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  • A long series of supply chain advances has delivered a long series of temporary competitive advantages. And another is on the way. In the early 70s Japan brought the quality revolution and Just In Time. Better cheaper customer service with far less inventory. Esp for early implementers About 1985-86, QR was born as an application of JIT to general merchandise, particularly softgoods. Better cheaper customer service with far less inventory. Esp. for early. VMI or co-managed inventories was the next leap, with similar results if the CG did not cheat to make quartlery $. About 1992, after general merchandise started eating the grocers’ lunches with cost-effective customer service, supermarkets started to apply QR-like ideas plus some other good ones for better customer service with far less inventory. Esp for early. About 7 years ago, supply chain management, which offers, you guessed it, better customer service with far less inventory. Early implementers gaining well, esp CGs. Next, wave is something with collaborative. CYY. Next great competitive advantage. Millions for consulting & software. The next great gain is collaborative, but operating closer to real time. Buyers and suppliers share the data on sales and promotions and related topics. Systems compare actual to plan and alert mangers to the biggest problems to solve as they arise. Companies ratchet down inventories while keeping customer service levels at the highest economic level for increased in-stock sales. Data is synchronized at buyer and seller. And for early implementers it will come JIT.
  • A long series of supply chain advances has delivered a long series of temporary competitive advantages. And another is on the way. In the early 70s Japan brought the quality revolution and Just In Time. Better cheaper customer service with far less inventory. Esp for early implementers About 1985-86, QR was born as an application of JIT to general merchandise, particularly softgoods. Better cheaper customer service with far less inventory. Esp. for early. VMI or co-managed inventories was the next leap, with similar results if the CG did not cheat to make quartlery $. About 1992, after general merchandise started eating the grocers’ lunches with cost-effective customer service, supermarkets started to apply QR-like ideas plus some other good ones for better customer service with far less inventory. Esp for early. About 7 years ago, supply chain management, which offers, you guessed it, better customer service with far less inventory. Early implementers gaining well, esp CGs. Next, wave is something with collaborative. CYY. Next great competitive advantage. Millions for consulting & software. The next great gain is collaborative, but operating closer to real time. Buyers and suppliers share the data on sales and promotions and related topics. Systems compare actual to plan and alert mangers to the biggest problems to solve as they arise. Companies ratchet down inventories while keeping customer service levels at the highest economic level for increased in-stock sales. Data is synchronized at buyer and seller. And for early implementers it will come JIT.
  • Webster's definition: Act of working together as in writing a book. Cooperating with the enemy.
  • Use Minitab to have students record the results and have the students display using Graph..Histogram Note how “rough” the graph looks Redo using Basic Statistics …. Descriptive Statistics and display using the Graphical Summary. Walk through the normal curve transform: Mean (Arithmetic Average) Standard Deviation Skew (How off center the data is skewed -=left) Kurtosis (How flat or peaked the data is -=flat) Show the Box Plot: Quartile (25% of the Data Points) Median (50% of the Data Points on Each Side) Show the 95% Confidence Interval and Explain how it relates to the data.
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  • Wcm

    1. 1. World ClassManufacturing 1
    2. 2. Core text books.1. Production & Operation Management by S.N. Chary2. World Class manufacturing B.S SahayReference Book : Operation Management Jay Heizer & B.Render 8th Edn National Manufacturing Competitiveness council report. 2009 2
    3. 3. World Class Manufacturing is a set of concepts,principles, policies and techniques for managingand operating a manufacturing company. It isdriven by the results achieved by the Japanesemanufacturing resurgence following World War II,and adapts many of the ideas used by theJapanese in automotive, electronics and steelcompanies to gain a competitive edge. It primarilyfocuses on continual improvement in quality, cost,lead time, flexibility and customer service. 3
    4. 4. WORLD CLASS MANUFACTUING CONCEPT DRIVES : QUALITY LEADHIGH MORAL & SAFETY TIME CONTINUAL REDUCTION IMPROVEMENT COST FLEXIBILITY REDUCTION IN OPERATION & PROCESS
    5. 5. Framework for Continuous ImprovementCompanies that are pursuing world-class status may follows four dominantprinciples of which these companies may choose one or more.1.Just-in-Time (JIT) - The JIT principle focuses on the elimination of waste, withwaste defined as anything other than the minimum amount of equipment,materials, parts, space, and workers time, that are absolutely essential to addvalue to the product.2. Total Quality Control (TQC) Under the TQC principle, everyone in theorganization must be involved in improving the products quality to meetcustomer needs. The emphasis is placed on defect prevention rather thandefect detection and development of an attitude of "do it right the first time."3. Total Preventive Maintenance (TPM) - With the TPM principle, machines andequipment are maintained so often and so thoroughly that they rarely everbreak down, jam, or misperform during a production run.4. Computer Integrated Manufacturing (CIM) - CIM involves the integration ofthe companys operations from design, production, and distribution to after-sales service and support in the field through the use of computer and 5information technologies."
    6. 6. Transition of manufacturing Sector High Acceptance issue WCM Image & quality Global Issue. Competitiveness Lean manufacturingConsumer Uncontested marketExpectation .Manufacturing Traditional Process Excellence Manufacturing for cost competitiveness Practices & innovation Low Local Global Competition 6
    7. 7. Time to Market is shortening : Rapid introduction ofnew products puts pressure on manufacturing facilitiesto profitably produce a larger variety in smallervolumes. Manufacturing firms have to adopt to newprocesses, new materials, new vendors, new shopfloor layouts, new ways of reducing cycle times,new designs etc. to deliver these products .The real challenge is therefore to improve substantiallyon several dimensions viz : quality, technology, shopfloor practices, supply chain coordination, and newproduct introduction over a short period of time. 7
    8. 8. Manufacturing shiftMass Production lean Production Mass CustomizationScientific CAD/CAM ERPmanagement EDI/ TQM Lean SCMProcess KAIZAN Agile manufacturingMRP Six Sigma Build to orderPERT/CPM SCM Lean Cost Focus manufacturing Quality focus Customization focus 8
    9. 9. MANTRA FOR GLOBAL COMPETITIVENESS IN MANAUFACTURING FIRMS ARE :•Product mix change•Conformance to quality•Volume change•Product customization•On time delivery•Research on New product development•Quick design changes•Price competitiveness 9
    10. 10. A Perspective of Indian Manufacturing sectorExtract of Report submitted to NMCC by IIM BangaloreMarch 2009.The Indian Manufacturing sector has traversed a diversifiedpath to industrial development within the country. While itsshare in the GDP has declined over the years, its growth ratein recent years has been impressive (a CAGR of close to 8percent in the last eight years). Very few countries in theworld can boast of such a diversified industrial base ofsignificance: from textiles & apparel to steel, from chemicalsto machine tools, from consumer goods to avionics. And thenthere is the automobile and the auto-component industry withengineering & service design that has created an industrialdynamics that only a few countries in the world have beenable to achieve. 10
    11. 11. Concerns of Indian manufacturing sector Studies have indicated that the productivity of the manufacturing industry in India is approximately 1/5th of the productivity in the manufacturing industry of United States Of America. It is about ½ as compared to the productivity levels in South Korea as well as Taiwan. Labor productivity has escalated only to a small extent in case of India in comparison to United States Of America, on the contrary, labor productivity has increased manifold in Taiwan & Korea .• While Indian Manufacturing Industry is competing in the global marketplace and registering growth on YoY basis, in sector areas , large sections of Indian manufacturing sector still suffers from bottlenecks like –1. Use of primitive technology or under utilization of technology.2. Poor infrastructure.3. Over staffed operations & high operation cost4. Low flexibility in manufacturing process5. Expensive financing and bureaucracy 11
    12. 12. New Competitive ChallengesToday, Indian firms are facing a very different competitive scenario ascompared to the past. They are facing competition from imports and fromMNCs in the domestic markets. Firms also have to compete as newentrants in global markets. Earlier, firms would segregate these twomarkets and serve them with different quality products and services,compromising on quality in the home market. This is no longer possible.Therefore, many strategies that may have worked in the past are not likelyto succeed in the future.The cost structure of Indian manufacturing plants shows that materialsconstitute 66 percent of total costs, direct labour 10 percent andoverheads 24 percent.This implies that management initiatives to control manufacturing costsneed to be focussed to reduce material costs and overheads. 12
    13. 13. Efforts to control material related costs may need to address severalissues including rejects and rework on the shop floor, identifyingalternative materials, and better materials management andsourcing.The new competition is in terms of reduced cost, improved quality,products with higher performance, a wider range of products, andbetter service - all delivered simultaneously. Indian firms have quite often followed an opportunistic approach togrowth as opposed to a capability driven approach that seeks tostrengthen key aspects of manufacturing 13
    14. 14. Traditional Manufacturing Process.Causal Diagram. 14
    15. 15. Logistics were organized around the principle of massproduction.Low cost was to be achieved through high volume. This ledfirms to hold large inventories of incoming materials, work-in-progress and finished products, just-in-case anything mightgo wrong and interrupt the flow of production. Machinery wasdesigned to produce one type of products, and machinechangeovers were to minimum.Quality procedures were designed so as not to get in the wayof production-flow. So quality inspection was placed at theend of the production line, and faulty products were reworkedbefore delivery.These principles of mass production were appropriate as longas markets were stable and undemanding. As marketsbecame more heterogeneous and changeable, new principles 15of production had to be established.
    16. 16. Principles of World Class Manufacturing : WCM is a processdriven approach where implementations usually involve thefollowing philosophies and techniques:1. Make-to-order2. Streamlined flow3. Small lot sizes4. Families of parts5. Doing it right the first time6. Cellular manufacturing7. Total preventive maintenance8. Quick changeover 16
    17. 17. 9. Zero Defects 10. Just-in-time 11. Variability reduction 12. High employee involvement 13. Cross functional teams 14. Multi-skilled employees 15. Visual signaling 16. Statistical process controlThese sixteen practices helps an organization to achievea position of world class manufacturing. 17
    18. 18. World class manufacturing 18
    19. 19. WCM has following inherent advantage•Logistics are designed so that flexibility can be ensured.•Producing in small batches to satisfy varied and volatilemarkets.•Inventories are organized on a "just-in-time" basis, andproduction flows through the plant as single units ratherthan in large batches.•Attention is paid to rapid changeover and simpler andmore flexible machinery is often used.•Instead of checking quality at the end of the line, quality isassured at each stage of the production process, so that nodefects are allowed to pass through the plant. 19
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    23. 23. Lean manufacturing Model ( TPS House )Integrated SCM People & Team Work Self triggered stopsJust In Time Common Goal , Cross Process drivenContinuous flow Trained high morale Error proofingPull system In station qualityQuick change Continuous Improvement Controlover Waste reduction Problem solving 5 Why;s Leveled production Standard manufacturing process Visual Management 23
    24. 24. Lean Manufacturing & Toyota Production System.Lean manufacturing practices works on the premise ofeliminating waste and being flexible and open tochange . It is a team based approach to identifying andeliminating waste (non-value adding activities) throughcontinuous improvement by flowing the product at the pull ofthe customer in pursuit of perfection.The Toyota Production System is a philosophy ofmanufacturing that was created by the Toyota Corporation.TPS, has become synonymous with Lean Manufacturing.TPS defined three types of waste: “Muda“( non value-addedwork), “Muri" (overburden) and “Mura“( unevenness). Byeliminating waste, overall quality can be improved andproduction time as well as cost can be reduced. 24
    25. 25. TPS defined three types of waste known as 3 M’s ofTPS.“Muda“( non value-added work),“Muri" (overburden)“Mura“( unevenness).By eliminating waste, overall quality can be improvedand production time as well as cost can be reduced. 25
    26. 26. Toyota Production System ( TPS) & 3 M’sThe Toyota seven wastes are as follows:The TPS identifies seven wastes specifically and collectivelycalled as “wastes”.1. Over-production2. Motion (of operator or machine)3. Waiting (of operator or machine)4. Conveyance,5. Processing itself6 .Inventory (raw material)7. Correction (rework and scrap).Lean manufacturing aims to improve the manufacturingprocess by eliminating seven wastes in all their forms. 26
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    29. 29. TPS approach to reduce waste.1. Reduce setup times - Employees at Toyota were made responsible for their own setups thus reducing the wastefulness of this process .2. Small-lot production - The process of economically producing a variety of things in small quantities rather than producing things in large batches.3. Employee involvement and empowerment - Employee are divided into teams and even those in supervisory positions work along side other employees on the production line as part of the team.4. Quality at the source - Product defects are identified and corrected as soon as they occur or at the source. 29
    30. 30. 5. Equipment maintenance - Operators of the equipmentare also assigned to take care of their maintenance sincethese should be the individuals who know the equipmentbest.6. Pull production - The work performed at each stage ofthe process is dictated solely by demand for materialsfrom the immediate next stage (also known as "Just inTime").7. Supplier involvement - Suppliers are treated as partnersand are also trained in the TPS methods. 30
    31. 31. Factors affecting Lean Manufacturing 31
    32. 32. Theory of ConstraintsEli Goldratt is the creator of the Theory of Constraints (TOC)Theory of Constraints (TOC) is an overall management philosophy that aims to achieve goal of a system by eliminating bottle neck in the process.TOC focuses on critcal areas which influence the system’s efficency and productivity.1) The management thinking processes and their implication to execution and human behavior .2) The constraints in critical business activity & its implication to processes flow in the service operation.The constraints can be broadly classified as either an internal constraint or a market constraint ( suppler constraint) . 32
    33. 33. Theory of Constraints is based on the premise that the rate ofrevenue generation is limited by constraining process (i.e. abottleneck).Only by increasing throughput (flow) at the bottleneck process orelminating the bottleneck , can overall throughput be increased. The key steps to overcome constraint are:1. Articulate the goal of the organization.2. Identify the constraint (the thing that prevents the organization from obtaining more of the goal. 33
    34. 34. 3. Decide how to exploit the constraint.Subordinate all other processes to above decision (alignall other processes to the decision made above)The primary methodology used to overcome constraintsis refered as Drum-Buffer-Rope (DBR) approach. 34
    35. 35. 1. The drum is the physical constraint of the plant: the workcenter or machine or operation that limits the ability of theentire system to produce more. The rest of the plant followsthe beat of the drum.2.The buffer protects the drum, so that it always has workflowing to it. Buffers in DBR methodology advocates time asthe unit of measure, rather than quantity of material. Thismakes the priority system operate strictly based on the time .3. The rope is the work release mechanism for the plant.( Trigger ). It Pulls work into the system just when requiredrather than earlier than a buffer time which creates highwork-in-process and slows down the entire system. 35
    36. 36. Marching to the Drum Beat of the Drummer Constraint linked to Inventory available to Buffer time Market demand Overcome the constraint Drum Beat Proactive Virtual stock Process Of the plant buffer 36
    37. 37. Traditional system calls for buffers at several points inthe system. Simplified DBR requires only a singlebuffer at shipping point.Drum - The constraints, linked to market demand, is thedrumbeat for the entire plant.Buffer - Time/inventory that ensures that the constraintis protected from disturbances occurring in the system.Rope - Material release is "tied" to the rate of theconstraint. 37
    38. 38. The Simplified- Drum, Buffer Rope ( S-DBR)provide the basis for building a productionschedule that is highly immune to disruption,avoids creating excess inventory, and usessmall batches to minimize overall lead time.Thus S-DBR is used to mitigate and oftenprevent those disruption which happens inProduction process. 38
    39. 39. Lean Manufacturing ModelIntegrated SCM Self triggered stops People & Team WorkJust In Time Process driven Common Goal , CrossContinuous flow Error proofing Trained high moralePull system In station qualityQuick change Controlover Continuous Improvement Waste reduction Problem solving 5 Why;s Leveled production Standard manufacturing process Visual Management 39
    40. 40. 7 Essential principles of Lean manufacturing1. Pull Inventory Control. Work moves based on the needs of the downstream operation starting from the customer need.2. Automation: Equipment intelligently recognizes & eliminates process variation with human like intervention. Technology support from ERP, CAD/CAM etc3. JIT Inventory : WIP & supplies arrive at the process location as they are needed. 40
    41. 41. 5. Visual control. : Management by sight of equipment & process Variation.6. Standardized work process & procedures. All activities are defined in advance & characterizes by process consistency.7. Pursuit of perfection. There is no end to the process of reducing , waste , time cost & mistake.8. Continuous work flow : Alignment of machines are such that it drives continuous work flow without interruption. 41
    42. 42. A flexible manufacturing system (FMS) is a group of numerically-controlledmachine tools, interconnected by a central control system. The variousmachining cells are interconnected, via loading and unloading stations, byan automated transport system. Operational flexibility is enhanced by theability to execute all manufacturing tasks on numerous product designs insmall quantities and with faster delivery.It has been described as an automated job shop and as a miniatureautomated factory. It is an automated production system that produces oneor more families of parts in a flexible manner. Automation and flexibilitypresents the possibility of producing nonstandard parts to create acompetitive advantage.
    43. 43. Flexible Manufacturing System Batch Production or Job productionDedicated machinery or General-purpose toolsCost savings but Costly, and may notlacks flexibility reach full capacity
    44. 44. FMS is limited to firms involved in batch production or job shopenvironments. Normally, batch producers have two kinds of equipmentfrom which to choose: dedicated machinery or general-purpose tools.Dedicated machinery results in cost savings but lacks flexibility. Generalpurpose machines such as lathes, milling machines, or drill presses are allcostly, and may not reach full capacity.Flexible manufacturing systems provide the batch manufacturer with anotheroption that can make batch manufacturing just as efficient and productive asmass production.Two kinds of manufacturing systems fall within the FMS spectrum. Theseare assembly systems, which assemble components into final products andforming systems, which actually form components or final products.A generic FMS is said to consist of the following components:A set of work stations containing machine tools that do not require significantset-up time or change-over between successive jobs. Typically, thesemachines perform milling, boring, drilling, tapping, reaming, turning, andgrooving operations.
    45. 45. An automated and flexible material-handling system ( Guided vehicle )permits jobs to move between any pair of machines so that any job routingcan be done more efficiently .A network of supervisory computers that perform some or all of thefollowing tasks:1. Directs the routing of jobs through the system2. Tracks the status of all jobs in progress so it is known where each job is to go next.3. Passes the instructions for the processing of each operation to each station and ensures that the right tools are available for the job.4. Provides essential monitoring of the correct performance of operations and signals problems requiring attention.5. Storage, locally at the work stations, and/or centrally at the system level.The jobs to be processed by the system. In operating an FMS, the workerenters the job to be run at the supervisory computer, which then downloadsthe part programs to the cell control or NC controller.
    46. 46. Benefits•Less waste•fewer workstations•quicker changes of tools, dies, and stamping machinery•reduced downtime•better control over quality•reduced labor•more efficient use of machinery•work-in-process inventory reduced•increased capacity•increased production flexibility
    47. 47. LIMITATIONS OF FMSIt can handle a relatively-narrow range of partvarieties, so it must be used for similar parts (familyof parts) that require similar processing.Due to increased complexity and cost, an FMS alsorequires a longer planning and development periodthan traditional manufacturing equipment.Equipment utilization for the FMS always is not ashigh as one would expect.
    48. 48. Lack of technical literacy, managementincompetence, and poor implementation of the FMSprocess.If products change ( variation is high ) rapidly, andperformance of the firm is measured on the ability tointroduce new products fast than minimizing cost, insuch scenario, scale is no longer the main concernand size is no longer a barrier to entry.
    49. 49. Traditional FMSThe traditional flexible manufacturing system (FMS) is based onnumerically controlled machines in addition to other value-added,automatic, material handling facilities. A degree of flexibility within FMSserves to satisfy demands for a relatively diverse range of products witha small to medium batch size production.
    50. 50. Flexible Manufacturing SystemMass production Mass Customization
    51. 51. When customer orders come through more randomly with different deliverydates, product mix changes irregularly and drastically, or the productdiversification increases, downstream processes require randomlycustomized parts on flexible schedules to be supplied to their matchingpredecessor processes on short notice, extra inventory, equipment, andlabor are needed to meet order variations. In such a case , traditionalFMS is challenged to meet these rapid changes with minimum productioncost and satisfaction. This leads to a new concept called MassCustomization . A process which delivers sufficient flexibility and rapidresponse capability to deal with complex manufacturing situations.Mass customization system demands a higher degree of flexibility thantraditional FMS. It is highly desirable that each component demonstratesprompt response capability in managing demand changes in a FMS withparallel considerations in product costs, quality and reliability to formthe flexibility in an agile mass manufacturing system,
    52. 52. Agile Mass Customized Manufacturing SystemManufacturing process focused on the ability to flexibly and rapidlyrespond to changing market conditions. As product life cycles getshortened significantly , manufacturers have found that they can nolonger capture market share and gain higher profits by producing largevolumes of a standard product for a mass market. Success inmanufacturing requires the adoption of methods in customer-acquisitionand order-fulfillment processes that can manage anticipated changewith precision while providing a fast and flexible response tounanticipated changes .
    53. 53. Goal of MCM is to produce and deliver customized products rapidlywhile keeping costs at the mass-production level. MCM implementation strategies can be divided into three differentcategories according to the different stages when customization isintroduced in the value-chain: (1) form MCM, (2) optional MCM, (3) core MCMForm MCM is the simplest MCM implementation strategy, wherecustomization is introduced at the delivery stage.Optional MCM allows customization to take place at themanufacturing stage. The essential point of this implementationstrategy is to provide a large number of pre-designed, standard options tocustomers. It produces the configured products. Customers can onlyselect options from a predetermined list and request them to beassembled. ( Dell manufacturing Model )Core customization integrates customers with the design process.
    54. 54. Mass Customized Manufacturing ( MCM ) Steps for mass customization lie in two areas:1. Design For Mass Customization ( DFMC )2 Mass Customization Manufacturing (MCM) system.DFMC emphasizes decoupling of the design and manufacturing processto reduce costs. In developing MCM, it is important to take DFMC intoconsideration in order to reduce the setup time and other volume-relatedcosts drivers. Modification of product shape and size are limited toguarantee that fabrication can be performed on the same production line.Product design for mass customization ( DFMC) calls for Parameterizedproducts: Parameterized products possess a series of attributes calledparameters. These parameters allow customers to change the actualdesign of the product, for example, by creating new sizes, or modifyingperformance characteristics. Each parameter can be chosen bycustomers within a certain scope, and the scope itself can also bedefined as one of the parameters
    55. 55. Success in mass customization manufacturing( MCM) is achieved byswiftly reconfiguring operations, processes, and business relationshipswith respect to customers’ individual needs and dynamic manufacturingrequirements.MCM system is characterized by four challenging characteristics: Degrees of flexibility, Production capability adjustments, Modularization methods Dynamic network-control system structureModularization methods : Modularization methods in traditionalmanufacturing systems are often product-oriented, where modules aregrouped in teams with intercross functions . In an MCM system,categorization of modules is based on their functionalities: the greaterthe diversity of module classifications, the better the system’s potential tosatisfy different customized demands
    56. 56. Dynamic-network-control system structure: Control system structures in FMS are often constructed in a hierarchical mode. Modules assigned at various closely interactive layers result in the limitation of the capability for system reconfiguration, reliability, and system expandability. Because of the complexity in ever-changing manufacturing requirements and flexible process routing, fixed and centralized control is almost impossible in a MCM system. Dynamic and flexible network utilizations in MCM functional modules can maximize the strength of each empowered resource, and hence, the overall risk and costs are reduced. The dynamic network connections among functional modules are characterized as :Instantaneous: Accessing valid resources and reconfiguring functionalmodules should be instantaneous.Low cost: Besides the initial capital investment, it is better to reduce therecurring system costs.
    57. 57. Seamless: A set of system mechanisms needs to be established to ensureseamless data exchange among customized orders, suppliers, services,and production controls.Frictionless: There should be no resource conflicts when a new network iscreated. Success in this feature promotes better cost controls and dynamicnetwork operations.
    58. 58. Integrated design and simulation system to enable MCM
    59. 59. Evolving of Supply Chain practices for competitive advantage 2001: CPFR 1996: ECR 1992: VMI/Co-Managed 1986: Quick Response (QR) 1960s: Just-In-Time/Total Quality
    60. 60. The goal of JIT in manufacturing organization is to continuouslyreduce the cost associated with requirement material resource.Its objective is to achieve cost efficiency through zeroinventory. The goal of JIT process is to reduce excess workingcapital held-up on account of material & minimal inventory at WIP.The constraints of managing RM inventory are due to :•Unpredictable quality of supply of material•Inability to hold tolerances.•Shortcoming in lead time. ( Erratic delivery )•Short supply of quantity of material•Inaccurate forecasting•Non standard materials being used ( Increased variety )•Last minute product changes.
    61. 61. Steps for implementing JIT in an organization.1. Do detailed analysis of inventory requirement of all types at every stage of production process.2. Estimate the market fluctuations on account of price, supply , quality demand etc.3. Identify reliable source of suppliers who are capable of supplying material as when required.4. Take supplier in to confidence & sensitize them the importance of JIT inventory & build healthy business relationship with suppliers to have high commitment & ownership . Use Value engineering approach.
    62. 62. 5. Conduct periodic vendor appraisal & follow vendor rating system of evaluation .6. Give instant feed back on the supply & suggest improvement steps.7. Sign rate contract .8. Use IT enabled ordering system , ERP .
    63. 63. Inventory Control TechniquesInventory control techniques are used to prevent :1 financial leakage due o excessive stock & poordemand , 2 2shortage of inventory3. Inventory Obsolescence Plan safety stock for critical & essential itemsBuild selective control on fast & slow movinginventory .Various Inventory control technique used are :ABC : Always Better ControlVED : Vital Essential & DesirableSDE : Scarce Difficulty & EasyFNSD Fast moving , Normal , Slow moving , Dead
    64. 64. ABC Classification 100 CLASS C 90 Low annual consumption value CLASS BUsage % Moderate annual Consumption value 70(InventoryValue ) CLASS A High annual consumption value items 0 10 30 100 % items
    65. 65. VED analysis : Vital : Without which production processwill come to halt. Essential : Non availability of such item will affectthe efficiency .Desirable : It is good if it is available , howeveralternate option can be done.SDE : Scarce ( Short supply ) Difficult ( Imported components ) easily ( Short lead time )
    66. 66. Purchase Inventory review system :Review process is administered on the basis of Fixedorder quantity ( Q system ) and fixed period quantitysystem . ( P system )In Q system , whenever the stock level reaches the RoL , order is placed for a fixed quantity of material .RoL is calculated as a sum of demand during the leadtime & variation in demand during lead time ( safetystock ) and average demand during delivery delays.( reserve stock )In p system , stock position is reviewed after every fixedperiod & order is placed according to stock position &demand .
    67. 67. Value Engineering or Value AnalysisIt is a technique of cost reduction and costprevention. It focuses on building necessaryfunctions at minimum cost with outcompromising on quality, reliability ,performance& appearance. It helps in identifying unnecessarycosts associated with any material , partcomponents or service by analysis of functionand efficiently eliminating them with outimpairing the quality functional reliability or itscapacity to provide service. It is a preventiveprocess.
    68. 68. When to apply VE1. Raw material cost increases suddenly .2. Vendors are unreliable & organization is highly dependent on a few select vendor .3. Cost of manufacturing is disproportionate to volume of production .Value analysis is done w.r.t cost associated at:• Cost Value (Labour , Material & overhead).• Use Value• Esteem Value ( Look & finish )• Performance Value ( Reliability , Safety , Service & Maintenance )
    69. 69. Value = Performance ( Utility) CostVendor analysis is done to minimize the cost incurred dueto a supplier Inefficiency or inability .Vendor cost to be considered are :•Opportunity loss due to poor quality ( High rejection cost )•leading to machine & labour idle time.•High re-work cost•Inconsistent lead time•Inability to meet the demand of the manufacturer•Poor Credit terms
    70. 70. Value engineering procedure:Constantly evaluate the inventory costs associated &benchmark against the best in practice.As & when the cost of manufacturing increasesdisproportionately, identify an alternate source for contractmanufacturing & monitor the quality & standards.Use more standard parts which can be sourced easilyDevelop more suppliers ( at least 4 to5 for one part.) &minimize dependency on one supplier.Audit the supplier’s work premise & rate them on theperformance . Conduct quarterly vendor meet & share the highlights &concerns .
    71. 71. Manufacturing Requirement Planning
    72. 72. MRP MRP1 ERPMaterial requirement planning Manufacturing resource Enterprise resourcein manufacturing organization. Planning in manufacturing Planning organization Inventory planning Production planning Business planning & control & control Material planning Material, Machine Man Machine Method Man Material, Method & Money The essence of the progress was based on seamless integration and analysis of information on various resources required by a manager to make an effective decision.
    73. 73. MRP vs. ERP — Manufacturing management systems haveevolved in stages over the past three plus decades, from a simplemeans of calculating materials requirements to the automation ofan entire enterprise.As frequent changes in sales forecasts happened entailingcontinual readjustments in production, as well as inflexible fixedsystem parameters, MRP (Material Requirement Planning)evolved into a new concept : Manufacturing Resource Planning(or MRPII ) and finally the generic concept Enterprise ResourcePlanning (ERP)Prior to the concept of ERP systems, a manufacturing organizationfaced tremendous difficulty in planning & controlling of resourceslike people , finance WIP inventory at plant , machine status etcdue to lack of integrated & updated information about resources.
    74. 74. Advantage of ERP in a manufacturing organization.Integration among different functional areas to ensureproper communication, productivity and efficiencyIntegration of Design engineering & collaboration.(CAD & CAM )Order tracking, from acceptance through fulfillmentThe revenue cycle, from invoice through cash receiptManaging inter-dependencies of complex processesBOM .Tracking the three-way match between purchase orders(what was ordered), inventory receipts (what arrived),and costing (what the vendor invoiced)The accounting for all of these tasks: tracking therevenue , cost and profit at a granular level.
    75. 75. DisadvantagesCustomization of the ERP software is limited.Re-engineering of business processes to fit the "industrystandard" prescribed by the ERP system may lead to aloss of competitive advantage.ERP systems can be very expensive (This has led to anew category of "ERP light" solutions)ERPs are often seen as too rigid and too difficult to adaptto the specific workflow and business process of somecompanies, cited as one of the main causes of their failure.Many of the integrated links need high accuracy in otherapplications to work effectively. A company can achieveminimum standards, then over time "dirty data" will reducethe reliability of some applications.
    76. 76. The Next Competitive Advantage: Collaborative Commerce 2004: Collaborative Commerce 2001: CPFR 1996: ECR 1992: VMI/Co-Managed 1986: Quick Response (QR) 1960s: Just-In-Time/Total Quality
    77. 77. Software solution for collaborative commercei2 manugistics leveraged Intelligence SAP/R3 LOGILITY VOYAGER SOLUTIONS Eqos
    78. 78. The CPFR® ( Collaborative planning , forecasting& replenishmentA shared process of creation between two or moreparties with diverse skills and knowledge deliveringa unified approach that provides the optimalframework for customer satisfaction. Voluntary Inter Industry Commercial Standards (VICS)•A set of guidelines supported and publishedby the Voluntary Inter industry CommerceStandards (VICS) Association ,Trading partners to share their plans for future events, and thenuse an exception-based process to deal withchanges or deviations from plans.
    79. 79. CPFR is a business practice that combines theintelligence of multiple trading partners in the planning andfulfillment of customer demand.CPFR is a strategy for improving supply chain efficiencyand effectiveness by making demand transparency, drivethe execution of the supply chain participants to maximizevalue for the end-customer. Fundamentally, the aim of CPFR is to convert the supplychain from a disjointed, ineffective and inefficient “push”system to a coordinated “pull” system based upon endcustomer demand.
    80. 80. CPFR Process Model.The driving premise of CPFR is that all supply chain participants develop asynchronized forecast. Every participant in a CPFR process — supplier,manufacturer, distributor, retailer — can view and amend forecast data tooptimize the process from end to end. Essentially, CPFR puts an end toguesswork in forecasting. It means that manufacturers and retailers sharetheir plans, with detailed knowledge of each others’ assumptions andconstraints.The target objectives for CPFR process include the following:• Increased in-stock at shelf• Reduce average transit inventory• Increased sales• Reduce operating expense• Reduce cost of goods• Reduced lead time/cycle time• Decreased account receivables• Reduced forecast error +/- 10%(Source: University of Denver Supply Chain Round table: “CPFR Overview.” ValueChain Collaboration Associates, Inc
    81. 81. The CPFR® Process Model Seller FRONT END AGREEMENT Collaborative Planning JOINT BUSINESS PLAN CREATE SALES FORECAST Collaborative IDENTIFY EXCEPTIONS Forecasting RESOLVE EXCEPTIONS CREATE ORDER FORECASTBuyer IDENTIFY EXCEPTIONS RESOLVE EXCEPTIONS GENERATE ORDER
    82. 82. Phase I — PlanningThis phase relates to people, processes, and developing of trust. Partners must break down cultural barriers and company-centric perceptions so they can view the bigger picture. Partners have to share a unified vision to make the process work. First, partners must define their relationships and identify what processes need to be changed to allow stronger collaboration. Next, “trigger” points for alerts must be identified and assignment charts developed that designate who responds to the alerts and in what time frame. Overall,suppliers may have to change compensation plans and move away from “push” plans, so that shared forecasts can “pull” information through the processes. Specific benchmarks and key performance indicators (KPIs) must then be established to determine the efficacy of the shared plan.The two major steps in this plan are :1. Developing a front-end agreement2. Creating a joint business plan.
    83. 83. Phase II — Forecasting Collaborative forecast of end-user demand continues through all aspects of supply chain planning, providing support for both long-term and day-to-day decisions. Analysis like “what-if ” , forecasting planners can quickly and easily determine the financial and operational effects of any action throughout the supply chain. In Phase II, an organization creates the sales forecast, which then feeds into the order forecast. A large quantity of information rapidly permeates the entire process. A single, collaborative forecast is created with dynamic capability to address the complexities in the business environment.Using advanced demand planner ( software modules ) , organizations can buildmulti-dimensional models, which may include product hierarchies, geographies,channels, and specific customers. Causal variables such as pricing, promotions, andnew store openings can also be completely integrated. In addition, historical data can becombined with near real-time variations in the channel to get the most accurate forecast.
    84. 84. Phase III — ExecutingDuring 3rd phase of CPFR , front-end planning and forecasting cometogether with supply chain execution. Using Order Promising softwaremodule , companies can instantly determine where orders can best besatisfied — from inventory at any location, planned production orders, orpurchase receipts. When there is a promotion (such as a new storeopening or product launch), Order Promising allows companies to quotefuture delivery dates or other key information related to the event. OrderPromising provides the real-time information essential to good customerservice.Manufacturing, warehousing, order fulfillment, and transportation plansare completely synchronized into an integrated package to monitor andensure on-time execution of the order delivery process.
    85. 85. Collaborative commerce in RetailProcess view of Supply Chain in collaborativecommerce . SUPPLIER SUPPLY CHAIN Supply chain design Demand forecasting PLAN Inventory planning SOURCE Retail Store CUSTOMER DELIVER Distribution planning Allocation Transportation Planning Order Fulfillment Delivery scheduling Visibility, Event Management CATEGORY & coordination & Track & Trace Management  Warehouse Management Reverse Logistics Procurement  Inventory Management Trade Management In sourcing/out sourcing  Transportation management Relationship Management
    86. 86. Managing Manufacturing Lead time ( MLT ) is an essentialtask in any organization to deliver the goods as per thecustomer order lead time.MLT depends on the nature of manufacturing process. Thefour types of manufacturing process are :ETO ( Engineer to Order)MTO ( Manufacture to Order )ATO ( Assemble to Order )MTS (Made to Stock )Design Procure Manufacture Assemble Ship ETO Lead Time 90
    87. 87. Types of Production System 91
    88. 88. Production Process. Standardization Non standardization Variation Flow (Mass) Batch Job Project/ Turn Production production production key production MTS ETOStandard parts & Non standard low volumeHigh Volume Plant location Plant Layout Production process 92
    89. 89. Mass or Flow productionFlow or mass production employs special types of machines speciallydesigned for mass scale productions . It involves decomposition of theproduction task in to minute details & are grouped them according to thenorms of production.An assembly line consisting of workstations in a sequence meant to do aportion of the work , feed the parts and components machined toassembly line .Material moves continuously at a uniform average ratethrough the sequence of workstations .When to deploy mass production .•When production quantities are large & variations are small .•Demand for a single product is very high .•It must justify economy of scale. 93
    90. 90. Advantages of Flow production :•Smooth flow of material from one station to next in a logicalorder.•Result in small WIP inventory due to well connected process.•Effective production time can be short if the processes in theproduction is not in efficient .•Low labour skill is required and can be automated easily .•Low labour training is required.•Material movement is less & less WIP inventory storagespace required. 94
    91. 91. Disadvantages :1.Complete line stoppage if a machine breakdown.2.High preventive maintenance cost3.Plant layout is dictated by the product . Any change in the product designwill call for a major change in plant layout .4.Line balancing is essential in the assembly line to attain line efficiency .( Grouping of task to ensure that sum of the time of the work elementsperformed at a work station ( station time ) does not exceed the cycle time LE = STi ST = Station time for i station K x ( CT) K = total no of work station CT= cycle time5.Low degree of manual supervision . 95
    92. 92. Batch productionBatch production : When a variety of products to be made & volumesare not large , batch production is followed.•It uses general purpose machines or flexible machine system whichcan be used to produce variety of products.•Material flow is more complex than mass production.•Plant Layout is designed keeping in mind the variety & their flowpattern .•Production cycle time are larger as compared to mass production.•Production scheduling follows a particular sequence in which jobsshould be done at the work center.•Optimal batch size determination for economy is essential. 96
    93. 93. Manufacturing Economic batch Quantity Items are produced & consumed simultaneously for a portion of the cycle time. The rate of consumption is uniform through out the year & cost of production remains same irrespective of production lot . I max = t p x ( P-D)Q Q = Pxtp , tp = Q/P P = production rate D D= consumption rate P P – D = inventory build up rate Q = Inventory at t1 tp Cycle 2 DXCs P EBQ = Ci ( P-D ) 97
    94. 94. I max = t p x ( P-D) = Q/P x ( P-D) = Q x (1- D/P) Av annual Inv = Q/2 x ( 1- D/P) Av Annual Inv Cost = Q/2 x (1- D/P) Ci Annual set up cost = D/Q x C s Q/2 x(1-D/P) Ci = D/Q x Cs Q2 = 2 x D x Cs (P-D )Ci PEconomic 2x Dx C x P Q= sBatch Qty C i P-D 98
    95. 95. A manufacturing unit has annual demand of 10000 valves.Each valve costs Rs 32. The product engineeringdepartment estimates the setup cost as Rs 55 & holdingcost as 12.5 % of the valve. The production rate is uniformat 120 valve/day. Production happens for 250 days in ayear. Calculate optimal batch size & total inventory cost on the basis of optimal policy. Find the number of set ups on the basis of optimal batch . Ci= 12.5% of 32 = Rs 4 , D= 10000/250 = 40 units /day EBQ = 2 x 10000 x 55 ( 120/120-40) = 642 valves. 4 (10000/642)x 55 + 642/2 ( 120-40/120) x 4 856.8 + 856.35 = Rs 1713.15 /yr No of setups = 10000/ 642= 16 Approx 99
    96. 96. Disadvantages :Longer and irregular flow lines result in expensive material handlingprocess.Larger WIP inventory High grade skilled workers & operators arerequired.Total production time required is relatively larger. Job Production :In job production, similar machines are used to produce variety ofjobs of smaller quantity . As nature of demand is unpredictable, &each job order being unique, it requires varying processing time &distinct routing process through a number of machines in the factory.Job shop consists of general purpose machine clubbed in differentproduction centers.Each job requires a unique scheduling as there are n jobs to be 100processed by m machines so as to meet the due date.
    97. 97. •Managing total processing time ( make Span)•Minimizing idle machine time•The make span depends on number of jobs to be processed & number ofmachine available, their due date, job shop layout , the manner in which thejobs arrive at the factory.•Planning for the job shop involves deciding the order of priority for the jobswaiting to be processed in a queue to achieve the desired objective.•Attaining Shortest processing time( SPT sequencing rule ) is key to job work.•It helps to minimize lateness of the job . ( Job completion time - Due date)•Other approaches are first come first serve ( FCFS)•Prioritize the job with earliest due date. 101
    98. 98. Managing Large & complex production work Project Work ).A large complex task comprising of multiple activities tobe performed from manufacturing to delivery, installation& commissioning requires tight scheduling coordination& monitoring of activities from start to end for timelycompletion of work to avoid monetary loss & highcustomer satisfaction.Cost ,Time & Performance are the basis of such projectactivity.Interrelationships between the activities need to beunderstood by the operation team.Erection of a manufacturing plant. Manufacturing ofships , airbus etc. 102
    99. 99. •It requires a specific layout ( project layout ) to handle eachpart of the project.•Heavy machinery and material handling equipments arerequired to manage the projects.•Tight control and monitoring of resource are the essence ofthe project.•All such production activities are done using projecttechniques called CPM ( Critical Path Method ) & PERT( Project Evaluation & Review Technique)CPM deals with project management involving deterministictime estimates .When activity durations of the project are not deterministic &probabilistic, PERT is used. 103
    100. 100. 104
    101. 101. PLANT LAYOUTPlant layout is a floor plan of the physical facilities used forease in production system. It is an spatial arrangement ofphysical facilities to increase the productivity in the shopfloor.An economic layout decision helps to achieve long runefficiency in operation . It creates competitiveadvantageous in terms of capacity, processes , flexibility,cost and quality of work life 105
    102. 102. If the operational system suffers from :1. Poor on-time performance2. Long production lead-times3. High WIP and/or finished goods inventory4. High overtime5. Lots of expediting and rescheduling6. Wandering or stationary bottlenecks7. Reluctance to take on new business. . . then it implies that organizations production layout has constraints. 106
    103. 103. Layout decisions ..Key benefits are : Higher utilization of people , equipmentand space, Improved flow of information , & materialImproved Employee morale & safer working condition,Minimize material handling cost .Types of layout are :• Fixed position layout• Process layout,• Work cell layout, ( Group Layout )• Product layout. 107
    104. 104. Fully automated Plant layoutWIP Inventory 108
    105. 105. Assembly Line in a Car Factory 109
    106. 106. 110
    107. 107. 111
    108. 108. Product layout : Machines & auxiliary service are located according to the processing sequence of the product . This is also called line layout. Material flows in a uniform rate & operations are carried out in a balanced way.RM Sawing Turing bending drilling GrindingFG Packing Quality Inspection Painting approval 112
    109. 109. 113
    110. 110. Advantages product layout1.Simple production Planning & control .2.For high volume standard outputs, machine & work force utilization is high.3.Operator skill can be relatively low as he is trained for one kind of operation.1. Limitation : Breakdown of one machine will cause stoppage of work in down /up stream level.2. Last minute change in product design will require major alteration in layout .3. Heavy investment is required in material handling equipments , machinery etc. 114
    111. 111. Process layout : Deals with low volume high varietyproduction activity ( intermittent production ) . The productmanufactured undergoes different sequence of operation. Itprovides flexibility in equipment and labour assignments .The break down of one machine will not halt the processes.It is good for wide variety of product production in differentsize. RM SubJob Process Assembly Dispatch Heat Sawing & Treatment Shearing Grinding Turning Milling Drilling Bending Wielding 115 shop
    112. 112. Process layout1. A high degree of flexibility in terms of task allocation to machines exists.2. Relatively low investment in machines .3. Operators are multi skilled.4. Handles diversity in task better.Limitation1. High care in PP&C required.2. WIP inventory will be large.3. High grades of skilled work force will be required.4. Material handling cost will be high 116
    113. 113. Manufacturing system based on Cellular layoutA manufacturing system wherein the equipment andworkstations are arranged in an efficient sequence thatallows a continuous and smooth movement of inventoriesand materials to produce products from start to finish in asingle process flow, while incurring minimal transport orwaiting time .In order to set up a single process flow (or single productflow) line, it is necessary to locate all the different equipmentneeded to manufacture the product together in the sameproduction area. This calls for a improved production layout. 117
    114. 114. A work cell is defined as a collection ofequipment and workstations arranged in asingle area that allows a product or group ofsimilar products to be processed completelyfrom start to finish.It is, in essence, a self-contained mini-production line that caters to a group ofproducts that undergo the same productionprocess. Cellular manufacturing involves theuse of work cells. 118
    115. 115. Work cell layout : A combination of product & processlayout. It provides the benefits of both layout to thebusiness. Work cell Unit 1 Unit II Job A Job B Assembly line Unit iii Unit V Unit IV 119
    116. 116. Work Cell layout will provide standardization &rationalization of products , good estimates , effectivemachine operation , high productivity , reduce set up time,less down time , better through put etc.Work cell / Group layout will not be feasible for all kinds ofoperations. However the layout can meet the requirementsof batch production system . When the product mixmanufactured is very dissimilar it will not be advisable tohave group layout. 120
    117. 117. Benefits of Cellular layout1. Cellular layout helps to eliminate over production and reduce waste.2. Cellular manufacturing helps reduce waste by reducing defects that result from processing and product changeovers. Since products or components move through a cell one piece at a time, operators can quickly identify and address defects.3. Allowing operators to stop production when defects occur prevents wasted material and time. 121
    118. 118. 4. In a conventional queue process, it is difficult toidentify and respond to defects until the entire batch isproduced or numerous pieces are processed.5.Reducing defects has several benefits such as :•Fewer defects decreases the number of products thatmust be scrapped.•Fewer defects also means that the raw materials,energy, and resulting waste associated with the scrapare eliminated.•Fewer defects decreases the amount of energy, rawmaterial, and waste used or generated to fix defectiveproducts that can be re-worked. 122
    119. 119. 6.Cellular layouts typically require less floor space for equallevels of production. Reductions in square footage canreduce energy use for heating, air conditioning and lighting.It can also reduce the resource consumption and wasteassociated with maintaining the unneeded space (e.g.,fluorescent bulbs, cleaning supplies).7.Cellular manufacturing layouts and automation can freeworkers to focus more closely on equipment maintenanceand pollution prevention, reducing the likelihood of spills andaccidents. 123
    120. 120. Fixed position layout : The space required isvery large , meant for large bulky products .Heavy engineering equipments. Ship yard , Airrepair base. Equipment and people are fixed toan operation area. Ship Repair base Boiler manufacturing 124
    121. 121. Layout Design tools.A) Manual Method : 1.Travel chart 2. Systematic Layout planningB) Computerized Method. ( Using algorithms ) 1Automated Layout Design Algorithm ( ALDEP) 2.Computerized Relationship Layout Planning (CORELAP) 3.Computerized Relative Allocation of Facilities Technique.( CRAFT) 125
    122. 122. Plant layout variables1.Flow of material 2.Process flow Relationship of 1&2 Space Space Requirement Available Practical Constraints Develop layout alternatives 126
    123. 123. Production Planning & control function Staff function Line function Production PhysicalSales & Planning & ProductionMarketing Control work•Planning, coordinating and controlling fulfillment or OTD cycle.•Plan & control material , material cost & Vendor•Plan & control machine schedule, maintenance&productivity.•Plan & control plant productivity, safety , hygiene•Production incentive etc. 127•Set quality standard .
    124. 124. Production Planning & ControlProduction Planning and Control (PPC) is a process thatcomprises of managing the performance of criticalfunctions during planning as well as control of productionactivity to deliver quality output within the stipulated timeframe at minimum cost of production. 128
    125. 125. Production Planning & ControlProduction planning function is responsible for planning ofresources like Material , Machine , Manpower , Method &Money for production activity. Production planningfunction deals with two levels of planning :Prior Planning : All activities such as product development& design , production cost estimation , vendoridentification , sourcing mechanism , Material planning ,Order writing etc.Active planning includes Process scheduling , & routing,work force allocation , machine scheduling , Capacityscheduling, Finite capacity scheduling , Tool planningMaterial handling & movement etc. 129
    126. 126. PP&C function is responsible for managing the overallcycle time during production process sinceCycle time is directly related to production rate .CT ( Cycle Time ) = Productive time / Demand per periodIf the output per day from a manufacturing shop is 24cylinders operatign in a single shift , = 8 X60/24 = 20 Min is cycle time for one cylinder.Since the actual time available would be less than the idealtime ie 8hrs on account of various delays viz operatorefficiency , break etc, set up , the effective cycle timewould be less than 20 min .As demand increases & lead time need to be minimizedto be competitive in the market , PP&C has to manageEffective cycle time. 130
    127. 127. OTD cycle time = production time + delivery time (MTS) = order time + Production time + delivery time ( MTO) = order time + Supplier lead time + integration time + delivery time ( ATO ) = Order time + Supplier lead time ( ETO) + subcontractor’s lead time + Production time + Delivery time + Installation &commissioning timePP&C owns the prime responsibility in a manufacturing organization to ensure thatOTD cycle is in accordance with the realistic customer’s acceptation of delivery time. 131
    128. 128. Responsibilities of PP&C function1.Material Planning•Forecasting inventory•Preparing material budget•Make or buy decision analysis•Estimating individual requirements of parts ( BOM )•Raising material indent•2.Inventory Control•ABC analysis•SDE& VED inventory analysis•Fix Economic Batch Order•Building safety stock & re-order level.3.Subcontract ActivityVendor evaluation ( value engineering )Monitor out source activityOutsource to subcontractorsMake vendor inspection schedulesHandling & movement of materialsDisposal of scrap inventory 132
    129. 129. 4.Maintenance Planning & Scheduling•Preventive & corrective maintenance schedule•Spares planning5 Machine scheduling• Job Scheduling• Work Scheduling ( Loading )• Progress reporting•Productivity study ( Method study )6. Quality control•Inspection schedule•TQM•Kaizan•Kanban7 .Work & Job Design•Method study•Productivity norms•Work environment 133
    130. 130. RM demand estimation Inform sales Sales dept. According to sales order the expected delivery scheduleRaise Develop Aggregatework Masterorder Production plan Production Schedule Create Capacity Monitor MRP/ requirement Schedule & take corrective BOM plan Action Execution Machine & operator schedule Material Requirement Planning process : When a production system operates through dependent demand , technique used to determine the requirement of RM for production is called MRP. 134
    131. 131. Material requirement planning MRP process. Explode Demand into Analyze bill of material ( BOM) Make or Buy decisionDemandaggregation Check Inventory Stock (Stocking Policy ) Make Buy N YRaise Stock Raise production . Raise subcontractPurchase availability work order contractIndent 135
    132. 132. EOQ Assumption : Demand Constant & No lead time Q Q/2ROP Time Lead time D Lt = Av demand x LT Stock level = EOQ + DLt ( When supplier lead time not constant ) Stock level = EOQ + Dlt + variation in demand ( when 136 demand fluctuates )
    133. 133. Make or Buy decision .Criteria of make : 1. Finished goods can be made cheaper by the firm. 2.Quality standardization can not be met by out side party. ( strict quality control. ) 3.Supply of the parts are unsteady ( Long lead time) 4.Capacity of production can be used for manufacturing some other part. ( Fixed cost) Buy : 1.Heavy investment in the facility 2.Parts are standard and available easily. 3.Demand of the components are seasonal . 4.Patent of some legal implications exists. 5.Cost of buying is less than manufacturing. 137
    134. 134. A firm has extra capacity which can be used for production of gears, whichthey have been buying form the market at Rs 300 per unit. If the firm makesgears , it incurs the following cost.Mat cost Rs 90/unit.Lab cost 120/unitOverhead Rs 30/unit . The annual fixed cost of production estimated is Rs240,000. Projected demand for next 24 months is 4000 units.Will it be profitable for the firm to manufacturer?The same capacity can be utilized for producing agri-equipment. In such casethere will be a saving of s 90,000. What should be the decision. Making /Buying gears VC/unit = ( Rs 90 + 120+ 30) = Rs 240 Total VC = 4000 X 240 = 9,60,000 Fixed cost = 2,40,000 Total cost = 12,00,000 Purchase cost = ( 4000 x Rs 300/unit ) = 12,00,000 Fixed cost = 2,40,000 Total cost = 14,40,000 Make gears Make Gears and Agri Equipment 138 Rs 12,00,000 12,00,000 – 90,000 = 11,10,000
    135. 135. There are two processes to manufacture a particular product in a firm . Alternatively , they can also buy it from local market. The cost associated areas follows. The annual demand for the product is 10000 units. When would it be feasible for the firm to use process A & B . Cost ( Rs ) process A Processes B Buy FC/ Year 1,00,000 3,00,000 ----- VC/ unit 75 70 ----- Buy price / unit 80 Cost of Process A = 1,00,000 + 75 x 10000 = Rs 8,50,000 Cost of process B = 3,00,000 + 70 x 10000 = Rs 10,00,000 Cost of buying = 80 x 10000 = 8,00,000 Le t Q be the vol of production. For Process A 100000 + 75 Q =< 80 Q 100000 =< 5 Q 20000 units TC A >= TC B 100000 +75Q >= 300000 + 70Q Q>= 40000When demand exceeds 20000 units , use process A & beyond 40000, use process B 139
    136. 136. Determining Economic production quantity ( batch size )As volume reduces , the total cost of production becomes unviableunless the optimum batch quantity is not produced.Total cost comprises of two conflicting costs Setup cost ( favors largebatch size )and inventory holding cost ( favors small batch size )There are three possible situationsDemand rate > production rate ( shortage will occur )Demand rate = production rate ( N need of holding inventory )Demand rate < production rate ( Inventory stock will go on increasing ) 140
    137. 137. Cost trade off.When orders are placed more frequently, the ordering cost is high butcarrying cost lost is low , on the other hand if less frequent orders are placedordering cost will be low but carrying cost will be high. Total costCost Carrying cost Total cost Ordering cost Order Qty 141
    138. 138. An item has yearly consumption of 1000 units . The cost related tosourcing & Making are as under: Decide which option would be betterfor the organization. Source MakeItem cost /unit Rs 6.00 Rs 5.9Ordering cost 10.00 --Set up cost -- 50.00Annual ICC/item 1.32 1.3Production rate ---- 6000 BUY : EOQ = 123 units TC = 1000 x 6 + 1000 x 10 + 123 X1.32 _______ _________ 123 2 = 6162.48 Make : EBQ = 304 units . TC = 6229.14 142
    139. 139. Inventory Control TechniquesInventory control techniques are used to prevent :1 financial leakage due o excessive stock & poordemand , 2 2shortage of inventory3. Inventory Obsolescence Plan safety stock for critical & essential itemsBuild selective control on fast & slow movinginventory .Various Inventory control technique used are :ABC : Always Better ControlVED : Vital Essential & DesirableSDE : Scarce Difficulty & EasyFNSD Fast moving , Normal , Slow moving , Dead 143
    140. 140. ABC Classification 100 CLASS C 90 Low annual consumption value CLASS BUsage % Moderate annual Consumption value 70(InventoryValue ) CLASS A High annual consumption value items 0 10 30 100 % items 144
    141. 141. VED analysis : Vital : Without which production processwill come to halt. Essential : Non availability of such item will affectthe efficiency .Desirable : It is good if it is available , howeveralternate option can be done.SDE : Scarce ( Short supply ) Difficult ( Imported components ) easily ( Short lead time ) 145
    142. 142. Purchase Inventory review system :Review process is administered on the basis of Fixedorder quantity ( Q system ) and fixed period quantitysystem . ( P system )In Q system , whenever the stock level reaches the RoL , order is placed for a fixed quantity of material .RoL is calculated as a sum of demand during the leadtime & variation in demand during lead time ( safetystock ) and average demand during delivery delays.( reserve stock )In p system , stock position is reviewed after every fixedperiod & order is placed according to stock position . 146
    143. 143. The goal of JIT in manufacturing organization is tocontinuously reduce the cost associated with requirementmaterial resource. Its objective is to achieve zero ( minimal )inventory through out the supply chain, hence implementgood material control. The goal of JIT process is to reduceexcess working capital held-up on account of material ,minimal inventory at WIP .The constraints for implementing JIT are :•Unpredictable quality of supply of material•Inability to hold tolerances.•Shortcoming in lead time. ( Erratic delivery )•Short supply of quantity of material•Inaccurate forecasting•Non standard materials being used ( Increased variety ) 147•Last minute product changes.
    144. 144. Steps for implementing JIT in an organization.1.Symptoms : Identify the symptoms leading to inventory issue. Frequent Stock out2.Causes : Poor demand forecast & inconsistent supply Schedule by supplier .3.Remedy Pull inventory system .•Do detailed analysis of inventory requirement of all types at every stage of production process.•Estimate the market fluctuations on account of price, supply , quality demand etc.•Identify reliable source of suppliers who are capable ofsupplying material as when required. 148
    145. 145. •Take supplier in to confidence & sensitize them theimportance of JIT inventory & build healthy businessrelationship with suppliers to have high commitment &ownership . Use Value engineering approach.•Conduct periodic vendor appraisal & follow vendorrating system of evaluation .•Give instant feed back on the supply & suggestimprovement steps.•Sign rate contract .• Use IT enabled ordering system , ERP . 149
    146. 146. Value Engineering or Value AnalysisIt is a technique of cost reduction and costprevention. It focuses on building necessaryfunctions at minimum cost with outcompromising on quality, reliability ,performance& appearance. It helps in identifying unnecessarycosts associated with any material , partcomponents or service by analysis of functionand efficiently eliminating them with outimpairing the quality functional reliability or itscapacity to provide service. It is a preventiveprocess. 150
    147. 147. When to apply VE1. Raw material cost increases suddenly .2. Vendors are unreliable & organization is highly dependent on a few select vendor .3. Cost of manufacturing is disproportionate to volume of production .Value analysis is done w.r.t cost associated at:• Cost Value (Labour , Material & overhead).• Use Value• Esteem Value ( Look & finish )• Performance Value ( Reliability , Safety , Service & Maintenance ) 151
    148. 148. Value = Performance ( Utility) CostVendor analysis is done to minimize the cost incurred dueto a supplier Inefficiency or inability .Vendor cost to be considered are :•Opportunity loss due to poor quality ( High rejection cost )•leading to machine & labour idle time.•High re-work cost•Inconsistent lead time•Inability to meet the demand of the manufacturer•Poor Credit terms 152
    149. 149. Value engineering procedure:Constantly evaluate the inventory costs associated &benchmark against the best in practice.As & when the cost of manufacturing increasesdisproportionately, identify an alternate source for contractmanufacturing & monitor the quality & standards.Use more standard parts which can be sourced easilyDevelop more suppliers ( atleast 4 to5 for one part.) &minimize dependency on one supplier.Audit the supplier’s work premise & rate them on theperformance . Conduct quarterly vendor meet & share the highlights &concerns . 153
    150. 150. MRP vs. ERP — Manufacturing management systems haveevolved in stages over the past three plus decades, from a simplemeans of calculating materials requirements to the automation ofan entire enterprise.As frequent changes in sales forecasts happened entailingcontinual readjustments in production, as well as inflexible fixedsystem parameters, MRP (Material Requirement Planning)evolved into a new concept : Manufacturing Resource Planning(or MRPII ) and finally the generic concept Enterprise ResourcePlanning (ERP)Prior to the concept of ERP systems, a manufacturing organizationfaced tremendous difficulty in planning & controlling of resourceslike people , finance WIP inventory at plant , machine status etcdue to lack of integrated & updated information about resources. 154
    151. 151. MRP MRP1 ERPMaterial requirement planning Manufacturing resource Enterprise resourcein manufacturing organization. Planning in manufacturing Planning organization Inventory planning Production planning Business planning & control & control Material planning Material, Machine Man Machine Method Man Material, Method & Money The essence of the progress was based on seamless integration and analysis of information on various resources required by a manager to make an effective decision. 155
    152. 152. Advantage of ERP in a manufacturing organization.Integration among different functional areas to ensureproper communication, productivity and efficiencyIntegration of Design engineering & collaboration.(CAD & CAM )Order tracking, from acceptance through fulfillmentThe revenue cycle, from invoice through cash receiptManaging inter-dependencies of complex processesBOM .Tracking the three-way match between purchase orders(what was ordered), inventory receipts (what arrived),and costing (what the vendor invoiced)The accounting for all of these tasks: tracking therevenue , cost and profit at a granular level. 156
    153. 153. DisadvantagesCustomization of the ERP software is limited.Re-engineering of business processes to fit the "industrystandard" prescribed by the ERP system may lead to aloss of competitive advantage.ERP systems can be very expensive (This has led to anew category of "ERP light" solutions)ERPs are often seen as too rigid and too difficult to adaptto the specific workflow and business process of somecompanies, cited as one of the main causes of their failure.Many of the integrated links need high accuracy in otherapplications to work effectively. A company can achieveminimum standards, then over time "dirty data" will reducethe reliability of some applications. 157
    154. 154. 158
    155. 155. Production Control . It involves work scheduling Reporting & corrective action. Production Planning  Work order  Scheduling Corrective Action ReportingObjective : Manufacture & deliver the work order within thecommitted time within the resource constraints provided.•Effective utilization of time .•Eliminate stress during the production activity•Cent percent plant capacity utilization•Minimize cost on waste like overtime, scrap , down time etc.•Proactive reporting of issues at shop floor , like absenteeism ofworkers , non availability of material on account of rejection ,unplanned breakdown , daily reporting of production status as perthe target plan. 159
    156. 156. Scheduling: It deals with working out of optimal timerequired to perform each operation and also the timenecessary to perform the entire series as routed,making allowances for all factors concerned. It mainlyconcerns with time element and priorities of a job. Thepattern of scheduling differs from one job to another .Master Schedule: Weekly or monthly Schedule prepared bybreaking -down of the production requirement for eachproduct for a definite time period. By having this as a runningrecord of total production requirements, production manager is in better position to shift the production from one productto another as per the changed production requirements. Thisforms a base for all subsequent scheduling activities. 160
    157. 157. Master schedule ChartMaster schedule chart communicates the following information related to production schedule.1. Operator schedule : This schedule informs the shop manager about the operator detail who is supposed be reporting for the work in a given shift.2. Machine schedule : This schedule informs the shop manager about the type of machine to be used for doing a job in a given time. 161
    158. 158. Reporting of the production progress in the plant.•Load chart•Gantt Chart•Process Chart 162
    159. 159. Gantt chartWork orderProduct AWork orderProduct BWork orderProduct C 163
    160. 160. Date & shiftType of 19.03 19.03 19.03 20.03 20.03 20.03 21.03Work S1 S2 S3 S1 S2 S3 S1SawingM/c Type: ABendingM/c Type: BGrindingM/c Type: CWieldingM/c Type: D 164
    161. 161. A master schedule is followed by operator schedulewhich fixes total time required to do a piece of workwith a given machine or which shows the timerequired to do each detailed operation of a given jobwith a given machine or process. 165
    162. 162. 1 a ) Machine scheduling : A process created for effectiveutilization of machine in the shop floor on the basis of actualavailable time for processing .It involves Set up time required . Startup time Routine maintenance time ( Cooling time, Tool trail ) Operator efficiencyTotal Machine Hr – Delay = Actual Hrs1 b ) Process scheduling : A method of establishing mosteconomic & shortest path for production .Process scheduling requires an understanding the flow ofthe work process & create a process sheet or route sheet tooptimize the time. 166
    163. 163. Process sheet : It gives the optimum method to do a job ,thereby fixing the sequence of the operation , link theancillary or parallel process to be accomplished . It gives thedetails & specification of the machines tools , operator to bedeployed for the job. Delays on account of set upmaintenance etc is communicated to the operator. Routing: Under this, the operations, their path and sequence are established. To perform these operations, the proper class of machines and personnel required are also worked out. The main aim of routing is to determine the best and cheapest sequence of operations and to ensure that this sequence is strictly followed. 167
    164. 164. Preparing process sheet (Routing procedure) involvesfollowing activities.(1) An analysis of the article to determine what to make andwhat to buy.(2) To determine the quality and type of material(3) Determining the manufacturing operations and theirsequence.(4) A determination of lot sizes(5) Determination of scrap factors(6) An analysis of cost of the article(7) Organization of production control forms. 168
    165. 165. Process sheet includes the following details of a process. • Part name to be machined & its engineering drawing & specification . •Sequence of the operation to be performed . •Specify the the machine & tools to be used. ( cutting tools ,jigs, fixtures ) •Operating machine details like Speed , ,load , cooling time set up time ) •Operating skill required •Productivity norm •Maintenance schedule of the machine •Subsequent operations 169
    166. 166. Process scheduling differs depending upon the nature ofproduction .Continuous or mass production : It is done by industrialengineers at the plant layout stage. It is difficult to alter the plan& incurs heavy expenditure.Batch production : In this case a master process sheet is created& is communicated to the shop floor . As & when the product linechanges it is altered.Job order. In this case the process sheet is created more often asthe nature of operation varies .Process schedule acts as a standard operating manual forprocess engineers to refer incase of any emergency or accidents. 170
    167. 167. Managing project based manufacturing work. A large complex manufacturing task comprising of multiple activities to be performed from design to manufacture, deliver, installation & commissioning requires tight scheduling coordination & monitoring of activities from start to end for timely completion of work to avoid monetary loss & have high customer satisfaction. Tight cost control ,Timely completion of work & Performance are the basis of such manufacturing project. An understanding of Interrelationships between the activities of task is essential by the operation team. 171
    168. 168. Steps involved in managing manufacturing projects.•Project planning ( Drawing the network )•Time estimation of the project ( Network analysis . Identifying activitytime and critical path)•Scheduling : ( identifying the amount of slack in the activities and inthe project )•Time- cost trade off : ( Arriving at a time where the overall cost ofexecuting the project is minimum with out compromising on anyactivity.•Resource allocation : ( Checking the feasibility for doing each activityat most optimistic schedule ) 172
    169. 169. Guide lines for managing project based network manufacturing work.• Break the task in to detailed activities.• Identify the start & end of each activity. (Node ).• Estimate the time required to perform each activity.• Establish dummy activities to show logical relationship between the activities .• All activities of the network should terminate in to final destination .• Establish relationship between activities such as 173 preceding , concurrent , succeeding etc.

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