Topic 5 - Manufacturing Management PDF

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Apuntes tema 5 de business logistics....

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Business Logistics

TOPIC 5: MANUFACTURING MANAGEMENT MANUFACTURING MANAGEMENT (Outline) What is Manufacturing/Operations Management? The Transformation Process Operations Management Operations management and Logistics - Design for Logistics - Process Design and Analysis Logistics decisions: Manufacturing Management In the supply chain operation management is very important in manufacturing and supplying of raw material. What is Manufacturing/Operations Management? The design, operation, and improvement of the systems that create and delivery the firm’s primary products and services. Operations management (OM) is - A functional field of business - Concerned with the management of the entire production/delivery system. - Operations refers to manufacturing and service processes that are used to transform the resources employed by a firm into products desired by customers. The Transformation Process A production system is defined as a user of resources to transform inputs into some desired outputs. Transforms pieces in cars.

Transformation Processes (example) - Manufacturing – Physical, like making a car - Transportation – Locational, like a travel to one city to another - Retailing – Exchange - Warehousing – Storage - Health Care – Physiological - Telecommunications – Informational

Business Logistics Some transformations processes are or need Logistics. Some of this are logistics transformations and another uses the logistics to be able to do the transformation. The OM function in a firm. Operations Strategy have to be in line with the firm strategy, and be also combined with finance and marketing strategy.

OPERATIONS AND SUPPLY CHAIN The OM function in a supply chain. Operations management strategy have to be combined with suppliers and customers to have a unique final strategy.

OPERATIONS AND LOGISTICS PROCESSES Operations: Manufacturing and service processes used to transform resources into products. For example, makes the car. Logistics: Processes that move information and material to and from the firm. No make the car but there are needed to make the car and to deliver the car to the customer. Strategies of operations and logistics have to be combined to have a final customer satisfy.

Business Logistics OPERATIONS STRATEGY Example of operation strategy. The firm detects that they need a new product. So, every part of the firm have to adapt the strategy.

MANUFACTURING MANAGEMENT Tesla versus Toyota Do they have similar or different Operations Strategy? In this case yes, they have different way to produce cars. Toyota have a efficient line and tesla more jobshop system to produce their cars.

TRIPLE BOTTOM LINE A business strategy have to include economic, social and environmental criteria.

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Social responsibility: this pertains to fair and beneficial business practices toward labor, the community, and the region in which a firm conducts its business. Economic prosperity: the firm is obligated to compensate shareholders who provide capital. Environmental stewardship: this refers to the firm’s impact on the environment.

COMPETITIVE DIMENSIONS All of this have to be taking into account when we decide an efficient operation management strategy.

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Price: make the product or deliver the service cheap. Quality: make a great product or delivery a great service. Delivery Speed: make the product or deliver the service quickly. Delivery Reliability: deliver it when promised. Coping with Changes in Demand: change its volume – high variable demand. Flexibility and New-Product Introduction Speed: change it- wide variety of products.

ORDER WINNERS AND ORDER QUALIFIERS - Order qualifiers: those dimensions that are necessary for a firm’s products to be considered for purchase by customers. They are the basic criteria that permit the firms products to be considered as candidates for purchase by customers. - Order winners: criteria used by customers to differentiate the products and services of one firm from those of other firms. Features that customers use to determine which product to ultimately purchase. Extra elements that differentiates this product of this firm of other of the competitors. - The Logistics activities can be order qualifiers or order winners. A brand name car can be an ‘’order qualifier’’. Repair services can be ‘’order winners’’. Examples: Warranty, Roadside Assistance… Extra elements that makes this car more attractive. PRODUCT DESIGN PROCESS - Companies continuously bring new products to market - Product design is integral to success - Product design differs significantly depending on the industry - Companies often outsource major functions - Logistics must be take into account when designing a product o Transportation and stock the good o Delivery of a service It is important to coordinate all the processes in order to offer what the customer wants.

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Time to market: there are two aspects to this, the frequency of new product introductions and the time from initial concept to market introduction. Productivity: such measures as the number of engineering hours, the cost of materials, and tooling costs are used in these measures. To try to reduce costs. Quality: measures that relate to the reliability of the product in use, the product’s performance features compared to customer expectations, and the ability of a factory or service process to produce the product.

DESIGN FOR LOGISTICS Design for logistics is the design of products for manufacturing, packaging, shipping, warehousing, merchandising and repackaging for returns. Examples: - Flat Packs from Ikea - Standard shipping containers from Inditex - Fits the warehouse and store shelves - Reduce the packaging Benefits - Reduce costs - Optimize logistics operations - Look good for customers PROCESS DESIGN AND ANALYSIS Product versus Process Design. You have to design the product and the processes to produce the product. -

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How to evaluate and measure the processes? Measuring the processes help to improve them. Design the right process is fundamental to improve the overall operations and performance of the business. In a business there are several processes; any part of an organization that takes inputs and transforms them into outputs is a process. Include the Logistics Processes in the Design and Analysis o Not only the manufacturing processes Run Time: time required to produce a batch of parts/products. Example: it takes 20 min to paint the car. Operations Time: sum of the setup time and the run time for a batch of parts that run on a machine. Example: it takes 10 min to prepare the machine to paint the car. Flow Time (Throughput time): average time that it takes to move through an entire process. Example: 10h on the production line, from the beginning. Throughput Rate: output rate that the process is expected to produce over a period of time. Cycle Time: average time between the completion of units (batches). Example: production a car every minute, there’s 1 minute between cars.

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Utilization: ratio of the time that a resource is actually activated relative to the time that it is available for use. Example: the machine is working 70% of the time. Value-added time: time in which useful work is actually being done on the unit. WIP (Work in Process): material that is in a manufacturing process in a factory can also be considered in transit. Bottleneck is the stage that limits the capacity of the process.

Process flowcharting: use of a diagram to present the major elements of a process. The basic elements can include tasks or operations, flow of materials or customers, decision points, and storage areas or queues. It is an ideal methodology to analyze a process.

Flowchart Symbols

EXAMPLE: BREAD MAKING - Two steps are required 1. Prepare the dough, bake them and pack the loaves (bread making) 2. Deliver the loaves - Bread is made in batches of 100 loaves o Process 1 is done by a machine that includes the preparation, baking and packaging. o Completes a batch every hour, which is the cycle time. - Delivery needs only 0.75 hour to place the 100 loaves in the store and return to the factory. o Delivery is done by a truck and a driver.

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- Capacity of the process (2 shifts) We want to calculate: - Bottleneck and Utilization of each operation - Flow time - Throughput rate - Cycle time - WIP -

Capacity of the process (2 shifts): 100*8h*2= 1600 loaves Bottleneck and Utilization of each operation: Bread Making 100%; Delivery 75% Flow time: 1h+3/4h Throughput rate: 100 loaves/hour Cycle time: each hour comes 100 loaves (batch) WIP (Finish loaves)= 100 loaves/h*1.75h= 175 loaves (on average)

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How to increase production? o Capacity of the process (2 shifts): 100*8h*2= 1600 loaves o Capacity of the process (3 shifts): 100*8h*3= 2400 loaves Other idea?

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Improve the process Increase the capacity Reduce Process Flow Time o Perform activities in parallel o Change the sequence of activities o Reduce interruptions

Suppose we have two bread making lines - Bread making 2 shifts, Deliver 3 shifts

Calculate the same than before to know if this measures will be useful. - Capacity of the process (2 shifts bread making; 3 shifts delivery) - Bottleneck and Utilization of each operation - Estimate the average work-in-process between bread making and delivering - Estimate the average time that loaves are in work-in-process

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Estimate the total flow time

Suppose we have to bread making lines - Cycle time on each (bread making) is still one hour to make 100 loaves Bread making runs two shifts - Produces 200 x 8 x 2= 3.200 - Throughput rate= 200/1= 200 loaves/hour (average) Delivering runs three shifts - 0.75h for 100 loaves - Throughput rate= 100/0.75= 133.3 loaves/hour (average) - Produces 133.3 x 8 x 3= 3.200 -

Bottleneck and Utilization of each operation 100% - bottleneck is now delivery Delivering needs to run 3 shifts

Estimate the average work-in-process between bread making and delivering - First two shifts (min= 0; max= 1200) - Average= 600 - Third shift (min= 0; max= 600) - Overall average= 600 This calculations are in an excel Estimate the average time that loaves are in work- in-process - Little’s law: Inventory= Throughput rate * Flow time o 600 loaves= 133.3 loaves/hour * Flow time o Flow time= 4.50 hours (on average) Estimate the total flow time - 1 hour baking - 4.5 hours in inventory (WIP) - 0.75 hours delivering Total flow time: 6.25 hours Coordination and integrations of Operations, Logistics and Supply Chain activities Other current issues in OM: - Optimizing global network of suppliers, producers, and distributors - Managing customer needs and services - Sustainability and triple bottom line (Social, Economic, Environment) - Technology, IoT, Business Analytics, Big Data - Ethical conduct...