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Restructuring Operations for Selected competitive Strategies Business World Entrepreneurs Forum Series Cebu International Convention Center June 21, 2008 The Need for Manufacturing Competitiveness

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restructuring operations for selected competitive strategies

Restructuring Operations for Selected competitive Strategies

Business World Entrepreneurs Forum Series

Cebu International Convention Center

June 21, 2008

Center for Lean Systems and Management

Department of Industrial Engineering

the need for manufacturing competitiveness
The Need for Manufacturing Competitiveness
  • “Make an increasing variety of products, on shorter lead times with smaller runs, but with flawless quality. Mechanize – but keep your schedules flexible, your inventories low, your capital costs minimal, and your work force contended”

Center for Lean Systems and Management

Department of Industrial Engineering

the need for manufacturing competitiveness3
The Need for Manufacturing Competitiveness
  • “Improve our return on our investment by automating and introducing new technology in processes and materials so that we can cut prices to meet local and foreign competition.”

Wickham Skinner, Harvard Business Review, 1966

Center for Lean Systems and Management

Department of Industrial Engineering

signs of the time
Signs of the Time
  • Growth of Government regulation, Taxes, and Intrusion into business affairs
  • Deterioration of work ethics by workers
  • Adversary relationship between workers and employers
  • Interruptions in raw supply due to rapid changes in prices (i.e. oil) and wage increases
  • Job mismatch of labor skills
  • High cost of capital and increase in inflation

Center for Lean Systems and Management

Department of Industrial Engineering

is this a reflection of our current condition
Is this a reflection of our current condition?
  • All these happened in the United States during 1980s
  • They also happened to the rest of the world.
  • The same scenario is being depicted in the Philippines against Vietnam, Laos, Cambodia, Indonesia, Thailand, Malaysia, Japan, Singapore and even China.

Source: Restoring our Competitive Edge by Hayes and Wheelright

Center for Lean Systems and Management

Department of Industrial Engineering

learning from history even before 1970s up to the present
Learning from History (Even before 1970s up to the Present)
  • Stagnation in productivity did not begin during these times. It predated these events!
  • The same forces affected the other countries of the world and yet they suffered less in productivity decline.

Center for Lean Systems and Management

Department of Industrial Engineering

what are the common views
What are the common views?
  • Change government tax laws, monetary policies, and regulatory practices
  • More reasonable “Unions”
  • Developing alternative energy sources
  • Government, Inflation, Rising Prices, Labor, etc. are all contributing factors to Productivity. But this is universal!

Source: Restoring our Competitive Edge by Hayes and Wheelright

Center for Lean Systems and Management

Department of Industrial Engineering

most important and constant factor of productivity
Most important and constant factor of Productivity
  • Management is the most important and most variable across companies all over the world.
  • A fundamental change in mind set on its ability to produce better products (and services) using better manufacturing and operation practices  Competitive Strategy.

Center for Lean Systems and Management

Department of Industrial Engineering

role of management in addressing productivity
Role of Management in addressing Productivity
  • Short Term – using existing assets more efficiently on existing products.
  • Medium Term – Substituting existing resources for new sets.
  • Long Term – Develop new products and processes that address the same concerns at a higher level of productivity.

Source: Restoring our Competitive Edge by Hayes and Wheelright

Center for Lean Systems and Management

Department of Industrial Engineering

what is manufacturing operations strategy
What is Manufacturing (Operations) Strategy?
  • Strategy - a series of intended decisions (pattern of decisions)
  • A consistent set of manufacturing decisions that support the desired competitive advantage.
  • A set of manufacturing capabilities that it will enable it to pursue its chosen competitive strategy over the long term

Center for Lean Systems and Management

Department of Industrial Engineering

what are the decision in your manufacturing operations strategy
Capacity

Facility

Technology

Organization

Workforce

Quality

Production Planning and Control

What are the decision in your Manufacturing (Operations) Strategy?

Center for Lean Systems and Management

Department of Industrial Engineering

role of manufacturing
Role of Manufacturing
  • Common Perception:
    • To simply “assist” or support in the implementation of total management strategy
  • Manufacturing must take a proactive role in defining the company’s strategy.
  • Challenge the role of manufacturing

Center for Lean Systems and Management

Department of Industrial Engineering

changes in manufacturing strategy
Changes in Manufacturing Strategy

Source: Operations Management by Heizer and Render

Center for Lean Systems and Management

Department of Industrial Engineering

manufacturing strategy choices
Manufacturing Strategy Choices
  • To Produce the Quantities (Flexibility)
  • To Produce at Desired Quality (Quality)
  • To Produce on Time (Service/Delivery)
  • To Produce at Acceptable Cost (Cost)

Center for Lean Systems and Management

Department of Industrial Engineering

three general categories of production systems
Craft Production

Job Shop

Batch Flow

Mass Production (HVM)

Operator Paced

Machine Paced

Continuous Flow

Three General Categories of Production Systems

Center for Lean Systems and Management

Department of Industrial Engineering

properties of the production systems
Properties of the Production Systems

Source: Manufacturing Strategy by Miltonburg, Productivity Press

Center for Lean Systems and Management

Department of Industrial Engineering

cell designs
Cell Designs

Source: Reorganizing the Factory by Hyer and Wemmerlov

Center for Lean Systems and Management

Department of Industrial Engineering

flexibility in u shape cells
Flexibility in U-Shape Cells

Source: Improving Production with Lean Thinking by Santos, Wysk, and Torres (John Wiley and Sons)

Center for Lean Systems and Management

Department of Industrial Engineering

pre requisites for cell layout
Pre-requisites for Cell Layout
  • Multifunctional workers
  • Improvement of set-up time (especially for dies)
  • Looking for simple method for production automation

Center for Lean Systems and Management

Department of Industrial Engineering

methodology for production cell layout
Methodology for Production Cell Layout
  • Form Product Families
  • Re-layout the work flow
  • Plan and control the cell

Center for Lean Systems and Management

Department of Industrial Engineering

grouping of products
Grouping of Products
  • Group Technology – process of identifying commonality of processes among products
  • The objective is to identify product families based on similar processes.
  • This grouping of products helps reorganize processes into cells.

Center for Lean Systems and Management

Department of Industrial Engineering

example of group technology analysis
Example of Group Technology Analysis

Lean for Dummies by Natalie Sayer and Bruce Williams

Center for Lean Systems and Management

Department of Industrial Engineering

cell design performances
Cell Design Performances

Center for Lean Systems and Management

Department of Industrial Engineering

simulation results from lean trainings

Average

Min

Max

Improvement on Completed Output

521%

250%

900%

Improvement in Accepted Quality Output

533%

256%

860%

Reduction in Cycle Time (time between deliveries, min)

46%

23%

67%

Reduction in Leadtime per order (average min)

31%

17%

50%

Simulation Results from Lean Trainings

Lean Trainings were conducted across different regions using real manufacturing scenarios involving low volume with high variety situation.

Center for Lean Systems and Management

Department of Industrial Engineering

cell operations as a manufacturing advantage
Cell Operations as a Manufacturing Advantage
  • Restructuring Operations into cells can help streamline operations, whether in manufacturing or services
  • Cells have been proven to deliver in shortening lead times, improving quality, and lowering total cost
  • Cellular manufacturing is an effective strategy to gain competitive advantage against competitors through better manufacturing performance.

Center for Lean Systems and Management

Department of Industrial Engineering

http leancenter dlsu edu ph

http://leancenter.dlsu.edu.ph

Center for Lean Systems and Management

Department of Industrial Engineering