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Management
Introduction to Manufacturing
and Production Management
Why is manufacturing
important?
Wealth
What is it?
The
Adding
value
Value comes from the transformation of
resources into useful goods.
Between the extraction of resources to the
provision of finished goods to customers there are
a number of stages in which value is added and
wealth is created.
Margin = Price
Decisions based on
profit only give raise to
ethical issues
Click on images
Operations
Operations management
What is the
environment in which
manufacturing takes
place like?
Government regulations
Safety
standards
Regulations
Economy
Affects
demand
Occurrence of shortages and surpluses
Global competition
Reduced
Customer demands
Lower
prices
Improved Quality
Reduced lead times
Improved pre-sales and after-sale service
Product volume and flexibility
Quality
Order
Order
Qualifiers
Winners
life cycles
Customers are increasingly time-sensitive
Customers drive for reduced inventories
Market volatilitys impact on forecasts
Industrial buyers tend to look for the right
quality in the shortest lead time
For more information on this topic see Christopher, M. (1998), Logistics and Supply
Chain Management: Strategies for Reducing Cost and Improving Service, 2nd Ed.,
Prentice Hall
Production
Management
Introduction to Manufacturing
and Production Management
Business Objectives
Business Strategy
Manufacturing Strategy
Manufacturing Process
Organizational Chart
Functional Conflict
Business Objectives
Income = Revenue - Expense
Business Strategy
In
Operations
Right quality
Right quantity
Right time
Right place
Right price
Engineer-to-Order
Manufacturer
received
Custom
designs
Unique
products
Long
lead time
Inventory
Make-to-Order
Manufacturer
received
Often
Little
design time
Lead
time is reduced
Inventory
Assemble-to-Order
Manufacturer
inventories standard
components, some of which have been
manufactured
No
Assembly
Shorter
only required
lead time
Inventory
Make-to-Stock
Manufacturer
Shortest
lead time
Inventory held as finished goods
process: Flow
product
Work flows at a nearly constant rate
Little work-in-process inventory
Flow Process
Arnold, Chapman & Clive (2008) Introduction to Materials Management, 6th ed.,Pearson Education, p. 4
Little
work-in-process inventory
Short throughput and manufacturing lead times
Lower unit cost (economies of scale)
process:Intermittent
Intermittent Process
Arnold, Chapman & Clive (2008) Introduction to Materials Management, 6th ed.,Pearson Education, p. 4
Used
Project
Avoids
See
Production process
Flow vs Intermittent
Flow
Capital cost
Production volume
Flexibility
Annual setup cost
Run cost
Work-in-process inventory
Production and inventory control cost
Lead time
Intermittent
Of
Objetives
Customer
Service
Production
changes
Inventories
High sales
Marketing
Production
Conflicting objetives
Source: Arnold, y Clive Chapman (2008) Introducion to Materials Management, 6 ed.
Pearson Education, p. 10
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Materials
control
Production
Sales
coordinated flow
High inventory costs
Low levels of customer service
Distribution
Integration
Stage1:
Complete Independence
Stage 2:
Functional Integration
Stage 3:
Internal Integration
Stage 4:
External Integration
Integration
Stage1: Complete Independence
Purchasing
Materials
control
Production
Sales
Manufacturing
Distribution
Distribution
Management
Manufacturing
Management
Distribution
Company
Customers
Christopher, (1998) Logistics and Supply Chain Management, 2th ed.,Prentice Hall, p.15
Externally:
Links
Has
many companies
May
Products
Design
Suppliers
Retailers
Factory
Warehouse
Customer
Suppliers supplier
1-1
Supply-Production-Distribution System
Arnold, Chapman & Clive (2008) Introduction to Materials Management, 6th ed.,Pearson Education, p. 5
Christopher, (1998), Logistics and Supply Chain Management, 2th ed.,Prentice Hall, p.18
Customer
Systems
focus
thinking
Collaboration
Objectives:
Provide
A matter of balance
Demand
Resources
Production
Management
Introduction to Manufacturing
and Production Management