Module 1 Section E Flashcards
Forecast-Driven Enterprise
-manufacturer or service supplier uses a forecast - an estimate of future demand - as basis of its org. strategy
Push System:
* when supply chain works in response to forecasts
* in production, the production of items at required times based on given schedule planned in advance
* in material control, the issuing of material according to given schedule or issuing material to job order at its start time
* in distribution, a system for replenishing field warehouse inventories where replenishment decision making is centralized, usually at manufacturing site or central supply facility
-everything is pushed downstream from one point to the next according to schedules based on forecasts
-root causes of bull whip effect:
* failure to communicate actual demand + over-reliance on forecasts
* solution: better visibility in both directions but especially of promotions, order to replenish safety stock, and other info on actual demand; rely less on forecasting
RISK:
* build-up of inventory all along supply chain; inventory costs money while it sits in retail stockroom, DC, or preproduction sotrage area
* runs risk of becoming obsolute or irrelevant; can also run short of stock
* forecasts can be wrong in either direction
Demand-Driven Enterprise
**Demand-driven material requirements planning (DDMRP) ** - method for planning material needs that enables org to build more closely to actual market requirements
Demand-driven supply network: situation in which customer purchase initiates real-time information flows through supply chain that consequently cause movement of product through network
Pull system:
1. in production, production of items only as demanded for use or to replace those taken for use
2. in material control, the withdrawal of inventory as demanded by using operations; material not issued until signal comes from user
3. in distribution, system for replenishing field warehouse inventories where replenishment decisions are made at field warehouse itself, not at central warehouse or plant
-focused on customer demand
-production process is based on actual demand info and product is turn out only in response to actual orders (on-demand) –> no fixed production schedule –> decrease in lead time
-inventory buffers reduced –> trade partners need to develop agility (ability to respond to variability in flow of orders based on sales)
-rely more on MTO or ATO
RISK: order will begin to come in above capacity and all along supply chain there be will be expensive activity to run plant overtime, expedite more and faster transportation or convince customer to wait/accept a substitute product
Decoupling Points
-locations in product structure or distribution network where inventory is placed to create independence between processes or entities
Example: push-pull frontier –> determining best point for moving from psh to pull is an important ops. strategy decision
Engineer-to-Order (ETO)
-products whose customer specifications require unique engineering design, significant customization, or new purchased materials
-each customer order results in a unique set of part numbers, bills of material, and routings
-product volume low
-product variety high
-extensive lead times (once designs are finalized, there is additional lead time for purchasing of materials for manufacturing); assembly and shipping also add to lead time
Make-to-Order
-production environment where good or service can be made after receipt of customer’s order
-final product is usually a combination of standard items and items customer-design to meet special needs of customer
-where options or accessories are stocked before customer orders arrive, term assemble-to-order is frequently used
-produces nothing until customer order is received
-org may still carry inventory , but it’s in form of raw materials e.g. custom windows or cabinets
-delivery lead time is fairly long –> includes production, assembly, and shipping
-best when variety is medium to high and volume is low to medium
-demand management involves determining how much engineering and manufacturing capacity will be necessary in order to meet needs of future customers
-options or accessories are stocked before a customer order arrives
Options = choice that must be made by customer or company when customizing end product; in many compnies option means mandatory cjoice from limited selection
Assemble-to-Order
-production environment where a good or service can be assembled after receipt of customer’s order
-key components (bulk, semi-finished, intermediate, subassembly, fabricated, purchasing, packing, etc) used in assembly or finishing process are planned and usually stocked in anticipation of order
-receipt of order initites assembly of customized product
-strategy is useful where large number of end products (based on selection of options/accessories) can be assembled from common components
-sometimes called build-to-order, finish-to-order, package-to-order
-more common than MTO
-Components = raw material, part, or subassembly that goes into hgiher-level assembly, compound or other item; may include packaging material for finished items
-finished product is then assembled only upon receipt of order e.g. laptops ordered online from manufacturer or motorcycle from dealership
-key inventory is that of components rather than finished product
-shorter lead time consisting of only assembly and shipping since components are already in inventory –> lower inventory costs than MTS because components can be made into wide variety of end products, if all built, would require significantly more inventory overall
-products are high enough in volume with adequate variety to justify making components and subassemblies in advance / variety is low to medium
Make-to-Stock
-production environment where products can be and usually are finished before receipt of customer order
-customer orders are typically filled from existing stocks and production orders are used to replenish those stocks
-products items for inventroy based on forecasts of demand e.g. can of soup or clothing store’s t-shirts
-demand management involves maintenance of finished goods inventories; customers buy products directly from available inventory so customer service is determined by whether item is in stock or not available
-lead time can be very short, as it is limited to shipping
-high inventory costs
-orgs may choose to:
1. manufacture inventory at economies of scale in just 1 or few locations so inventory is relatively inexpensive to produce
2. develop regional manufacturing centers and maintain lower overall inventory, but develop faster distribution methods;
2. others choose lean manufacturing (making items only in response to replenidhment orders) so they can achieve higher customer service levels with much lower inventory investment level
Configure-to-Order (CTO)
-same lead time as ATO, but allows customer to configure product, selecting from various features and options
-results in potential for entirely unique configurations that have not been produced before
-lack of design time requires reduces lead time to nearly equal to MTO
-components may not be may not be manufactured until order is received, but typically they are based on existing designs
Mass Customization
-attempt to serve markets that desire both high volume and high variety
-manufacturing cost is low due to large volume, allowing customers to specify an exact model out of a large volume of possible end items
-customers allowed some degree of customization while manufacturing produces products at nearly same cost as that of a high-volume process
-usually considered a subset of ATO and CTO because customer is choosing among previously manufactured or purchased options
-lead times can be longer
Example: personal computer order in which customer specifies processor speed, memory size, hard disk size/speed, removable storage device characteristics, etc. when PCs are assembled on one line and at low cost
Postponement
-product design, or supply chain strategy that deliberately delays finals differentiation of a product (assembly, production, packaging, tagging, etc) until latest possible time in process
-this shift product differentiation closer to consume to reduce anticipatory risk of producing wrong product –> eliminates excess finished goods in supply chain
-ATO strategy that often performs final assembly in distribution center because assembly usually does not require specialized equipment or extensive manufacturing expertise
Example: putting country-specific power supply in unit or labeling boxes for specific language
-can be used to reduce manufacturing costs by producing generic versions in high volume and delaying final configuration much closer to customer e.g household paint
Benefits: inventory reduction, lower production costs, improve response time to customer requests
Modular Design
-subdivides product/process into smaller parts that can be independently created and then assembled, which provides customer with more options at an affordable manufacturing cost
**Modular design strategy **= strategy of planning and designing products so that components or subassemblies can be used in current and future products or assemble to product multiple configurations of a product e.g. cars, personal computers
Modularization = in product development, use of standardized parts for flexibility and variety; allows product development cost reductions by using same item(s) to build variety of finished goods; 1st step in developing planning bill of material process
-more expensive by diagnosis and repair are easier; reduction of number of parts at final assembly
Package-to-Order
-type of ATO that uses postponement to delay packaging items produced and stores in bulk until orders for specific package sizes are received
-item is common across many different customers; packaging determines end product
Remanufacturing
-industrial process in which worn-out products are restores to like-new condition
-aspect of reverse logistics
-materials may be reused and recycled from worn-out products
Manufacturing Strategy
-collective pattern of decisions that acts upon formulation and deployment of manufacturing resources
-to be most effective, it should act in support of the overall strategic direction of the business and provide for competitive advantages
-focused on ensuring the correct product/service is supplied in correct volume with the required availability and quality
Product-Process Matrix and Manufacturing Environments
-vertical axis describes variety among products that ops. has capability to product
-horizontal axis refers to volume that ops. has capability to produce
Scales
1. customer lead time - longer for engineer or substantially customized products/service; shorter for assembled or stock items
2. tasks - diverse & completed (ETO) <—> repeated and divided (MTS)
3. frequency - frequency with which units can be produced will strongly impact their cost; project (ETO / own customer schedules ), intermittent (include work center and batch) & flow (line and continuous)
Manufacturing Philosophy
-set of guiding principles, driving forces, and ingrained attitudes that helps communicates goals, plans, and policies to all employees; reinforced through conscious and subconscious behavior within the manufacturing org
Manufacturing Environment
-framework in which manufacturing strategy is developed and implemented
-elements include external environmental factors; corporate strategy, business unit strategy, other functional strategies (marketing, engineering, etc), product selection, product/process design, product/process technology and management competencies
-often refers to whether a company, plant, product or service is MTS, MTO, ATO
Manufacturing Process
-series of operations performed upon material to convert it from raw material or a semifinished start to a state of further completion
-can be arranged in a process layout, product layout, cellular layoutm or fixed-position layout
-can be planned to support MTS, MTO, ATO, etc. based on strategic use and placement of inventories
Facility Layout
-describes where machines and utilities will be located in a facility + arranagement of processes
Manufacturing Environments & Production Process Types
Example: Building construction
- Manufacturing Environment = ETO
- Manufacturing Process type = Project
- Manufacturing Process Layout = Fixed position (thing being made generally stays in one place)
example: soda bottling facility
1. Environment = MTS
2. Process type = line
3. process layout = product-based
example: gas refinery
1. environment - MTS
2. process type = continous (material flow without stopping through refinement process)
3. process layout = product-based (designed to work with only a limited range of products)
pg. 1-177
Manufacturing Environments by Volume and Variety
-manufacturing environment must respond to two factord:
1. variety of products it creates
2. volume of its output
Variety how unique is product produced? how much says does customer have over product design?
* at high end of scale is product that has lond lead time to customer, is complex, and unique to customer’s needs e.g. communications satellite
* at low end is product that is produced quickly and repeatedly or in continouous production stream e.g. wood screws
Volume - how many units are being produced?
* Wood screws would be at high end of volume axis; manufactured in the thousands
High variety/low volume = ETO
High variety/high volume = mass customization (e.g. Dell)
Low variety/high volume = MTS
Delivery Lead Time
-the time from receipt of a customer order to delivery of product
pg. 1-182
Customer Tolereance Time
-the amount of time potential customers are willing to wait for delivery of a good/service
Supplier Lead Time
-amount of time that normally elapses between time an order is receive by supplier and time order is shipped
Procurement Lead Time
-time required to design a product, modify or design equipment, conduct market research, and obtain all necessary materials
-lead time begins when decision has been made to accept an order to product a new product and when when production commences
Purchasing Lead Time
-total lead time required to obtain a purchased item
-includes order preparation and release time; supplier lead time; transportation time, and receiving, inspection, put-away time
Manufacturing Lead Time
-total time required to manufacture an item, exclusive of lower-level purchasing lead time
-for MTO is it the length of time between release of an order to production process and shipment to final customer
for MTS: length of time between release of an order to production process and receipt into inventory
Project Process Type
example of products: buildings, ships, aircrafts
-product is primarily made at 1 site, is unique, and has a deadline for completion
**Project management: **use of skills and knowledge in coordinating the organizing, planning, scheduling, directing, controlling, monitoring, and evaluating of prescrived activities to ensure that stated objectives of project, manufactured good, or service are achieved
1. time de-limited
2. produces unique deliverables
Gantt chart: earliest and best-known type of planning and control cart, especially design to show graphically the relationship between planned performance and actual performance over time; used for:
1. machine loading - one horizontal line is used to represent capacity and another to represent load against that capacity
2. monitoring job progress - one horizontal line represents production schedule and another parallel line represents actual progress of job against schedule in tiem
Intermittent Production
-form of manufacturing in which jobs pass through functional departments in lots, and each lot may have a different routing
-intermittent process types are useful when there are many product design variants that have diff. process requirements and therefore ahve unbalanced workflows between work centers
-high work-in-process inventory –> longer lead times
-general purpose equipment is often needed instead of specialized equipment
-order quantities typically variables (some jobs will run longer than others)
-might use fixed-position, functional or cellular layouts
-2 types = Work Center & batch
- **batch **
Work Center
- made-to-order for customers
- parts: medium to high
- production rate: low to medium
- variety: high
- organized around similar processes
- usually involves smaller lots or batches
- production areas that are grouped by function, such as all lathes in one area and all sanding in a diff. work area
- products are routed between work centers in odff patterns depending on what process needs to be done next
- emphasis in planning is to have fast changeovers with skilled, flexible labor
Batch
- MTO or ATO
- # parts: medium
- volume: medium to high
- variety: low to medium
- production rate: medium to high
- version of intermittent manufacturing for high production volume
- lots or batches are larger
- flow between chain of activities is optimized to minimize distance traveled between workstations
- emphasis in planning is to have longer productions runs and fewer changeovers*
Flow Processing
-high volumes & low variety
-in process systems development, work flows from one workstation to another at nearly constant rate with no delays
-use product-base layout
2 types:
Line & continuous
Flow Shop
form of manufacturing org. in which machines and operations handle a standard, usually uninterrupted, material flow
-operators generally perform same operations for each production run
-equipment is more specialized allowing higher volumes, but less variety; usually designed to make only specific products and new products typically require new equipment
-capacity of line is fixed and difficult to alter
-material flow between workstations is often automated, meaning work-in-process (WIP) inventory is low (and very predictable) as are throughput times
-low amount of WIP inveentory –> shorter lead times
Example: process industries (chemicals, oil, paint, etc)
Line Process Type
-products are discrete units e.g. cans, soda, cars
-production rate: high
- # of parts: low to medium
- volume: high
- variety: low
Continuous Process Type
-used when products being produced are liquids, liquid metals, bulk solids (e.g. flour or pet food)
-continuous production = production system in which productive equipment is organized and sequenced according to steps involved to product the product; routing of jobs is fixed and setups seldom change
-production rate: high
-volume: high
-# of parts: low to medium
-variety: low
Process Layout - Fixed-position layout
-factory layout that plans for product to be in a set place: people, machines, and tools are brought to and from the product
-used when product is too heavy or large to move
-Benefits
* high independence of production centers
* high flexibility and adaptability
* low capital investment
* low amount of material movement
Limitations
* high effort when moving machines to product location
* highly skilled labor needed
* limited storage space for materials
e.g. crews will come to site of airport construction
Process Layout - Functional Layout
-facilitary configuration in which operations of a similar nature or function are grouped together…based on departmental specialty e.g. saw, lathre, mill, etc.
-can be used with either of intermittent manufacturing types (work center or batcH)
-economical choice when there is not enough production volume to justify setting up assembly line
-most frequently produced products may have most efficient path
-layout is useful where low volume of production is normal
-if product are not standardized this layout is more desirable –> greater **process flexibility **(design of manufacturing system that allows quick changeovers to respond to near-term changes in product volume and mix)
Benefits
* high equipment flexibility and need for fewer machines
* more specialized supervision
* ability to transfer work leads to low risk for loss of production due to machinery breakdowns
Limitations
* queue time leads to higher total production time
* bottleneck potential is high
* higher handling cots due to longer product flow line
Process Layout - Cellular Layout
-equipment configuration to support cellular manufacturing which is a process that produces families of parts within a single line or cell of machines controlled by operators who work only within the line or cell
-hybrid of a functional layout and product-based layout that places sequential steps adjacent to one another so one unit or small batch can be processed from start to finish with no waiting at each stations –> no WIP inventory accumulates and lead times shrink significantly
-extensively used in lean to enable fast, repetitive processing of small batches or single units
-can be used in intermittent environments that need to produce low volume and high variety as long as products can be grouped into product families
Example: producer of high-end audio speakers creates small cells for each product family; all processes (e.g. soldering, testing) can be completed with less complicated and wasteful routing
Benefits:
* minimizes material-handling distances and factory floor space requirements
* faster processing time
* no WIP inventory accumulates
* lead times shrink
* reduced finished goods inventory
Limitations
* works only if product can be grouped into product families
* locating work centers or cells near each other
Cell
-manufacturing or service unit consisting of a number of workstations and materials transport mechanisms and storage buffers that interconnect them
Work Cell
-dissimilar machines grouped together into a production unit to produce a family of parts having similar routings
Nesting
-act of combining several small processes to form one larger process
U-lines
-production lines shapre like the letter U
-shape allows workers to easily perform several nonsequential tasks without much walk time
-# of workstations usually determined by line balanacing
-promote communication
Process Layout - Product-based layout
-type of layout where resources are arranged sequentially according to steps required to make a particular complex product
-dedicated flow that minimizes materials handling between work centers
-customized for limited range of very similar products
-used with either type of flow system (line or continuous) to maximize efficiency (lower cost per unit) but high degree of specialization requires large capital expenditures that need to be justified by large volumes
Example: car frame moves continuously on an assembly line past workers and equipment that perform assigned tasks
Benefits:
* lower total material-handling costs
* less work in process
* less floor area occupied by material in transit and storage
* simplicity of production control
* total production time is minimized
* high degree of equipment and labor utilization
Limitations
* limited flexibility
* manufacturing costs increase with decreased in volume
* single machine breakdown could shut down whole production line
* cannot easily response to system changes
Service
-sometimes used to describe those activities that support production or distribution functions in any org, such as customer service and field service
-services with low degree of contact (e.g. marketing emails, vending machines, etc). are very efficient to offer but have low sales conversion ates or perceived as low value by customer
-services with high degree of contact more likely to generate sales or customer satisfaction (more expensive to offer)
Service Design Matrix
examples: fast food restaurant (lower customer interaction, no customization, higher production efficiency) vs. sit down restaurant (higher sales, higher degree of contact between customer and service provider, lower production efficiency)
Service Gap Analysis
-can take data from customer surveys, complaints, etc.
-analysis matrix compares customer satisfaction perceptions against customer important of a given service
-service perceived as having low quality but is also relatively unimportant results in slight irritations that could be addresses, but only if the response is inexpensive to implement
-service perceived as high quality but still unimportant is non-value added and it might be eliminated or made more efficient (e.g. less time could be spent on it)
-key for continuous improvement or service redesign is services that are of high important but perceived as low quality
pg. 1-204
Process-chain-network (PCN) diagram
-tool for service design that is like a swimlane flowchart in that the flowchart is divided into zones
-innermost zone is for independent processes –> under direct control of the org. / degre of process control is highest in this zone
-direct interactions: end zones deal with supplier on left side and customer on right size with decreasing degrees of proces control in both directions
-indirect interaction zones: when org. is acting on supplier’s or customer’s resources, such as with a resupply website in supplier case
RACI Matrix
R = responsible for task completion
A = accountable for income
C = consulted (provides input on the work)
I = informed of progress
-only 1 person can be accountable for a given part of a project (i.e. accountable for success or failure), but multiple people can be assigned responsibility for executing a particular task
Tuckman Ladder of Team Development
-during forming, team members try to understand their roles
-during storming, team may begin to question project’s objectives, and PM needs to work hard to enforce ground rules and expectations
-during norming, teams grow in confidence and PMs facilitate collaboration and sustain motivation
-during performing, team is at peak efficiency and PMs help with long-term skill development
-during adjourning, lessons learned are captured, successes are celebrted and teams are disbanded
Traditional Project Management
-for projects with requirements that can be frozen early on
-helps control project costs and keep project on its deadline
-initiating –> planning –> executing –> closing
-work done during planning phase is most critical to traditional project’s success
-largest cost accumuation occurs during executing phase, planning represents largest opportunity to affect project cost
Agile Project Management
-intense customer participation
-regular iteration with planning just for that iteration
-incremental planning to enable rearranging priority of work on regular basis
-key benefit of agile methods is they can turn innovation into results much faster than traditional PM
-scrum is an agile PM technique that can be used for projects with a lot of requirements variability
-product owner represents the customer
