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  • What do the following stakeholders want/expect from manufacturing?

    Sales & Marketing

    Brand power

    is the measure of customer preference based on reputation, product quality and supply chain capabilities


    is traditionally treated according to the principle of economy of scale

    -Average cost to produce product declines as manufacturing volume increases
    -Particularly important when high fixed costs are present


    involves frequent product runs and high repetition of small lot sizes

    -Processes that can rapidly switch production from one product to another while retaining efficiency are said to have economy of scope

    Manufacturing terms

    -Constraints interact with volume and variety to create realistic manufacturing plans
    -Capacity is how much can you produce in a given unit of time
    -Equipment considers how flexible it is
    -Is one particular piece a bottleneck?
    -Setup/Changeover considers how quickly can you
    change from one variety of product to another

    Lead time

    is the measure of elapsed time between release of a work order to the shop floor and completion of all work on the product to achieve ready-to-ship status


    How well the product performs in comparison to how it was designed to perform


    Likelihood that the product will perform throughout its expected life


    The actual life expectancy of the product


    Does the product meet its specifications as designed


    What different functions or tasks can the product perform


    Is the styling, color, workmanship pleasing to the customer


    What is the ease of fixing or repairing the product if it fails

    Perceived Quality

    Based on customer's experience before, during and after they purchase a product

    Total Quality Management (TQM)

    is a philosophy focused on meeting customer expectations with respect to all needs, across all company functions, and recognizing all customers, both internal and external
    It is a total, organization-wide activity versus a technical task

    TQM's basic conceptual elements are:

    Top Management commitment and support
    Maintaining a customer focus in product, service and process performance
    Integrated operations within and between organizations
    A commitment to continuous improvement

    Management Standards have been Established by the ISO in both Quality and Environment

    -The International Organization for Standards (ISO) was formed after World War II
    -The ISO 9000—International Quality Standard (first published in 1987) is a family of various aspects of quality management and contains some of ISO's best known standards.
    -The standards provide guidance and tools for companies and organizations who want to ensure that their products and services consistently meet customer's requirements, and that quality is consistently improved.

    What ISO provides

    -Shows commitment to providing a high level of customer satisfaction

    -Demonstrates the existence of an effective quality management system that satisfies the rigors of an independent, external audit

    -Can boost your organization's brand reputation and be a useful promotional tool, especially when going up against competitors who aren't certified.

    ISO 9001:2008

    - sets out the requirements of a quality management system.
    This standard is being replaced with ISO 9001:2015 The final updated version is expected by the end of 2015.

    ISO 9000:2005

    - covers the basic concepts and language

    ISO 9004:2009 -

    focuses on how to make a quality management system more efficient and effective

    ISO 19011:2011 -

    sets out guidance on internal and external audits of quality management systems.

    ISO 14000—International Environmental Standard

    -manage the environmental effect of their business practices.
    -manages the environment inside it's facilities and the immediate outside environment
    - analysis of the entire life cycle of a product
    - do not mandate a particular level of pollution
    -does not release a company from any national or local regulations

    Standards in the ISO 14000 series are:

    ISO 14001 - Specification of Environmental Management Systems
    ISO 14004 - Guideline Standard
    ISO 14010 through ISO 14015 - Environmental Auditing and Related Activities
    ISO 14020 through ISO 14024 - Environmental Labeling
    ISO 14031 through ISO 14032 - Environmental Performance Evaluation
    ISO 14040 through ISO 14043 - Life Cycle Assessment
    ISO 14050 - Terms and Definition

    ISO Certified Suppliers are Frequently Preferred by Procurement Departments

    -They have to conform to an externally defined set of standards for quality and delivery of service
    -They are usually more open to sharing supply chain information
    -They welcome building relationships with their customers
    -Formal processes in place for continual
    - easier for procurement to initially qualify and
    periodically audit
    -Certification is done by an external register agency
    -Recertified every three years

    Engineer to Order (ETO) START here

    is used when products are unique and extensively customized for the specific needs of individual customers

    Make to Order (MTO

    ) relies on relatively small quantities, but more complexity
    Requires much interaction with customer to work out design and specification
    Usually shipped direct to customer
    Can utilize postponement

    Assemble to Order (ATO)

    is when base components are made, stocked to forecast, but products are not assembled until customer order is received
    Manufacturing postponement practiced here

    Make to Stock (MTS)

    features economies of scale, large volumes, long production runs, low variety, and distribution channels
    Note: The textbook refers to this as Make to Plan (MTP)

    Job shop

    Product variety: High
    Valume: very low
    Strategy: ETO/MTO
    Lead time: Very long
    Do any JOB that is needed


    Product variety: High
    Volume: low
    Strategy: ETO/MTO/ATO
    Lead time: Long

    Line flow

    Product variety: Limited
    Volume: High
    Strategy: ATO/MTS
    Lead time: Short

    Continuious flow

    Product variety: Very limited
    Volume: Very high
    Strategy: MTS (MTP)
    Lead time: Very short

    Total Cost of Manufacturing (TCM) (aka Total Delivered Cost) includes:

    Procurement and production activities
    Inventory and warehousing activities
    Transportation activitie


    -TCM generally expressed as cost per unit
    -Procurement and production costs go down as volume goes up (generally-step function applies as more capital is required to produce)
    -Inventory and warehousing costs go up as volume goes up
    -Transportation costs go down as volume goes up, but level off at high volumes

    Mass Customization

    Individually customized products being produced at the low cost of standardized, mass produced goods.
    Increase variety for customer while realizing the cost advantages of high volume continuous and line flow processes
    "On-Demand", "To Order", "Postponement", "Agile Mfg"

    Market Characteristics:

    Sufficiently large customer segment that values "translatable variety"
    Turbulent, dynamic market
    Unpredictable demand - but not entirely unpredictable!
    Little impact of regulation or other constraints (designer drugs?

    Product/Process Characteristics:

    Modular or adjustable product building blocks
    Predictable components/functions interactions
    Standardized process/skill building blocks
    Reasonable lead times, steps, work content

    Lean Systems

    -Lean is a philosophy that is focused on the customer
    -Defining principle is the elimination of "waste". Waste is anything that does not add value for the customer
    -Lean emphasizes the minimization of the amount of all resources (including time) used in the operation of a company

    Primary Objectives of Lean Systems

    1.)Produce only the products that customers want
    2.)Produce products only as quickly as customers want them
    3.)Produce products with perfect quality
    4.)Produce in the minimum possible lead times
    5.)Produce products with features that customers want and no others

    6.)Produce with no waste of labor, materials or equipment; designate a purpose for every movement to leave zero idle inventory.
    7.)Produce with methods that reinforce the occupational development of workers

    The Elements of Lean Production

    Waste Reduction
    Lean Supply Chain Relationships
    Lean Layouts
    Inventory & Setup Time Reduction
    Small Batch Scheduling
    Continuous Improvement
    Workforce Empowerment

    Lean, in particular Value Stream mapping, is a great tool in administrative processes

    The Elements of Lean Production - The Seven Wastes

    Waiting - Excess idle machine & operator & inventory wait time
    Over-processing - Non-value adding manufacturing & other activities
    Excess Inventory
    Excess Movement
    Scrap & Rework

    Six sigma concepts

    -Six sigma approach is to identify sources of variability and then systematically reduce them. Get to the "root cause"

    -The six sigma goal is to achieve a process standard deviation that is six times smaller than the range of outputs allowed by the product's design specification

    -DMAIC methodology is a systematic approach to eliminating defects and keeping the process in control

    Quality level

    Three sigma quality level
    Produces defect free product 99.74 percent of the time
    66,807 defects per million parts produced

    Six sigma quality level
    Produces defect free product 99.99966 percent of the time
    3.4 defects per million parts produced

    Logistical Interfaces

    Resources must be procured, positioned, and coordinated as needed to support the manufacturing strategy selected

    Four approaches to achieve this are:

    Just-in-Time (JIT)
    Materials Requirements Planning (MRP)
    Design for Manufacture (DFM)
    Design for Logistics (DFL)

    Just-in-time (JIT) Interfaces

    Purchased materials and components arrive at the manufacturing or assembly point just at the time they are required for the transformation process
    Raw material and work in process inventories are minimized
    Demand for materials depends on the finalized production schedule
    Close cooperation with suppliers is essential!
    Lot sizes are as low as one unit

    Materials Requirements Planning (MRP) Interfaces

    Procurement has a key role in insuring all the components are obtained on time to make an end item
    Key information requirement is the bill of materials (BOM)
    Particularly for more complex manufacturing (i.e., MTO, ETO) where large numbers of components or subassemblies are used to produce a final product

    -Planning sometimes spans multiple manufacturing locations

    Design for Manufacture

    -Design-for-assembly - focuses on minimizing the number of parts and on easing assembly processes.

    -Design-for-product-serviceability - focuses on easing the disassembly and reuse of product components.

    -Design-for-six-sigma - systematically evaluates the consistency with which a good or service can be produced or delivered given the capabilities of the processes used.

    Design for Logistics Interface

    Design for logistics concept incorporates the requirements and framework for logistical support of the product in the early phases of product development

    What we are going to make
    How we are going to make it
    What logistics capabilities do we need
    How we are going to integrate our suppliers into the process
    Any subassembly manufacture by suppliers
    The need for outsourcing of some parts or assemblies

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