Ch 5 Manufacturing

Mass Customization Product/Process Characteristics:

-Modular or adjustable *product building blocks* -Predictable components/functions interactions -Standardized process/skill building blocks -Reasonable lead times, steps, work content

Unnecessary steps in a process. Redundancies between processes. More work or higher quality than required by the customer

Extra-Processing

There are four distinct layout strategies

Fixed Position Layout Process Layout Product Layout Cellular Layout

What is the ease of fixing or repairing the product if it fails

Serviceability

Design for Manufacture

Design for assembly Design for product serviceability Design for six sigma

Issues with make-to-order

The MTO strategy relieves the problems of excessive inventory that is common with the traditional Make-to-Stock strategy. MTO is not appropriate for all types of products. It is appropriate for highly configured products such as computer servers, aircraft, ocean vessels, bridges, automobiles, or products that are very expensive to keep in inventory.

Total Cost of Manufacturing

Total Cost of Manufacturing (TCM) includes: 1. Manufacturing and Procurement activities 2. Inventory and warehousing activities 3. Transportation activities

ISO 19011:2011

Guidance on internal and external audits of quality management systems

Based on customer's experience before, during and after they purchase a product

Perceived quality

Volume

Traditionally treated according to the principle of economy of scale -Average cost to produce product declines as manufacturing volume increases -Particularly important when high fixed costs are present

Unnecessary movement of materials or products

Transportation

Involves 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*

Variety

Elapsed time between processes when no work is being done

Waiting

Materials Requirements Planning (MRP) Interfaces

-Procurement has a key role in insuring all the components are obtained on time to make an end item --Key information requirement is the Bill of Materials (BOM) -Particularly for more complex manufacturing .(i.e., MTO, ETO) where large numbers of components or subassemblies are used to produce a final product --Planning sometimes spans multiple manufacturing locations

Benefits of Mass Customization

-Profits -Lower cost -Inventory -Market exploitation

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

Assemble-to-Order (ATO)

A manufacturing strategy where products ordered by customers are produced quickly and are custommizable to a certain extent. The ATO strategy requires that the basic parts for the product are already manufactured but not yet assembled. Once an order is received, the parts are assembled quickly and sent to the customer.

Total quality management

A philosophy focused on meeting customer expectations with respect to all needs, across all company functions, and recognizing all customers, both internal and external It is a total *organization-wide* activity versus a technical task

_____ 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.

ATO; 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

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

Brand Power

Manufacturing Vision

Brand Power Volume Variety Constraints Lead Time

Fixed Position Layout

Used when a product cannot be moved during production. Processes are moved to the product. -Typically used for producing large products such as ships, airplanes, and spacecraft. [Buildings and Houses] -The fixed nature of the layout creates a *challenge in the timing and sequencing* of different tasks. Project process and ETO/MTO

What different functions or tasks can the product perform

Features

Design-for-Product-Serviceability

Focuses on easing the disassembly for repair, replacement, and reuse of product components

Design-for-Assembly

Focuses on minimizing the number of parts and on easing the assembly process

Cellular Layout

Group items based on similar processing characteristics and arrange workstations to form a number of small assembly lines called work cells -Identify products that have similar processing requirements, called product families. -Each work cell can be dedicated to make a product family Batch process/line process MTO/ATO/MTS

Line Process

Has standard products with a limited number of variations moving on an assembly line through stages of production Product variety: Limited Volume: high Strategy: ATO/MTS Customer lead time: short

Analyze

Identify the cause of the problem Why, when and where fo the defects occur?

Improve

Implement and verify the solution How can we fix the process?

Mass Customization: What Is It?

Individually customized products being produced at the low cost of standardized, mass produced goods. Mass customization produces a unique product quickly and at a low cost using a high volume production process Objective Increase variety for customer while realizing the cost advantages of high volume continuous and line flow processes "On-Demand", "To Order", "Postponement", "Agile Mfg" Examples: Dell, M&M's, Reebok

ISO 14000—International Environmental Standard

Intended to assist organizations to manage the *environmental effects* of their business practices. Deal with how a company manages the environment *inside it's facilities* and the *immediate outside environment* Call for analysis of the entire *life cycle of a product*, from raw material to eventual disposal. They *do not mandate a particular level of pollution* or performance, but focus on awareness of the processes and procedures that can effect the environment. Adherence to the ISO 14000 standards *does not release* a company from any national or local regulations regarding specific performance issues regarding the environment.

Based on these characteristics, manufacturing processes can be grouped into two broad categories:

Intermittent Processes .- used to produce a large variety of products with different processing requirements in lower volumes. Repetitive processes.- used to produce one, or a few, standardized products in high volumes.

What processes would you do for intermittent? Repetitive?

Intermittent: Project process, batch process Repetitive: Line process, continuous process

Logistical Interfaces: 4 approached to achieve

Just-in-Time (JIT) Materials Requirements Planning (MRP) Design for Manufacture (DFM) Design for Logistics (DFL)

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

Lead Time

Production before it is needed, or in excess of customer requirements. Providing a service that is not needed.

Overproduction

Wages and Salaries Safety and training Working Conditions Leadership and motivation Unionization Communication

People

How well the product performs in comparison to how it was designed to perform

Performance

Primary Objectives of Lean Systems

1. Produce only the products that customers want 2. Produce products only as quickly as customers want them 3. Produce products with perfect quality 4. Produce in the minimum possible lead times 5. Produce products with features that customers want and no others 6. Produce with no waste of labor, materials or equipment; designate a purpose for every movement to leave zero idle inventory. 7. Produce with methods that reinforce the occupational development of workers

Six Sigma Methodology

2 key methodologies: DMADV DMAIC

Issue of Make-to-Stock (MTS)

Avoid having excess inventory. Companies today that operate with an MTS model struggle to make the correct product at the correct time in the correct quantities. Every company ends with too much inventory

ISO 9000:2005

Basic quality concepts and language

Project Process (also known as a "Job Shop")

Creates a custom product for each customer. High customization Product variety: very high Volume: very low Strategy: ETO/MTO Customer lead time: very long

The Eight Wastes

DOWNTIME 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.

Manufacturing Process

Involves developing a manufacturing process that can create the exact product that has been designed. Although there are differences between processes of companies, many manufacturing processes have certain characteristics in common.

Lean Systems

Lean is a philosophy that is focused on the customer Defining principle is the elimination of *"waste."* Waste is anything that does not add value for the customer Lean emphasizes the minimization of the amount of all resources (including time) used in the operation of a company ensure quality, eliminate waste, and involve employees

Control

Maintain the solution How can we make the process stay fixed?

Manufacturing Strategies

Make-to-Stock (MTS) Make-to-Order (MTO) Assemble-to-Order (ATO) Engineer-to-Order (ETO)

Make-to-Stock (MTS)

Make-to-Stock (MTS) - literally means 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 such as processed foods, sundries, and textiles are MTS-type products (need a good forecast)

To process or make raw materials or components into a finished product -involves the entire process of converting the raw material(s) or the component(s) into a finished goods item. -it includes the machines used, the personnel involved, inventory handling, warehousing, etc.

Manufacturing

the management of all the processes which are involved in manufacturing. -It involves the management of personnel, management of raw materials and components, planning for production, etc

Manufacturing Management

As volume goes up

Manufacturing and Procurement costs go down (due to economies of scale. Generally-step function applies as more capital is required to produce) Inventory and Warehousing costs go up Transportation costs go down (but level off at high volumes as the shipping container gets filled to capacity and another container must be used)

Measure

Map out the current process What is the frequency of defects?

Manufacturing - Contemporary Developments

Mass Customization Lean Systems Six Sigma Requirements Planning Design-for-Manufacture Design-for-Logistics

Future Demand Health and Safety Productivity of Equipment Reliability of Equipment Environmental issues

Plants

Available Capacity Available Skills Types of Production Safety Production Costs Maintenance Requirements

Processes

Three sigma quality level

Produces defect free product 99.74 percent of the time 66,807 defects per million parts produced

Just-in-time (JIT) Interfaces

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 is dependent on the finalized production schedule --Close cooperation with suppliers is essential --Lot sizes can be as low as one unit

Benefits of Lean Systems

Reductions: -waste (>80%) -Production costs (>50%) -Manufacturing cycle time (>50%) -Labor (>50%) -Inventory (> 80%) Increases: -Capacity (>50%) -Quality -Profits -Flexibility -Strategic focus -Cash flow

Likelihood that the product will perform throughout its expected life

Reliability

ISO 9001:2015

Requirements of a quality management system

Product Layout

Resources are arranged in sequence to enable efficient production of the product. -Best suited for producing a high volume of one or a very few similar products. -Minimize processing times, and planning, scheduling, and control are simplified. Line process/ continuous process ATO/MTS

What do the following stakeholders want/expect from manufacturing?

Sales & Marketing Design/Development Finance Quality

ISO Standards - Environment

Standards in the ISO 14000 series are: ISO 14001 - Specification of Environmental Management Systems ISO 14004 - Guideline Standard ISO 14010 - 14015 - Auditing and Related Activities ISO 14020 - 14024 - Labeling ISO 14031 - 14032 - Performance Evaluation ISO 14040 - 14043 - Life Cycle Assessment ISO 14050 - Terms and Definitions

Mass Customization: Market Characteristics:

Sufficiently *large customer segment* that values "translatable variety" Turbulent, dynamic market Unpredictable demand - but not entirely unpredictable! Little impact of regulation or other constraints (designer drugs?)

Design-for-Six-Sigma

Systematically evaluates the consistency with which a good or service can be produced or delivered given the capabilities of the processes used

ISO Standards - Quality and Environment

The International Organization for Standards (ISO) was formed after World War II The ISO 9000—International Quality Standard (first published in 1987) is a family of various aspects of quality management and contains some of ISO's best known standards.

The Elements of Lean Production

Waste Reduction Lean Supply Chain Relationships Lean Layouts Inventory & Setup Time Reduction Small Batch Scheduling Continuous Improvement Workforce Empowerment

ISO 9004:2009

focuses on how to make a quality management system more efficient and effective

Is the styling, color, workmanship pleasing to the customer

Aesthetics

The actual life expectancy of the product

Durability

ISO Standards - Quality and Environment

The standards provide guidance and tools for companies and organizations who want to ensure that their products and services consistently meet customer's requirements, and that quality is consistently improved. -Shows commitment to providing a high level of *customer satisfaction* -Demonstrates the existence of an effective *quality management system* that satisfies the rigors of an independent, external audit -Can boost your organization's *brand reputation* and be a useful promotional tool, especially when going up against competitors who aren't certified.

What are the Key Dimensions of Product Quality

1. performance 2. reliability 3. durability 4. conformance 5. features 6. aesthetics 7. serviceability 8. perceived quality (ppacdfrs)

The Role of Production in Business

Business is defined as the activity of providing goods and services involving various financial, commercial, and industrial aspects. -Production is the transformation of raw materials, components, and operational inputs, into outputs that when distributed, meet the needs of customers. --Therefore, production plays a very important role in the overall business scenario as it basically deals with the manufacturing of the goods, which are in turn provided to the customer to fulfill their needs.

Manufacturing - Strategies

Companies must develop a manufacturing strategy that suits the type(s) of products that they produce, their customer's expectations, and their strengths -Manufacturing strategies can vary significantly depending on the product and/or the customer requirements. -Developing a manufacturing strategy that suits a company's strengths is essential for establishing and maintaining an effective supply chain

Does the product meet its specifications as designed

Conformance

Interact with volume and variety to create realistic manufacturing plans -Capacity is how much can you produce in a given unit of time -Equipment; must consider how flexible it is -Is one particular piece a bottleneck? -Setup/Changeover considers how quickly can you change from one variety of product to another

Constraints

Anything that does not meet the acceptance criteria

Defects

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.

Define

Define the problem What is the customers' expectation of the process?

Engineer to Order (ETO)

Engineer-to-Order (ETO) is a manufacturing process in which the product is designed, engineered, and built to specifications only after the order has been received. It is a more dramatic evolution of a Make-to-Order supply chain. The essence of ETO is building a unique product every time. There may be components that are common from one product to another, but not in the same quantity as in repetitive manufacturing

Engineer to order (ETO) issues

In the ETO world, the cost of poor quality can be very high. --The warranty costs and the cost of rework to replace an item in a complex assembly can have a serious negative effect on profit margins. --Quality must be part of the entire process, and not just part of purchasing and manufacturing—the typical focus of a repetitive manufacturer.

Design for Logistics Concept

Incorporates the requirements and framework for logistical support of the product in the early phases of product development Considers: What we are going to make? How we are going to make it? What logistics capabilities do we need? Will we need to outsource any parts or subassemblies? How we are going to integrate our suppliers into the process>

Excess products or materials not being processed

Inventory

Batch Process

Manufactures a small fixed quantity of an item in a single production run Product variety: high Volume: low Strategy: MTO/ATO/MTS Customer lead time: long

Unnecessary movement of people. Multiple hand-offs

Motion/Movement

Underutilizing people's talents, skills or knowledge. De-motivating the workforce by not asking for input or recognizing success

Non-Utilized Talent

Six sigma quality level

Produces defect free product 99.99966 percent of the time 3.4 defects per million parts produced

Manufacturing Strategy -vs- Performance Cycle The choice of strategy determines which performace cycles (i.e lead time) the customer experiences

Product design: ETO Strategy Procurement cycle: MTO strategy Manufacturing cycle: ATO Strategy Customer delivery cycle: MTS strategy Use this to determine lead time/ total cycle experienced by customers

Performance Aesthetics Quality Reliability Production Costs Delivery Dates

Products

The plan for production has to be developed considering the following: (aka the role of production in business)

Products, plants, process, programs, people

Purchasing Patterns Cash Flow Need for Storage Transportation

Programs

Logistical Interfaces

Resources must be procured, positioned, and coordinated as needed to support the manufacturing strategy selected

Facility Layout Strategy

The physical arrangement of all resources within a facility Facility layout has a significant impact on performance, especially production cost, time, and flexibility Different layouts lend themselves to producing different types of products, and it is important to match product designs with appropriate layouts.

ISO certified suppliers are preferred by procurement departments

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 They have formal processes in place for continual improvement of their products, services, and processes They are easier for procurement to *initially qualify* and periodically* audit* Certification is done by an external register agency Firms have to be *re-certified* every three years

Six Sigma

To identify sources of variability and then systematically reduce them. Get to the "root cause" -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

Disadvantages of Mass Customization

-Communication -Logistics -Process -Costs

Make-to-Order (MTO)

A manufacturing strategy that typically allows customers to purchase products that are customized to their specifications --The MTO strategy only manufactures 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. --It is like an elevator because MTO starts by receiving an order as an elevator starts by pressing a button

Process Layout

Resources are grouped by process, and product is moved between grouping based on need. -Best suited for producing many different types of products in low volume. -Each product may take a different route through the operation. Batch process and ATO/MTS

Continuous process

is used to manufacture such items as gasoline, laundry detergent and chemicals. Inflexible processes. High capital investment Product variety: very limited Volume: very high Strategy: MTS Customer lead time: very short