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Session 1
Manufacturing v. Service Organizations
Process Categories
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Introduction
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Production planning
Inventory management
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Timing
how long would you wait to have a dishwasher
repaired?
Customer Contact
ever had a poor customer service rep?
Quality
how would it be measured?
Inventory
stored capacity (service at 100% for spares)
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Make-to-stock (MTS)
Assemble-to-order (ATO)
package-to-order (breakfast cereal sizes)
Make-to-order (MTO)
Engineer-to-order (ETO)
A number of issues influence these decisions...
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Wealth Creation
What is wealth?
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External Environment
World competition
Quality
Customer
expectations
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Lead Time
A span of time required to perform a process
APICS Dictionary
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Manufacturing Strategies
Delivery Lead Time
Design
Purchase
Manufacture
Assemble
Ship
Engineerto-Order
Ship
Make-toOrder
Manufacture
Assemble
Inventory
Assemble
Ship
Assembleto-Order
Inventory
Ship
Make-toStock
Assemble
Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, third edition, Prentice-Hall, 1998
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Project
Job Process
Continuous
What are some examples of each, and why?
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Manufacturing Processes
Manufacturing Processes
Product Layout
Continuous
Production
Repetitive
Production
Process Layout
Project Layout
Intermittent Production
(Job Shop)
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Product Layout
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Dedicated workstations
Sufficient demand
Capital intensive
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Process Layout
Reprinted with permission, J.R. Tony Arnold, Introduction to Materials Management, second edition, Prentice-Hall, 1996
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General-purpose machinery
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Process
Capital cost
Flexibility
Annual setup cost
Run cost
Work-in-process inventory
Production and inventory control
costs
Lead time
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Business Strategy
To meet customer expectations, a
company must be market oriented.
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Customer Expectations
Meeting customer expectations requires
good communications
Understanding customer needs
Two-way communication
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Price
standard (catalog)
custom (negotiated)
Quality
tangible (conformance, reliability)
intangible (aesthetics, brand)
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Delivery
speed
reliability
volume
variety
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Order qualifiers
Competitive characteristics needed to be a
viable competitor
Order winners
Competitive characteristics that cause
customers to choose firms products and
services
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Customer learning
quality as an order winner v qualifier
Competitor moves
may change strategies (price once a winner,
now a qualifier
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Process Mapping
developing a detail view of the flow of
information
how complete?
How efficient?
Eliminate redundancy
how effective?
Process improvement
Kaizen events
continuous improvement
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Process reengineering
radical changes in processing possible?
Flow v. batch production?
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Capacity Management
Techniques
Sales and
Operations
Planning
(SOP)
Resource
Planning
(RP)
Master
Production
Schedule
Rough-Cut
Capacity
Planning (RCCP)
Material
Requirements
Planning (MRP)
Production
Activity Control
(PAC)
Capacity
Requirements
Planning (CRP)
Input/Output
Control
Operation
Sequencing
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Physical Supply/Distribution
Movement of goods from suppliers to the beginning
of the production process and from the end of the
production process to consumers
Activities
Transportation
Distribution inventory
Warehousing
Packaging
Materials handling
Order entry
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Company Objectives
Profit = Revenue Expense
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Increase revenue
Operations
Finance
Reduce
Increase profit and
manufacturing cost cash flow, reduce
investment
This implies
Customer service
Production efficiency
Inventory investment
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Demand
Resources
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Why Plan?
To satisfy customer demand and ensure
the availability of resources
Material
Capacity
Demand
Resources
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