Chapter 5

What do the following stakeholders want/expect from manufacturing?

Sales & Marketing
Design/Development
Finance
Quality

Brand power

is the measure of customer preference based on reputation, product quality and supply chain capabilities

Volume

is traditionally treated according to the principle of economy of scale
-Average cost to produce product declines as manufacturing volume increases
-Particularly important when high fixed costs are present

Variety

involves frequent product runs and high repetition of small lot sizes
-Processes that can rapidly switch production from one product to another while retaining efficiency are said to have economy of scope

Manufacturing terms

-Constraints interact with volume and variety to create realistic manufacturing plans
-Capacity is how much can you produce in a given unit of time
-Equipment considers how flexible it is
-Is one particular piece a bottleneck?
-Setup/Changeover considers

Lead time

is the measure of elapsed time between release of a work order to the shop floor and completion of all work on the product to achieve ready-to-ship status

Performance

How well the product performs in comparison to how it was designed to perform

Reliability

Likelihood that the product will perform throughout its expected life

Durability

The actual life expectancy of the product

Conformance

Does the product meet its specifications as designed

Features

What different functions or tasks can the product perform

Aesthetics

Is the styling, color, workmanship pleasing to the customer

Serviceability

What is the ease of fixing or repairing the product if it fails

Perceived Quality

Based on customer's experience before, during and after they purchase a product

Total Quality Management (TQM)

is a philosophy focused on meeting customer expectations with respect to all needs, across all company functions, and recognizing all customers, both internal and external
It is a total, organization-wide activity versus a technical task

TQM's basic conceptual elements are:

Top Management commitment and support
Maintaining a customer focus in product, service and process performance
Integrated operations within and between organizations
A commitment to continuous improvement

Management Standards have been Established by the ISO in both Quality and Environment

-The International Organization for Standards (ISO) was formed after World War II
-The ISO 9000�International Quality Standard (first published in 1987) is a family of various aspects of quality management and contains some of ISO's best known standards.

What ISO provides

-Shows commitment to providing a high level of customer satisfaction
-Demonstrates the existence of an effective quality management system that satisfies the rigors of an independent, external audit
-Can boost your organization's brand reputation and be a

ISO 9001:2008

- sets out the requirements of a quality management system.
This standard is being replaced with ISO 9001:2015 The final updated version is expected by the end of 2015.

ISO 9000:2005

- covers the basic concepts and language

ISO 9004:2009 -

focuses on how to make a quality management system more efficient and effective

ISO 19011:2011 -

sets out guidance on internal and external audits of quality management systems.

ISO 14000�International Environmental Standard

-manage the environmental effect of their business practices.
-manages the environment inside it's facilities and the immediate outside environment
- analysis of the entire life cycle of a product
- do not mandate a particular level of pollution
-does not

Standards in the ISO 14000 series are:

ISO 14001 - Specification of Environmental Management Systems
ISO 14004 - Guideline Standard
ISO 14010 through ISO 14015 - Environmental Auditing and Related Activities
ISO 14020 through ISO 14024 - Environmental Labeling
ISO 14031 through ISO 14032 - Env

ISO Certified Suppliers are Frequently Preferred by Procurement Departments

-They have to conform to an externally defined set of standards for quality and delivery of service
-They are usually more open to sharing supply chain information
-They welcome building relationships with their customers
-Formal processes in place for co

Engineer to Order (ETO) START here

is used when products are unique and extensively customized for the specific needs of individual customers

Make to Order (MTO

) relies on relatively small quantities, but more complexity
Requires much interaction with customer to work out design and specification
Usually shipped direct to customer
Can utilize postponement

Assemble to Order (ATO)

is when base components are made, stocked to forecast, but products are not assembled until customer order is received
Manufacturing postponement practiced here

Make to Stock (MTS)

features economies of scale, large volumes, long production runs, low variety, and distribution channels
Note: The textbook refers to this as Make to Plan (MTP)

Job shop

Product variety: High
Valume: very low
Strategy: ETO/MTO
Lead time: Very long
Do any JOB that is needed

Batch

Product variety: High
Volume: low
Strategy: ETO/MTO/ATO
Lead time: Long

Line flow

Product variety: Limited
Volume: High
Strategy: ATO/MTS
Lead time: Short

Continuious flow

Product variety: Very limited
Volume: Very high
Strategy: MTS (MTP)
Lead time: Very short

Total Cost of Manufacturing (TCM) (aka Total Delivered Cost) includes:

Procurement and production activities
Inventory and warehousing activities
Transportation activitie

TCM

-TCM generally expressed as cost per unit
-Procurement and production costs go down as volume goes up (generally-step function applies as more capital is required to produce)
-Inventory and warehousing costs go up as volume goes up
-Transportation costs g

Mass Customization

Individually customized products being produced at the low cost of standardized, mass produced goods.
Objective
Increase variety for customer while realizing the cost advantages of high volume continuous and line flow processes
"On-Demand", "To Order", "P

Market Characteristics:

Sufficiently large customer segment that values "translatable variety"
Turbulent, dynamic market
Unpredictable demand - but not entirely unpredictable!
Little impact of regulation or other constraints (designer drugs?

Product/Process Characteristics:

Modular or adjustable product building blocks
Predictable components/functions interactions
Standardized process/skill building blocks
Reasonable lead times, steps, work content

Lean Systems

-Lean is a philosophy that is focused on the customer
-Defining principle is the elimination of "waste". Waste is anything that does not add value for the customer
-Lean emphasizes the minimization of the amount of all resources (including time) used in t

Primary Objectives of Lean Systems

1.)Produce only the products that customers want
2.)Produce products only as quickly as customers want them
3.)Produce products with perfect quality
4.)Produce in the minimum possible lead times
5.)Produce products with features that customers want and no

The Elements of Lean Production

Waste Reduction
Lean Supply Chain Relationships
Lean Layouts
Inventory & Setup Time Reduction
Small Batch Scheduling
Continuous Improvement
Workforce Empowerment
Lean, in particular Value Stream mapping, is a great tool in administrative processes

The Elements of Lean Production - The Seven Wastes

Overproducing
Waiting - Excess idle machine & operator & inventory wait time
Transportation
Over-processing - Non-value adding manufacturing & other activities
Excess Inventory
Excess Movement
Scrap & Rework

Six sigma concepts

-Six sigma approach is to identify sources of variability and then systematically reduce them. Get to the "root cause"
-The six sigma goal is to achieve a process standard deviation that is six times smaller than the range of outputs allowed by the produc

Quality level

Three sigma quality level
Produces defect free product 99.74 percent of the time
66,807 defects per million parts produced
Six sigma quality level
Produces defect free product 99.99966 percent of the time
3.4 defects per million parts produced

Logistical Interfaces

Resources must be procured, positioned, and coordinated as needed to support the manufacturing strategy selected

Four approaches to achieve this are:

Just-in-Time (JIT)
Materials Requirements Planning (MRP)
Design for Manufacture (DFM)
Design for Logistics (DFL)

Just-in-time (JIT) Interfaces

Purchased materials and components arrive at the manufacturing or assembly point just at the time they are required for the transformation process
Raw material and work in process inventories are minimized
Demand for materials depends on the finalized pro

Materials Requirements Planning (MRP) Interfaces

Procurement has a key role in insuring all the components are obtained on time to make an end item
Key information requirement is the bill of materials (BOM)
Particularly for more complex manufacturing (i.e., MTO, ETO) where large numbers of components or

Design for Manufacture

-Design-for-assembly - focuses on minimizing the number of parts and on easing assembly processes.
-Design-for-product-serviceability - focuses on easing the disassembly and reuse of product components.
-Design-for-six-sigma - systematically evaluates the

Design for Logistics Interface

Design for logistics concept incorporates the requirements and framework for logistical support of the product in the early phases of product development
Considers:
What we are going to make
How we are going to make it
What logistics capabilities do we ne