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Perspectives
In

Manufacturing Management
By

Dr. Akarte Milind M.

Associate Professor, IE Group

National Institute of Industrial Engineering Mumbai 400 087 Maharashtra

Objective:
To understand: Role of manufacturing Linkages between different Decision Areas in Manufacturing. The manufacturing capability

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Contents:
Manufacturing: As an Important function Environments & Production Systems Outputs

Subsystems/Decision Areas in Value Chain Layouts Lead Time Inventory, TCO Concurrent Product Design

Business Strategy
Finance

Manufacturing

Company Business Strategy

Product Development

Marketing

Service

Business strategy of a firm = Sum of individual strategies of its component functions Ex: finance, manufacturing, marketing, product development, service, etc

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Introduction
In successful firms all functional strategies Must be interlock for maximum competitive advantage That is No function is left out and no function dominates In sum firms the business strategy is dominated by nonmanufacturing function Result throw over the wall to manufacturing

Manufacturing Techniques
A variety of new techniques and technologies are introduced such as Concurrent Engineering, DF x Benchmarking Standardization Cycle time reduction CAD, CAM. CAE, PDM, SCM, CRM, ERP Six Sigma TQM FMS JIT AGV

Each presented as a way of dramatically improve manufacturing capability.

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Why Manufacturing Is Important?

Manufacturing Changes slowly Take long time to Build facilities Develop new suppliers Change operating procedures Train personal While Customer requirements changes quickly as New products appears Technology changes Economic conditions fluctuates New competitors emerges Changes in government regulations

Why Manufacturing Strategy?

Need to be aligned

Slow movement of manufacturing function

Fast changing marketplace

This needs Manufacturing to take number of decisions

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Why Manufacturing Strategy?

When Formal Manufacturing strategy exists: Decisions follow a neat logical pattern When No Manufacturing strategy exists: Pattern of decisions is erratic and unpredictable Hence Objective of MS is To understand how manufacturing decisions to be made To provide long term competitive advantage.

MS Process Formulation Consideration

Process of formulating MS should consider the following: Take into account customer requirements Take into account competitors

Take into account manufacturing capabilities

Consider all options available to manufacturing List the outputs that the manufacturing will provide and specify them.

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Key Points for successful Strategy

The firm must know where it will specifically attack in market (product or region) and then must focus its resources and capabilities to succeed. The firm must anticipate other competitors and defend the same - once it has made an attack on a particular market segment Equally, The firm must know where it will not attack and stay out of the dangerous area in which it cannot compete. Everybody in the organization must know and understand the strategy

Choosing Market Segment

The firm matches market requirements with its present or future (by strategic search) and attack the appropriate market segments and avoid others. Market segments may be defined in terms of geographical area, or by product grouping

Attack Avoid

Avoid

Avoid Attack Attack

Avoid

Avoid

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Functional Layout
Equipment of same type grouped together in same department Example machine shop Lathe in one department, drilling, Grinding, Milling, in another Operator work in one department - highly skilled in the area of work Equipment, tooling are of general purpose and capable of performing wide range of work

line Layout
One line of different equipment for each product or family Equipment / tooling are customized for the product features Used when volume is large to justify the large investment in customized equipment and tooling Operator perform simple tasks as most of the work is performed by the machine.
L M M G D

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Cellular Layout
Different equipment/processes are located in the same department Department is also called cell Worker flexible to operate all equipment in the cell One cell for each product family Equipment, tooling are of general purpose and capable of performing wide range of work - but often specialized to range of requirements.

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

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Manufacturing Environment
High Engineer-to-Order

Product Variety

Make-to-Order Assemble-to-Order

Make-to-Stock Low Low Product Volume High

Manufacturing and Lead Time

The definition of Lead Time is:
The time that is required to process a customer order from order entry through shipping the product to the customer.

Lead Time

Start

Finish

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Manufacturing and Lead Time

What are the components of lead time?

Manufacturing and Lead Time

Components of Lead Time Product development (design) lead time Sourcing (procurement) lead time Manufacturing (production) lead time Assembly & testing lead time Order processing lead time Distribution lead time Other (ex, decision making, coordination)

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Manufacturing Environment
Engineer-to-Order

Customer Order

Design

Purchase

Manufacture

Assemble

Pack and Ship

<------------------

Customer Delivery Lead Time -------------------->

Manufacturing Environment
Make-to-Order

Customer Order

Design

Stock standard Parts as Inventory

Purchase

Manufacture

Assemble

Pack and Ship

<---------- Customer Delivery Lead Time ------------------>

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Manufacturing Environment
Assemble-to-Order

Customer Order

Design

Purchase

Manufacture

Stock standard Parts as Inventory

Final Pack and Assemble Ship

Delivery Lead Time ->

Manufacturing Environment
Make-to-Stock

Customer Order

Design

Purchase

Manufacture

Assemble

Stock as Inventory

Pack and Ship

Delivery Lead Time ->

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Production Systems
Seven Production System can be grouped into: Craft production Job shop production system (JSPS) Batch flow production system (BFPS) Mass production Operator paced line flow production system (OPLFPS) Equipment paced line flow production system (EPLFPS) Continuous Flow production System (CFPS) Lean production system JIT production system FMS production system Broad classification is enough for many purposes, but for precious decision like manufacturing strategy detailed classification essential.

Order Qualifiers and Order Winner

Order qualifiers: - minimum requirement Generally supplier must meet set of minimum requirements to be consider a viable Competitor in the market place. Customer requirements may be based on price, quality, delivery, etc.

Order qualifiers can bring the firm in competition but may or may not provide business
Example for the supplier to be considered. the price for a certain type of product must fall within a range to become a supplier, firm must have ISO 9000 certification

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Order Qualifiers and Order Winner

Order Winner: But, being considered does not mean winning the order, That is - for Order Winner firms must need to be better than competitor. To win orders a supplier must have characteristics that encourage customers to choose its product and services over competitor Those competitive characteristic that persuade customer to choose product / service are called order winners.

Inventory Management
Inventory models Mathematical formula for economical solution applicable in different paradigm Objective Fundamental How much to order and Inventory Decisions When to order Subject To: To minimize inventory costs Costs of ordering inventory Cost of carrying inventory To achieve satisfactory levels of customer service

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Need
Can 100 % service on all item be given? Then how many items? High Service level high safety stock high cost of inventory low profit Can we afford stock out on some item Too many stock out on too many items Over a period reputation company value Design a system 95 % service level on some item 85 95 % Majority of stocks 60 85 % on slow moving & high cost items

Types of Inventory
1. 2. 3. 4. Raw materials - Purchased parts Work-in-process (partially completed) products (WIP) Finished goods Maintenance, Repair and Operating (MRO)

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Inventory Positions in the Supply Chain

Reducing amounts of raw materials, purchased parts and subassemblies by having suppliers deliver them directly. Reducing the amount of works-in process by using just-intime production. Reducing the amount of finished goods by shipping to markets as soon as possible.
Raw Materials Works in Process Finished Goods Finished Goods in Field

Right & wrong reasons for carrying inventory

The right reasons for carrying inventory Support production requirements WIP Support operational requirement MRO Support customer service requirements Hedge against market place uncertainties Take advantage of quantity discounts The wrong reasons for carrying inventory Poor quality and material yield Unreliable supplier delivery Extended buyer-supplier order cycle time Inaccurate or uncertain demand forecast Specifying custom item for standard application Extended material in pipelines Insufficient manufacturing processes
Forecasting inaccuracies Inconsistent logistic Supply chain variability Demand variability

Uncertainty

Greater safety stock

More inventory costs

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Manufacturing Issues Related to Inventory Management

Manufacturing Type ETO, MTO, ATO, MTS Layouts - Functional, Line, Cellular Manufacturing Systems Job, Batch, Mass Production Batch Size influence on WIP Understanding Capacity Analysis / Bottleneck Concept Purchase / Supplier Related Issues Inventory in Supply Chain

Advantage of Small Batch

1 2

Batch 1 Batch 1 Batch 1 Batch 1 Batch 1 Batch 1 0 500 1000 1500 2000 2500 3000

Machines

3 4 5 6

Alternative 1 Batch size = 100 units Batch completed after = 3000 min

Elapsed Time in Minute

1 2
B1 B2 B1 B2 B1 B2 B1 B2 B1 B2 B1 B2

Machines

3 4 5 6

Alternative 2 Batch size = 50 units Batch completed after = 1750 min

500

1000

1500

2000

2500

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Design for x
Functionality Aesthetics Ergonomics Energy efficiency Maintenance Manufacturability Easy of assembly Ease of testing Ease of handling Ease of packaging Eco-friendly
Sand Shell Investment Gravity Die

Castability Machaniability Moldability Weldability Formability

The above are clubbed as Design for X or simply DFX

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