You are on page 1of 22

Introduction to Six Sigma

In todays competitive world there is no room for any type of error, everyone wants
quick and efficient access to information, products and services so it has become
very important and mandatory to bring some critical changes, in the ways by which a
company conducts or carries its various business activities. The company should
make it a point to delight their customers by fulfilling their expectations. To help this
cause, six sigma plays a very critical role as it lays a lot of emphasis on Quality must
become a part of the culture
Theory behind six sigma
Six sigma was pioneered by Bill Smith at Motorola in 1986 in the beginning six
sigma was just considered as a metric for measuring defects and improving the
quality, but now six sigma has spread its wings in all the directions and has grown
beyond just controlling the defects. Six sigma is now a registered service mark and a
trademark of Motorola, Inc.
The word sigma is a statistical term which helps us in knowing, how far a given
process deviates from perfection. Six sigma helps in the control of process variations,
which are responsible for causing defects.
Objectives of six sigma
1. To give good performance and reliability.
2. To provide value to the end customer.
3. Reducing or minimizing defects in any type of process (reducing defects to less
than 3.4 million operations).
4. To eliminate wasteful practices i.e. the practices which do not provide any value to
the process, should be eliminated.
5. Providing after sales service quality.
6. Improving the quality of the product.
7. Satisfying both internal and external customers.
Benefits of Six sigma
1. Transaction involving six sigma provides services and products, free from defects.
2. Lower production, inspection and warranty costs, with tension free conditions for
3. Greater satisfaction of the customer, resulting in better place and better reputation
in the market.
4. Moving from % defect AQL PPM (parts per million) to PPB (parts per billion) to
zero defect (Zero variation), which automatically results in achievement of excellence
in the process.
Principles of six sigma
1. The use of pro active thinking to achieve perfection.
2. Top priority should always be service towards customer, stress towards
understanding their needs and expectations and trying to fulfill them.
3. Boundary less collaboration, supported by data and fact driven management.
4. Failure is allowed but through risk management techniques.

Steps to calculate process sigma

1. Defining ones opportunities.
2. Defining the possible defects.
3. Measuring opportunities and defects, this step is very important as an opportunity
tells the minimum defect that is noticeable by a customer.
4. Calculating the yield.
5. This is the last step which involves looking up ones sigma on a sigma conversion
The main function of the six sigma methodology involves, following the measurement
based strategy for checking process improvement and variation reduction. This is
done by using six sigma sub methodologies: DMAIC (define, measure, analyze,
improve, control) and DMADV (define, measure, analyze, design, verify).
Six sigma organizational architecture
Six sigma, if worked out properly can result in producing good amount of profits and
benefits to the business, as it acts as a great quality methodology. The roles and
responsibilities for a successful six sigma quality program can be given a better
understanding by knowing the roles and responsibilities of the following
1. Quality leader or quality manager (QL/QM) The main responsibilities of a
quality manager/leader are : Representing the needs of the customers.
Aiming to improve the operational working of the organization.
Maintaining high quality standards.
2. Process Owner (PO) As the name suggests, process owners are the individuals
who are responsible for the working of a certain specific process.
3. Master Black Belt (MBB)
Work with the owners of the process and are assigned to a specific area or a function
of a business or an organization.
Responsible for setting up quality objectives and targets, determining plans, tracking
progress and providing education.
In good six sigma organizations, process owners and the master black belts work in
combination with each other, sharing information daily.
4. Black Belt (BB)
Are referred to as the back bone of a good six sigma organization.
Play a key role in six sigma quality initiative.
Lead quality projects.
Work full time until the project is completed.
Capable of completing about four to six projects per year.
Also coach green belts.
5. Green Belt (GB)
Employees trained in six sigma, spend some time completing projects.
Can spend 10% to 15% of their time anywhere on their projects depending on the
work load.

Project management is the discipline of planning, organizing, motivating, and

controlling resources to achieve specific goals. A project is a temporary endeavor with
a defined beginning and end (usually time-constrained, and often constrained by
funding or deliverables), undertaken to meet unique goals and objectives, typically to
bring about beneficial change or added value. The temporary nature of projects stands
in contrast with business as usual (or operations), which are repetitive, permanent, or
semi-permanent functional activities to produce products or services. In practice, the
management of these two systems is often quite different, and as such requires the
development of distinct technical skills and management strategies.
The primary challenge of project management is to achieve all of the project goals
and objectives while honoring the preconceived constraints. The primary constraints
are scope, time, quality and budget. The secondary and more ambitious challenge
is to optimize the allocation of necessary inputs and integrate them to meet predefined objectives.
There are a number of approaches to managing project activities including lean,
iterative, incremental, and phased approaches.
Regardless of the methodology employed, careful consideration must be given to the
overall project objectives, timeline, and cost, as well as the roles and responsibilities
of all participants and stakeholders.

The traditional approach

A traditional phased approach identifies a sequence of steps to be completed. In the
"traditional approach", five developmental components of a project can be
distinguished (four stages plus control):

Typical development phases of an engineering project

1. initiation
2. planning and design
3. execution and construction
4. monitoring and controlling systems
5. completion
Not all projects will have every stage, as projects can be terminated before they reach
completion. Some projects do not follow a structured planning and/or monitoring
process. And some projects will go through steps 2, 3 and 4 multiple times.


Initiating process group processes

The initiating processes determine the nature and scope of the project. If this stage is
not performed well, it is unlikely that the project will be successful in meeting the
business needs. The key project controls needed here are an understanding of the
business environment and making sure that all necessary controls are incorporated
into the project. Any deficiencies should be reported and a recommendation should be
made to fix them.
The initiating stage should include a plan that encompasses the following areas:

analyzing the business needs/requirements in measurable goals

reviewing of the current operations
financial analysis of the costs and benefits including a budget
stakeholder analysis, including users, and support personnel for the project
project charter including costs, tasks, deliverables, and schedule

Planning and design

After the initiation stage, the project is planned to an appropriate level of detail (see
example of a flow-chart). The main purpose is to plan time, cost and resources
adequately to estimate the work needed and to effectively manage risk during project
execution. As with the Initiation process group, a failure to adequately plan greatly
reduces the project's chances of successfully accomplishing its goals.
Project planning generally consists of

determining how to plan (e.g. by level of detail or rolling wave);

developing the scope statement;
selecting the planning team;
identifying deliverables and creating the work breakdown structure;
identifying the activities needed to complete those deliverables and
networking the activities in their logical sequence;
estimating the resource requirements for the activities;
estimating time and cost for activities;
developing the schedule;
developing the budget;
risk planning;
gaining formal approval to begin work.

Additional processes, such as planning for communications and for scope

management, identifying roles and responsibilities, determining what to purchase for
the project and holding a kick-off meeting are also generally advisable.

For new product development projects, conceptual design of the operation of the final
product may be performed concurrent with the project planning activities, and may
help to inform the planning team when identifying deliverables and planning

[edit] Executing

Executing process group processes

Executing consists of the processes used to complete the work defined in the project
plan to accomplish the project's requirements. Execution process involves
coordinating people and resources, as well as integrating and performing the activities
of the project in accordance with the project management plan. The deliverables are
produced as outputs from the processes performed as defined in the project
management plan and other frameworks that might be applicable to the type of project
at hand.
Execution process group include:

Direct and Manage Project execution

Quality Assurance of deliverables
Acquire, Develop and Manage Project team
Distribute Information
Manage stakeholder expectations
Conduct Procurement

Monitoring and controlling

Monitoring and controlling process group processes

Monitoring and controlling consists of those processes performed to observe project
execution so that potential problems can be identified in a timely manner and
corrective action can be taken, when necessary, to control the execution of the project.
The key benefit is that project performance is observed and measured regularly to
identify variances from the project management plan.
Monitoring and controlling includes:

Measuring the ongoing project activities ('where we are');

Monitoring the project variables (cost, effort, scope, etc.) against the project
management plan and the project performance baseline (where we should be);
Identify corrective actions to address issues and risks properly (How can we
get on track again);
Influencing the factors that could circumvent integrated change control so only
approved changes are implemented.

In multi-phase projects, the monitoring and control process also provides feedback
between project phases, in order to implement corrective or preventive actions to
bring the project into compliance with the project management plan.
Project maintenance is an ongoing process, and it includes:

Continuing support of end-users

Correction of errors
Updates of the software over time

Monitoring and controlling cycle

In this stage, auditors should pay attention to how effectively and quickly user
problems are resolved.
Over the course of any construction project, the work scope may change. Change is a
normal and expected part of the construction process. Changes can be the result of
necessary design modifications, differing site conditions, material availability,
contractor-requested changes, value engineering and impacts from third parties, to
name a few. Beyond executing the change in the field, the change normally needs to
be documented to show what was actually constructed. This is referred to as change
management. Hence, the owner usually requires a final record to show all changes or,
more specifically, any change that modifies the tangible portions of the finished work.
The record is made on the contract documents usually, but not necessarily limited
to, the design drawings. The end product of this effort is what the industry terms asbuilt drawings, or more simply, as built. The requirement for providing them is a
norm in construction contracts.
When changes are introduced to the project, the viability of the project has to be reassessed. It is important not to lose sight of the initial goals and targets of the projects.
When the changes accumulate, the forecasted result may not justify the original
proposed investment in the project.


Closing process group processes.

Closing includes the formal acceptance of the project and the ending thereof.
Administrative activities include the archiving of the files and documenting lessons
This phase consists of:
Project close: Finalize all activities across all of the process groups to formally close
the project or a project phase

Contract closure: Complete and settle each contract (including the resolution
of any open items) and close each contract applicable to the project or project

[edit] Project controlling and project control systems

Project controlling should be established as an independent function in project
management. It implements verification and controlling function during the
processing of a project in order to reinforce the defined performance and formal goals.
The tasks of project controlling are also:

the creation of infrastructure for the supply of the right information and its
the establishment of a way to communicate disparities of project parameters
the development of project information technology based on an intranet or the
determination of a project key performance index system (KPI)
divergence analyses and generation of proposals for potential project
the establishment of methods to accomplish an appropriate the project
structure, project workflow organization, project control and governance
creation of transparency among the project parameters[30]

Fulfillment and implementation of these tasks can be achieved by applying specific

methods and instruments of project controlling. The following methods of project
controlling can be applied:

investment analysis
costbenefit analyses
value benefit Analysis
expert surveys
simulation calculations
risk-profile analyses
surcharge calculations
milestone trend analysis
cost trend analysis

Project control is that element of a project that keeps it on-track, on-time and within
budget.[27] Project control begins early in the project with planning and ends late in the
project with post-implementation review, having a thorough involvement of each step
in the process. Each project should be assessed for the appropriate level of control
needed: too much control is too time consuming, too little control is very risky. If
project control is not implemented correctly, the cost to the business should be
clarified in terms of errors, fixes, and additional audit fees.
Control systems are needed for cost, risk, quality, communication, time, change,
procurement, and human resources. In addition, auditors should consider how
important the projects are to the financial statements, how reliant the stakeholders are
on controls, and how many controls exist. Auditors should review the development
process and procedures for how they are implemented. The process of development
and the quality of the final product may also be assessed if needed or requested. A
business may want the auditing firm to be involved throughout the process to catch
problems earlier on so that they can be fixed more easily. An auditor can serve as a
controls consultant as part of the development team or as an independent auditor as
part of an audit.
Businesses sometimes use formal systems development processes. These help assure
that systems are developed successfully. A formal process is more effective in creating
strong controls, and auditors should review this process to confirm that it is well
designed and is followed in practice. A good formal systems development plan

A strategy to align development with the organizations broader objectives

Standards for new systems
Project management policies for timing and budgeting
Procedures describing the process
Evaluation of quality of change

3rd ans

What is process analysis? A process can be defined as "a logical series of related transactions that converts input to results or output" (Andersen
1999). The process we are considering is a "business process," which can be defined as "a chain of logical connected, repetitive activities that
utilizes the organization's resources to refine an object for the purpose of achieving specified and measurable results or products for internal or
external customers." Some UCF examples include the processing of an application, the development of class schedules, and the budgeting process.
Process analysis is an approach that helps managers improve the performance of their business activities. It can be a milestone in continuous
improvement (Trischler 1996). At UCF, our analysis approach consists of the following steps: (1) definition of the scope and the objectives of the
study, (2) documentation of the status quo and definition of performance measures, (3) assessment and performance evaluation, and (4)
development of recommendations.

Analyze a job by looking at the processes involved.

This can be a top-down analysis, starting from higher-level processes and
decomposing the hierarchy of tasks. It can also be a bottom-up approach, identifying
actual tasks and building a structure from these (Post-it Notes are useful for this). A
combination of top-down and bottom-up may also be effectively used.
For each process consider the outputs created and the inputs that are required. Inputs
can fall into several general categories.

Transformed inputs are those which become a part of the output, and include raw materials
and other processed parts.
Other consumables may be used in the process but not end up in the output.
Tools are items used to help create the output, but which are not a part of the output.
Controls are things which are used to shape and control the work, such as specifications and
People are also needed to make a process work, although in process analysis these are not
covered in as much depth as some other methods.

Also look at other related processes and the flow of inputs and outputs between the
target process and these other customer and supplier processes. Processes may be the
source of the various types of input and hence may be classified as supplier, support
or control processes.
The process may be visually mapped with methods such as flowcharts, dataflow,
state-transition and other tools. Visual maps are particularly useful for seeing overall
flow and for communicating detail.
Inputs and outputs are very useful for scoping the task, as inputs and outputs are at
the boundaries of all activity.

Within the process, tasks are effectively like smaller processes with inputs and
outputs. The process may be broken down as far as is appropriate. In some
manufacturing tasks, for example, every small movement of the hand is examined.

Process analysis largely takes people out of the process. This can be useful as it
enables focus solely on what needs to be done and is a useful first stage. Following
up with a human analysis is then usually essential, for example looking at skills
A danger of process analysis is going into too much detail. As with other methods,
knowing when to stop is quite important.
Manufacturing Process Selection and Design

Process Selection
Types of Processes
Job Shop Defined
Batch Shop Defined
Assembly Line Defined
Continuous Flow Defined
Process Flow Structures
Product-Process Matrix
Product-Process Matrix Defined
Break-Even Analysis
Specific Process Equipment Selection
Manufacturing Process Flow Design

Injection molding
Structural foam
Sheet metal
Fastening techniques



Case: Circuit Board Fabricators, Inc.


Process selection refers to the strategic decisions of selecting the kind of production
process to have in a manufacturing plant. The process flow in an organization refers to
how a factory organizes material flow using one or more of the process technologies
including the job shop, batch shop, assembly line, and continuous flows. The process
chosen depends on the customization of the product as well as the volume required in

the market. The relationship between the process structures and volume requirements
is depicted on a product-process matrix. As volume increases the product line narrows
and specialized equipment and standardized material flows are come economically
feasible. The evolution in the process structure is often related to the product's life
cycle stage. Thus the matrix is useful in linking marketing and manufacturing
Break even analysis allows manufacturing managers to visually present alternative
profits (and losses) based on the number of units produced or sold. Specific
equipment selection follows the selection of the general type of process structure in an
organization. The tools of break-even analysis help managers make equipment
selection decisions.
Process flow designs focus on the specific processes that raw materials, parts, and
subassemblies follow as they move through the plant. Charts and drawings aid in
process flow design.
The theory of constraints (TOC) is a management paradigm that views any
manageable system as being limited in achieving more of its goals by a very small
number of constraints. There is always at least one constraint, and TOC uses a
focusing process to identify the constraint and restructure the rest of the organization
around it.
TOC adopts the common idiom "a chain is no stronger than its weakest link". This
means that processes, organizations, etc., are vulnerable because the weakest person
or part can always damage or break them or at least adversely affect the outcome.

The theory of constraints (TOC) is an overall management philosophy introduced

by Eliyahu M. Goldratt in his 1984 book titled The Goal, that is geared to help
organizations continually achieve their goals. Goldratt adopted the concept with his
book Critical Chain, published 1997. The concept was extended to TOC with
respectively titled publication in 1999.
An earlier propagator of the concept was Wolfgang Mewesin Germany with
publications on power-oriented management theory (Machtorientierte
Fhrungstheorie, 1963) and following with his Energo-Kybernetic System (EKS,
1971), later renamed Engpasskonzentrierte Strategie as a more advanced theory of
bottlenecks. The publications of Wolfgang Mewes are marketed through the FAZ
Verlag, publishing house of the German newspaper Frankfurter Allgemeine Zeitung.
However, the paradigm Theory of constraints was first used by Goldratt.

The five focusing steps

Theory of constraints is based on the premise that the rate of goal achievement by a
goal-oriented system (i.e., the system's throughput) is limited by at least one

The argument by reductio ad absurdum is as follows: If there was nothing preventing

a system from achieving higher throughput (i.e., more goal units in a unit of time), its
throughput would be infinite which is impossible in a real-life system.
Only by increasing flow through the constraint can overall throughput be increased.
Assuming the goal of a system has been articulated and its measurements defined, the
steps are:
1. Identify the system's constraint(s) (that which prevents the organization from
obtaining more of the goal in a unit of time)
2. Decide how to exploit the system's constraint(s) (how to get the most out of
the constraint)
3. Subordinate everything else to the above decision (align the whole system or
organization to support the decision made above)
4. Elevate the system's constraint(s) (make other major changes needed to
increase the constraint's capacity)
5. Warning! If in the previous steps a constraint has been broken, go back to step
1, but do not allow inertia to cause a system's constraint.
The goal of a commercial organization is: "Make money now and in the future", and
its measurements are given by throughput accounting as: throughput, inventory, and
operating expenses.
The five focusing steps aim to ensure ongoing improvement efforts are centered on
the organization's constraint(s). In the TOC literature, this is referred to as the process
of ongoing improvement (POOGI).
These focusing steps are the key steps to developing the specific applications
mentioned below.

A constraint is anything that prevents the system from achieving more of its goal.
There are many ways that constraints can show up, but a core principle within TOC is
that there are not tens or hundreds of constraints. There is at least one but at most only
a few in any given system. Constraints can be internal or external to the system. An
internal constraint is in evidence when the market demands more from the system
than it can deliver. If this is the case, then the focus of the organization should be on
discovering that constraint and following the five focusing steps to open it up (and
potentially remove it). An external constraint exists when the system can produce
more than the market will bear. If this is the case, then the organization should focus
on mechanisms to create more demand for its products or services.
Types of (internal) constraints

Equipment: The way equipment is currently used limits the ability of the
system to produce more salable goods/services.
People: Lack of skilled people limits the system. Mental models held by
people can cause behaviour that becomes a constraint.
Policy: A written or unwritten policy prevents the system from making more.

The concept of the constraint in Theory of Constraints is analogous to but differs from
the constraint that shows up in mathematical optimization. In TOC, the constraint is
used as a focusing mechanism for management of the system. In optimization, the
constraint is written into the mathematical expressions to limit the scope of the
solution (X can be no greater than 5).
Please note: organizations have many problems with equipment, people, policies, etc.
(A breakdown is just that a breakdown and is not a constraint in the true sense of
the TOC concept) The constraint is the thing that is preventing the organization from
getting more throughput (typically, revenue through sales).

Breaking a constraint
If a constraint's throughput capacity is elevated to the point where it is no longer the
system's limiting factor, this is said to "break" the constraint. The limiting factor is
now some other part of the system, or may be external to the system (an external
constraint). This is not to be confused with a breakdown.

Buffers are used throughout the theory of constraints. They often result as part of the
exploit and subordinate steps of the five focusing steps. Buffers are placed before the
governing constraint, thus ensuring that the constraint is never starved. Buffers are
also placed behind the constraint to prevent downstream failure from blocking the
constraint's output. Buffers used in this way protect the constraint from variations in
the rest of the system and should allow for normal variation of processing time and
the occasional upset before and behind the constraint.
Buffers can be a bank of physical objects before a work center, waiting to be
processed by that work center. Buffers ultimately buy you time, as in the time before
work reaches the constraint and are often verbalized as time buffers. There should
always be enough (but not excessive) work in the time queue before the constraint and
adequate offloading space behind the constraint.
Buffers are not the small queue of work that sits before every work center in a Kanban
system although it is similar if you regard the assembly line as the governing
constraint. A prerequisite in the theory is that with one constraint in the system, all
other parts of the system must have sufficient capacity to keep up with the work at the
constraint and to catch up if time was lost. In a balanced line, as espoused by Kanban,
when one work center goes down for a period longer than the buffer allows, then the
entire system must wait until that work center is restored. In a TOC system, the only
situation where work is in danger is if the constraint is unable to process (either due to
malfunction, sickness or a "hole" in the buffer if something goes wrong that the time
buffer can not protect).
Buffer management, therefore, represents a crucial attribute of the theory of
constraints. There are many ways to apply buffers, but the most often used is a visual
system of designating the buffer in three colours: green (okay), yellow (caution) and
red (action required). Creating this kind of visibility enables the system as a whole to

align and thus subordinate to the need of the constraint in a holistic manner. This can
also be done daily in a central operations room that is accessible to everybody.

Plant types
There are four primary types of plants in the TOC lexicon. Draw the flow of material
from the bottom of a page to the top, and you get the four types. They specify the
general flow of materials through a system, and they provide some hints about where
to look for typical problems. The four types can be combined in many ways in larger

I-plant: Material flows in a sequence, such as in an assembly line. The primary

work is done in a straight sequence of events (one-to-one). The constraint is
the slowest operation.
A-plant: The general flow of material is many-to-one, such as in a plant where
many sub-assemblies converge for a final assembly. The primary problem in
A-plants is in synchronizing the converging lines so that each supplies the
final assembly point at the right time.
V-plant: The general flow of material is one-to-many, such as a plant that takes
one raw material and can make many final products. Classic examples are
meat rendering plants or a steel manufacturer. The primary problem in Vplants is "robbing" where one operation (A) immediately after a diverging
point "steals" materials meant for the other operation (B). Once the material
has been processed by A, it cannot come back and be run through B without
significant rework.
T-plant: The general flow is that of an I-plant (or has multiple lines), which
then splits into many assemblies (many-to-many). Most manufactured parts
are used in multiple assemblies and nearly all assemblies use multiple parts.
Customized devices, such as computers, are good examples. T-plants suffer
from both synchronization problems of A-plants (parts aren't all available for
an assembly) and the robbing problems of V-plants (one assembly steals parts
that could have been used in another).

For non-material systems, one can draw the flow of work or the flow of processes and
arrive at similar basic structures. A project, for example is an A-shaped sequence of
work, culminating in a delivered project.

An inventory control system is a process for managing and locating objects or

materials. In common usage, the term may also refer to just the software components.
Modern inventory control systems often rely upon barcodes and radio-frequency
identification (RFID) tags to provide automatic identification of inventory objects. In
an academic study performed at Wal-Mart, RFID reduced Out of Stocks by 30 percent
for products selling between 0.1 and 15 units a day. Inventory objects could include

any kind of physical asset: merchandise, consumables, fixed assets, circulating tools,
library books, or capital equipment. To record an inventory transaction, the system
uses a barcode scanner or RFID reader to automatically identify the inventory object,
and then collects additional information from the operators via fixed terminals
(workstations), or mobile computers.

[edit] Applications
An inventory control system may be used to automate a sales order fulfillment
process. Such a system contains a list of orders to be filled, and then prompts workers
to pick the necessary items, and provides them with packaging and shipping
An inventory system also manages in and outwards material of hardware.
Real-time inventory control systems may use wireless, mobile terminals to record
inventory transactions at the moment they occur. A wireless LAN transmits the
transaction information to a central database.
Physical inventory counting and cycle counting are features of many inventory
control systems which can enhance the organization.
In the operations management or the production management, this technique of
operations scheduling forms a very important part and acts as the back bone for the
performance of the manufacturing or the service organizations. With the help of the
operations scheduling, two very important factors or the aspects of the resources
within an organization that can be pertained are as follows
1. Allocating the resources within an organization.
2. Setting up the time table.
In todays competitive world, the orders that are placed either from the side of the
customer or from the side of the assembly benches are to be completed on or before
the contracted or the promised date. For fulfilling this, operations scheduling plays a
very critical and an essential role and completely ensures that these dates are met.
Operations scheduling helps in the confirmation or the revision of the tentative
delivery date that has been promised in the original quotation. Sometimes during the
operations scheduling of the work order, it may be discovered that the delivery date
originally and tentatively promised cannot be met. All this may be due to the several
problems like the materials that are required may not be available at that particular
time or may not be available immediately. This problem can also occur due to the
increased plant loading while the customer is deciding whether or not to award the
quoted job to this company.
It has been observed that the operations scheduling has a direct affect on the
effectiveness of the production function and this relation was actually explained by

According to Vollman, The priority planning and the shop floor control and the
scheduling elements ultimately determine the performance of the production system.
If the operations scheduling is carried out in an efficient manner, then there occurs a
considerable improvement in the performance in the delivery. Also helps in the
achievement of the goals that have been set by the company. Efficient operations
scheduling playa a very critical part in the reduction of the production lead times.
6th ans
A Product design is the process of creating a new product to be sold by a business to
its customers.[1] It is the efficient and effective generation and development of ideas
through a process that leads to new products.[2]
In a systematic approach, product designers conceptualize and evaluate ideas, turning
them into tangible inventions and products. The product designer's role is to combine
art, science, and technology to create new products that other people can use. Their
evolving role has been facilitated by digital tools that now allow designers to
communicate, visualize, analyze and actually produce tangible ideas in a way that
would have taken greater manpower in the past.
Product design is sometimes confused with industrial design, and has recently become
a broad term inclusive of service, software, and physical product design. Industrial
design is concerned with bringing artistic form and usability, usually associated with
craft design and ergonomics, together to mass produce goods.

There are various product design processes and they are all focused on different
aspects. The process shown below is "The Seven Universal Stages of Creative
Problem-Solving," outlined by Don Koberg and Jim Bagnell. It helps designers
formulate their product from ideas. This process is usually completed by a group of
people, designers or field experts in the product they are creating, or specialists for a
specific component of the product, such as engineers. The process focuses on figuring
out what is required, brainstorming possible ideas, creating mock prototypes, and then
generating the product. However, that is not the end of the process. At this point,
product designers would still need to execute the idea, making it into an actual
product and then evaluate its success by seeing if any improvements are necessary.
The product design process has experienced huge leaps in evolution over the last few
years with the rise and adoption of 3D printing. New consumer-friendly 3D printers
can product dimensional objects and print upwards with a plastic like substance
opposed to traditional printers that spread ink across a page.
The design process follows a guideline involving three main sections:


Capacity planning is the process of determining the production capacity needed by
an organization to meet changing demands for its products.[1] In the context of
capacity planning, "design capacity" is the maximum amount of work that an
organization is capable of completing in a given period, "effective capacity" is the
maximum amount of work that an organization is capable of completing in a given
period due to constraints such as quality problems, delays, material handling, etc. The
phrase is also used in business computing as a synonym for Capacity Management.
A discrepancy between the capacity of an organization and the demands of its
customers results in inefficiency, either in under-utilized resources or unfulfilled
customers. The goal of capacity planning is to minimize this discrepancy. Demand for
an organization's capacity varies based on changes in production output, such as
increasing or decreasing the production quantity of an existing product, or producing
new products. Better utilization of existing capacity can be accomplished through
improvements in overall equipment effectiveness (OEE). Capacity can be increased
through introducing new techniques, equipment and materials, increasing the number
of workers or machines, increasing the number of shifts, or acquiring additional
production facilities.
Capacity is calculated: (number of machines or workers) (number of shifts)
(utilization) (efficiency).
The broad classes of capacity planning are lead strategy, lag strategy, and match

Lead strategy is adding capacity in anticipation of an increase in demand.

Lead strategy is an aggressive strategy with the goal of luring customers away
from the company's competitors by improving the service level and reducing
leadtime. It is also a strategy aimed at reducing stockout costs. A large
capacity does not necessarily imply high inventory levels, but it can imply in
higher cycle stock costs. Excess capacity can also be rented to other
Lag strategy refers to adding capacity only after the organization is running at
full capacity or beyond due to increase in demand (North Carolina State
University, 2006). This is a more conservative strategy. It decreases the risk of
waste, but it may result in the loss of possible customers either by stockout or
low service levels.
Match strategy is adding capacity in small amounts in response to changing
demand in the market. This is a more moderate strategy.

In the context of systems engineering, capacity planning[2] is used during system

design and system performance monitoring.
Capacity planning is long-term decision that establishes a firms' overall level of
resources. It extends over time horizon long enough to obtain resources. Capacity
decisions affect the production lead time, customer responsiveness, operating cost and
company ability to compete. Inadequate capacity planning can lead to the loss of the
customer and business. Excess capacity can drain the company's resources and

prevent investments into more lucrative ventures. The question of when capacity
should be increased and by how much are the critical decisions.

Material requirements planning (MRP) is a production planning and inventory

control system used to manage manufacturing processes. Most MRP systems are
software-based, while it is possible to conduct MRP by hand as well.
An MRP system is intended to simultaneously meet three objectives:

Ensure materials are available for production and products are available for
delivery to customers.
Maintain the lowest possible material and product levels in store
Plan manufacturing activities, delivery schedules and purchasing activities

The scope of MRP in manufacturing

The basic function of MRP system includes inventory control, bill of material
processing and elementary scheduling. MRP helps organizations to maintain low
inventory levels. It is used to plan manufacturing, purchasing and delivering activities.
"Manufacturing organizations, whatever their products, face the same daily practical
problem - that customers want products to be available in a shorter time than it takes
to make them. This means that some level of planning is required."
Companies need to control the types and quantities of materials they purchase, plan
which products are to be produced and in what quantities and ensure that they are able
to meet current and future customer demand, all at the lowest possible cost. Making a
bad decision in any of these areas will make the company lose money. A few
examples are given below:

If a company purchases insufficient quantities of an item used in

manufacturing (or the wrong item) it may be unable to meet contract
obligations to supply products on time.

If a company purchases excessive quantities of an item, money is wasted - the

excess quantity ties up cash while it remains as stock and may never even be
used at all.
Beginning production of an order at the wrong time can cause customer
deadlines to be missed.

MRP is a tool to deal with these problems. It provides answers for several questions:

What items are required?

How many are required?
When are they required?

MRP can be applied both to items that are purchased from outside suppliers and to
sub-assemblies, produced internally, that are components of more complex items.
The data that must be considered include:

The end item (or items) being created. This is sometimes called Independent
Demand, or Level "0" on BOM (Bill of materials).
How much is required at a time.
When the quantities are required to meet demand.
Shelf life of stored materials.
Inventory status records. Records of net materials available for use already in
stock (on hand) and materials on order from suppliers.
Bills of materials. Details of the materials, components and sub-assemblies
required to make each product.
Planning Data. This includes all the restraints and directions to produce the
end items. This includes such items as: Routings, Labor and Machine
Standards, Quality and Testing Standards, Pull/Work Cell and Push
commands, Lot sizing techniques (i.e. Fixed Lot Size, Lot-For-Lot, Economic
Order Quantity), Scrap Percentages, and other inputs.

There are two outputs and a variety of messages/reports:

Output 1 is the "Recommended Production Schedule" which lays out a

detailed schedule of the required minimum start and completion dates, with
quantities, for each step of the Routing and Bill Of Material required to satisfy
the demand from the Master Production Schedule (MPS).
Output 2 is the "Recommended Purchasing Schedule". This lays out both the
dates that the purchased items should be received into the facility AND the
dates that the Purchase orders, or Blanket Order Release should occur to
match the production schedules.

Messages and Reports:

Purchase orders. An order to a supplier to provide materials.

Reschedule notices. These recommend cancelling, increasing, delaying or
speeding up existing orders.

Supply chain management (SCM) is the management of a network of

interconnected businesses involved in the provision of product and service packages
required by the end customers in a supply chain. Supply chain management spans all
movement and storage of raw materials, work-in-process inventory, and finished
goods from point of origin to point of consumption.
Another definition is provided by the APICS Dictionary when it defines SCM as the
"design, planning, execution, control, and monitoring of supply chain activities with
the objective of creating net value, building a competitive infrastructure, leveraging

worldwide logistics, synchronizing supply with demand and measuring performance

SCM draws heavily from the areas of operations management, logistics, procurement,
information technology and strives for an integrated approach.
Common and accepted definitions of supply chain management are:

Managing upstream and down stream value added flow of materials, final
goods and related information among suppliers; company; resellers; final
consumers is supply chain management.

Supply chain management is the systematic, strategic coordination of the

traditional business functions and the tactics across these business functions
within a particular company and across businesses within the supply chain, for
the purposes of improving the long-term performance of the individual
companies and the supply chain as a whole .

A customer focused definition is given by Hines "Supply chain strategies

require a total systems view of the linkages in the chain that work together
efficiently to create customer satisfaction at the end point of delivery to the
consumer. As a consequence costs must be lowered throughout the chain by
driving out unnecessary costs and focusing attention on adding value.
Throughput efficiency must be increased, bottlenecks removed and
performance measurement must focus on total systems efficiency and
equitable reward distribution to those in the supply chain adding value. The
supply chain system must be responsive to customer requirements.
Supply chain management is a cross-function approach including in managing
the movement of raw materials into an organization, certain aspects of the
internal processing of materials into finished goods, and the movement of
finished goods out of the organization and toward the end-consumer. As
organizations strive to focus on core competencies and becoming more
flexible, they reduce their ownership of raw materials sources and distribution
channels. These functions are increasingly being outsourced to other entities
that can perform the activities better or more cost effectively. The effect is to
increase the number of organizations involved in satisfying customer demand,
while reducing management control of daily logistics operations. Less control
and more supply chain partners led to the creation of supply chain
management concepts. The purpose of supply chain management is to
improve trust and collaboration among supply chain partners, thus improving
inventory visibility and the velocity of inventory movement.

Several models have been proposed for understanding the activities required to
manage material movements across organizational and functional boundaries. SCOR
is a supply chain management model promoted by the Supply Chain Council. Another
model is the SCM Model proposed by the Global Supply Chain Forum (GSCF).
Supply chain activities can be grouped into strategic, tactical, and operational levels.
The CSCMP has adopted The American Productivity & Quality Center (APQC)
Process Classification Framework a high-level, industry-neutral enterprise process

model that allows organizations to see their business processes from a cross-industry


Strategic network optimization, including the number, location, and size of

warehousing, distribution centers, and facilities.
Strategic partnerships with suppliers, distributors, and customers, creating
communication channels for critical information and operational
improvements such as cross docking, direct shipping, and third-party logistics.
Product life cycle management, so that new and existing products can be
optimally integrated into the supply chain and capacity management activities.
Segmentation of products and customers to guide alignment of corporate
objectives with manufacturing and distribution strategy.
Information technology chain operations.
Where-to-make and make-buy decisions.
Aligning overall organizational strategy with supply strategy.
It is for long term and needs resource commitment.

Tactical level

Sourcing contracts and other purchasing decisions.

Production decisions, including contracting, scheduling, and planning process
Inventory decisions, including quantity, location, and quality of inventory.
Transportation strategy, including frequency, routes, and contracting.
Benchmarking of all operations against competitors and implementation of
best practices throughout the enterprise.
Milestone payments.
Focus on customer demand and Habits.

Operational level

Daily production and distribution planning, including all nodes in the supply
Production scheduling for each manufacturing facility in the supply chain
(minute by minute).
Demand planning and forecasting, coordinating the demand forecast of all
customers and sharing the forecast with all suppliers.
Sourcing planning, including current inventory and forecast demand, in
collaboration with all suppliers.
Inbound operations, including transportation from suppliers and receiving
Production operations, including the consumption of materials and flow of
finished goods.
Outbound operations, including all fulfillment activities, warehousing and
transportation to customers.

Order promising, accounting for all constraints in the supply chain, including
all suppliers, manufacturing facilities, distribution centers, and other
From production level to supply level accounting all transit damage cases &
arrange to settlement at customer level by maintaining company loss through
insurance company.
Managing non-moving, short-dated inventory and avoiding more products to
go short-dated.