CPIM Module 1: Manufacturing Strategies, KPIs, and Metrics

Remanufacturing

1) An industrial process in which worn-out products are restored to like-new condition. In contrast, a repaired product normally retains its identity, and only those parts that have failed or are badly worn are replaced or serviced. 2) The manufacturing environment where worn-out products are restored to like-new condition.

Job Shop

1) An organization in which similar equipment is organized by function. Each job follows a distinct routing through the shop. 2) A type of manufacturing process used to produce items to each customer's specifications. Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general-purpose equipment.

b) Make-to-order Rationale: In a make-to-order production environment, a good or service can be made after receipt of a customer's order.

A chemical company waits to manufacture batches of products until customers place orders, due to the products' shelf life. This is an example of which of the following production environment strategies? a) Assemble-to-order b) Make-to-order c) Engineer-to-order d) Make-to-stock

Functional Layout

A facility configuration in which operations of a similar nature or function are grouped together; an organizational structure based on departmental specialty.

Key Performance Indicator (KPI)

A financial or nonfinancial measure that is used to define and assess progress toward specific organizational goals and typically is tied to an organization's strategy and business stakeholders.

Intermittent Production

A form of manufacturing in which the jobs pass through the functional departments in lots, and each lot may have a different routing

Flow Shop

A form of manufacturing organization in which machines and operators handle a standard, usually uninterrupted, material flow. The operators generally perform the same operations for each production run.

a) Balanced scorecard Rationale: The balanced scorecard can be used to evaluate organizational or supply chain performance. The SCOR model is tailored specifically to supply chain management, which is part of the organizational processes, but would not give a clear picture of overall performance. The United Nations Global Compact and blockchain are not tools tailored to tracking KPIs.

A large organization that maintains manufacturing, distribution, marketing, and retail operations wants to track key performance indicators (KPIs) to measure overall organizational performance. Which tool would be best suited for the desired tracking? a) Balanced scorecard b) SCOR model c) United Nations Global Compact d) Blockchain

Balanced Scorecard

A list of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions of which might include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives. It formally connects overall objectives, strategies, and measurements. Each dimension has goals and measurements.

Cellular Manufacturing

A manufacturing process that produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell.

a) A flow shop Rationale: In a flow shop, the machines and the operators process a standard, uninterrupted material flow. The same operations are performed for each production run. The layout is designed to facilitate a product flow.

A mass production shop with a continuous layout where products follow the same process is also known as: a) A flow shop b) A job shop c) Discrete d) Intermittent

Postponement

A product design, or supply chain strategy that deliberately delays final differentiation of a product (assembly, production, packaging, tagging, etc.) until the latest possible time in the process. This shifts product differentiation closer to the consumer to reduce the anticipatory risk of producing the wrong product. The practice eliminates excess finished goods in the supply chain. Sometimes referred to as delayed differentiation.

Package-to-Order (PTO)

A production environment in which a good or service can be packaged after receipt of a customer order. The item is common across many different customers; packaging determines the end product.

Continuous Production

A production system in which the productive equipment is organized and sequenced according to the steps involved to produce the product. The routing of the jobs is fixed and setups are seldom changed.

Production Line

A series of pieces of equipment dedicated to the manufacture of a specific number of products or families.

a) Repetitive Rationale: Repetitive manufacturing is dedicated to a single product or a small range of products, where products are passed through the same sequence of operations.

A vehicle assembly plant would be classified as which type of manufacturing process? a) Repetitive b) Continuous c) Batch d) Job

Assembly Line

An assembly process in which equipment and work centers are laid out to follow the sequence in which raw materials and parts are assembled.

a) Postponement Rationale: Product differentiation as a strategy seeks to create unique product characteristics or selling points that differ from those of competitors. Postponement, a subtype of an assemble-to-order production environment, is a product design or supply chain strategy that deliberately delays final differentiation (assembly, production, packaging, tagging, etc.) until the latest possible time in the process. This shifts product differentiation closer to the consumer to reduce the anticipatory risk, eliminating excess inventory in the form of finished goods in the supply chain. Note that neither decoupling nor cellular layouts are terms that refer to a production environment.

An organization is pursuing a product differentiation strategy. Which is a production environment that could accommodate this strategy while also minimizing related inventories of components and/or finished goods? a) Postponement b) Cellular layout c) Decoupling d) Make-to-Stock

Product Layout

Another name for flow process layout. A system that is set up for a limited range of similar products. Focused-factory production is also considered to be in this category.

b) Design, purchase, manufacture, assemble, ship Rationale: Delivery lead time is the time from the receipt of a customer order to the delivery of the product. Since this is engineer-to-order, the receipt of the order would initiate the design phase.

Delivery lead time in an engineer-to-order environment includes which of the following elements? a) Assemble, ship b) Design, purchase, manufacture, assemble, ship c) Purchase, manufacture, assemble, ship d) Manufacture, assemble, ship

Work Cell

Dissimilar machines grouped together into a production unit to produce a family of parts having similar routings.

d) Each customer order results in a unique set of part numbers, bills of material, and routings. Rationale: With engineer-to-order products, customer specifications require unique engineering design, significant customization, or new purchased materials. Each customer order results in a unique set of part numbers, bills of material, and routings.

How does an engineer-to-order product differ from products in other production strategies? a) Once the product is designed, it is typically sold as a standard product offering. b) The demand lead time is comparable to that for assemble-to-order products. c) It is produced upon receipt of the customer order. d) Each customer order results in a unique set of part numbers, bills of material, and routings.

c) Each work center must be flexible. Rationale: The advantage to a functional layout is that equipment can handle a wide variety of products. Capital costs generally are higher for a product layout, not a process layout. Dedicated equipment is used in a process layout, hence its relative inflexibility. There tends to be more WIP inventory in a process layout because, unlike in a product layout, workflow is lumpy because of varying batch sizes and non-standard routings.

In a functional layout, a) Capital costs are higher than in a product-based layout. b) Specialized equipment is used. c) Each work center must be flexible. d) There is little buildup of WIP inventory.

Performance Standard

In a performance measurement system, the accepted, targeted, or expected value for the criterion.

d) There is little build-up of work-in-process (WIP) inventory. Rationale: There is little build-up of WIP inventory in a product layout. The other answers are incorrect because workstations are located in a line formation for a product layout; work tends to flow at a regular rate in a product layout; and product layouts are not flexible enough to handle more than a limited variety of products.

In a product-based layout, a) A wide variety of different products can be produced. b) Workflow is lumpy. c) Work centers are located according to equipment type. d) There is little build-up of work-in-process (WIP) inventory.

Flow Processing

In process systems development, work flows from one workstation to another at a nearly constant rate and with no delays. When producing discrete (geometric) units, the process is called repetitive manufacturing; when producing non-geometric units over time, the process is called continuous manufacturing.

Modularization

In product development, the use of standardized parts for flexibility and variety. Permits product development cost reductions by using the same item(s) to build a variety of finished goods. This is the first step in developing a planning bill of material process.

d) Total time required to manufacture an item, exclusive of lower-level purchasing lead time. Rationale: Manufacturing lead time represents the total time required to manufacture an item, exclusive of lower-level purchasing lead time. For make-to-order products, it is the length of time between the release of an order to the production process and shipment to the final customer. For make-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Included are order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time.

Manufacturing lead time represents the: a) Time from the receipt of a customer order to the delivery of the product. b) Total lead time required to obtain a purchased item. c) Longest planned length of time to accomplish the activity in question. d) Total time required to manufacture an item, exclusive of lower-level purchasing lead time.

U-Lines

Production lines shaped like the letter "U." The shape allows workers to easily perform several nonsequential tasks without much walk time. The number of workstations in a U-line is usually determined by line balancing. U-lines promote communication.

Nesting

The act of combining several small processes to form one larger process.

Supplier Lead Time

The amount of time that normally elapses between the time an order is received by a supplier and the time the order is shipped.

Mass Customization

The creation of a high-volume product with large variety whose manufacturing cost is low due to the large volume, allowing customers to specify an exact model out of a large volume of possible end items. An example is a personal computer order in which the customer specifies processor speed, memory size, hard disk size and speed, removable storage device characteristics, and many other options when PCs are assembled on one line and at low cost.

Gantt Chart

The earliest and best-known type of planning and control chart, especially designed to show graphically the relationship between planned performance and actual performance over time.

Discrete Manufacturing

The production of distinct items such as automobiles, appliances, or computers.

Components

The raw material, part, or subassembly, compound, or other item. This term may also include packaging materials for finished items.

Repetitive Manufacturing

The repeated production of the same discrete products or families of products. This method minimizes setups, inventory, and manufacturing lead times by using production lines, assembly lines, or cells. Work orders are no longer necessary; production scheduling and control are based on production rates. Products may be standard or assembled from modules. It is not a function of speed or volume.

Manufacturing Process

The series of operations performed upon material to convert it from the raw material or a semi finished state to a state of further completion. Manufacturing processes can be arranged in a process layout, product layout, cellular layout, or fixed-position layout. They can be planned to support MTS, MTO, ATO, and so forth based on strategic use and placement of inventories.

Manufacturing Philosophy

The set of guiding principles, driving forces, and ingrained attitudes that helps communicate goals, plans, and policies to all employees and that is reinforced through conscious and subconscious behavior within the manufacturing organization.

Supply Chain Operations Reverence (SCOR)

The standard cross-industry diagnostic tool for supply chain management. This model describes the business activities associated with satisfying a customer's demand, which include plan, source, make, deliver, return, and enable. Use of the model includes analyzing the current state of a company's processes and goals, quantifying operational performance, and comparing company performance to benchmark data.

Procurement Lead Time

The time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials. Lead time begins when a decision has been made to accept an order to produce a new product and ends when production commences.

Purchasing Lead Time

The total lead time required to obtain a purchased item. Included here are order preparation and release time; supplier lead time; transportation time; and receiving, inspection, and put-away time.

Manufacturing Lead Time

The total time required to manufacture an item, exclusive of lower-level purchasing lead time. For make-to-order products, it is the length of time between the release of an order to the production process and shipment to the final customer. For make-to-stock products, it is the length of time between the release of an order to the production process and receipt into inventory. Included are order preparation time, queue time, setup time, run time, move time, inspection time, and put-away time.

Project Management

The use of skills and knowledge in coordinating the organizing, planning, scheduling, directing, controlling, monitoring, and evaluating of prescribed activities to ensure that the stated objectives of a project, manufactured good, or service are achieved.

Fixed-Position Manufacturing

This type of manufacturing is mostly used for large, complex projects where the product remains in one location for its full assembly period or may move from location to location after considerable work and time are spent on it.

d) Slow decision making Rationale: Tracking too many KPIs can complicate tracking and slow decision making down. Measuring KPIs should not affect production times. Goals not being tracked and or oversimplification of performance are risks of tracking too few KPIs.

What is the risk posed to an organization by measuring too many key performance indicators (KPIs)? a) Oversimplification of performance b) Slower production times c) Goals not being tracked d) Slowed decision making

d) Operational metrics Rationale: Operational metrics relate to daily work. Tactical metrics relate to intermediate-term goals to support the strategic plan. Strategic metrics relate to the long-term goals of a business. Although sustainability can be measured, it is not necessarily associated with daily operations.

Which is a category of performance measures that relates to daily work routines, such as cycle time and utilization? a) Strategic metrics b) Tactical metrics c) Sustainability metrics d) Operational metrics

a) Reduced material movement Rationale: Work cells can result in reduced material movement, or reduced waste, because workstations are placed together in a flow production system. The other options are incorrect because the cellular layout does not necessarily influence the use of the machine; work cells result in smaller batches; and workers in a cell need to be cross-trained to perform more than one function.

Which is an advantage of work cells? a) Reduced material movement b) Larger batches and lower unit costs c) Reduced requirements for worker skills d) Maximum machine use

b) Make-to-Order Rationale: According to the APICS Dictionary, a make-to-order manufacturing environment is one in which "a good or service can be made after receipt of a customer's order. The final product is usually a combination of standard items and items customed-designed to meet the special needs of the customer." In the question's example, the hydraulic press would include standard components as well as special components specific to the needs of the customer.

Which of the following is the most likely manufacturing environment for an industrial hydraulic press? a) Assemble-to-Order b) Make-to-Order c) Make-to-Stock d) Engineer-to-Order

b) Engineer-to-order Rationale: In an engineer-to-order environment, customer specifications for products require unique engineering design and significant customization. The customer is usually very involved in the product design. With assemble-to-order, the product can be assembled after receipt of a customer's order; with make-to-order, the product is manufactured using a combination of standard items and custom-modified items after receipt of a customer's order; and, with make-to-stock, products are usually finished based on forecasts before receipt of a customer order.

Which of the following manufacturing strategies is most appropriate when the customer is heavily involved in the product design? a) Assemble-to-order b) Engineer-to-order c) Make-to-order d) Make-to-stock

d) Cellular manufacturing Rationale: Cellular manufacturing is a process that produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell. The ease of changeover makes it ideal for high-variety, low-volume products. The other answers are incorrect, as they refer to processes that are more specialized or less flexible and thus unsuited for this purpose.

Which of the following methods often is employed to make high-variety, low-volume manufacturing operate in a repetitive mode? a) Flow manufacturing b) Process layout c) Project production d) Cellular manufacturing

c) Intermittent Rationale: Intermittent production is a form of manufacturing in which the jobs pass through the functional departments in lots and each lot may have a different routing. Meanwhile, flow is a form of manufacturing in which work flows from one workstation to another in a nearly constant rate and with no delays. Project production is a manufacturing process in which each unit or small group of units is managed by a project team created especially for that purpose. Repetitive manufacturing consists of the repeated production of the same discrete products of families of products.

Which of the following terms refers to a form of manufacturing in which the jobs pass through the functional departments in lots and each lot may have a different routing? a) Project b) Flow c) Intermittent d) Repetitive

a) Operational Rationale: Operational metrics measure the immediate short term on an hourly or daily basis and should be monitored in real time whenever possible to determine operational issues that are having the most impact on the business.

Which type of metrics should be tracked in real time whenever possible? a) Operational b) Financial c) Tactical d) Strategic