LECTURE 2

PRODUCTION PROCESSES

CLASSIFICATION OF PRODUCTION SYSTEM

Job-Shop Production:

-One or few quantity of products designed and produced as per the specification of
customers within prefixed time and cost.

-High variety of products and low volume.

-Use of general purpose machines and facilities.

-Highly skilled operators who can take up each job as a challenge because of uniqueness.

-Large inventory of materials, tools, parts.

-Detailed planning is essential for sequencing the requirements of each product, capacities
for each work centre and order priorities.
JOB-SHOP PRODUCTION
ADVANTAGES

-Variety of products can beproduced.

-Operators will become moreskilled and competent.

-Full potential of operators can be.

-Opportunity exists for creative methods and innovative ideas.

LIMITATIONS

- Higher cost.

-Higher level of inventory at all levels and hence higherinventory cost.

-Production planning is utilised complicated.

-Larger space requirements.

CLASSIFICATION OF PRODUCTION SYSTEM

Batch Production:

-The job passes through the functional departments in lots or batches and each lot may have
a different routing.

-Shorter production runs.

-Plant and machinery are flexible.

-Plant and machinery set up is used for the production of item in a batch and change of set up
is required for processing the next batch.

-Manufacturing lead time and cost are lower as compared to job order production.
BATCH PRODUCTION
ADVANTAGES

-Better utilisation of plant andmachinery.

-Promotes functionalspecialization.

-Cost per unit is lower as compared to job-shop production.

-Lower investment in plant and machinery.

-Flexibility to accommodate and process number of products.

-Job satisfaction exists foroperators.

LIMITATIONS

-Material handling is complex because of irregular and longerflows.

-Production planning and controlis complex.

-Work in process inventory is higher compared to continuous.

-Higher set up costs due to frequent changes in set up.

CLASSIFICATION OF PRODUCTION SYSTEM

Mass Production:
-Standardization of product and process sequence.

-Dedicated special purpose machines having higher production capacities and output rates.

-Large volume of products.

-Shorter cycle time of production.

-Lower in process inventory.

-Perfectly balanced production lines.

-Flow of materials, components and parts is continuous and without any back tracking.

-Production planning and control is easy.

-Material handling can be completely automatic.

MASS PRODUCTION
ADVANTAGES

-Higher rate of production with reduced cycle time

-Higher capacity utilisation due to line balancing

-Less skilled operators are required

-Low process inventory

-Manufacturing cost per unit is low

LIMITATIONS

-Breakdown of one machine will stop an entire production line

-Line layout needs major change with the changes in the product design

-High investment in production facilities

-The cycle time is determined by the slowest operation

CLASSIFICATION OF PRODUCTION SYSTEM

Continuous production:

-Production facilities are arranged as per the sequence of production operations from the first
operations to the finished product

-Dedicated plant and equipment with zero flexibility

-Material handling is fully automated

-Process follows a predetermined sequence of operations

-Component materials cannot be readily identified with final product

-Planning and scheduling is a routine action

CONTINUOUS PRODUCTION
ADVANTAGES

-Standardization of product and process sequence.

-Higher rate of production with reduced cycle time.

-Higher capacity utilization due to line balancing.

-Manpower is not required for material handling as it is completely automatic.

-Person with limited skills can be used on the production line.

-Unit cost is lower due to high volume of production.

LIMITATIONS

-Flexibility to accommodate and process number of products does not exist.

-Very high investment for setting flow lines.

-Product differentiation is limited.

CLASSIFICATION OF PRODUCTION SYSTEM

PRODUCTIVITY

PRODUCT DESIGNPROCESS
IDEA DEVELOPMENT

Sources:

-customers.
-competitors.
-suppliers.
-company’s R&D.

PRODUCT SCREENING

Product idea evaluation– a need to consider:

-operations.

-marketing.

-financial requirements.

BREAK-EVEN ANALYSIS
Total cost = F +(VC)Q

F = fixed cost

VC = variable cost per unit

Q = number of units sold

Revenue = (SP)Q

SP = selling price per unit

𝑄𝐵𝐸
𝐹
= 𝑆𝑃−𝑉𝐶
PRODUCT DESIGNPROCESS
PRELIMINARY DESIGN AND TESTING

Product prototypes built, tested, and refined.

FINAL DESIGN

Final product specifications completed.

PRODUCT LIFE CYCLE

CREATIVITY
The process of imagining and developing something new.

The factors of creativity:

-Knowledge.

-Age.

-Positive outlook.

-Cognitive flexibility.

-Working memory and sustained attention.

-Self-esteem.

-“Rogue” behaviour and avoiding conformity.

-Mindfulness.

INNOVATION
The process of implementing new ideas.

Innovative firms outperform their competitors in terms of market share, profitability, growth or
market capitalization.

Innovation requiresa different set of management knowledge and skills from those of everyday
business administration.
INNOVATION AS MANAGEMENT PROCESS
Thomas Edison realized that:

-Technology push and demand pullneed to be mobilized.

-Innovation is more than simply coming up with good ideas – it is the process of growing them
into practical use.

4PS OF INNOVATION
PRODUCT INNOVATION.

PROCESS INNOVATION.

POSITION INNOVATION.

PARADIGM INNOVATION.

EXAMPLES OF PRODUCT INNOVATIONS

INCREMENTAL

-New versions of established carmodels, e.g. new version of VWGolf.

-Improved performance incandescent light bulbs.

-CD replacing vinyl records –improvements in storage technology.

RADICAL

-Toyota Prius – bringing a newconcept with hybrid engines.

-LED-based lightning, using completely different and moreenergy efficient principles.

-Spotify and other streaming services – changing a patternfrom owning collections to renting
a vast library of music.

EXAMPLES OF PROCESS INNOVATIONS

INCREMENTAL

-Improved fixed line telephoneservices.

-Improved factory operationsefficient through upgraded equipment.

-Improved retailing logistics.

RADICAL

-Voice over internet protocol

-Toyota Production Systems andother ‘lean’ approaches

-Online shopping
EXAMPLES OF POSITION INNOVATIONS
INCREMENTAL

-Airline segmenting service offering for different passenger groups – LOT Premium Economy,
Virgin Upper Class

-Dell and others segmenting andcustomizing computer configuration for individual users

RADICAL

-Low cost airlines opening up airtravel to those previously unable to afford it – create new
market and disrupt existing one

-Variations on the ‘One laptop per child’ project – e.g. Indiangovernment $20 computer for
schools

EXAMPLES OF PARADIGM INNOVATIONS

INCREMENTAL

-Dyson redefining the home appliance market in terms of high performance engineeredproducts

-IBM from being a machine maker to a service and solutioncompany – selling off its computer
making an building up its consultancy and service side.

RADICAL

-Amazon, Google, Skype – redefining industries like retailing, advertising and telecoms
through on-line models.

-Linux, Mozilla, Apache – movingfrom passive users to active communities of users co- creating
new products and services.

CONCURRENT ENGINEERING