Lecture 6, Fundamentals of Manufacturing Logistics PDF

Lecture 6 Fundamentals of Manufacturing Logistics  Manufacturing Logistics Manufacturing systems logistics refers to the management and coordination of various components within a manufacturing environment to ensure smooth and efficient operations. It mainly focuses on the followin...

Lecture 6 Fundamentals of Manufacturing Logistics  Manufacturing Logistics Manufacturing systems logistics refers to the management and coordination of various components within a manufacturing environment to ensure smooth and efficient operations. It mainly focuses on the following aspects: Procurement: Ordering and receiving raw materials. Warehousing: Storing raw materials, work-in-progress (WIP), and finished goods. Inventory management: Tracking and controlling inventory levels. Transportation: Moving materials and goods within the manufacturing facility and to and from customers. Production planning and scheduling: Coordinating the flow of materials with the production process.  Manufacturing Logistics Manufacturing systems logistics is the foundation of any manufacturing operation. It's all about efficiently managing the flow of materials, from raw materials to finished goods, throughout the production process. Effective manufacturing logistics advantages include: Reduce costs: By minimizing waste and optimizing inventory levels. Improve production efficiency: By ensuring that materials are available when and where they are needed. Enhance customer satisfaction: By delivering products on time and in full. Gain a competitive advantage: By being more efficient and responsive than competitors.  Manufacturing Logistics Manufacturing systems logistics involves the design and implementation of systems and processes to optimize the manufacturing process. It is also essential for ensuring the smooth operation of manufacturing processes. Several factors can impact manufacturing systems logistics, including: The type of product being manufactured The production process The size and layout of the manufacturing facility The location of suppliers and customers The overall business strategy  QA and TQM of Manufacturing Systems Quality assurance (QA) and total quality management (TQM) are widely recognized as being the responsibility of everyone involved in the design and manufacturing of products and their components. Product integrity is a term generally used to define the degree to which a product Functions reliably during its life expectancy Is suitable for its intended purposes Can be maintained with relative ease. Manufacturing and marketing defective products can be very costly to the manufacturer, with costs varying by orders of magnitude.  Lean Production Lean production, is a methodology that involves thorough assessment of each activity of a company. Its basic purpose is to minimize waste at all levels, and calling for the elimination of unnecessary operations that do not provide any added value to the product being made. This approach, also called lean manufacturing, identifies all of a manufacturer’s activities and optimizes the processes used in order to maximize added value. Lean production focuses on: the efficiency and effectiveness of each and every manufacturing step, the efficiency of the machinery and equipment used, and the activities of the personnel involved in each operation. This methodology also includes a comprehensive analysis of the costs incurred in each activity and the costs of productive and for nonproductive labor. Lean production does not necessarily require cutting back on a company’s physical or human resources. It aims at continually improving efficiency and profitability by removing all waste in the company’s operations and dealing with any problems as soon as they arise. Lean Production  Agile Manufacturing Agile manufacturing is a strategy that helps manufacturers adapt quickly to changing customer needs and market demands. It's all about being flexible, responsive, and constantly improving. Agile manufacturing mainly focuses on the following aspects: Flexibility: Easily adjust their production processes to accommodate changes. This might involve using modular product designs, having a skilled workforce that can learn new tasks quickly, and having suppliers who can provide materials on short notice. Rapid response: Quickly ramp up production of a new product or change an existing product. This is important in today's fast-paced markets where customer preferences can change quickly. Continuous improvement: Always looking for ways to improve their processes. This can involve things like investing in new technologies, training employees, and streamlining workflows. Lean vs Agile  Manufacturing Costs Typically, the manufacturing cost of a product represents about 40% of its selling price, which often is the overriding consideration in a product’s marketability and general customer satisfaction. It is critically important because of the ever-increasing global competition and the demand for high-quality products, generally referred to as world-class manufacturing, and at low prices.  Manufacturing Costs The total cost of manufacturing a product generally consists of the following components: Materials: Raw material costs depend on the material itself and on supply and demand for that material. Low cost may not be the deciding factor if the cost of processing a particular material is higher than that for a more expensive material. Tooling: Tooling costs include those for cutting tools, dies, molds, work-holding devices, and fixtures depending on their size and the materials involved in making them, Fixed: Fixed costs include costs for energy, rent for facilities, insurance, and real estate taxes. Capital: Production machinery, equipment, buildings, and land are typical capital costs. Machinery costs can range from a few hundred to millions of dollars. Labor: Labor costs consist of direct and indirect costs. Direct labor, also called productive labor, concerns the labor that is directly involved in manufacturing products.  Manufacturing Costs Calculations A company is developing a new smartwatch. They need to determine the manufacturing cost per unit to set a profitable selling price. The cost breakdown includes: Direct Material Cost (DMC): $5 per unit (cost of electronic components, sensors, etc.) Direct Labor Cost (DLC): $10 per hour, depending on the number of units produced (x). Variable Manufacturing Overhead (VMO): $2 per unit Fixed Manufacturing Overhead (FMO): $10,000 per month Develop a mathematical formula to determine the total manufacturing cost per unit (TMC) based on the number of units produced (x).  Manufacturing Costs Calculations Solution: Direct Labor Cost (DLC): Since labor cost depends on production volume, we can express it as a function of units produced (x). If it takes 1 minute to assemble a unit and the labor cost is $10/hour, then the labor cost per unit is (1 minute / 60 minutes/hour) * ($10/hour) = $1/6 per unit. To get the total direct labor cost, we multiply this cost per unit by the number of units (x): DLC = (x) * ($1/6) Total Manufacturing Cost (TMC): The total manufacturing cost is the sum of all the cost components. Therefore, TMC = DMC + DLC + VMO + FMO Substitute the expressions for each cost component: TMC = $5/unit + (x) * ($1/6 per unit) + $2/unit + $10,000