CSM Operations & Supply Chain Management Flashcards

What is the primary focus of lean management?

Answer: Eliminating waste and creating more value for customers with fewer resources

Lean management focuses on identifying and eliminating non-value-adding activities (waste) throughout a process to deliver maximum value to customers efficiently.

Which supply chain metric measures the average number of days a company takes to convert inventory into revenue?

Answer: Days inventory outstanding (DIO)

Days Inventory Outstanding (DIO) measures how many days on average a company holds inventory before it is sold, indicating inventory management efficiency.

The 'just-in-time' (JIT) inventory system is designed to:

Answer: Receive goods only as they are needed in the production process to minimize inventory costs

JIT reduces inventory holding costs and waste by scheduling the arrival of materials and components precisely when they are needed in the production process.

What does 'vertical integration' mean in supply chain strategy?

Answer: A company owning and controlling multiple stages of its supply chain

Vertical integration occurs when a company acquires or develops capabilities across different stages of its supply chain, such as owning suppliers or distribution channels.

In operations management, 'process capability' refers to:

Answer: The ability of a process to produce output within specified quality limits consistently

Process capability measures how well a process can produce outputs that meet specifications, typically expressed as Cp or Cpk indices comparing variation to tolerance limits.

Which approach to quality improvement focuses on reducing variation and defects to 3.4 defects per million opportunities?

Answer: Six Sigma

Six Sigma uses statistical methods and a structured DMAIC or DMADV methodology to reduce process variation to achieve near-perfect quality at 3.4 defects per million opportunities.