Production Planning & Control PDF

OPM545 PRODUCTION PLANNING & CONTROL 2. Preplanning PRODUCT DEVELOPMENT Overview of product design The objective of the product decision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage. The basic for an organization exi...

OPM545 PRODUCTION PLANNING & CONTROL 2. Preplanning PRODUCT DEVELOPMENT Overview of product design The objective of the product decision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage. The basic for an organization existence is the good or service it provides society. Great products are the key to success. Product Strategy Options ► Differentiation ► Shouldice Hospital ► Low cost ► Taco Bell ► Rapid response ► Toyota  Product Life Cycles Cost of development and production Sales, cost, and cash flow Sales revenue Net revenue (profit) Cash flow Negative cash flow Loss Introduction Growth Maturity Decline Figure 5.1 continue Successful product strategies require the best strategy for each product based on its position in its life cycle. Consists of four stages: 1. Introduction phase – Fine tuning warrant unusual expenses for research, product development, process modification and enhancement and supplier development. 2. Growth phase – Product design begins to stabilize, Effective forecasting of capacity becomes necessary. Adding or enhancing capacity may be necessary. continue 3. Maturity Phase – Competitors now established High volume, innovative production may be needed Improved cost control, reduction in options, paring down of product line 4. Decline Phase Unless product makes a special contribution to the organization, must plan to terminate Generating new product 1. Understanding the customer – the premier issue in new product development. 2. Economic factor – people have greater purchasing power to buy many things in life due to increased household income. Thus, it creates opportunity to new product design. E.g. 2-3 cars in a family 3. Sociological and demographic factor – due to improve in standard or quality of living. E.g. working mother encourage the demand for fast food, instant food and electrical appliances. 4. Technological factor – technology makes life better and enhance quality of life either at the home or workplace that make life easier and faster. 5. Political/legal change – changes in trade regulations and agreements, restrictions, government rules, taxes and wages. E.g. HALAL logo, verification by Ministry of Health. Product Development Stages Concept: ideas from many sources Feasibility: does firm have ability to carry out idea? Customer Requirements to win orders Functional Specifications : how the product will be function Product Specifications: how the product will be made Scope of Scope for design Design Review: are these product and engineering product Specifications the best way to meet teams development customer requirement? team Test Market: does product meet customer expectation Introduction to market Evaluation: success? Quality Function Deployment 1. Identify customer wants 2. Identify how the good/service will satisfy customer wants 3. Relate customer wants to product hows 4. Identify relationships between the firm’s hows 5. Develop customer importance ratings 6. Evaluate competing products 7. Compare performance to desirable technical attributes QFD HOUSE OF QUALITY Interrelationships Customer importance How to satisfy ratings customer wants assessment Competitive What the Relationship customer matrix wants Target values Weighted rating Technical evaluation Issues for product design Techniques to the design of a product Robust design Modular design Computer-aided design (CAD) Computer-aided manufacturing (CAM) Virtual reality technology Value analysis Environmentally friendly design Robust Design Product is designed so that small variations in production or assembly do not adversely affect the product Typically results in lower cost and higher quality  Modular Design Products designed in easily segmented components Adds flexibility to both production and marketing Improved ability to satisfy customer requirements. Use relatively few modules to make variety of products  Computer Aided Design (CAD) Using computers to design products and prepare engineering documentation Shorter development cycles, improved accuracy, lower cost Information and designs can be deployed worldwide Assist product engineers to use the three dimensional drawings to save time and costs in designing, drawing and producing the virtual image of the new product.  Computer-Aided Manufacturing (CAM) Utilizing specialized computers and program to control manufacturing equipment and system that are used in manufacturing the new product design. Often driven by the CAD system (CAD/CAM) Benefits of CAD/CAM 1. Product quality 2. Shorter design time 3. Production cost reductions 4. Database availability 5. New range of capabilities Virtual Reality Technology Computer technology used to develop an interactive, 3-D model of a product from the basic CAD data Allows people to ‘see’ the finished design before a physical model is built Very effective in large-scale designs such as plant layout  Value Analysis Focuses on design improvement during production Seeks improvements leading either to a better product or a product which can be produced more economically with less environmental impact Cost Reduction of a Bracket via Value Engineering Figure 5.5 Sustainability and Life Cycle Assessment (LCA) ► Sustainability means meeting the needs of the present without compromising the ability of future generations to meet their needs ► LCA is a formal evaluation of the environmental impact of a product Defining a Product ► Engineering drawing ► Shows dimensions, tolerances, and materials and finishes of a component ► It is an item for bill of material ► Shows codes for Group Technology ► Bill of Material ► Lists the hierarchy of components, description, quantities of each required to make one unit of a product ► Shows product structure Engineering Drawings Figure 5.8 Engineering drawing for bicycle  Bills of Material Figure 5.9 (a) BOM for a Panel Weldment NUMBER DESCRIPTION QTY A 60-71 PANEL WELDM’T 1 A 60-7 LOWER ROLLER ASSM. 1 R 60-17 ROLLER 1 R 60-428 PIN 1 P 60-2 LOCKNUT 1 A 60-72 GUIDE ASSM. REAR 1 R 60-57-1 SUPPORT ANGLE 1 A 60-4 ROLLER ASSM. 1 02-50-1150 BOLT 1 A 60-73 GUIDE ASSM. FRONT 1 A 60-74 SUPPORT WELDM’T 1 R 60-99 WEAR PLATE 1 02-50-1150 BOLT 1  Bills of Material Hard Rock Cafe’s DESCRIPTION QTY Hickory BBQ Bacon Bun 1 Cheeseburger Hamburger patty 8 oz. Cheddar cheese 2 slices Bacon 2 strips BBQ onions 1/2 cup Hickory BBQ sauce 1 oz. Burger set Lettuce 1 leaf Tomato 1 slice Red onion 4 rings Pickle 1 slice French fries 5 oz. Seasoned salt 1 tsp. Figure 5.9 (b) 11-inch plate 1 HRC flag 1 Group Technology ► Parts grouped into families with similar characteristics ► Coding system describes processing and physical characteristics ► Part families can be produced in dedicated manufacturing cells Group Technology Scheme (b) Grouped Cylindrical Parts (families of parts) (a) Ungrouped Parts Grooved Slotted Threaded Drilled Machined Figure 5.10 PROCESS CHOICES Introduction A process strategy is an organization’s approach to transforming resources into goods and services. The objective of a process strategy is to build a production process that meets customer requirements and product specifications within cost and other managerial constraints. The process selected will have a long term effect on 1. Efficiency (productivity) 2. Flexibility (the ability to respond fast and maintain customer value with less cost and time) 3. Cost 4. Quality of the product produced. Four types of process strategies Four basic strategies 1. Process focus 2. Repetitive focus 3. Product focus 4. Mass customization The relationship of these strategies is shown in the next slide. Process, Volume, and Variety Figure 7.1 Volume Low Repetitive High Volume Process Volume High Variety one or few Process Focus Mass Customization units per run, projects, job shops (difficult to achieve, (allows (machine, print, but huge rewards) customization) hospitals, restaurants) Dell Computer Arnold Palmer Hospital Changes in Modules modest runs, Repetitive standardized (autos, motorcycles, modules home appliances) Changes in Harley-Davidson Attributes Product Focus (such as grade, (commercial baked quality, size, Poor Strategy (Both fixed and goods, steel, thickness, etc.) glass, beer) long runs only variable costs are high) Frito-Lay  1. Process focus strategy/Intermittent Is called a job shops – a production facility organized around processes to facilitate low volume, high variety production such as a machine shop, a car workshop or a bakery shop. Such facilities are organized around specific activities or processes such as a metal fabrication operation. The process focus strategy is to arrange the process by department e.g. the cutting process (cutting unit), wielding (wielding department) the metal grinding (grinding department) and spraying. Required general purpose equipment and skilled personnel. High degree of product flexibility as products move between processes Typically high variable costs and low equipment utilization of facilities and the equipment are generally multi-purpose (low fixed cost). Process Focus Many inputs (surgeries, sick patients, baby deliveries, emergencies) (low volume, high variety, Many departments and intermittent processes) many routings Arnold Palmer Hospital Figure 7.2(a) Many different outputs (uniquely treated patients) 2. Repetitive focus strategy Falls between the product and process focuses. It use modules (parts or components previously prepared) often in a continuous process. Widely used in assembly lines of automobiles manufacturing and household appliances. For example in a manufacturing factory, there are various types of sub assembly lines to prepare sub assemblies such as engine assembly, upholstery assembly and all these assemblies will then be fed into the main or final assembly lines. It is more structure and consequently less flexibility than the previous process. Another example is fast food firms (service).  Raw materials and Repetitive Focus module inputs (multiple engine models, wheel modules) Few modules (modular) Harley Davidson Figure 7.2(b) Modules combined for many Output options (many combinations of motorcycles) 3. Product focus strategy High volume, low variety processes are product focused. They also called continuous processes because they have very long continuous productions run for example glass, paper, tin sheets, beer and potato chips are made via a continuous process. It is only with standardization and effective quality control that firms have established product-focused facilities. The facilities are generally of high investment, costly and specialized equipment, thus high fixed costs but low variable costs because of the high facility utilization and high technology. Generally less skilled labor. Product Focus Few Inputs (corn, potatoes, water, seasoning) (low-volume, high variety, continuous process) Frito-Lay Output variations in size, Figure 7.2(c) shape, and packaging (3-oz, 5-oz, 24-oz package labeled for each material) 4. Mass customization focus Mass customization is rapid, low cost production of products and services that can fulfill unique and instant customer orders. It encompasses low volume production (process focus), low cost production (product focus), high product variety, high automated or technology operated and highly customized according to customers’ orders. Combines the flexibility of a process focus with the efficiency of a product focus. Achieving mass customization is a challenge that requires sophisticated operational capabilities. The link between sales, design, production, supply chain and logistics should be tight.  Many parts and Mass component inputs (chips, hard drives, software, cases) Customization Many modules (high-volume, high-variety) Dell Computer Figure 7.2(d) Many output versions (custom PCs and notebooks)  Comparison of Processes Mass Process Focus Repetitive Product Focus Customization (low-volume, Focus (high-volume, (high-volume, high-variety) (modular) low-variety) high-variety) 1. Small 1. Long runs, 1. Large 1. Large quantity quantity and usually a quantity and and large large variety standardized small variety variety of of products product with of products products are are produced options, are produced produced produced from modules 2. Equipment 2. Special 2. Equipment 2. Rapid used is equipment used is changeover on general aids in use of special flexible purpose an assembly purpose equipment line Table 7.2  Comparison of Processes Mass Process Focus Repetitive Product Focus Customization (low-volume, Focus (high-volume, (high-volume, high-variety) (modular) low-variety) high-variety) 5. Raw-material 5. JIT 5. Raw material 5. Raw inventories procurement inventories material high relative techniques are low inventories to the value are used relative to the are low of the value of the relative to product product the value of the product 6. Work-in- 6. JIT inventory 6. Work-in- 6. Work-in- process is techniques process process high are used inventory is inventory compared to low driven down output compared to by JIT, output kanban, lean production Table 7.2  Comparison of Processes Mass Process Focus Repetitive Product Focus Customization (low-volume, Focus (high-volume, (high-volume, high-variety) (modular) low-variety) high-variety) 7. Units move 7. Assembly is 7. Swift 7. Goods move slowly measured in movement of swiftly through the hours and units through through the facility days the facility is facility typical 8. Finished 8. Finished 8. Finished 8. Finished goods are goods made goods are goods are usually made to frequent usually made often build- to order and forecast to forecast to-order not stored and stored (BTO) Table 7.2  Comparison of Processes Mass Process Focus Repetitive Product Focus Customization (low-volume, Focus (high-volume, (high-volume, high-variety) (modular) low-variety) high-variety) 9. Scheduling 9. Scheduling 9. Scheduling 9. Sophisticated is complex, is based on is relatively scheduling is concerned building simple, required to with trade- various concerned accommodate offs between models from with custom orders inventory, a variety of establishing capacity, and modules to output rate customer forecasts sufficient to service meet forecasts 10. Fixed costs 10. Fixed costs 10. Fixed costs 10. Fixed costs tend to be dependent tend to be tend to be low and on flexibility high and high, variable variable of the variable costs must be costs high facility costs low low Table 7.2  2. Process Analysis and Design Is the process designed to achieve a competitive advantage? Does the process eliminate steps that do not add value? Does the process maximize customer value? Will the process win orders? A number of tools help us understand the complexities of process design and redesign. They are simple ways of making sense of what happens or must happen in a process. Flow charts, time-function mapping, value stream mapping, process chart and service blue printing.  continue Flow Charts - Shows the movement of materials, product and materials Time-Function Mapping - Shows flows and time frame. A flow chart with time added on the horizontal axis. Can identify and eliminate waste. Value-Stream Mapping - Shows flows and time and value added beyond the immediate organization. Helps manager understand how to add value in the flow of material and information through the entire production process including the suppliers. Process Charts - Uses symbols, time and distance to show key activities. Charts that allows us to focus on value added activities. Service Blueprinting - focuses on customer/provider interaction with the customer.  “Baseline” Time-Function Map Order Receive Customer product product Process Sales order Order Production Wait control Product Order Plant A Print Product WIP Warehouse Wait Wait Wait Product WIP WIP Plant B Extrude WIP Transport Move Move 12 days 13 days 1 day 4 days 1 day 10 days 1 day 0 day 1 day Figure 7.5 52 days Value-Stream Mapping Figure 7.6  Process Chart Figure 7.7 © 2011 Pearson Education, Inc. publishing as Prenti ce Hall  Service Blueprint Personal Greeting Service Diagnosis Perform Service Friendly Close Level Customer arrives for service. Customer departs #1 (3 min) F Determine Notify Customer pays bill. specifics. customer (4 min) Warm greeting (5 min) and obtain No and recommend an alternative F service request. (10 sec) provider. Standard Can F Level request. (7min) service be #2 (3 min) done and does Notify Direct customer customer No customer the to waiting room. approve? car is ready. (5 min) (3 min) F F F F Yes Yes Perform Level required work. F Prepare invoice. #3 (varies) (3 min) Figure 7.8 Special Considerations for Service Process Design ► Some interaction with customer is necessary, but this often affects performance adversely ► The better these interactions are accommodated in the process design, the more efficient and effective the process ► Find the right combination of cost and customer interaction  Service Process Matrix Degree of Customization Figure 7.8 Low High Mass Service Professional Service Private Traditional banking orthodontics Commercial banking High General- Full-service purpose law firms stockbroker Digital Degree of Labor Boutiques orthodontics Retailing Service Factory Law clinics Service Shop Limited-service Specialized stockbroker hospitals Warehouse and Fast-food Fine-dining catalog stores restaurants Hospitals Low restaurants Airlines No-frills airlines Service Process Matrix Mass Service and Professional Service ► Labor involvement is high ► Focus on human resources ► Selection and training highly important Degree of Customization Personalized services Low High ► Mass Service Professional Service Private banking Traditional orthodontics Commercial banking High General- Full-service purpose law stockbroker firms Digital Degree of Labor Boutiques orthodontics Retailing Law clinics Service Factory Service Shop Limited-service Specialized stockbroker hospitals Warehouse and Fast-food catalog stores Fine-dining Low restaurants restaurants Hospitals Airlines No-frills airlines Service Process Matrix Service Factory and Service Shop ► Automation of standardized services ► Restricted offerings ► Low labor intensity responds well to process technology and scheduling Degree of Customization Low High Mass Service Professional Service Private Traditional banking orthodontics Tight control required to Commercial banking General- ► High Full-service purpose law stockbroker firms Digital Degree of Labor Boutiques orthodontics maintain standards Retailing Law clinics Service Factory Service Shop Limited-service Specialized stockbroker hospitals Warehouse and Fast-food catalog stores Fine-dining Low restaurants restaurants Hospitals Airlines No-frills airlines Improving Service Productivity TABLE 7.3 Techniques for Improving Service Productivity STRATEGY TECHNIQUE EXAMPLE Separation Structuring service so Bank customers go to a customers must go where manager to open a new the service is offered account, to loan officers for loans, and to tellers for deposits Self-service Self-service so customers Supermarkets and examine, compare, and department stores evaluate at their own pace Postponement Customizing at delivery Customizing vans at delivery rather than at production Focus Restricting the offerings Limited-menu restaurant Improving Service Productivity TABLE 7.3 Techniques for Improving Service Productivity STRATEGY TECHNIQUE EXAMPLE Modules Modular selection of Investment and insurance service selection Modular production Prepackaged food modules in restaurants Automation Separating services that Automatic teller machines may lend themselves to some type of automation Scheduling Precise personnel Scheduling ticket counter scheduling personnel at 15-minute intervals at airlines Training Clarifying the service Investment counselor, options funeral directors Explaining how to avoid After-sale maintenance problems personnel Crossover Chart Example ▶ Evaluate three different accounting software products ▶ Calculate crossover points between software A and B and between software B and C DOLLARS REQUIRED PER TOTAL FIXED COST ACCOUNTING REPORT Software A $200,000 $60 Software B $300,000 $25 Software C $400,000 $10 Crossover Chart Example ► Software A is most economical from 0 to 2,857 reports ► Software B is most economical from 2,857 to 6,666 reports  Crossover Charts Variable costs Variable Variable $ costs $ costs $ Fixed costs Fixed costs Fixed costs Low volume, high variety Repetitive High volume, low variety Process A Process B Process C sts sts co co B A ss $ s c e es ts pro c os c l C ro ta ss To roce lp l p Tota ta To 400,000 300,000 200,000 Fixed cost Fixed cost Fixed cost Process A Process B Process C Figure 7.3 (2,857) V1 V2 (6,666) Volume 3. Process Technology Machine technology Automatic identification systems (AISs) Process control Vision system Robot Automated storage and retrieval systems (ASRSs) Automated guided vehicles (AGVs) Flexible manufacturing systems (FMSs) Computer-integrated manufacturing (CIM) Machine Technology Increased precision Increased productivity Increased flexibility Improved environmental impact Reduced changeover time Decreased size Reduced power requirements Automatic Identification Systems (AISs) Improved data acquisition Reduced data entry errors Increased speed Increased scope of process automation Example – Bar codes and RFID  Process Control Real-time monitoring and control of processes Sensors collect data Devices read data on periodic basis Measurements translated into digital signals then sent to a computer Computer programs analyze the data Resulting output may take numerous forms Vision Systems Particular aid to inspection Consistently accurate Never bored Modest cost Superior to individuals performing the same tasks Robots Perform monotonous or dangerous tasks Perform tasks requiring significant strength or endurance Generally enhanced consistency and accuracy Automated Storage and Retrieval Systems (ASRSs) Automated placement and withdrawal of parts and products Reduced errors and labor Particularly useful in inventory and test areas of manufacturing firms Automated Guided Vehicle (AGVs) Electronically guided and controlled carts Used for movement of products and/or individuals Flexible Manufacturing Systems (FMSs) Computer controls both the workstation and the material handling equipment Enhance flexibility and reduced waste Can economically produce low volume at high quality Reduced changeover time and increased utilization Stringent communication requirement between components Computer-Integrated Manufacturing (CIM) Extension of flexible manufacturing systems Backwards to engineering and inventory control Forward into warehousing and shipping Can also include financial and customer service areas Reducing the distinction between low- volume/high-variety, and high-volume/low- variety production  Computer- Integrated Manufacturing (CIM) Figure 7.10 Technology in Services Service Industry Example Financial Services Debit cards, electronic funds transfer, ATMs, Internet stock trading, on-line banking via cell phone Education Electronic bulletin boards, on-line journals, WebCT, Blackboard and smart phones Utilities and Automated one-man garbage trucks, optical government mail and bomb scanners, flood warning systems, meters allowing homeowners to control energy usage and costs Restaurants and Wireless orders from waiters to kitchen, robot foods butchering, transponders on cars that track sales at drive-throughs Communications Interactive TV, ebooks via Kindle 2 Table 7.4 END OF SLIDES