Management of Manufacturing Systems

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Management of Manufacturing

Systems

Module 1


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Introduction


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Production Vs Manufacturing

Production is the process by which,raw materials and other inputs areconverted in to finished products.

Manufacturing is the process ofproducing only tangible goods, whereas production includes creation of bothtangible goods as well as intangible

services.


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Inputs & Outputs

Inputs are resources such as

People, Material, and Money

Outputs are goods and services


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Goods Vs Services

Goods Services

Tangible product

Product can beinventoried

Low customer contact

Longer response time

Capital intensive

Intangible product

Product cannot beinventoried

High customer contact

Short response time

Labor intensive


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On the other hand

Both use technologyBoth have quality, productivity, &response issues

Both must forecast demandBoth will have capacity, layout, andlocation issues

Both have customers, suppliers,scheduling and staffing issuesManufacturing often provides servicesServices often provides tangible goods


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Understanding the Nature ofManufacturing/Production


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Manufacturing function from 3angles

1. Production as a system

2. Production as an organisationalfunction

3. Decision-making in production


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1. Production as a SystemConsists of three systems:

Production System: A system whose function is toconvert a set of inputs (materials, personnel, capital,utilities and info) into a set of desired outputs.

Conversion Sub-system: A sub-system of thelarger production system where, inputs areconverted into outputs.

Control sub-system: A sub-system of the largerproduction system where, a portion of the output ismonitored for feedback signals to provide correctiveaction, if required.


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2. Production as an OrganisationFunction

The conversion sub system is the coreof a production system.

Here, workers, materials andmcahines are used to convert inputsinto products and services.

Every organisation irrespective of itspurpose , has a production function.


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3. Decision-making inProduction

OM are required to make a series ofdecisions in the production function.

They plan, organize, staff, direct andcontrol all the activities in the processof converting all the inputs in tofinished products.


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Pdn Management Vs OpnsMgmt

Production management involvesapplication of planning, organizing,directing and controlling to the productionprocess.

Operations Management is the bus ines sfunc t ion responsible for planning ,coordinating , and controlling theresources needed to produce products andservices for a company ( R. Dan Reid &Nada R. Sanders)


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Production Management Operations Management

More used for a system wheretangible goods are produced.

Used where various inputs aretransformed into tangibleservices.e.g. banks, airlines, utilities,educational institutions

Precedes operations managementin the historical growth of thesubject.

Term that is used now a days.


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Organizational Chart


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Scope


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Scope covers the following:

Selection of location Acquisition of landConstructing buildingProcuring and Installing machineryPurchasing and storing raw materialsConverting them in to productsQM, Maintenance, ProductionPlanning and Control etc


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Who are operationsmanagers?


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Who are operationsmanagers?

Managers transform inputs into outputsExample: Accounting Manager Inputs: data, information, labor Transformation : application of accounting

principles and knowledge Outputs: accounting reports, knowledge of

performance, ... All managers have an operation to runTherefore:

All managers are Operations Managers!


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Manufacturing Systems&

Decisions


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Is all manufacturing thesame?


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Is the type of manufacturingsystem used to produce cars thesame as the one that makes

jeans?


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Is a ball point pen made in the

same way as the furniture in yourhome?


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Are manufacturing systems thesame across the world - indifferent countries and cultures?


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Because of the very broad range of

products that are manufactured, severaldifferent types of manufacturing

systems

have evolved.

Each system meets the unique

demands and characteristics of theproduct and the market in which it willeventually be sold.


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Manufacturing Systems

1. Process or Continuous Production

2. Mass Production

3. Batch production

4. Jobbing Production


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Pr o ces s o r co n t in u o u sp r o d u c t io n Plant or factory may run twenty-four hours a day,for weeks or months

Stops only for maintenance or when breakdownsoccur.

E.g Chemical processing, food production andsteel makingProducts that depreciate quickly, or are in high

demand

Output is normally expressed in weight or volumeof goods producedCost of production is high & Labour costs aregenerally low


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Mass Production

Individual products are manufactured inlarge quantities

E.g Motor cars, white goods

Expensive machinery is used

Most of the operations are repeatitiveLabour and supply of materials andcomponents are highly organised


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Batch Production

Manufacturing products in specificquantities.One production run or in batches to berepeated at certain times.

A batch can range from 2 or 3 products toa hundred thousand or more.

Aircraft s, agricultural machinery, furniture,

machine tools, buses and lorries aremade in larger numbers.Each piece of equipment may be used tomake several different products.Versatile Machines & Skilled workers


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Jobbing Production

Also known as custom manufacturing.Normally produces one product at a timeHighly skilled workers and general

purpose equipment are usedProblem-solving and trouble- shooting arenecessaryProducts that are custom-manufacturedare normally very expensiveLarge yachts, space satellites, oil rigs andspecial purpose machine tools


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Manufacturing Decisions

Strategic or Long Term Decisions

Tactical or Intermediate-term decisions

Operational Planning and Control (ST)decisions


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2. Tactical Decisions

Primarily addresses how to efficientlyschedule material and labour withinthe constraints of previously made

strategic decisions.

How many workers do we need?

When should we have materialdelivery?Should we have finished goods

inventory?


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3. Operational P&C Decisions

Concern the day to day activities ofworkers, quality of products andservices, production and overhead costsand maintenance of machines.

What jobs do we work on today or this

week?

Whom do we assign tasks?


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Transformation Approach


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What is Operations?

Transformation Definition

The design, control, and managementof processes that transform inputs intofinished goods and services for sale tocustomers


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Operations Management


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Value Driven Approach


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What is Operations?

Added-Value DefinitionValue is the customers subjective evaluation,adjusted for cost, of how well a good orservice meets or exceeds expectations.

Note that: Value is defined in terms of a singular customer It is a subjective evaluation

The evaluation is compared with an expectation Expectations can be influenced and do change


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Added Value Model

adapted from Porter, Competitive Advantage, Free Press, 1985

Information SystemsPeople and Organization

FinanceAccounting

Marketing Operations

Profit!

Cost

Loss!

Added Value for Customer


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Added Value Model

adapted from Porter, Competitive Advantage, Free Press, 1985

Suppliers Customers

Competitors

The Firm

BusinessEnvironment

Value Chain


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Adding Value withMarketing and Operations

Marketing Operations

Inputs: Materials Labor Ideas Technology

Outputs: Goods + Services = Products How?

Marketing and Operationstouch the product


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How do Firms Add Value?

Greater Productivity Lower costs and expenses Lower prices for the

customer

Higher Quality Better performance Greater durability, reliability,

aesthetics, ...

Better Timeliness Faster response and

turnaround On-time delivery, meet

promises

Greater Flexibility Greater variety Customization for customer

needs / desires

Useful Innovation Features, technology Better performance New capabilities Often unrecognized


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The Value Equation

pricee Performanc

Value

price Innovation y Flexibilit TimelinessQuality

Value

P I F T Q

Value


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A framework for managing

Operations


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Planning

OM defines the objectives for theoperations subsystem of the

organization, and the policies,programs, and procedures forachieving the objectives.

Product Planning, Facilities designingand using the conversion process


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Behavior

OM are concerned with how theirefforts to plan, organize and control

affect humanBehaviour

They also want to know how the

behaviour of subordinates can affectmanagements POC actions


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Models

As operations managers plan,organize and control the conversion

process, they encounter manyproblems and must make manydecisions.Mathematical modeling : Creatingand using mathematicalrepresentations of managementproblems and organizations to predictoutcomes of proposed courses ofaction.


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Role of a Production Manager1) Forecasting the requirements of the production in order toachieve the production target.

2) Making most efficient utilization of the available sourcesfor production.

3) Minimizing throughput time and work in processinventory. This can be achieved by systematic production

planning and also by very efficient execution of the plans.

4) Reduce material handling cost, which generally is achieved

by the use of efficient material handling system and also byusing plant layouts which must be developed in a proper orcorrect way.


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Management of Manufacturing Systems