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S2899191 Faculty of Economics and BusinessGlobal Supply Chain Management 1Global Supply Chain Management Final Exam Summary Lecture 4 – 7 Lecture 4 – Manufacturing Processes Outline Volume vs. Varity: The Process Matrix Layout Efficiency Planning vs. Customised: Order Penetration Point Assembly Line...

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business Global Supply Chain Management Final Exam Summary Lecture 4 – 7

Lecture 4 – Manufacturing Processes Outline -

Volume vs. Varity: The Process Matrix Layout Efficiency Planning vs. Customised: Order Penetration Point Assembly Line Design

Volume vs. Varity: The Process Matrix The Supply Chain

Two organisations 1. 2. 3. 4.

Differences? Similarities What causes the differences? How can we describe and categorise differences and similarities?

Process Type Process Types: Represents the way products are approached in an organisation  unique, as a commodity, or anything in between Factors to distinguish how products are handled: 1. Volume 2. Variety There might be a difference between what could be expected and what can be observed

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Product – Process Matrix

Organisations of Production Process 1. Project: Unique product, general equipment and resources  the product remains in a fixed location 2. Job shop: Unique, but similar products, similar equipment or functions are grouped together 3. Batch: Production in small series, less variation 4. Line: Same products in large amounts, work processes are arranged according to the progressive steps by which the product is made 5. Continuous process: like a line only the flow is continuous such as with liquids

Project 1. 2. 3. 4. 5.

e.g. Ship Building Large-scale One or a few end-items Tailored to fit unique requirements Clear start and finish Buildings, movies, highways, aircraft and ships

Jobbing

e.g. Gear Production

1. Small-scale 2. Output is one or a few – often customized - identical items 3. Instead of being dedicated to one product, resources are shared by many low volume/high variety products 4. Many change-overs 5. Special equipment and machine parts.

Batch Production

e.g. Silicone Chips

1. Same production line is used for multiple products  set-up or change-over time between various products 2. Jobs follow more-or-less the samline 3. Focus more on standardised products 4. Bread, beer and dinnerware Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191 Mass Production

University of Groningen Faculty of Economics and Business e.g. Car

1. Production line produces only a single type of product continuously  all products follow the same path of activities 2. Sililar or identical itenms are produced in high volumes 3. Few interruptions / change-overs in the process 4. Emphasis on efficiency 5. Cars, telephones and packaging lines

Continuous Production 1. 2. 3. 4. 5. 6.

e.g. Gasoline

Products are not discrete (i.e. only kilos, litres and metres) Similar or identical end products (mass production) Clear flow through the process The product seldom changes Only after packaging the product becomes a discrete unit Examples; chemicals, fibers, paper

Layout (Differs from organisation of the production process) Type of Layout Type of Layout: can be defined as the physical aarrangement or grouping of production resources Examples  placement of departments, workgroups within departments, work stations, machines and stock-holding points within a facility 1. Layout is the physical manifestation of the process type, and there is often some overlap between process types and the layouts that they could use. 2. Type of process and Layout are different concepts, which is not very clear in the book. 3. Layout might refer to a whole organization or to one department. 4. The observed lay-out (in reality or in a case) is not necessarily the most logical one based on volume and variety

Basic Layout Types 1. Fixed Position Layout: Product remains on one position and production means are brought to the product 2. Functional Layout – Work centre: Production means are grouped according to function / specialization 3. Cellular Layout – Manufacturing cell: Production means are grouped to optimize movement of materials 4. Product Layout: Production means are grouped following the steps of the production process

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Fixed Position Layout 1. 2. 3. 4.

The product remains in a fixed location Resources move towards products A high degree of task ordering/priority setting/sequencing is common A project layout may be developed by arranging materials according, to their assembly priority

Funcational Layout 1. 2. 3. 4.

Clustering around activities Machines and/or resources are grouped by their specialty Medical specialisms or Technologies Often associated with jobbing

Cell Layout 1. Dissimilar equipment and tools are clustered into manufacturing cells 2. Jobs are routed through the areas more efficiently due to smart clustering of resources. 3. Often products with both unique elements and standardized elements. (e.g. Gears, Machine parts, Total hip patients) 4. Often associated with jobbing and/or batch production

Product Layout 1. 2. 3. 4.

Activities are centred around Jobs (Products) Order of production steps determines sequence of machines/resources Dedicated product lines Often associated with mass/line production and/or continuous production

Funcational Layout vs. Product Layout

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Processes and Layouts

Case: Narayana Hurdayalaya Hospital

Efficiency Planning vs. Customised: Order Penetratin Point Customer Order Decoupling Point (CODP) 1. Corresponds with the last major stock point in the goods flow  Deliveries to customers are made from here 2. It separates order-driven activities from forecast-driven activities 3. It creates a certain degree of freedom to optimize the upstream activities independently from irregularities/uncertainties in market demand 4. The actual CODP is not always located where you would expect it to be, given all factors influencing it

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Operations Psuh vs. Customer Pull

Sense & Respond vs. Planning & Control

CODP and the 5 Key Performance Indicators

Speed and the CODP

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

DP1: Make-to-Stock -

Serve customers from finished goods inventory

Typical Products: Television, Clothing, Packaged food products Essential Issue: Balance the level of inventory against level of customer service  forecasting is a very important task Achieve operational excellence: Lean Manufacturing

DP2: Assemble-to-Order -

firms combine a number of preassembled modules to meet a customer’s specifications

Typical Products: Dell for desktop computer Essential Issue: define a customer’s order in terms of alternative components → One capability required is a design that enables as much flexibility as possible in combining components 1. Manufacturing results in customer specific products, assembled in a similar way 2. Maintaining inventories of components is key issue → Forecasting at aggregate/component level

DP3:Make-to-Order -

Firms make customers product from raw materials, parts and components

Typical Products: Machines, Some cars (e.g. Nissan, Mercedes), Exclusive sofes, chairs and tables Essential issue: to deliver on time, while keeping costs low through high capacity utilization → Catalogue products with small demand and specific customer details/specification Limited inventory of raw materials, extensive planning and scheduling efforts

DP4: Purchase-to-Order -

Firms will work with the customer and will start buying parts/products after an order has been placed

Typical Products: Expensive spare parts in a car repair shop, Expensive and very specific products, Furniture Essential Issue: Companies wait for the customers to specify their wishes and start procuring after receiving an order → Products are very exclusive or specific and will not be kept in stock, but specification is more or less known  Customer is willing to wait

DP4: Engineer-to-Order -

Firms will work with the customer to first design and then make the product

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Typical Products: Large machines: ASML, Boeing, Factories, Packaging materials Essential Issue: Design of the products requires novel solutions and a lot of engineering knowledge  Manufacturing might be relatively easier, but still complex: many suppliers, materials, and subcontractors

Determining the CODP: Downstream Forces

Determining the CODP: Upstream Forces

Determining the CODP Position

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Re-Setting the CODP 1. Moving Backward [“Moving Backward”] (MTS  ATO) a. Techniques i. Modular Production ii. Value Added Logistics b. Pros and Cons i. Customisation (+) ii. Reduced inventory of end-products (+) iii. Increased oder lead times (-) 2. Moving Forward (MTO  ATO) a. Pros and Cons i. Increased Efficiencies (+) ii. Reduced Customization (–) iii. Reduced Lead times (+)

Case: HP DeskJet Printers (I) Problems Observed 1. High inventories 2. Frequent stockouts Due to lask of responsiveness? Case: HP DeskJet Printers (II) Results 1. Cost savings on inventory and mass production 2. Responsive to demand Postponement / Value Added Logistics

Assembly Line Design Zernike Hair Salon: Utilisation and Balancing

Assume ZHS receives customers 8 hours per day, 5 days per week Capacity of ZHS = [2 cust/h] x [40 hours/week] = 80 customers per week -

Utilization Anna = 2/6 = 33% Utilization Brit = 2/3 = 67% Utilization Christine = 2/2 = 100%

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Assemby Line Balancing -

The Model J Wagon is assembled at a moving assembly line Desired capacity: 500 wagons / day (= demand) Production time per day: 7 hours (= 420 minutes = 25,200 seconds) List of activities, sequence of assembly activity (steps) and times per step are given

Problem: 1. Find an assignment of steps to work stations so that efficiency of the line is maximized 2. Precedence constraints must be satisfied 3. Demand must be met

Balancing Steps 1. 2. 3. 4. 5. 6. 7.

Specify the sequential relationships among tasks. Determine the required workstation cycle time (C). Determine the theoretical minimum number of workstations. One workstation should include as much tasks as the cycle time allows. Sequence of tasks cannot be broken by a divide in workstations. Assign tasks Evaluate the efficiency of the balance 8. Rebalance if needed

“Random” Workstations

Bottleneck takes 50 seconds/wagon: Capacity=25,200/50 = 504 wagons (>500) Is this the most efficient? The Most Efficient

C = 50.4 Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Problems in Balancing What if production has to go to 525 per day? CT = 48

Problems in Balancing 1. If cycle time cannot be reached a. Split the task (shorten task time) b. Use parallel workstations c. Share the task d. Use a more skilled worker (shorten task time) 2. If balancing remains problematic a. Work overtime (lengthen work time) b. Redesign the product 3. Motivation due to repetition

Creating Line Layout for Teamwork

Creating Line Layout for Worker Flexability

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

U-Shaped Lines

Summary of Lecture 4 1. 2. 3. 4. 5.

The design of a factory relies heavily on the volume – variety characteristics of products There should be a fit between process type and lay-out The CODP allows producers to balance the need for flexibility (by customers) and efficiency Upstream and downstream forces determine the position of the CODP Assembly lines can be balanced by fitting tasks within a Cycle Time

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Lecture 5 – The Lean Philosophy & Qulity Management Outline -

The lean Philosophy (Total) Quality Management

The Lean Philosophy Various Names: 1. “Toyota Production System”  Introduced at Toyota, Japan in 1950s by Taiichi Ohno 2. “Lean Manufacturing”  Term coined by Womack, Jones & Roos in their study on the Automobile industry: “The Machine that Changed the World” 3. Just-in-Time (JIT) 4. “Stockless Production” 5. “Japanese Management” 6. “Lean six-sigma”

Waste Reduction Fundamental Lean / JIT approach: Remove Waste  all things that do not add value 1. Muda (無駄 無駄 無駄): An activity that is wasteful and doesn't add value 2. Mura (斑 斑): Unevenness 3. Muri (無理 無理 無理): Over-burden of resources

Seven Sources of Waste T-I-M-W-O-O-D -

Transportation: Material movement Inventory: Work-in-Process Inventory Waste → Buffers; Large batch sizes Motion: Unnecessary motion of producer, worker or equipment → Poor house-keeping Wait: Waiting time of Jobs and Resources Over-processing: doing more work than what is required by customer → E.g. using tools that are more precise, complex, or expensive than required Over-production: Producing too early, too much → Attack End product inventories Defect: Rework, rescheduling, repair → Quality Management

Lean Objective is to Produce: 1. 2. 3. 4. 5.

Exactly what is needed (quality) Exactly how much is needed (variety – volume) Exactly when it is needed (just-in-time) Exactly where it is needed (location) At the lowest possible cost

Global Supply Chain Management Final Exam Summary

13

Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Lean is not primarily a cost-cutting strategy / productivity strategy Cutting cost is a result of: 1. More Efficient Operations (“Operational Excellence”) 2. Higher Quality 3. Less Inventory If you focus on Cost, you drive out Quality  if you focus on Quailty you drive out Cost

The Lean Philosophy 1. Attack problems rather than containing them 2. Be “pragmatic”: Inventories and Defects do exist, However, the long term goal is to remove them 3. “Labour is concerned with quality and Management with productivity” a. Management is focused on avoiding the problems to occur b. Quality first, productivity comes later 4. Integration: Functions should work together as one organization a. Do not strive for local optima 5. Does not rely on automation: “Simplicity” is key

Attack Problems rather than containing them

Traffic Planning Analogy

1. 2. 3. 4. 5. 6. 7. 8.

Lean Leadership Responsibility Manage the Process Bosses ask questions Gemba learning Experiments Improvements initiated by staff Go see, ask why, show respect Horizontal management

Global Supply Chain Management Final Exam Summary

1. 2. 3. 4. 5. 6. 7. 8.

Traditional Leadership Authority Manage by objectives Bosses give answers Formal education Plans Improvements initiated by managers Remote decisions from analysing data Vertical management 14

Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Employee Involvement 1. Everybody is part of the company a. In-company communication → Productivity graphs etc. b. Single status facilities c. Job-security (“life-time employment”) 2. Empowered Employees a. Management enables workers (Coaches) 3. Responsibilities on the work-floor a. Require problem-solving capabilities (“good thinking” of all employees) 4. Team approach a. Job-rotation: Share tasks in an “honest” way b. Minimize “boredom” (highly repetitive tasks) c. Increases flexibility 5. Bottom-up suggestions for improvement a. Appraisal systems (“Employee of the month”) 6. Extensive training a. Cross-functional b. Problem solving

Lean: Some Tools 1. 2. 3. 4. 5.

Value Stream Mapping (process focus) 5S 5 Why’s Visual Control (Jidoka) One-piece flow a. Cellular Manufacturing b. Levelled Scheduling (Heijunka) → SMED; Transfer batches 6. Pull (Kanban) 7. Continuous Improvement (Kaizen) 8. Fool-proofing (Poka-Yoke)

Value Stream Mapping

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

5S: Organisinng the working place 1. 2. 3. 4. 5.

Seiri (整理) Seiton (整頓) Seisō (清掃) Seiketsu (清潔) Shitsuke (躾)

1. 2. 3. 4. 5.

Sort Stabilize Sustain Shine Standardise

5 Why’s to find the root of the cause 1. 2. 3. 4. 5.

Why? The battery is dead Why? The alternator is not functioning Why? The alternator belt has broken Why? The alternator belt was well beyond its useful service life and has never been replaced Why? I have not been maintaining my car according to the recommended service schedule

Poke-Yoke: “fool proofing”

Reducing Unevenness: One Piece Flow 1. What: a. b. 2. Why: a. b. 3. How: a. b. c. d. e.

Small quantities – frequently Continuous replenishment Produce only when needed No waiting time for jobs Heijunka – leveled scheduling SMED (Single Minute Exchange of Die)– Set up time reduction Transfer batches Cellular manufacturing Just-in-time deliveries by vendors

Process vs. Transfer Batches Process Batch: One batch of 20 items -

R1: 0.8 min/item R2: 1.0 min/item R3: 0.6 min/item

Total 16 minutes Total 20 minutes Total 12 minutes

Completion time: 48 minutes

Global Supply Chain Management Final Exam Summary

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Sinead Walsh S2899191

University of Groningen Faculty of Economics and Business

Transfer Batch 4 batches of 5 items -

R1: 0.8 min/item R2: 1.0 min/item R3: 0.6 min/item

Each batch: 4 minutes Each batch: 5 minutes Each batch: 3 minutes

Total 16 minutes Total 20 minutes Total 12 minutes

Completion time: 27 minutes → Reduction by 21 minutes when compared to Process batch

Transfer batches decrease WIP inventories Transfer batches shorten throughput time

Levelled Scheduling (Heijunka) Assume that in a given day the MPS says that the following items are to be produced: -