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Decision

Decision

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03/18/2014

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changing scenario in manufacturing
s mitra* and a k chatterjee+

this paper traces the development of new approaches to manufacturing management such as mrp/mrp ii, erp, jit and opt during the last two decades. the evolution of these approaches has been discussed in the context of historical development in manufacturing starting from early in this century. earlier approaches typically are \u201creductionist\u201d in nature, in that they assume that the problem of the entire system can be solved by solving efficiently each of its sub-systems in isolation. but with time, these approaches failed to meet the expectations, and gave way to the adoption of more recent \u201cholistic\u201d approaches like erp, jit and opt, which offer solutions by taking an integrated view of the system. having discussed the new techniques, an attempt has been made to outline the future of manufacturing management, where it is argued that it could possibly evolve to a hybrid system with the systems view of the recent approaches and the optimisation capability of or techniques.

1. introduction

the last two decades have witnessed the evolution of new approaches to manufacturing management, illustrated by the growing body of literature in this field. material requirement planning (mrp), manufacturing resource planning (mrp ii), just in time (jit), optimized production technology (opt), and enterprise resource planning (erp) are some of the approaches the companies are adopting to achieve manufacturing excellence. a survey of american industries done by newman and sridharan (1992) shows that out of 185 firms from different manufacturing industries ranging from machine tools, automobile components, furniture, plastics, and medical equipment to computers and defense electronics, 56% were using mrp systems, while 22% were using reorder point (rop) systems. about 8% reported using jit, while 5% used opt systems. 9% of the firms reported using their own in-house developed systems.

in india too, these techniques have been successfully implemented by various organisations. jit has been implemented in tvs suzuki, crompton greaves, maruti udyog, eicher goodearth limited, godrej and boyce manufacturing company, hero honda, siemens limited, sundaram clayton, tisco and many other companies (padukone and subba rao, 1993). sundaram fasteners limited and sundaram brake linings, two tvs group companies, have implemented jit, and are moving toward lean manufacturing systems with supply chain integration, cellular manufacturing andkaizen, or continuous improvement. sundaram fasteners limited has introduced total productive maintenance (tpm) in 1995, and it is the first indian company to get iso 9000 (suresh, 1998 and sridharan, 1998). more recently, companies are going for erp solutions. companies like hindustan lever,

* fellow student, operations management, iim calcutta
+ professor, operations management, iim calcutta
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telco, arvind mills, mahindra and mahindra, ranbaxy laboratories, and larsen and toubro,
among others, have opted for erp.

the objective of this paper is to put these approaches into perspective by examining them in the context of the historical developments in manufacturing management starting from the beginning of this century to date. an overview of manufacturing problem solving is first presented in section 2. this is followed by a presentation on the new approaches in section 3. in section 4, the new approaches are examined and an attempt to identify the future scenario in manufacturing is made. the concluding remarks are presented in section 5.

2. history of manufacturing

manufacturing, by definition, involves transforming inputs into a desired set of outputs. various types of problems ranging from forecasting of demand to planning for production and distribution arise while managing the inputs, outputs, and the transformation process. different approaches to manufacturing management have evolved over time to find solutions to such problems. the manufacturing scenario during this century has also been marked by increased degree of automation in the shop floor. transition from manual operations to transfer machines to numerical control (nc) to flexible manufacturing systems (fms), and finally to computer integrated manufacturing (cim) depicts the evolution of the automation process.

f. w. taylor\u2019s contribution, manifested by the scientific management movement at the beginning of this century, provides a landmark in the history of manufacturing problem solving. manufacturing environment at that time was mainly labour intensive. taking time as a measure of efficiency, taylor contributed to the development of the concept of \u201cstandard time\u201d, which laid the foundation of planning in the context of manufacturing. \u201cwork study\u201d, as it was popularised later, thus consisted of measuring, and also simplifying tasks by critical examinations of the same. taylor\u2019s scientific management had a wider perspective, where the basic objective could be summarized in terms of determining the most efficient way of doing any task. the variation of the efficiency objective in terms of time, cost and productivity soon percolated to different areas in manufacturing. this was manifested in terms of development of different inventory management and quality control models during 1910-1940.

a departure from the efficiency objective was, however, noted during 1927, with elton mayo coming out with human relations approach focussing on the role of workers in increasing productivity. the theory of socio-technical system, propounded by miller and rice (1967) reinforced this further by advocating the dovetailing of task needs with social needs of the workers.

during 1935-40 operations research (or) came into existence for solving military problems. or, as a mathematical modelling approach, soon found its application in manufacturing problem solving. methodologies available before or had their foundation in mathematics and probability theory that were fairly developed at the beginning of this

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century. however, the applications were limited to relatively simple systems. for example, economic order quantity (eoq) model for purchasing decisions, statistical quality control (sqc) model for quality inspections were solved using calculus and sampling theory respectively. production planning and distribution problems, on the other hand, were ill solved, and or, by 1950, provided the requisite methodology for formulating and solving these complex problems. with commercialization of computers during 1951, it was possible to exploit or methodologies to a greater extent. this also made possible solutions of large scale manufacturing problems.

thus, from the beginning of this century till about 1960, manufacturing management was dominated by piece-meal applications of work study, or, and related techniques catering to the problems of different subsystems. the environment, on the other hand, changed from labour intensive to fixed automation (eg. transfer lines) to programmable automation (eg. nc). the fixed and programmable automations were characterized by high volume and low to medium volume production respectively, and accordingly were associated with mass production and batch production systems.

in the late 1960s, several ideas began to surface to improve manufacturing. the marketplace was also undergoing changes both in terms of increasing demand of variety products from the customers and increasing competition in the following decades. for manufacturing this meant a shift from mass production system to batch and job shop systems. by then, the advantages and economics of designing and planning for mass production system vis-a-vis batch or job-shop production system had become quite apparent. automation took the front seat with the objective of increasing efficiency by cutting down the throughput time. application of group technology (gt) for manufacturing systems with a variety of products having similar parts helped to exploit the benefits of mass production in the context of batch production systems. single minute exchange of dies (smed) made jit system a reality by cutting down the set-up time drastically (shingo, 1989). in the early 1970s, flexible automation (flexible manufacturing systems and robotics) emerged to offer solutions for job shop. flexible automation helped in producing variety products in small batches with virtually no time lost for changeovers (groover, 1989; asfahl, 1985). computer integrated manufacturing (cim) advocated systems oriented approach where effort was directed towards achieving integration of the different activities in an organisation through a common data base and flexible technology such as cnc (computer numerical control) machines, automated material handling systems (rehg, 1994).

the first writing in manufacturing strategy also came up during this time (skinner, 1969). other writings (hayes et al, 1978; wheelwright, 1978) followed and the need to spell out clearly the manufacturing action plans, and integrating them with the overall business strategy to gain competitive advantage were soon established. thus a shift from the piece- meal approach to the holistic approach towards manufacturing problem solving was seen during this time. this and the following decades were marked by the evolution of the new approaches. material requirement planning (mrp) followed by manufacturing resource planning (mrp ii) were developed during this period and offered as solutions to the complex problem of production, material and resource planning. if or among the earlier approaches was integrative, these were supposed to be more so. these approaches were

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