Chapter 6: Production Flashcards
What is production?
- Transforms input resources into goods or services
- Uses equipment and personnel
Describe some differences between the marketing perspective and the production perspectives for a company`s production strategy.
Marketing: Focuses on customer needs and market demand.
Production: Focuses on efficiency and cost-effectiveness in manufacturing
Why is the difference between independent demand and dependent demand important for a company`s production strategy?
ndependent Demand: For final products. Needs flexibility.
Dependent Demand: For components of final products. Benefits from standardization and efficient planning.
What issues should be covered by a production strategy?
- Address investments in processes.
- Consider infrastructure needs.
- Plan resource allocation.
In what ways are the strategic competitive factors of production conflicting? What are the consequences of this?
- Factors: Price, delivery, quality, flexibility.
- Conflict: Can’t fully meet all factors at once.
- Solution: Balance based on value proposition and business strategy.
Why is it important to identify so called qualifiers and order winners when designing a production strategy?
- Production Strategy: How a company operates production to achieve goals.
- Qualifiers: Factors that allow market competition.
- Order Winners: Factors that determine customer choice.
- Importance: Aligns production with goals, positions within value chains, and designs processes to match value proposition
Describe the relationship between product variety and production volume as well as the consequences this relationship has on the production system.
High Variation & Low Volume:
Focus: Flexibility, complex processes, exclusivity
Outcome: High customer value
Low Variation & High Volume:
Focus: Specialization, capital intensity, cost efficiency
Outcome: Low prices
Describe the 5 typical process types in goods manufacturing and how these are related to different production layouts.
Project Production: Custom work tailored to individual projects, often with high production costs.
One-Off Production: Creating and customizing each product for specific customers, such as in restaurants where products are marketed before development.
Batch Production: Producing products in batches or series, common in both goods and service industries, such as fast food restaurants.
Mass Production: Large volumes of identical products produced efficiently, usually against inventory, like in the automotive industry.
Continuous Production: Very large volumes of a single product are produced in a continuous flow, with significant fixed costs and constant supervision, such as in paper mills.
Explain the differences between professional services, service shops and standard services.
Professional Services: Customized by experts (e.g., consultants, lawyers).
Service Workshops: Moderate variation (e.g., auto repair, medical clinics).
Standard Services: High volume, low variation (e.g., banks, security).
Describe the 4 different logics of production flow.
- Convergent Production: Many inputs are turned into a few outputs, like making an airplane.
- Divergent Production: A few inputs create many different products, like in a steel mill.
- Hourglass-Shaped Production: Combines many parts into fewer modules that can be assembled in different ways, like engines or cabins.
- T-Shaped Production: The base product is the same, but it’s customized at the final step before delivery, like a car being tailored with specific features for the customer.
What is the effect of the customer order decoupling point on a production system?
- Definition: The point in the supply chain where production switches from being driven by forecasts to actual customer orders.
- Impact:
- Inventory Levels: Determines how much stock is kept.
- Lead Times: Affects how quickly orders are fulfilled.
- Production Flexibility: Influences the ability to adapt to changes in demand
What are the differences between stock and made to order?
- stock involves producing and storing goods in advance for immediate sale
-made-to-order produces goods only after receiving a customer order, minimizing inventory but potentially increasing lead times.
Why is capacity a crucial concept in a production strategy?
- The maximum amount a production system can produce in a given times.
- Why it matters:
- Meeting Demand: Ensures the system can handle customer orders.
- Setting Limits: Defines the boundaries for all other operations.
- Production Level: Represents the highest production achievable.
What does “bottleneck” mean when designing production processes? How does a bottleneck affect a production flow?
A “bottleneck” in production design is a stage that limits overall process capacity and slows down production flow, causing delays and reducing efficiency.
Describe some typical supply chains in the production of goods and in the production of services.
- goods: include raw materials, manufacturing, distribution, and retail.
- services: customer interaction, delivery of the service.
What is a contract manufacturer?
A contract manufacturer produces components according to the ordering company’s designs and specifications.
What does sourcing mean?
- What it is: Deciding which parts of production to do in-house or outsource.
Why it matters:
- Expertise: Choose based on who does it best.
- Capacity: Consider production limits and capabilities.
- Efficiency: Helps optimize the production process.
Describe Kraljic´s matrix for strategic purchasing.
Strategic Items
What they are: Very important for profits (impact on profit), hard to get (supply risk).
Focus: Build strong relationships with key suppliers.
Leverage Items
What they are: Very important for profits, easy to get.
Focus: Use your power to get the best deals.
Bottleneck Items
What they are: Not very important for profits, hard to get.
Focus: Make sure you have a steady supply and find backups.
Non-Critical Items
What they are: Not very important for profits, easy to get.
Focus: Keep it simple and use fewer suppliers.
Describe the difference between a functional layout and a flow layout in the manufacturing of goods.
- functional layout groups machines with similar functions together in different departments, suitable for small-batch production where products are moved around.
-flow layout arranges machines in sequence according to the production steps, facilitating mass production by allowing products to move through a streamlined assembly line.
Explain how the choice of production layout affects the production costs.
- The choice of layout affects costs by influencing how efficiently tasks are performed and how much handling is required
- functional: Higher costs due to more product movement and setup.
- flow: Lower costs through streamlined processes and less handling.
Describe how flexibility and buffers can be used for managing variation and uncertainty in the production process.
Flexibility: Allows changing tasks or having the right people and tools ready.
Buffers: Extra staff or materials to avoid delays.
Describe the concept Lean Production
-Efficient manufacturing that removes anything not adding value for the customer.
-Focus: Identify what creates value and reduce waste to improve flow.
Describe the difference between the two ordering principles push and pull.
Push: Production starts based on forecasts or schedules, pushing products through each stage of the process regardless of current demand.
Pull: Production starts based on actual demand, with each stage producing items only when requested by the next stage or customer.
What is the relationship between inventory level and replenishment volume?
Inventory Level: The amount currently in stock.
Replenishment Volume: The amount added to restock.
Higher inventory levels: Larger, less frequent restocks.
Lower inventory levels: Smaller, more frequent restocks.
What is a safety inventory?
Safety stock is the minimum buffer level in inventory to prevent shortages of products or materials.
Explain the concept Economic Order Quantity (EOQ).
the optimal order size that minimizes the total costs of inventory, including ordering and holding costs.
What does products in progress mean?
Products in progress refer to items that are currently being manufactured but are not yet finished or ready for sale.
Draw the typical profile of capital ties up in a manufacturing company.
Raw Materials: Initial investment in materials.
Products in progress: Capital invested in partially completed goods.
Finished Goods: Investment in completed products ready for sale
In what way is batch size and setup time important for the throughput time of a production process?
- Batch Size:
- Larger batches: Fewer setups, but longer lead times.
- Smaller batches: Shorter lead times, but more frequent setups.
- Setup Time:
- Longer setup time: Slower production.
- Shorter setup time: Faster production.
What is: just in time?
-Produce and deliver goods exactly when needed.
-Goal: Minimize inventory and reduce tied-up capital.
-Requirement: High discipline.
What is: production preparation?
Planning how to make a product.
Includes:
- Reviewing new products.
- Selecting work methods.
- Choosing machinery.
- Ordering special tools.
- Calculating time requirements.
What is: 5S?
5S is a workplace organization method involving:
Sort: Remove unnecessary tools and materials.
Set in Order: Arrange tools and materials in designated places.
Shine: Clean regularly.
Standardize: Establish daily routines.
Sustain: Maintain the order and cleanliness.
Describe some important principles and methods used in quality management.
what: Ensuring high quality and finding defects.
methods:
* Six Sigma: Improve processes and projects.
* Fishbone Diagram: Identify cause-and-effect.
* Five Whys: Ask “why” five times to find the root cause
