Topic 10 Flashcards
What is Just in Time (JIT), advantages and disadvantages
- the company doesn’t reserve space to store products but orders manufacturers to make more when required (pull)
Advantages: cuts down on storage space, increased efficiency, improved stock control, every customer becomes the sale
Disadvantages: if the stock is faulty there might not be enough time to order more from manufacturer (slows process, could lose money)
What is Just in Case (JIC), advantages and disadvantages
- company keeps a small stock of products just in case of a rush order (push)
Advantages: prevention of waste and overproduction, the manufacturer can respond quickly to demand
Disadvantages: needs storage space, large investment at the start of business, a trend change can leads to unsealed products
what is lean production
- considers product and process design as an ongoing activity and not a one-off task –> a long-term strat that focuses on continual feedback and incremental improvement
- (it’s JIT)
5 characteristics of lean production
- JIT supplies: right amount of material to production line
- Highly trained multi-skilled workforce
- Quality control and continuous improvement: quickly identify and fix any problems
- Zero defects: ensuring time, material, and energy are not wasting producing a sub-standard product
- Zero inventory: products are manufactured just in time to be sold
10 principles of lean production
- eliminating waste
- minimizing inventory
- maximizing flow
- pulling production from customer demand
- meeting customer requirements
- doing it right the first time
- empowering workers
- designing for rapid changeover
- partnering with suppliers
- creating a culture of continuous improvement (Kaizen)
what is Kaizen
= a culture of continuous improvement (originated in Japan)
- an important aspect of an organization’s long-term strat
what is value stream mapping
- a visual aid to map relationships between material, process, info, and time (end-to-end)
- used to identify problems in the design or analyze current and future processes
Workflow analysis
- classifies all tasks in a manufacturing process (supports value stream mapping)
- the review by production managers of processes to identify potential improvements
- considers the sequence, tools, and worker movement
how value stream mapping and workflow analysis help lead production
value stream mapping provides the “big picture” of the manufacturing process while the workflow analysis is concerned with the details of the production line
role of the workforce in lean production
- best people to identify improvements are those who use it
- they can identify areas of improvement in the workflow
- this reduces cost and creates brand loyalty
what is Kanban
- a way of managing knowledge (case stock, orders, and quality)
- e.g. when something reaches low level the Kanban label is submitted to order and deliver automatically another batch just in time
Product family
- a group of products using similar processing methods
- allows companies to create a competitive advantage
Advantages: reduced design effort, reduced time it takes, waste from one product can be used to make another, less variety of materials needed
What is lead time
- the time between the date of purchase and date of delivery
lead time = sum of all processes + sum of all delays
the 5Ss for cleaning workspace
- sorting
- stabilizing
- shining
- standardizing
- sustaining the practice
the seven wastes
- overproduction
- waiting
- transporting
- inappropriate processing
- unnecessary inventory
- unnecessary motion
- defects
Advantages and disadvantages of lean production
Advantages: minimizes waste so reduces cost, less impact on env
Disadvantages: one problem in production stops the whole process, since its JIT manufacturers rely on suppliers, more suitable for large-scale production
Computer-integrated manufacture (CIM)
= a system of manufacture that uses computers to integrate the processing of production for more efficient production lines
- uses computer networks
Advantages and disadvantages of CIM
Advantages: complex products on large-scale production (runs smoothly), suitable for batch production (repetitive patterns), low maintenance
Disadvantages: high investment, smaller production with no repetitive pattern doesn’t feel a need for CIM
Flexible manufacturing system (FMS)
= a manufacturing system with flexibility that allows the system to react in case of changes (predicted or unpredicted)
- Benefits: increased productivity due to automation, shorter lead times, lower labor cost (automation),
Quality control
products are produced to meet or exceed customer requirements and expectations
- quality control at the source eliminates waste from defects
Statistical process control
- applied to monitor and control a process
- a quality control tool that uses statistical methods to ensure process is most efficient
Quality assurance
Covers all activities from design to documentation (regulation of quality)
Differences between quality assurance and quality control
QA = process-oriented & deals with developing processes and systems
QC = product-oriented & deals with monitoring products
Value for money
The relationship between what a product is worth and what it costs
Costing vs pricing
Price = how much consumers are willing and able to pay
Cost = how much it takes to produce products
Fixed and variable costs
Fixed = what needs to be paid before production starts
Variable = costs that vary with the volume of production
Cost analysis: financial and economic
The examination and evaluation of separate elements of cost, including profit
Financial = how financial decisions will impact an individual or company
Economic = the impact of a financial decision on the economy as a whole, including environment and society
Break even point
The point of balance between profit anf loss –> the number of sales required to cover the total cost
Pricing strats
- Demand Pricing
- Competitor Pricing
- Product Line Pricing
- Psychological Pricing
- Cost-plus Strategy
Price-minus strategy
- Find out how much customers are willing to pay and then minus the profit margin to determine the price and work out how to produce it at price point
Retail and wholesale price
Retail = price of a product sold in the store
Wholesale = price of product when sold to a retailer –> higher price than what the wholesaler paid the producer
Typical manufacturing price
= price required to manufacture a product –> cheaper than the price it is sold to the wholesaler or retailer
Target costs and unit cost
Target Costs = a marketing approach that assigns an appropriate price to a product period to its production or manufacture
Unit: total cost (production) / total output (how many products are made = average cost (based on one product)
Return on investment
Compares a company’s profitability with a company’s efficiency
((total revenue - total cost) / total cost) x 100
Financial return and sales volume
Financial return = profit gained from an investment for the product
Sales volume = number of products over a period of time
