SyE 6075

Warehousing and
Inventory Control
Manufacturing Systems Overview
What Is A Manufacturing
System?

The network of manufacturing and

distribution sites that interact in order
to procure and transform raw materials
for producing finished goods to
customers.

Often called a “Supply Chain”

Supply Chain
Manufacturers Warehouses
Raw Customers
Material

Assemblers

Stages

Procurement Production Distribution

One Minute Exercise

  Draw an example of a manufacturing system

for a product you are familiar with
  Be as specific as possible
Manufacturing System for Snickers

Raw Material Suppliers Peanuts Cocoa Sugar

farmers processor processor

Roasting Plant

Bar Plants

Warehouse/
Distribution Centers
Customers
Supply Chain Management

Supply Chain Management (SCM) is the

management of material and information
flows in and between the different parts
of the Supply Chain.
Terminology
  Setup: changes to system before you can start to produce
something different from what you had been producing.
Recalibrate machines, load and reprogram devices, move
processors to different layout, etc.
  Setup cost: usually time, can also be $. Time: opportunity cost,
poor use of capital investment.
  Lot or batch size: how many you make at a time
  Product mix: how many or what range of different things or
services you produce
  Capacity: how much your facility is capable of producing
Process Classifications

Custom, Project: buildings, software, Mars lander, Atom bomb, first

computers
Job Shop: complex, “lives by its information flows’’, machining metal
parts, small batches of parts for old cars, tool and die. No straight
line flow of product.
Batch flow: clothing, semiconductor, cardboard boxes. Set menu of
what they can produce. Lot sizes.
Line flow: a kind of mass production for discrete items such as cars,
computers. Some customization (color, style, features).
Continous flow: paper, steel, some chemicals, oil, food. Often
expensive to turn off. More capital intensive than labor intensive
Hybrid: many real processes don’t fit so neatly into these categories. But
these are our basic categories and they are often found within more
complex systems.
Product Life Cycle
  Product planning
  Introduction

  Growth

  Maturity

  Decline
Lifecycle Classification
  During the lifecycle of a product, the process
strategy may change.
  Example: Computers
  Custom to flow line during growth
  Near the end of the cycle, back to small batches.
The Product-Process Matrix
Issues in Manufacturing Systems
  Technology
  Product layout - chemical plants, automotive plants
  Process layout - job shop, group technology
  Management
  Push systems Pull systems Synchronized systems
  Inventory mgt Capacity mgt Forecasting
  Information Requirements
  Bill of Material Product Costing
  Forecast Schedule Shop Floor Control
Supply Chain Decisions
Two Minute Exercise
  List some supply chain decisions managers
make.
Supply Chain Decisions

• Corporate Objectives
• Capacity
Strategic Level Long Term • Facilities
• Location
• Resources

• Aggregate Planning
• Resource Allocation
Tactical Medium Term • Capacity Allocation
• Distribution

• Master Production Schedule

• Raw Material
Operational Near Term
• Scheduling
Factors in Production Planning

  Goals: determine which products to produce

  When? How much?
  At low cost and on time!
  Need to know capacity
  don’t promise deliveries you can’t meet
  don’t stretch your resources
  don’t leave too much excess capacity
Supports for Materials Management

Information

Buffers
•  Capacity
•  Inventory
•  Leadtime
Control
Adding Short Term Capacity
  Add extra workers
  Schedule overtime/extra shifts

  Additional equipment (usually long term solution)

  Subcontract

ALL THESE OPTIONS ADD EXTRA COSTS

  Additional production costs
  Opportunity costs: revenues foregone for lost output
that could have been sold
Cost of Capacity
  A new semiconductor fab may cost US$4-6
billion
  The finance cost can be $600 million per year

  An engine line for GM can cost as much as

$150 million--and there is at least one line for
every different engine model
  Idle capacity is a CEO’s nightmare
Meeting Deliveries
  Modulating capacity
  Burger king:
  At peak hours: increase labor and make to stock
  At low hours: broil to order
  Inventory buffers
  Keep a finished goods inventory
  Manage demand
  Decouple operations
  Keep storage of beer. Package to order
Customers Want Speed
  Jiffy Lube
  Domino’s 30 Minute Guarantee

  1 Hour Film Development

Products usually have substitutes. As such, if the

product isn’t delivered when the customer wants it in
the quantities desired, customers will switch brands.
Factors in a Changing
Environment
  Consumer emphasizes choice, quality, lower cost
  Smaller volume, larger variety
  Shorter product life cycle
  Global competition and heterogeneous markets
  Information technology changes nature of business
  New materials, processes and technologies
  Direct labor cost declining; OH, materials and capital costs
rising
  Worker culture and demographics and the sociology
of work are changing
  Discussion topic: How does this affect the way we
organize production?
Customer Value Drivers

  COST
  QUALITY

  SPEED

  INNOVATION
Cost, Quality, Speed, and Innovation are the core manufacturing
competencies essential to success. They are the essential ways
to creating value for customers and the basis for competition.
Traditional Production Goals
  “To deliver the highest quality at the lowest cost at the required
time.”
  COST - Main concern before 1970
  A measure of resource use
  Lower cost allow flexibility in marketing
  The emphasis now is in cost reduction
  QUALITY - Importance grows as of mid 60s
  Expectations of performance, appearance, service, value for the
money, and warranty
  Defective rates measured in ppm may not be good enough
  TIME - Tremendously important since the mid 80s
  Shorter delivery time (customer satisfaction)
  Quick response and time to market are competitive advantages
Current Production Objectives
  Continuously increase customer satisfaction in an
effective manner
  At great quality, on time, at low cost, and CONTINUOUSLY
IMPROVING
  “Kaizen” - Japanese term for continuous improvement.
Involves every one and is an on-going effort
  Efficiency - a local measure of performance. Doing things
right (machine utilization)
  Effectiveness - a global measure. Doing the right thing
(responding to customer demands)
  Changes observed in management role
(commitment, participation, setting goals) and
employees role (involvement, promotion, upgrade)