Manufacturing Systems

Context of Manufacturing

Manufacturing Systems

1.The Context of Manufacturing

2.Quality Management

3.Project Management

4.Concurrent Engineering

5.Manufacturing System Design and Control

The Context of Manufacturing

Manufacturing is part of a bigger scheme known as operations.

Operations takes in all systems that involve getting work done.

•services •manufacture

The same principles apply to both.

The Context of Manufacturing

Operations is a transformation process.

Inputs are transformed into outputs.

Goal is to create and add value to the inputs during the transformation.

InputsMaterialsLabourEquipmentCapital

InputsMaterialsLabourEquipmentCapital

OutputsGoodsServices

OutputsGoodsServicesTransformation

process

Manufacture: adding value to a raw material by changing its shape or properties.

Manufacturing

Technical terms: manufacturing process is used

to turn raw material into finished items.

Scrap and waste

Starting material

Processed Part

MachineryMachinery

ToolingTooling

PowerPower

LabourLabour

Manufacturing process

Manufacturing process

Manufacturing

Economics terms: the value added to the inputs

is important.

Starting material

Processed Part

Material in process

Manufacturing Process

Manufacturing Process

€ €€ €€€Added Value

Manufacturing

Industries can be grouped into:

• Primary – exploit natural resources

• Secondary – converts primary outputs into

consumer goods - manufacturing

• Tertiary – contributes to the service sector

Business Strategies

•Companies exist to make a profit

•Products offered by more than one company

•Companies compete for market share

•Company needs a strategy

Direction

Focus

Business Strategies

A strategy consists of four steps:

1.Define a primary task

2.Assess core competencies

3.Determine order qualifiers and order winners

4.Position the firm

Business Strategies

1. Define a primary task

Represents the purpose of the firm - what is its business

Identifies the area in which it will be competing - stated in broad terms.

e.g. Iarnrod Eireann is in the business of Transportation, not Railways

Often expressed as a mission statement.

Amazon.com - ‘To provide the fastest, easiest, most enjoyable shopping experience’

Business Strategies

2. Assess core competencies

Identify what the company does best

Usually based on knowledge or processes

Rarely single product or technology – easily copied

Dell Computer: is the ability to quickly assemble computers to order and to deliver them to customers without delay.

Business Strategies

3. Determine order qualifiers and order winners

An order qualifier is a characteristic of a product that will make a consumer consider buying it.

An order winner is the characteristic of a product that will make the consumer purchase it.

Buying a car: Order qualifier - priceOrder winner - model with the most features

Business Strategies

4. Position the firm

Choose one or two important things to concentrate on and do extremely well.

Defines:•how well the firm competes in the marketplace•what unique value it will deliver to the consumer

Relative strengths of competitors must be taken into account

Apple computers do not compete with companies such as Dell for its market – they concentrate on a niche market for innovative products such as the iPhone, IPod where they are often first to the market.

Manufacturing Strategies

Different ways of offering a product:

•Make to stockProducts are designed, produced and delivered to customer specifications in response to an order

•Make to orderProducts are designed and produced for a ‘standard’ customer in anticipation of demand.

•Assemble to orderBase unit or module is produced onto which options can be added according the specification of the customer.

Manufacturing Strategies

Types of Production Processes:

1.Project

• Long time to complete

• Large investment in resources

• One item to customer order

2.Batch production

• Product produced in batches

• Volume relatively low

• Demand for item can fluctuate

Manufacturing Strategies

Types of Production Processes:

3.Mass Production

• Large volume of standard product

• Demand is stable

• Demand is high

4.Continuous Production

• Very high volume products

• Highly standardised

• Highly automated systems

Product Process Matrix

Relationship between volume levels and standardisation of a product and its manufacturing process

StandardisationLow High

Volume of products

High

Low

Projects

Batch Production

Mass Production

Continuous Production

Functional Organisation of a

Manufacturing Enterprise

OrdersQuality requirementsDesign SpecsMaterial availabilityQuality data etc.

Manufacturing

Hiring/FiringTrainingLegal requirements Job designUnion negotiations etc.

BudgetsStockholder requirementsCost AnalysisProduction and Inventory data

Sales ForecastsCustomer ordersCustomer feedbackPromotionsStatus of order

Suppliers

Human Resources

Finance / Accounting

Marketing

Key Success Factors in Manufacturing

Competitiveness

Global market means more customers but also more competition

Companies will usually compete on:

•Cost - Ryanair, Penneys

•Quality - Toyota, Mercedes

•Flexibility - Dell

•Speed - Dell, McDonalds

Simple System for Costing

Often a choice is available:

•Make the product individually

→Costs more

→No setup cost

•Set up tooling and mass produce

→Setup cost

→Cost less to make once set up

Simple System for Costing

Break even Analysis

Used to choose the most economical method for making a given number of parts.

or

Finding the least number of parts to justify setting up a mass production system

Simple System for Costing

Break even Analysis

Co

st

Number of units made

Total Cost of process A

Total Cost of process B

Choose Process A

Choose Process B

Break Even Quantity

Simple System for Costing

Example:

Qty: 500 required

•Skilled labour costs €2.50 per item to manufacture

using the lathe.

•Unskilled labour costs €0.50 to manufacture using

the automated press.

•The setup cost of the press tool is €500

Simple Systems for Costing

€0

€100

€200

€300

€400

€500

€600

€700

€800

€900

€1,000

0 50 100 150 200 250 300 350 400

Quantity Made

Co

st

Simple Systems for Costing

Calculating BEQ numerically

)()( itemperCostAutomateditemperCostManual

CostSetupBEQ

BEQ = 500/(2.50 – 0.5)

= 500/2

= 250 Items