Management of Manufacturing Systems

Module 1

Topics
1. 2.

3.
4. 5.

Nature, Scope and Importance of Manufacturing Manufacturing Systems and Decisions Transformation Approach and Value Driven Approach Interface with other Functions The Role of a Production Manager

Introduction

Production Vs Manufacturing

Production is the process by which, raw materials and other inputs are converted in to finished products.
Manufacturing is the process of producing only tangible goods, where as production includes creation of both tangible goods as well as intangible services.

Inputs & Outputs

Inputs are resources such as
People, Material, and Money

Outputs are goods and services

Goods Vs Services
Goods Services

Tangible product Product can be inventoried Low customer contact Longer response time

Intangible product Product cannot inventoried High customer contact Short response time Labor intensive be

Capital intensive

On the other hand

Both

use technology Both have quality, productivity, & response issues Both must forecast demand Both will have capacity, layout, and location issues Both have customers, suppliers, scheduling and staffing issues Manufacturing often provides services Services often provides tangible goods

Understanding the Nature of Manufacturing/Production

Manufacturing function from 3 angles

1.

Production as a system
Production as an organisational function

2.

3.

Decision-making in production

1. Production as a System
Consists of three systems:

Production System: A system whose function is to convert a set of inputs (materials, personnel, capital, utilities and info) into a set of desired outputs. Conversion Sub-system: A sub-system of the larger production system where, inputs are converted into outputs.
Control sub-system: A sub-system of the larger production system where, a portion of the output is monitored for feedback signals to provide corrective action, if required.

2. Production as an Organisation Function

The conversion sub system is the core of a production system. Here, workers, materials and mcahines are used to convert inputs into products and services. Every organisation irrespective of its purpose , has a production function.

3. Decision-making in Production

OM are required to make a series of decisions in the production function.

They plan, organize, staff, direct and control all the activities in the process of converting all the inputs in to finished products.

Pdn Management Vs Opns Mgmt

Production management involves application of planning, organizing, directing and controlling to the production process.
Operations Management is the business function responsible for planning, coordinating, and controlling the resources needed to produce products and services for a company (R. Dan Reid & Nada R. Sanders)

Production Management

Operations Management

More used for a system where tangible goods are produced.

Used where various inputs are transformed into tangible services.e.g. banks, airlines, utilities, educational institutions

Precedes operations management in the historical growth of the subject.

Term that is used now a days.

Organizational Chart

Scope

Scope covers the following:

Selection of location Acquisition of land Constructing building Procuring and Installing machinery Purchasing and storing raw materials Converting them in to products QM, Maintenance, Production Planning and Control etc

Who are operations managers?

Who are operations managers?

Managers transform inputs into outputs Example: Accounting Manager

Inputs: data, information, labor Transformation: application of accounting principles and knowledge Outputs: accounting reports, knowledge of performance, ...

All managers have an operation to run Therefore: All managers are Operations Managers!

Manufacturing Systems & Decisions

Is all manufacturing the same?

Is the type of manufacturing system used to produce cars the same as the one that makes jeans?

Is a ball point pen made in the same way as the furniture in your home?

Are manufacturing systems the same across the world - in different countries and cultures?

Because

of the very broad range of products that are manufactured, several different types of manufacturing systems have evolved. system meets the unique demands and characteristics of the product and the market in which it will eventually be sold.

Each

Manufacturing Systems
1.

Process or Continuous Production

Mass Production Batch production Jobbing Production

2.

3.

4.

Process or continuous production

Plant

or factory may run twenty-four hours a day, for weeks or months only for maintenance or when breakdowns occur.

Stops

E.g

Chemical processing, food production and steel making Products that depreciate quickly, or are in high demand
Output

is normally expressed in weight or volume of goods produced Cost of production is high & Labour costs are generally low

Mass Production
Individual

products are manufactured in large quantities Motor cars, white goods

E.g

Expensive
Most

machinery is used

of the operations are repeatitive

Labour

and supply of materials and components are highly organised

Batch Production
Manufacturing

products in specific

quantities. One production run or in batches to be repeated at certain times. A batch can range from 2 or 3 products to a hundred thousand or more. Aircraft s, agricultural machinery, furniture, machine tools, buses and lorries are made in larger numbers. Each piece of equipment may be used to make several different products. Versatile Machines & Skilled workers

Jobbing Production
Also

known as custom manufacturing. Normally produces one product at a time Highly skilled workers and general purpose equipment are used Problem-solving and trouble- shooting are necessary Products that are custom-manufactured are normally very expensive Large yachts, space satellites, oil rigs and special purpose machine tools

Manufacturing Decisions

Strategic or Long Term Decisions Tactical or Intermediate-term decisions Operational Planning and Control (ST) decisions

1. Strategic Decisions
Time

frame is long (years)

Affect

the companys LR effectiveness in terms of how it can address its customers be aligned with the corporate strategy become the operating constraints under which the firm must operate in both the intermediate and short term

Must

This

Strategic Decisions..

How to make the product?

Where do we locate the facility? How much capacity? When should we add more capacity?

2. Tactical Decisions
Primarily

addresses how to efficiently schedule material and labour within the constraints of previously made strategic decisions. How many workers do we need? When should we have material delivery? Should we have finished goods inventory?

3. Operational P&C Decisions

Concern

the day to day activities of workers, quality of products and services, production and overhead costs and maintenance of machines.
jobs do we work on today or this week? do we assign tasks?

What

Whom

Transformation Approach

What is Operations?

Transformation Definition

The design, control, and management of processes that transform inputs into finished goods and services for sale to customers

Operations Management

What is Operations?

Transformation Definition
INPUTS
Materials Goods Labor Transformation Processes Capital Services Knowledge

OUTPUTS

Value Driven Approach

What is Operations?

Added-Value Definition
Value is the customers subjective evaluation, adjusted for cost, of how well a good or service meets or exceeds expectations. Note that:

Value is defined in terms of a singular customer It is a subjective evaluation The evaluation is compared with an expectation Expectations can be influenced and do change

Added Value Model

Cost
Finance Accounting Information Systems Profit! Loss! People and Organization Marketing Operations

Added Value for Customer

adapted from Porter, Competitive Advantage, Free Press, 1985

Added Value Model

Business Environment

The Firm

Value Chain
Suppliers Customers

Competitors
adapted from Porter, Competitive Advantage, Free Press, 1985

Adding Value with Marketing and Operations

Inputs:
Materials Labor Ideas Technology

How?

Outputs:
Goods + Services = Products

Marketing and Operations touch the product

Marketing Operations

Added-Value Definition

Operations is the fundamental means by which firms Add Value!

Suppose you are in the market for a new automobile?

What attributes are you most interested in? What would cause you to purchase one car versus another?

How do Firms Add Value?

Greater Productivity
Lower costs and expenses Lower prices for the customer

Greater Flexibility
Greater variety Customization for customer needs / desires

Higher Quality
Better performance Greater durability, reliability, aesthetics, ...

Useful Innovation
Features, technology Better performance New capabilities Often unrecognized

Better Timeliness
Faster response and turnaround On-time delivery, meet promises

The Value Equation

Performance Value price
Quality Timeliness Flexibilit y Innovation Value price

Q T F I Value P

A framework for managing Operations

Planning
OM

defines the objectives for the operations subsystem of the organization, and the policies, programs, and procedures for achieving the objectives.
Planning, Facilities designing and using the conversion process

Product

Organising
OM

establish a structure of roles and the flow of information within the operations subsystem
the activities required to achieve the operations subsystems goals authority and responsibility for carrying them out

Determine

Assign

Controlling
OM

exercise control by measuring actual outputs and comparing them to planned outputs
costs, quality and

Controlling

schedules

Behavior
OM

are concerned with how their efforts to plan, organize and control affect human Behaviour They also want to know how the behaviour of subordinates can affect managements POC actions

Models
As

operations managers plan, organize and control the conversion process, they encounter many problems and must make many decisions. Mathematical modeling : Creating and using mathematical representations of management problems and organizations to predict outcomes of proposed courses of action.

Role of a Production Manager

1) Forecasting the requirements of the production in order to achieve the production target. 2) Making most efficient utilization of the available sources for production. 3) Minimizing throughput time and work in process inventory. This can be achieved by systematic production planning and also by very efficient execution of the plans. 4) Reduce material handling cost, which generally is achieved by the use of efficient material handling system and also by using plant layouts which must be developed in a proper or correct way.

Role of a Production Manager

5) Reducing the quality cost with the help of analysis of non conformances on periodic basis and also by following suitable actions (both corrective and preventive). 6) Building team spirit among the workmen and also motivating by means of personal involvement. This task of motivation can also be achieved by designing and implementing suitable financial incentive schemes. 7) To device accurate methodology involving method study of manufacturing, along with the other engineering economic principles. 8 ) Improving the productivity level of the workers on continuous basis by workmens training and by bringing into use the standards of the performance derived from work measurement studies etc.

Any Questions?