dr akarte nitie perspectives in manufacturing management

18
11/17/2011 1 National Institute of Industrial Engineering Mumbai 400 087 Maharashtra By Dr. Akarte Milind M. Associate Professor, IE Group Perspectives In Manufacturing Management Objective: To understand: Role of manufacturing Linkages between different Decision Areas in Manufacturing. The manufacturing capability

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Page 1: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

1

National Institute of Industrial Engineering

Mumbai – 400 087 Maharashtra

By

Dr. Akarte Milind M.Associate Professor, IE Group

Perspectives In

Manufacturing Management

Objective:

• To understand:

• Role of manufacturing

• Linkages between different Decision Areas in

Manufacturing.

• The manufacturing capability

Page 2: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

2

Contents:

Manufacturing:

As an Important function

Environments & Production Systems

Outputs

Subsystems/Decision Areas in Value Chain

Layouts Lead Time Inventory, TCO Concurrent Product Design

Business Strategy

Finance

Business strategy of a firm =

Sum of individual strategies of its component functions

Ex: finance, manufacturing, marketing, product

development, service, etc

Company Business Strategy

Product Development

Manufacturing

Marketing Service

Page 3: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

3

Introduction

• In successful firms all functional strategies

– Must be interlock for maximum competitive advantage –

– That is -

• No function is left out and no function dominates

• In sum firms the business strategy is dominated by non-manufacturing function

– Result – “throw over the wall” to manufacturing

Manufacturing Techniques

• A variety of new techniques and technologies are introduced –such as”

√ Concurrent Engineering, DF “x”

√ Benchmarking

√ Standardization

√ Cycle time reduction

√ CAD, CAM. CAE, PDM, SCM, CRM, ERP

• Each presented as a way of dramatically improve manufacturing capability.

Six Sigma

TQM

FMS

JIT

AGV

Page 4: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

4

Why Manufacturing Is Important?

• Manufacturing Changes slowly

– Take long time to –

• Build facilities

• Develop new suppliers

• Change operating procedures

• Train personal

• While – Customer requirements changes quickly – as

• New products appears

• Technology changes

• Economic conditions fluctuates

• New competitors emerges

• Changes in government regulations

Why Manufacturing Strategy?

Slow movement of manufacturing

function

Fast changing marketplace

Need to be aligned

This needs – Manufacturing to take number of decisions

Page 5: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

5

Why Manufacturing Strategy?

• When Formal Manufacturing strategy exists:

– Decisions follow a neat logical pattern

• When No Manufacturing strategy exists:

– Pattern of decisions is erratic and unpredictable

• Hence – Objective of MS is

– To understand how manufacturing decisions to be made

– To provide long term competitive advantage.

MS – Process Formulation Consideration

• Process of formulating MS should consider the following:

– Take into account customer requirements

– Take into account competitors

– Take into account manufacturing capabilities

– Consider all options available to manufacturing

– List the outputs that the manufacturing will provide and

specify them.

Page 6: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

6

Key Points for successful Strategy

• The firm must know where it will specifically attack in market

(product or region) and then must focus its resources and

capabilities to succeed.

• The firm must anticipate other competitors and defend the

same - once it has made an attack on a particular market

segment

• Equally, The firm must know where it will not attack and stay out

of the dangerous area in which it cannot compete.

• Everybody in the organization must know and understand the

strategy

Choosing Market Segment

The firm matches market requirements with its present or future (by strategic search) and attack the appropriate market segments and avoid others. Market segments may be defined in terms of geographical area, or by

product grouping

Avoid Avoid

Avoid

Avoid

Avoid

Attack

Attack

Attack

Page 7: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

7

Functional Layout• Equipment of same type grouped together in same department

• Example – machine shop

• Lathe in one department, drilling, Grinding, Milling, in another

• Operator work in one department - highly skilled in the area of work

• Equipment, tooling are of general purpose and capable of performing wide range of work

L L

L L

M M

M M

G G

G G

D D

D D

line Layout

• One line of different equipment for each product or family

• Equipment / tooling are customized for the product features

• Used when volume is large to justify the large investment in customized equipment and tooling

• Operator perform simple tasks as most of the work is performed by the machine.

L M

D

L M

D

M

L G

D

G

L D

M

D

M

Page 8: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

8

Cellular Layout

• Different equipment/processes are located in the same department

• Department is also called “cell”

• Worker flexible to operate all equipment in the cell

• One cell for each product family

• Equipment, tooling are of general purpose and capable of performing wide range of work - but often specialized to range of requirements.

L M

D G

M L

G D

G L

D M

D L

G M

16

Manufacturing Environment

Manufacturing Environment

• Engineer to Order (ETO)

• Make to Order (MTO)

• Assemble to Order (ATO)

• Make to Stock (MTS)

Page 9: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

9

Pro

du

ct V

arie

ty

Product Volume High

Engineer-to-Order

Make-to-Order

Assemble-to-Order

Make-to-Stock

High

Low

Low

Manufacturing Environment

18

Manufacturing and Lead Time

The definition of Lead Time is:

“ The time that is required to process a customer order from order entry through shipping the product to the customer”.

Start Finish

Lead Time

Page 10: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

10

Manufacturing and Lead Time

What are the components of lead time?

20

Manufacturing and Lead Time

Components of Lead Time

• Product development (design) lead time

• Sourcing (procurement) lead time

• Manufacturing (production) lead time

• Assembly & testing lead time

• Order processing lead time

• Distribution lead time

• Other (ex, decision making, coordination)

Page 11: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

11

Manufacturing EnvironmentEngineer-to-Order

<------------------ Customer Delivery Lead Time -------------------->

Design Purchase Manufacture Assemble Pack and

Ship

Customer Order

Manufacturing Environment

<---------- Customer Delivery Lead Time ------------------>

Stock standard Parts as

Inventory

Purchase Manufacture Assemble Pack and

Ship

Customer Order

Make-to-Order

Design

Page 12: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

12

Manufacturing EnvironmentAssemble-to-Order

Delivery Lead Time ->

Stock standard Parts as

Inventory

Purchase ManufactureFinal

Assemble Pack and

Ship

Customer Order

Design

Manufacturing Environment

Make-to-Stock

Delivery

Lead Time ->

Stock as Inventory

Purchase Manufacture Assemble Pack and

Ship

Customer Order

Design

Page 13: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

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• Seven Production System can be grouped into:• Craft production

– Job shop production system (JSPS)– Batch flow production system (BFPS)

• Mass production– Operator paced line flow production system (OPLFPS)– Equipment paced line flow production system (EPLFPS)– Continuous Flow production System (CFPS)

• Lean production system– JIT production system– FMS production system

• Broad classification is enough for many purposes, but for precious decision like manufacturing strategy detailed classification essential.

Production Systems

Order Qualifiers and Order Winner

• Order qualifiers: - minimum requirement

– Generally – supplier must meet set of minimum requirements to be consider a viable Competitor in the market place.

– Customer requirements may be based on price, quality, delivery, etc.

– Order qualifiers can bring the firm in competition but may or may not provide business

– Example – for the supplier to be considered.

– the price for a certain type of product must fall within a range

– to become a supplier, firm must have ISO 9000 certification

Page 14: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

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Order Qualifiers and Order Winner

• Order Winner:

– But, being considered does not mean winning the order,

– That is - for Order Winner – firms must need to be better than competitor.

– To win orders a supplier must have characteristics that encourage customers to choose its product and services over competitor

– Those competitive characteristic that persuade customer to choose product / service are called order winners.

Inventory Management

• Inventory models

– Mathematical formula for economical solution – applicable in different paradigm

– Objective –» How much to order and » When to order

» Subject To:• To minimize inventory costs

• Costs of ordering inventory• Cost of carrying inventory

• To achieve satisfactory levels of customer service

Fundamental Inventory Decisions

Page 15: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

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Need

• Can 100 % service on all item be given?

• Then how many items?

– High Service level – high safety stock – high cost of inventory – low profit

• Can we afford stock out on some item

– Too many stock out on too many items

– Over a period – reputation – company value

• Design a system

– 95 % service level on some item

– 85 – 95 % Majority of stocks

– 60 – 85 % on slow moving & high cost items

Types of Inventory

1. Raw materials - Purchased parts

2. Work-in-process (partially completed) products (WIP)

3. Finished goods

4. Maintenance, Repair and Operating (MRO)

Page 16: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

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Inventory Positions in the Supply Chain

Raw

Materials

Works

in

Process

Finished

Goods

Finished

Goods

in Field

Reducing amounts of raw materials, purchased parts and

subassemblies by having suppliers deliver them directly.

Reducing the amount of works-in process by using just-in-

time production.

Reducing the amount of finished goods by shipping to

markets as soon as possible.

Right & wrong reasons for carrying inventory

• The right reasons for carrying inventory

– Support production requirements – WIP

– Support operational requirement – MRO

– Support customer service requirements

– Hedge against market place uncertainties

– Take advantage of quantity discounts

• The wrong reasons for carrying inventory

• Poor quality and material yield

• Unreliable supplier delivery

• Extended buyer-supplier order cycle time

• Inaccurate or uncertain demand forecast

• Specifying custom item for standard application

• Extended material in pipelines

• Insufficient manufacturing processes

Forecasting inaccuracies

Inconsistent logistic

Supply chain variability

Demand variability

Uncertainty

Greater safety stock

More inventory costs

Page 17: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

17

Manufacturing Issues Related to

Inventory Management

Manufacturing Type – ETO, MTO, ATO, MTS Layouts - Functional, Line, Cellular Manufacturing Systems – Job, Batch, Mass Production Batch Size influence on WIP Understanding Capacity Analysis / Bottleneck Concept Purchase / Supplier Related Issues Inventory in Supply Chain

Advantage of Small Batch• Alternative 1

• Batch size = 100 units

• Batch completed after = 3000 min

Batch 1

Batch 1

Batch 1

Batch 1

Batch 1

Batch 1

1

2

3

4

5

6

0 500 1000 1500 2000 2500 3000

Machin

es

Elapsed Time in Minute

B1 B2

B1 B2

B1 B2

B1 B2

B1 B2

B1 B2

1

2

3

4

5

6

0 500 1000 1500 2000 2500

Machin

es

• Alternative 2• Batch size = 50 units• Batch completed after = 1750

min

Page 18: Dr Akarte NITIE Perspectives in Manufacturing Management

11/17/2011

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• Functionality• Aesthetics• Ergonomics• Energy efficiency• Maintenance• Manufacturability• Easy of assembly• Ease of testing• Ease of handling• Ease of packaging• Eco-friendly

The above are clubbed as Design for X or simply DFX

Castability

Machaniability

Moldability

Weldability

Formability

……

Sand

Shell

Investment

Gravity Die

……

Design for ‘x’