Production Operations & Methods Flashcards
Production Process
Transforming raw materials into finished goods
Production Methods
- Make-to-Stock (MTS): finished products are made before customer orders (based on forecasts)
- Assemble-to-Order (ATO): standard components are assembled based on customer specifications
- Build-to-Oder (BTO)/ Engineer-to-Order (ETO): highly customized products made after confirmed orders
Role of Production Operations
Manufacturing and service production (contract manufacturing) provide an economic utility called form utility through processes that change the appearance or composition of the product
- Component fabrication
- Product assembly
- Service request execution
Form utility drives the need for supply chain capabilities (time & place utilities)
Fabrication (n) (specialist) the process of making or producing goods, equipment, etc. from various different materials
Effective Production Operations
A production operation requires the support from different players in a supply chain in order to effectively support the production demands from customers
To operate to optimal efficiency, supply chain tradeoffs must be understood and made
In situations where production
processes have high fixed costs and equipment like chemical production or paper manufacturing, it makes sense to pursue volume.
In contrast, processes that can produce a range of products are said to have economies of scope
Common tradeoffs in Production Operations: Responsiveness & Efficiency
*Centralized production facilities provide operating cost and inventory efficiencies - regional production facilities allow companies to be closer to customers and more responsive
*Make vs. Buy decision - whether to conduct your own production operations or to outsource production to external suppliers
Economies of scope differ from economies of scale, in that the former means producing a variety of different products together to reduce costs while the latter means producing more of the same good in order to reduce costs by increasing efficiency.
Production Tradeoffs
Volume-variety tradeoff is a primary issue of production
- High variety/low volume (economies of scope – flexible to demand)
- Low variety/high volume (economies of scale – cost effective)
Fundamental tradeoffs between responsiveness (R) and efficiency (E)
- Centralized (E) versus decentralized (R) production facilities
- Larger (R) versus smaller (E) production facilities
- Operating methodology used by the facility - many (R) v few (E) functions
Make versus Buy decision
Complex and involves sacrifice
- Internal production processes are more visible and better controlled for quality output
- Outsourced production processes should lead to lower product costs and allow the focal company to focus its resources on more strategic needs
focal (adj) central; very important; connected with or providing a focus
Mass Production
- Operations strategy focuses on cost efficiency and large scale production (economies of scale)
- Push-based system that relies on long-term forecast for production planning and decision making
- Works well if demand is somewhat constant
- Production backlogs are used to accommodate variations of demand
- Works well for supply chains that focus on the immediate delivery of off-the-shelf, low cost, standardized goods
- Visibility of inventory is important to manage demand changes in the market
- Ex. school supplies, toys, traditional clothing, household items
- Process option to use: make-to-stock (MTS)
backlog (n) a quantity of work that should have been done already, but has not yet been done
Lean Production
- Operations strategy focuses on improved quality and waste reduction
- The goal is to have materials arrive at the needed location just in time for rapid processing and flow through the system
- Relies on pull-based systems to coordinate production and distribution with actual customer demand
- No need for the manufacturer to build inventory in anticipation of demand
- Difficult for achieving economies of scale as well as lack of technological capabilities makes it difficult to achieve visibility and system synchronization
- Ex. Toyota production system, Dell computers
- Process option to use: assemble-to-order (ATO)
Adaptive Manufacturing
- Operations strategy focuses on greater velocity and real-time execution
- Provides companies with the ability to replace planning and replanning with execution based on real time demand
- Custom orders are captured in an automated manner, sequenced, and then executed by the factory with little to no intervention from personnel
- Technology, such as ERP, is key to an adaptive strategy serving to seamlessly link factory processes, production equipment, and production systems to supply chain operations
- Ex. electronic components, automobile parts, cosmetics, medical equipments
- Process option to use: hybrids (combination of many)
velocity (n) (specialist) the speed of something in a particular direction
Flexible Manufacturing
- Operations strategy focuses on leveraging production resources (e.g., time and efforts) in support of different transformation processes (economies of scope)
- Relies on strong suppliers and information technology
- Main flaw of this strategy is cost (purchase of multipurpose or adjustable equipment; labour skills)
- Outsourcing and offshoring gives manufacturers other ways to be flexible as well as be more cost effective, gain more capacity, and improve quality
- Ex. automobiles, plastic bottles, custom parts, apparel
- Process option to use: build-to-order (BTO)/ engineer-to-order (ETO)
Production Planning
- Long-Range Plan
Covering a year or more, focus on major decisions regarding capacity and aggregate production. - Medium-Range Plan
Span 6 to 18 months and involve tactical decisions regarding employment levels and similar issues. - Short-Range Plan
Ranging from a few days to a few weeks
Production Process Layout
- Manufacturing Cell
Process-focused layout that dedicates production areas to a narrow range of products that are similar in processing requirements - Assembly Line
Product-focused layout in which machines and workers are arranged according to the progressive sequence of operations - Continuous Process Facilities
Similar to assembly lines, with product flowing through a predetermined sequence of stops
Production Metrics
- Total Cost
All money spent on manufacturing must be summarized and the total compared to the previous period - Total Cycle Time
Total cycle time is a measure of manufacturing performance that is calculated by studying major purchased components and determining the total days on hand of each one - Delivery Performance
Is the percentage of customer orders shipped when the customer requested them to be shipped - Quality
This may vary by company but it must focus on quality from the perspective of the customer - Safety
The standard metrics of accident/incident frequency, severity, and cost are important to monitor, with continuous improvement (i.e., reduction) as the goal
on hand (adj) available, especially to help
Lean production relies on
a. just-in-time system
b. the Toyota production system (TPS)
c. push-based system
d. pull-based system
d. pull-based system
Processes that can produce a range of products are said to have
a. work centers
b. economies of scale
c. routing flexibility
d. economies of scope
d. economies of scope
A project layout is
a. a process-focused layout that groups together similar equipment or functions
b. a floor plan of the production facility
c. a product-focused layout in which machines are arranged according to the progressive sequence of operations
d. a fixed location layout where the product remains in place for the duration of production
d. a fixed location layout where the product remains in place for the duration of production
