What do the following stakeholders want/expect from manufacturing?
Sales & Marketing
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
-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
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
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
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.
- 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 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
-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)
Product variety: High
Valume: very low
Lead time: Very long
Do any JOB that is needed
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
-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
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"
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?
Modular or adjustable product building blocks
Predictable components/functions interactions
Standardized process/skill building blocks
Reasonable lead times, steps, work content
-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
Lean Supply Chain Relationships
Inventory & Setup Time Reduction
Small Batch Scheduling
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
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
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
Resources must be procured, positioned, and coordinated as needed to support the manufacturing strategy selected
Four approaches to achieve this are:
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