Business Logistics Ch 5

Materials Requirement Planning

insures all the components are obtained on time to make product, usually for more complex manufacturing

Specific stakeholder's expectations for manufacturing

-Sales & Marketing: marketers representing the customer base expect manufacturing to make the product the way the ads perceive it, it's priced appropriately -Design/Development: want manufactures to be flexible for demand, make enough to supply for demand, -Finance: priced correctly -Quality: want manufacturers to make the product right the first time

Manufacturing Strategy: Make To Order

-also a postponement strategy -a manufacturing strategy that typically allows customers to purchase products that are customized to their specifications. Only manufacturers the end product once the customer places the order, creating additional wait time for the consumer to receive the product but allowing for more flexible customization -this strategy relieves the problems of excessive inventory that is common with the traditional MTS strategy. MTS is not appropriate for all product types. It is appropriate for highly configured products like computers, aircraft, cars, or products that are very expensive to keep in inventory

Mass Customization

individually customized products being produced at the low cost of standardized, mass produced goods. OBJECTIVE: increase variety for customer while realizing the cost advantages of high volume continuous and line flow processes and "On Demand", "To Order", "Postponement". EXAMPLES: Dell, M&Ms, Reebok Market Characteristics= dynamic market, unpredictable demand, little impact of regulation (designer drugs) Benefits= increased profit margin from customization, lower costs bc taking advantage of economies of scale, don't have to carry a lot of inventory, Market Exploitation(customers can give you ideas on what the trends are in the market)

Just In Time

purchased materials and components arrive at the manufacturing or assembly point just at the time they are required for the transformation process. Raw material and work in process inventories are minimized. Demand for materials depends on the finalized production schedule. Lot sizes are as low as one unit.

Manufacturing involves the entire process of converting the ____ ________ into _______ _______ and includes

raw material, finished goods the machines used, personnel involved, inventory handling, warehousing, etc

Role of Production in Business is BIG since it is the key element in fulfilling customer's needs. The plan for production has to be developed considering the following:

-Products -Plants -Processes -Programs -People

Manufacturing Strategy: Assemble-To-Order

-a manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent. ATO strategy requires that the basic parts for the product are already manufactured but not yet assembled. One an order is recieved, the parts are assembled quickly and sent to the customer -This is a postponement strategy -ATO is a hybrid strategy between a Make-to-Stock strategy where products are fully produced in advance, and the Make-to-Order strategy where products are manufactured once the order has been received. -The ATO strategy attempts to combine the benefits of both strategies - getting products into customers' hands quickly while allowing for the product to be customizable.

Logistical Interfaces

1. Just in Time 2. Materials Requirements Planning 3. Design for Manufacture: 4. Design for Logistics Interfaces

The 8 Wastes

Defects Overproduction Waiting Non-Utilized Talent Transportation Inventory Motion/Movement Extra-Processing

DMADV Methodology:

Define --> Measure --> Analyze --> Design -->Verify: which is a data-driven quality strategy for designing products & processes. This methodology is used when the company wants to create a new product design or process that is more predictable and defect free.

DMAIC Methodology:

Define --> Measure --> Analyze --> Improve -->Control: which is a data-driven quality strategy for improving products & processes. This methodology is used when the company wants to improve an existing business process. DMAIC is the most widely adopted and recognized Six Sigma methodology in use. It defines the steps a Six Sigma practitioner typically follows during a project.

Design for Manufacture

Design-for-assembly: focuses on minimizing the number of parts and on easing assembly processes Design-for-product-serviceability: focuses on easing the disassembly and reuse of product components Design-for-six sigma: evaluates the consistency with which a good or service can be produced or delivered given the capabilities of the processes used

Manufacturing Process Characteristics

Job Shop: creates a custom product for each customer. High customization Batch: process manufacturers a small quantity of an item in a single production run Line Flow: process has standard products with a limited number of variations moving on an assembly line through stages of production Continuous Flow: used to manufacture items like gas, laundry detergent and chemicals. Inflexible processes. High capital investment. *Modifications of the above can create new options: Mass Customization produces a unique product quickly and at a low cost using a high volume production process

Lean Systems

a philosophy that eliminates waste, focused on the customer, lean emphasizes the minimization of the amount of all resources (including time) used in a company. OBJECTIVE: make product customers want, not what they don't want. Produce quickly, time is waste. Perfect quality. Produce with no waste of labor, materials. Make in small batches bc small batches move through processes more quickly than big batches. Benefits: limit waste, reduce production costs, manufacturing cycle time, labor and inventory

Total Quality Management (TQM)

focused on meeting customer expectations meeting all needs, across all company functions, recognizing all customers both internal and external. It is a total, organization-wide activity vs a technical task. TQM's basic conceptual elements are: -Top Management commitment and support -maintaining a customer focus in product, service and process performance -integrated operations within and between organizations -a commitment to continuous improvement

Design for Logistics Interfaces

incorporates the requirements for logistical support of the product in the early phases of product development. Considers: what we are making, where supplies is coming from, are we using 3rd parties or own operation, etc

Manufacturing Perspectives: Brand Power

measure of customer preference based on reputation, product quality and supply chain capabilities

Manufacturing Management

the management of all the processes involved in manufacturing, aka the conversion of raw materials to finished product (includes the management of personnel, management of raw materials, planning for production, etc)

Manufacturing Perspectives: Lead Time

the measure of elapsed time between release of a work order to the shop floor and completion of all work on the product to achieve ready-to-ship status

Types of Manufacturing Strategies

-Engineer To Order -Make to Order -Assemble to Order -Make to Stock/Make to Plan

Manufacturing Strategy: Engineer-To-Order

-a manufacturing process where the component is designed, engineered, and built to specifications only after the order has been received. (it's a more dramatic evolution of a make to order supply chain -the essence of ETO is building a unique product every time. Probably never gonna make this product again -ISSUE: the cost of poor quality can be very high, quality must be part of the entire process, the warranty costs and the cost of rework to replace an item in a complex assembly can have serious negative effects on profit margins

8 Dimensions of Product Quality:

1. Performance: how well the product performs in comparison to how is was designed to perform (does the toaster actually toast the bread well?) 2. Reliability: does it perform well every time used? 3. Durability: the life expectancy of the product 4. Conformance: does the product meet its specifications as designed (the toaster was supposed to be white, but it's brown. Or it's supposed to have 4 toaster slots but only has 2) 5. Features: what different functions or tasks can the product perform? 6. Aesthetics: the styling, color, workmanship pleasing to the customer 7. Serviceability: what is the ease of fixing or repairing the product of it fails? 8. Perceived Quality: based on customer's experience before, during and after they purchase a product

Total Cost of Manufacturing (aka Total Delivered Cost)

Includes: -Procurement and production activities -Inventory and warehousing activities -Transportation activities -TCM is usually expressed as cost per unit: -Procurement and production costs go down as volume goes up (fixed costs go up when your volume goes up bc you're gonna need to get more equipment, build new facility, etc.) -Inventory and warehousing costs go up as volume goes up -Transportation costs go down as volume goes up, but level off at high volumes

Manufacturing Strategies

companies must develop a manufacturing strategy that suits the types of products that they produce, their customer's expectations, and their strengths -manufacturing strategies can vary significantly depending on the product and customer requirements -developing a manufacturing strategy that suits a company's strengths is essential for establishing and maintaining an effective supply chain

Manufacturing Perspectives: Constraints

interact with volume and variety to create realistic manufacturing plans -capacity is how much can you produce in a given unit of time -equipment considers how flexible it is -is one particular piece a bottleneck? (the "rate limiting" step in the entire process, if you have 10 steps in the process and one step takes longer than the others for example it could limit you to making only 3,000 per day, that's the bottleneck step) So the goal is to limit these constraints to make a steady flow of raw materials going in and coming out as finished goods really easily with no constraints -Setup/Changeover considers how quickly you can change from one variety of product to another

Manufacturing Perspectives: Variety

involved frequent product runs and high repetition of small lot sizes. Processes that can rapidly switch production from one product to another while retaining efficiency are said to have "economy of scope": the more they make, the bigger the scope is and the more people you can reach

Manufacturing Perspectives: Volume

treated according to the principle of economy of scale. Average cost to produce product declines as manufacturing volume increases aka the more you make, the less $$$ it will cost. Particularly important when high fixed costs are present

Manufacturing Strategy: Make To Stock

-means to manufacture products for stock based on demand forecasts, which is a push system. Since accuracy of the forecasts will prevent excess inventory and opportunity loss due to stockout, the critical issue is how to forecast demands accurately -MTS is like a train schedule (supply schedule) for which the number of passengers (forecast demand) for each time period can be determined from the past data. Most daily necessities like processed food, toothpaste, etc are MTS products -Issue of MTS: they have a lot of excess inventory. Companies struggle to make the correct product at the correct time in the correct quantities. Bc they'd rather have too much than not enough

Six Sigma Quality Concepts:

-six sigma: approach is to identify sources of variability and then systematically reduce them. Get to the "root cause" -The six sigma goal is to achieve a process standard deviation that is six times smaller than the range of outputs allowed by the product's design specification -Six Sigma has two key methodologies that provide a systematic approach to eliminating defects and keeping the process in control: DMADV Methodology and DMAIC Methodology

ISO Certified Suppliers are Frequently preferred by Procurement Departments because:

-they have to conform to an externally defined set of standards for quality and delivery of service -they are usually more open to sharing supply chain information -they welcome building relationships with their customers because they have formal processes in place for continuous improvement, they're easier for procurement to initially qualify and periodically audit because ISO recertifies them every 3 years