logistics chapter 5

Design for Manufacture

Design for Assembly Design for Product Serviceability Design for 6 sigma

Durability

The actual life expectancy of the product

Volume

is 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

Batch Process

manufactures a small fixed quantity of an item in a single production run

Perceived Quality

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

Role of Production in Business

Business is defined as the activity of providing goods and services involving financial commercial and industrial aspects

ISO Standards- Quality

Standards in the ISO 9000 family include: ISO 9001:2015 - Requirements of a quality management system. ISO 9000:2005 - Basic quality concepts and language ISO 9004:2009 - focuses on how to make a quality management system more efficient and effective ISO 19011:2011 - Guidance on internal and external audits of quality management systems

Elements of Lean Productions

Waste Reduction Lean Supply Chain Relationships Lean Layouts Inventory & Setup Time Reduction Small Batch Scheduling Continuous Improvement Workforce Empowerment Lean, in particular Value steam mapping is a great tool in admin processes

Features

What different functions or tasks can the product perform

Serviceability

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

Variety

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

ISO Certified Suppliers

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

Project Process

(also known as a "Job Shop") creates a custom product for each customer. High customization

Manufacturing involves

-Entire process of converting the raw materials or the components into finished goods item -Includes the machine used , the personnel involved, inventory handling, warehouse,etc.

What are Key Dimensions Of Product Quality

1. Performance 2. Reliability 3. Durability 4. Conformance 5. Features 6. Aesthetics 7. Serviceability 8. Perceived Quality

Lean Production- Waste Reduction

8 wastes- DOWNTIME Defects Anything that does not meet the acceptance criteria Overproduction Production before it is needed, or in excess of customer requirements. Providing a service that is not needed. Waiting Elapsed time between processes when no work is being done Non-Utilized Talent Underutilizing people's talents, skills or knowledge. De-motivating the workforce by not asking for input or recognizing success Transportation Unnecessary movement of materials or products Inventory Excess products or materials not being processed Motion/Movement Unnecessary movement of people. Multiple hand-offs Extra-Processing Unnecessary steps in a process. Redundancies between processes. More work or higher quality than required by the customer

TCM vs Strategic Alternatives

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

Assemble to Order

Assemble-to-Order (ATO) is a manufacturing strategy where products ordered by customers are produced quickly and are customizable . 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. 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.

Mass Customization-Disadvantages

Communication: Getting information from customers is not an easy job Logistics: The logistics of distributing the right product to the right customer at the right time at a reasonable price is very difficult Process: The production process must be flexible. Since usually only certain stages of production are flexible, only some attributes of the product can be customized. Costs: Increase in material and manufacturing costs

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.

Conformance

Does the product meet its specifications as designed

Engineer to Order

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. 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. 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.

Benefits of Lean Systems

Establishment and mastering of a lean production system would allow you to achieve the following benefits:

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.

Performance

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

ISO Standards - Environment

ISO 14000—International Environmental Standard Intended to assist organizations to manage the environmental effect .of their business practices. Deal with how a company manages the environment inside its 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.

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?

Mass Customization

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

Aesthetics

Is the styling, color, workmanship pleasing to the customer

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

Reliability

Likelihood that the product will perform throughout its expected life

Make to Order

Make-to-Order (MTO) is 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 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.

Manufacturing Strategies

Make-to-Stock (MTS) Make-to-Order (MTO) Assemble-to-Order (ATO) Engineer-to-Order (ETO) What are the implications to customer lead time with each of these manufacturing strategies?

Make to Stock

Make-to-Stock (MTS) - literally 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 such as processed foods, sundries, and textiles are MTS-type products. One issue of MTS is to 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.

Manufacturing Management

Management of all the processes which are involved in manufacturing - management of personnel, raw materials and components

Manufacturing Process

Manufacturing Process strategy 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. Based on these characteristics, 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.

Mass Customization- Where does it work

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?) Product/Process Characteristics: Modular or adjustable product building blocks. Predictable components/functions interactions Standardized process/skill building blocks Reasonable lead times, steps, work content

Manufacturing-Contemporary Developments

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

Material 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

Primary Objectives of Lean Systems

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

Benefits of Mass Customization

Profits: By providing tailored products to meet particular needs, focus shifts from price to benefits. While it is possible to manufacture at a mass produced price, you have the option to charge a premium while still retailing below the price of a custom product. Lower Costs: Mass customization allows the ordinary person to acquire a product that has been produced to meet their own particular needs yet at a competitive price - providing exceptional value for money. Inventory: As the concept of mass customization is for heterogeneous market, there is no extra inventory accumulation. Only required inventory is ordered in order to make customized goods, which helps in reducing inventory cost and spoilage. Market Exploitation: Lead customers will provide a rich source of new ideas that can be exploited with other customers or with new prospects. Companies will forge close relationships with their suppliers, distributors and customer as they return again for further unique products.

Just in time 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

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.

Process Layout

Resources are grouped by process, and product is moved between groupings 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.

Logistical Interfaces

Resources must be procured., . positioned ., and coordinated. as needed to support the manufacturing strategy selected Four approaches to achieve this are: Just-in-Time (JIT) Materials Requirements Planning (MRP) Design for Manufacture (DFM) Design for Logistics (DFL)

6 Sigma Methodology

Six Sigma has two key methodologies that provide a systematic approach to eliminating defects and keeping the process in control: 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.

6 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 Three sigma quality level Produces defect free product 99.74 percent of the time 66,807 defects per million parts produced Six sigma quality level Produces defect free product 99.99966 percent of the time 3.4 defects per million parts produced

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

Manufacturing

To process or make raw materials or components into a finished product

Facility Layout Strategy

The physical arrangement of all resources within a facility. Facility layout has a significant impact on performance, especially . Production Costs.., . Time., and Flexibility .. Poor facility layouts are one of the most significant contributors to inefficiency and increased production cost. Different layouts lend themselves to producing different types of products, and it is important to match product designs with appropriate layouts. There are four distinct layout strategies: -fixed position layout -process layout -product layout -cellular layout

Production

The transformation of raw materials, components, and operational inputs, into outputs that when distributed, meet the needs of customers

Role of Production in Business

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 fulfil their needs.

Total Quality Management

Total Quality Management (TQM) is 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

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.

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.

Line Process

has standard products with a limited number of variations moving on an assembly line through stages of production

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; 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

Design for 6 sigma

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

Plan for Production has to be developed considering the following

-products -plants -processes -programs -people

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 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 systems .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.

TQMs basic conceptual elements

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

Total Cost of Manufacturing

Total Cost of Manufacturing (TCM) includes: Manufacturing .and Procurement .activities Inventory .and Warehousing .activities Transportation .activities

Brand Power

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

Lead Time

is 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

Continuous Process

is used to manufacture such items as gasoline, laundry detergent and chemicals. Inflexible processes. High capital investment