good.
Statistical process control (SPC) - Use
of variation analysis, with manual or computerized control charts, to
detect non-normal variations in a process as quickly as possible.
Often, SPC charts display upper and lower limits for part
characteristics or process parameters and show trends over time,
indicating when the limits were exceeded or approached and corrective
actions were needed. In some closed-loop systems, adjustments are made
automatically when readings indicate that a control limit is being
approached.
Supplier JIT deliveries - See
"JIT delivery."
Supplier partnerships - Agreements
with suppliers whereby operations are linked together, information is
openly shared, problems and issues are commonly solved, and joint
performance is mutually approved. They usually include multiyear
purchase agreements.
Supply-chain/logistics systems - A
class of manufacturing software designed to optimize scheduling and
other activities throughout the supply chain - or "value
chain" - including transportation and distribution functions.
Takt time - the optimum frequency at which product should be produced to
meet customer demand, calculated by dividing available work time per
shift by actual customer demand. For example, an 8-hour, one-shift
operation might have 435 minutes of available time (480 minutes minus
two 15-minute breaks and a 15-minute cleanup period). If daily demand
is 1,305 products, then the takt time of the operation would be 20
seconds.
TL
9000 - A quality system certification program developed by the Quality
Excellence for Suppliers of Telecommunications Leadership Forum for
the telecommunications industry. The requirements include the ISO 9000
family of standards as a base-line but add specific performance
metrics and a formal benchmarking mechanism.
Total
cost of quality - The
aggregate cost of poor quality or product failures - including scrap,
rework, and warranty costs - as well as expenses incurred to prevent or
resolve quality problems (including the cost of inspection).
Total
logistics costs - Total
costs for inbound delivery and storage of material and parts, plus the
total cost to store, transport and deliver (and possibly set up)
product to the customer following final manufacture and assembly. That
a manufacturer calculates and monitors such a measure indicates that
management is not only focused on improving efficiencies within the
walls of the factory, but also on the total order-fulfillment process.
Total
productive maintenance (TPM) - A
comprehensive program to maximize equipment availability in which
production operators are trained to perform routine maintenance tasks
on a regular basis, while technicians and engineers handle more
specialized tasks. The scope of TPM programs includes unscheduled
maintenance prevention (through design or selection of easy-to-service
equipment), equipment improvements, preventive maintenance, and
predictive maintenance (determining when to replace components before
they fail).
Total
quality management (TQM) - A
multifaceted, company-wide approach to improving all aspects of
quality and customer satisfaction - including fast response and service,
as well as product quality. TQM begins with top management and
diffuses responsibility to all employees and managers who can have an
impact on quality and customer satisfaction. It uses a variety of
quality tools, such as QFD, Taguchi methods, SPC, corrective-action
response teams, cause-and-effect analysis, problem-solving
methodologies, and fail-safing.
Transitional work program - A
transitional work program offers various options to assist an injured
worker in progressively performing the duties of a targeted job.
Value-added per employee - Calculate
by subtracting cost of purchased materials, components, and services
from value of shipments divided by number of employees. See
"productivity change."
Vendor-managed inventory - Materials,
components or subassemblies managed and replenished by on-site vendors
"resident suppliers" with whom the plant has prearranged purchasing
agreements. The supplier takes responsibility for the availability of
supplies.
Visibility systems - Visual
systems on the plant floor and design areas and elsewhere that enable
anyone familiar with the work to understand its status and condition
at a glance, or to respond to work priorities. This can be done with
standard layouts, signal lights, kanban systems, or other methods. The
distinguishing feature is that communication is rapidly executed by
line of sight.
Voice
recognition/response - Computerized
systems capable of recognizing or synthesizing human voices. Such
systems capture verbalized data for quality-control or
inventory-tracking purposes (often when operators' hands are busy),
recognize spoken commands that activate equipment, and convert
computer data into audible information.
WIP turn rate - A measure of the speed with which work-in-process moves through
a plant. Typically calculated by dividing the value of total annual
shipments at plant cost (for the most recent full year) by the average
WIP value at plant cost.
World-class manufacturer - A
somewhat arbitrary designation that can be supported by performance
results related to various manufacturing metrics. (World-class metrics
may vary from one industry to another.) Typically, it denotes
"best-in-class" producers on a worldwide basis. In the broadest sense,
world-class manufacturers are those perceived to deliver the greatest
value at a given price level.
Work-in-process inventory (WIP) - The
amount or value of all materials, components, and subassemblies
representing partially completed production; and anything between the
raw material/purchased component stage and finished-goods stage. Value
should be calculated at plant cost, including material, direct labor,
and overhead.
Yield improvement- Defined
as the percentage reduction in rejects within a five-year period.
Example: If yield improves from 95% to 98%, that means rejects have
been reduced by 60% - from 5% to 2%. Therefore, yield improvement equals
60%.
