chapter 3

make to stock

- products that require no customization - typically generic products and are produced in large enough volumes to justify keeping a finished goods inventory - items you buy off a shelf

make to order

- products that use standard components but have customer specific final configuration of those components - have some limits on what customer can order - ex: nike customer shoes

service positioning

- service operations compete and position themselves in the marketplace based on the three dimension; nature of the service package, degree of customization, degree of customer contact

product process matrix

- starting point - want to stay away from process inefficient and process to inflexible - dotted line is ideal - y axis: manufacturing processes - x axis: variability in production volumes

when customization occurs early in the supply chain

- takes longer to get to the customer - usually more expensive

back room

- the part of the service operation that is completed without direct customer contact

front room

- the physical or virtual point where the customer interfaces directly with the service organization

fixed-position layout

- the position of products is fixed - materials, equipment and workers are transported to and from the product - where you are bringing everything to where you are building that product - ex: a bridge

job shop

- used to make a wide variety of high customized products in quantities as small as one - characterized by general purpose equipment and workers who are broadly skilled - handful of products at a time - harder to plan for - ex: machine shop, hospital, bank

production line/assembly

- used to produce a narrow range of standard items with identical or highly similar designs - advantages: lower var. cost/ unit; lower but more specialized labor skills; easier production planning and control; higher equipment utilization - disadvantages: lower product flexibility; more specialized equipment; usually higher capital investment

product based layout

-resources are arranged sequentially, according according to the steps required to make the product - where everything is set up in steps - ex: build a bear

service processes

three dimensions on which services can differ - the nature of the service package - the degree of customization - the level of customer contact

assemble to order

- products that are only customized at the very end of the manufacturing process - you mix different components at the last minute - ex: paint color

service package

- a package that includes all the value added physical and intangible activities that a service organization provides to the customer

functional layout

- a type of layout where resources are physically grouped by function - similar groups of machines are put together

continuous flow process

- closely resembles a production line process - the main difference is the form of the product, which usually cannot be broken into discrete units - product based layout - not a lot of variety - cannot see where one items starts and ends - ex: yarn and fabric, food products, chemical products like oil or gas, paint

questions to ask when selecting manufacturing processes

- design - are products similar (sub or salad) - production volume - customization (generic or MTO)

when customization occurs late in the supply chain

- don't have as much flexibility - product is cheaper - lead times are shorter --> go to store and immediately buy

customer contact

- front room - back room

batch manufacturing

- items are moved through the different manufacturing steps in groups or batches - making a lot of the same product at one time - ex: making all the same t-shirts in size small, then making them all in medium

product customization within the supply chain

- make to stock (MTS) - assemble to order (ATO) - make to order (MTO) - engineer to order (ETO)

introduction

- manufacturing and service processes are very important to firms because • expensive and far reaching • different processes have different strengths and weaknesses

hybrid manufacturing process

- manufacturing processes that seeks to combine the characteristics, and hence the advantages of more than one of the classic process - ex: machine centers, group technology, flexible manufacturing systems

manufacturing processes

- product-based layout - functional layout - continuous flow processes - production line/assembly - batch manufacturing - job shop - fixed position layout

servie approaches

- production line approach (no customization) (McDonalds) - self service approach (ATM) - personal attention approach

engineer to order

- products that are designed and produced from the start to meet unusual customer needs or requirements - highest level of customization - ex: new house

where does customization occur in the supply chain?

ETO --> design --> sourcing material --> MTO --> fabrication --> ATO --> assembly/finishing --> MTS --> distribution