Agility and Agile Management of Production PDF

Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Chapter 3 Agile production and Industry 4.0 3.1 Industry 4.0 and its push towards Agility Recently, it has been noted that manufacturing systems are...

Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Chapter 3 Agile production and Industry 4.0 3.1 Industry 4.0 and its push towards Agility Recently, it has been noted that manufacturing systems are experiencing a tremendous acceleration and are changing rapidly. This accelerated change has been called the fourth industrial revolution, or Industry 4.0. The Fourth Industrial Revolution (4IR) represents the current era of connectivity, advanced analytics and intelligence, cloud technology, the Internet, automation, virtual reality (VR) and augmented reality (AR), and advanced manufacturing technology that has transformed global business for years and began to take hold in the mid-2010s involving dramatic changes in operations and the future of production engineering. The 4IR has put the industry in front of the challenge of rapid adaptation to face the rapidly changing factors facing production processes and a competitive speed to continue producing goods and services. Industry 4.0 was accompanied by significant transformations in the field of manufacturing that made agility a matter of paramount importance. Some of these transformations are as follows : 1. Rapid technology development: A rapidly developing environment in terms of technology, materials engineering, nanotechnology, product customization, the evolution of consumer behavior, regulations, the emergence of complex supply chains and questionable international trade stability. 2. Information revolution and telecommunications: The daily technological development of information and communication technologies contributed to the emergence of new technologies, digital manufacturing, connectivity- driven business models, AI, autonomous systems, Internet of Things (IoT), electrification, cybersecurity etc. 3. Easy and quick access to information: More access to information on an unprecedented scale enables organizations to act and plan according to real- time information at all levels, where synchronous data has become a need in various fields of work such as predictive maintenance, optimization, real- time performance evaluation, and detecting, diagnosing, and eliminating quality issues where they occur before moving downstream. That will give the organization a new vision. Page 1 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 4. Intense competition: Intensive competition at the local and global levels, the availability of information at a lower cost, the rapid growth in communication technologies, the tendency to produce products with shorter product life, and the increase in environmental and ethical pressures. Changing in customers' expectations and markets. Customers are becoming more individual and more precise in setting their expectations. Perfection, fast product delivery, and after-sales services, Products with increased informational content have become a necessity. Market segmentation and the emergence of niche markets, high rate of model changes, global competition, and share market shrinking, and the need for rapid development of new products. 5. Business relationships: The emergence of a new form of collaborations and business relationships, including inter-enterprise cooperation, multiple forms of outsourcing, labor relationships, the increasing rate of corporate mergers, and the emergence of virtual institutions and companies. 6. Professionalism and specialized skills: The skills gap renders it difficult for manufacturers to recruit skilled. Workers who miss many job opportunities. 7. Societal pressures: Committing companies to social issues such as training and education of employees, legal pressures, environmental issues, gender issues, civil rights issues, responsibility towards the poor and needy social groups, responsibility toward global disasters, the impact of conflicts between countries, and sustainability and preservation of the rights of future generations to natural resources. In front of these technological disruptions, modern companies find themselves facing a confrontation with these market forces to become flexible by embracing agile work methods that enable them to focus on response speed increases, interaction with their customers, and the surrounding industrial environment that is characterized by technological disruptions and rapid change. Agility is a strategy that enables companies to survive and maintain future profitability in constantly changing and fragmented global markets. Agility is an enterprise-wide manufacturing strategy to keep pace with rapidly changing markets, and to create a competitive advantage from speed of response, it also expresses an organizational ability of companies to respond quickly to change in meeting customers' requirements and needs, in a competitive environment characterized by continuous change that is expected at times and unexpected at other times. As a developed method of doing business, agile methods came out after the lean philosophy, as a result of a study led by Lehigh University in 1991, yet share many aspects with lean, as we shall see ahead when we compare the two. Page 2 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 3.2 Historical development of Agile Manufacturing The use of the term agile manufacturing became popular with the publication of the 21st century manufacturing corporation strategy Synonyms such as flexible manufacturing and lean production used also to express it. In 1991, a study was conducted under the sponsorship of Lehigh University/ Iacocca Institute, 13 U.S. companies participated to the study such as AT&T, Boeing, Chrysler, General Electric, General Motors, Motorola, and many others , the study entitled is “the 21st Century Manufacturing Enterprise”. The study's main research question when the study was launched in 1991 was: What distinguishing characteristics will successful manufacturing firms possess in 2006? By the time the study was successfully completed, its findings were announced in a report titled "21st century manufacturing enterprise study". The report coined the term “rapid manufacturing”, and the term has since been used to describe how can companies build the ability to respond quickly to changes in the surrounding industrial environment that is characterized by different technological disruptions, the study report also included the following key findings: 1. There is a strong competitive environment that forces change in manufacturing systems and organizations. 2. Agile companies that can quickly respond to demand for customized products have a competitive advantage in this environment. 3. Transforming companies into an agile one requires the following: (1) flexible production technologies, (2) knowledgeable work force, and (3) Organizational structures that encourage and facilitate collaborative initiatives internally and externally with other companies. 4. Industrial agility enhances and improves the standard of living; the standard of living is at risk unless the industry can transition to agility. Three of the participants in the 1991 study, namely Goldman, S.L., Nagel, R.N. and Preiss, K., published a book in 1995 that summarized the content of the final work related to agility. The book is titled “Agile Competitors and Virtual Organizations”. In the current era, the spread of this new term has expanded, and many engineers, entrepreneurs, managers, and academics have investigated it resulting in many books and scientific articles about it. Page 3 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Among the findings of the 1991 study, four principles of agility are identified. These four principles are described as the dimensions of Agility. Agile companies tend to exhibit these dimensions, the four agile principles are : 1. Organize to Master Change: An agile company is organized in a way that allows it to iterate faster and flexibly to be successful in the face of predictable and unexpected change. So that these companies can quickly reconfigure resources to adapt to the changing environment and market opportunities, their internal structure needs to be dynamic enough to respond quickly to external as well as internal disruptions. 2. Leverage the Impact of People and Information. So that knowledge is valued, innovation is invested, Entrepreneurship is encouraged, and authority is distributed properly. Management should provide resources needed by employees and create a climate of mutual participating responsibility. The bottom-up approach of management is favored, where directives flow seamlessly between all levels of the company. Agile Manufacturing supports the ideas of workers closest to the manufacturing floor. 3. Enhance cooperation and competitiveness. Collaboration across functions and seniority levels creates higher-value processes and output, internal cooperation internally and collaboration with other companies is a major strategic choice for agile competitors, this cooperation and collaboration at all levels aims to provide the market with products and commodities as quickly as possible. 4. Customer enrichment. Customers view the agile company as enriching them greatly, by obtaining products that provide solutions to the problems that they suffer from. Therefore, the price of the product is estimated on the basis of the value perceived by the customer and not on the basis of the manufacturing cost. Preparing the production system for agility For companies to become agile, they have to reorganize their production systems, manage all kinds of relationships differently, recognize and value the real knowledge that the companies have, and then employ that in the following three main areas: product development and design, production operations, and marketing. Page 4 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Product development and design: Approximately 70% of the cost of manufacturing a product is determined by decisions related to product design. For the company to be agile, it is recommended that the designed products be characterized by the following: - Customizable: Customizing products for niche markets for individual customers. - Upgradeable: Designing the product so that customers who purchased the base model can purchase additional options later to upgrade the product. - Reconfigurable: Design flexibility so that through modest changes, unique features can be obtained, and ease of developing a new model from the previous one without the need for a radical redesign. - Design modularity: The product must be designed to consist of several units and components (sub-assemblies) that can be easily assembled to create the final product. This way, if a module needs to be redesigned, the entire product does not require a redesign. Other modules can remain the same. - Frequent model changes: Even for products that succeed in a stable marketplace, producers should introduce new versions of the product. - Information and services platforms: Are important to create smart digital platforms for customer services and provide information that allows high-quality product and after-sales services. Marketing: It is important to align the company's design and marketing objectives and build an aggressive and proactive marketing plan that does not conflict with the introduction of new products at any time that enriches customers, considering the provision of after-sales services during the life of the product and competition effectively and in a graceful manner. Production Operations: Designing production lines and production facilitators in a way that allows for the reorganization of processes and procedures to comply with the agility strategy, in a way that achieves customer satisfaction at the lowest costs and in a way that achieves the reuse of processes and resources and managing the production as part of an integrated supply chain. Agility versus Mass Production Like lean production, agility is often compared with mass production. In this comparison, we must interpret mass production to include all the requisites that Page 5 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 made it successful, such as the availability of mass markets and the ability to forecast demand for a given product in such mass markets. Table 1 succinctly outlines the key differences between the two manufacturing approaches, highlighting their distinct characteristics and operational focuses. Table 1. Comparisons of Mass Production and Agile Manufacturing Dimension Mass Production Agile Manufacturing Type of production Uniform (Standardized) Customized (Tailored) Expected market life. Long Short Production ordering Produce to forecast Produce to order Information content Low High Customer relationship Single time sales Continuing relationship Pricing strategies Pricing by production cost Pricing by customer value Automobile Manufacturing Customized Motorcycle Production Consumer Electronics Bespoke Furniture Shops Industrial Examples Textile Industry Small Batch Artisan Food Producers Nike’s Custom Shoes The table illustrates the contrasting characteristics of Mass Production and Agile Manufacturing. While mass production emphasizes efficiency and cost- effectiveness through standardization, agile manufacturing prioritizes customization, responsiveness, and customer engagement. These differing methods impact how manufacturers operate, how products are marketed, and the overall customer experience. Explanation of for table 1 is presented below: 1. Type of Production: Mass Production: This approach focuses on the production of uniform, standardized goods. The objective is to produce large quantities of identical products, which can help achieve economies of scale and reduce costs. Agile Manufacturing: In contrast, this method emphasizes the creation of customized or tailored products. Agile manufacturing allows for flexibility in production to meet specific customer needs or preferences. 2. Expected Market Life: Mass Production: Products produced under this model generally have a long market life. These are often items that remain relevant for extended Page 6 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 periods and can be sold over time without significant adaptation. Agile Manufacturing: Products in this category typically have a short market life. This reflects the fast-paced nature of customer demands and trends, requiring quick adaptation and turnover of products. 3. Production Ordering: Mass Production: Production is based on forecasting future demand. Companies predict how much product will be needed and produce accordingly, which can lead to overproduction or stockouts if forecasts are inaccurate. Agile Manufacturing: This model operates on a "produce to order" basis, meaning products are made only after an order is received. This minimizes excess inventory and aligns production closely with actual customer demand. 4. Information Content: Mass Production: The information content inherent in mass production processes is typically low. This is due to the standardized nature of the products, necessitating less detailed data about individual customer needs. Agile Manufacturing: Here, information content is high. Agile manufacturing relies heavily on data to understand customer preferences and market trends, which informs product design and production processes. 5. Customer Relationship: Mass Production: The relationship with customers is often transactional and may be limited to single-time sales. Once the product is sold, there may be little engagement or follow-up. Agile Manufacturing: This approach fosters ongoing customer relationships. By providing customizable solutions and responding quickly to feedback, businesses can create loyalty and continue engaging with customers beyond the initial sale. 6. Pricing strategies: Mass Production: Pricing strategies are generally based on production costs. The goal is to minimize costs to maintain competitiveness, which can drive down prices as production scales increase. Agile Manufacturing: In agile manufacturing, pricing is based on customer value, which means the perceived worth by customers drives the price. This approach allows for potentially higher margins by focusing on what customers are willing to pay for customized features or benefits. Page 7 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Lean versus Agile Table 2 clearly illustrates the fundamental differences between lean production and agile manufacturing frameworks. Table 2. Four Principles of Lean Production and Agile Manufacturing Lean Production Agile Manufacturing 1. Identify Value (eliminate 1. Enrich the customer sources of waste): 2 Seek Perfection or Perfect first- time quality 3. Establish Pull 2. Cooperate to enhance competitiveness 4. Map Value Stream 3. Organize to master change 5. Create Flow 4. Leverage the impact of people and information The table illustrates how Lean Production focuses on efficiency, waste reduction, and process optimization through specific principles, whereas Agile Manufacturing emphasizes customer engagement, flexibility, and collaboration. While both approaches aim to enhance operational performance and satisfaction, they do so through different but complementary philosophies. On the other hand, table 3 highlights the fundamental differences between Lean Production and Agile Manufacturing across various attributes. Lean production is centered on efficiency and waste reduction within a structured framework, while agile manufacturing champions flexibility and adaptability in response to customer needs and market shifts. Each approach has its strengths and is suited to different operational contexts and objectives. Explanation of for table 3 is presented below: Approach to Production: Lean Production: This approach enhances traditional mass production methods by focusing on eliminating waste and improving efficiency. Lean Production aims to create value for customers while minimizing resource expenditure, maintaining a focus on high-volume, low-cost production of standardized products. Agile Manufacturing: In contrast, agile manufacturing moves away from the mass production model, emphasizing the ability to mass- Page 8 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 customize products. This approach promotes flexibility and responsiveness to individual customer needs, allowing companies to quickly adapt their offerings based on market demands. 1. Flexibility: Lean Production: Lean production provides flexibility to a certain extent, allowing for variations in product types within a structured production system. It focuses on optimizing production processes so that different products can be manufactured without significant downtime or resource waste. Agile Manufacturing: Agile manufacturing prioritizes greater flexibility specifically for customized products. This means that production systems are designed to accommodate a wide range of product options and configurations, enabling quick adjustments based on customer preferences. 2. Focus Area: Lean Production: The focus of lean production is primarily on factory operations. It involves improving internal processes, workflows, and efficiency within the manufacturing environment to optimize productivity. Agile Manufacturing: Agile manufacturing takes a broader view, encompassing the entire enterprise. This holistic focus means that agility is embedded not only in production but also in supply chain management, customer service, and overall organizational responsiveness. 3. Supplier Relationship: Lean Production: Lean production emphasizes strong supplier management to ensure timely delivery of quality materials and components. It fosters close collaboration with suppliers to streamline processes and reduce lead times. Agile Manufacturing: Agile manufacturing encourages the formation of virtual enterprises, where companies collaborate flexibly with various partners—including suppliers and other stakeholders—to enhance their ability to respond quickly to changing market conditions. 4. Resource Management: Lean Production: This approach emphasizes the efficient use of resources, focusing on reducing waste in all forms—materials, time, and labor—to maximize operational effectiveness. Page 9 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Agile Manufacturing: Agile manufacturing stresses the ability to thrive in an environment characterized by continuous and unpredictable change. It prioritizes adaptability and responsiveness to fluctuations in customer demands and market dynamics, moving beyond the traditional focus on resource efficiency alone. Table 3. Contrasting Lean Production and Agile Manufacturing: Approaches for Optimizing Efficiency and Responsiveness in Modern Production Attribute Lean Production Agile Manufacturing 1. Approach to Production Enhancement of mass Break with mass production; production emphasis on mass customization 2. Flexibility Flexible production for Greater flexibility for product variety customized products 3. Focus Area Focus on factory operations Scope is enterprise-wide 4. Supplier Relationship Emphasis on supplier Formation of virtual management enterprises 5. Resource Management Emphasis on efficient use of Emphasis on thriving in an resources environment marked by continuous unpredictable change Agile Manufacturing AM tactics found in the literature have been mapped to nine impact areas as presented by Table 4. The table outlines various impact areas where agile tactics are implemented to enhance manufacturing efficiency, quality, and flexibility. The overall focus is on fostering rapid responses to market changes, supporting effective communication both internally and externally, and continually improving operational processes to meet customer demands. Comparative Review of Lean, Agile, and Mass Production Strategies Table 5 provides a comprehensive comparison of Lean Production (LP), Agile Manufacturing (AM), and Mass Production across several important business dimensions. The principles of Lean Production focus on eliminating waste, ensuring high-quality output from the start, maintaining flexible production lines, and promoting continuous improvement through Kaizen. Page 10 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Table 4: Agile Tactics Across Impact Areas: Enhancing Efficiency, Flexibility, and Customer Satisfaction in Manufacturing Impact Areas Agile tactic 1 - Specific equipment configurations (group technology, cellular layouts, continuous Manufacturing flow); equipment - Production process reengineering and technology - Flexible manufacturing - CNC and DNC - Robotics and PLC's - CAD/CAM and CIM 2 Processes - Removal of waste technology - Reconfigurable, and continuously changeable production system, and - Rapid machine setups and changeovers know-how - Standardized operating procedures. - Rapid prototyping and CAPP 3 Quality and - Fast identification of in-process defects productivity - Strategic focus on long-term productivity performance improvement - Modular production facilities and measures - Fast production cycle times 4 - Effective information system Production and - Make to customer requirements (Make-to-order strategy) inventory control - Decision making at functional knowledge levels. - Manufacturing resource planning 5 - High flexibility - General purpose equipments Shop floor - Effective communication between operators and management management - Removal of waste - Make to lot size 6 - Quick introduction of new products Product design - Rapid changes to control software and development - Rapid prototyping, remote and E-manufacturing - CAD/CAM and CAPP 7 - Effective communication technology Supplier - Long-term relationship relationship - Supplier evaluation and selection 8 - Immediate and quick delivery (performance); - Effective communication technology Customer - Make-to-order strategy. relationship - Competitive unit costs - Product customization In contrast, Agile Manufacturing emphasizes customer enrichment, collaboration to enhance competitiveness, effective organization to manage change, and leveraging the capabilities of people and information. Mass Production, on the other hand, adheres to traditional principles designed for high-volume production of standardized products. Regarding production quantity and flexibility, Lean Production enhances mass production techniques, while Agile Manufacturing prioritizes mass customization, allowing for greater product variety, whereas Mass Production typically offers limited flexibility. Each approach also differs in its emphasis—Lean Production focuses on technical and operational efficiency, Agile Page 11 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Manufacturing centers on organizational dynamics and adaptation to change, and Mass Production is primarily product-focused. Table 5: Comparison of Lean Production, Agile Manufacturing, and Mass Production: Key Distinctions Across Business Dimensions Dimension Lean production Agile manufacturing Mass production Principles - Eliminate source of waste. - Customer Enrichment - Traditional - Perfect first-time quality - Cooperate to enhance principles of - Flexible production lines competitiveness. mass - Kaizen - Organize to master production change. - Leverage the impact of people and information Production - Enhancement of mass - Break with mass - Standardized quantity production production; emphasis on products mass customization Production - Flexible production for - Greater flexibility for - Limited flexibility product variety customized products flexibility to Single or few mixed model Emphasis - On technical, operational - On organizational and - On product issues and management of people issues issues human resources Application l - To the factory level - To the enterprise level - To production line level Area of - Emphasis on supplier - Formation of virtual - Emphasis on management management enterprises accepted quality level of the product Area of - Relies on smooth - Attempts to be responsive - Relies on change production schedule to change master production schedule - Attempts to eliminate - Embrace unpredictable - Make to source of waste market change market Market life - Short - Short - Long Order - Produce to order - Produce to order - Produce to initiation forecast Information - High - High - Low content Customer - Continuing relationship - Continuing relationship - Single time relationship sales - Pricing by customer value - Pricing by customer value - Pricing by production cost Page 12 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Additionally, Lean and Agile applications extend beyond factory operations to broader enterprise-level strategies, while Mass Production is largely confined to production line activities. The management areas reflect Lean’s emphasis on supplier relationships, Agile’s formation of adaptable virtual enterprises, and Mass Production’s focus on consistent product quality. In response to changing market conditions, Lean seeks to maintain a smooth production schedule, Agile aims for responsiveness to change, and Mass Production relies on a predetermined schedule. The market life of products tends to be shorter for both Lean and Agile methodologies in contrast to the longer market lifespan associated with Mass Production. Finally, all three approaches support production initiation based on customer orders, but only Mass Production typically relies on forecasts, with Lean and Agile focusing on actual demand. Information content is high across both Lean and Agile approaches, whereas it is generally low in Mass Production, reflecting differences in customer relationships, with Lean and Agile fostering ongoing interactions valued by customers, while Mass Production is characterized by one-time sales and cost-based pricing. Overall, Table 5 illustrates how these three production methodologies differ significantly in their approaches, management practices, and responsiveness to customer needs and market dynamics. M.D. Al-Tahat, "Analysis of the disruptions of the digital revolution and its impacts on the evolution of continuous improvement methodologies and lean six-sigma," International Journal of Innovative Research and Scientific Studies, vol. 7, no. 4, pp. 1563– 1579, 2024. Goldman, S.L., Nagel, R.N. and Preiss, K. (1995) Agile Competitors and Virtual Organizations: Strategies for Enriching the Customer. Van Nostrand Reinhold, New York. Mikell P. Groover, Automation, production systems, and computer integrated manufacturing, 2nd ed., prentice Hall, ISBN 0-13-089546- 6. Goldman, S. L., and Preiss, K., 21st Century Manufacturing Enterprise Strategy: An Industry-Led View, Bethlehem, PA, Iacocca Institute at Lehigh University, 1991. Dove, R. (1991). The 21s Century Manufacturing Enterprise Strategy. Iacocca Institute, Lehigh University, AD-A257176. Page 13 of 14 Agility and Agile Management of production Prepared by Prof. Dr. Mohammad D. Al-Tahat October 21, 2024 Kidd, P. T. (1995). Agile manufacturing: a strategy for the 21st century. A. Gunasekaran, R. McGaughey, V. Wolstencroft, Agile Manufacturing: Concepts and Framework, Editor(s): A. Gunasekaran, Agile Manufacturing: The 21st Century Competitive Strategy, Elsevier Science Ltd, 2001, Pages 25-49, ISBN 9780080435671, https://doi.org/10.1016/B978-008043567-1/50002-4. Page 14 of 14