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Production/Manufacturing. Production/manufacturing is the process of converting raw materials or semi-finished products into finished products that have value in the market place. This process involves the contribution of labor , equipment , energy , and information.

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slide1

Production/Manufacturing

Production/manufacturing is the process of converting raw materials or semi-finished products into finished products that have value in the market place. This process involves the contribution of labor, equipment, energy, and information.

slide2

The Production System

Production

System

Raw materials

Finished products

Energy

Labor

Scrap

Equipment

Waste

Information

slide3

Inventory

Inventory is both an input and output of the production process. Inventory can be in the form of raw materials, semi-finished, and finished products.

slide4

The Inventory System

Supply source

Demand source

Inventory

slide5

Distribution

and sales

Suppliers

Fabrication

Assembly

Raw materials

Component parts

inventory

Finished goods inventory

The Production-Inventory System

slide6

The Supply Chain

Assembly/

Manufacturing

1st tier suppliers

Distribution

centers

2nd tier suppliers

Retailers

slide7

Supply Chain Management

Supply Chain Management (SCM) is the set of functions concerned with the effective utilization of limited resources that may reside with one or more independent firms and the management of material, information, and financial flows within and between these firms, so as to satisfy customer demands and create profits for all firms.

slide8

Production Planning and Inventory Control

Production planning and inventory control is the subset of SCM functions that focus on managing production operations and inventory throughout the supply chain.

examples of decisions1
Examples of Decisions
  • What should we produce, how much, and when (forecasting)?
  • How much can we produce (capacity planning)?
  • How much do we have and how much do we need (inventory management)?
  • When should we produce (production planning and scheduling)?
slide11

A Hierarchy of Decisions

Sales &

Marketing

Long term

forecasting

Transportation

& Distribution

Capacity

Planning

Warehousing &

order fulfillment

Network design

& facility location

Inventory

Management

Production

Planning

Production

Scheduling

slide13

Examples of Performance Measures

  • Cost (are products being created at minimum or acceptable cost?)
  • Quality (what are the specifications of the products? What percentages of shipped products meet specification?)
  • Variety (how many types of products are - or can be – simultaneously produced?)
  • Service (how long does it take to fulfill a customer order? how often are quoted lead times met?)
slide14

Examples of Performance Measures (continued…)

  • Flexibility (how quickly can existing resources be reconfigured to produce new products?)
  • Worker satisfaction (are workers and managers throughout the supply chain happy and motivated?)
  • Safety (are work environments safe for workers and the surrounding community?)
  • Environmental impact (how environmentally friendly are the supply chain processes and the products?)
the bottom line
The Bottom Line

In the long run, the supply chain must be profitable by delivering value to the end customer and to do so over the long run.

classification of the production process1
Classification of the Production Process
  • Production quantity
      • Mass production
      • Batch production
      • Job shop production
classification of the production process2
Classification of the Production Process
  • Production quantity
      • Mass production
      • Batch production
      • Job shop production
  • Product variety
classification of the production process3
Classification of the Production Process
  • Production quantity
      • Mass production
      • Batch production
      • Job shop production
  • Product variety
      • Single product or product line
      • Family of similar products
      • One-of-a-kind products
mass production systems1
Mass Production Systems
  • Low product variety
  • High production volumes
  • Specialized labor
  • Dedicated equipment
  • High reconfiguration costs
  • Make-to-stock production
batch production systems1
Batch Production Systems
  • Medium product variety
  • Products are made in larger lots
  • products are made to stock
  • Programmable/reconfigurable equipment
  • Significant setup costs
job shops1
Job Shops
  • High product variety
  • Products are made in small lots
  • Products are made to order
  • Flexible equipment and labor
  • Small setups
classification of production systems continued1
Classification of Production Systems (continued…)
  • Order fulfillment
      • Make-to-stock systems (MTS)
      • Make-to-order systems (MTO)
      • Hybrid MTO/MTS
classification of production systems continued2
Classification of Production Systems (continued…)
  • Order fulfillment
      • Make-to-stock systems (MTS)
      • Make-to-order systems (MTO)
      • Hybrid MTO/MTS
  • Resource configuration
classification of production systems continued3
Classification of Production Systems (continued…)
  • Order fulfillment
      • Make-to-stock systems (MTS)
      • Make-to-order systems (MTO)
      • Hybrid MTO/MTS
  • Resource configuration
      • Product layout
      • Process layout
      • Cellular layout
      • Fixed position layout
classification of production systems continued5
Classification of Production Systems (continued…)
  • Inputs/outputs
      • Discrete production systems (discrete inputs and outputs - cars, computers, machine tools, etc)
      • Continuous production systems (continuous inputs and outputs - chemicals, textiles, food processing, pharmaceuticals)
      • Hybrid systems (Discrete inputs/continuous outputs or continuous inputs/discrete outputs - steel, plastics, recycling)
process capabilities business strategy
Process capabilities & business strategy
  • Example product attributes: price, quality, variety, service, demand uncertainty
  • Example process attributes: cost, quality, flexibility, lead time
slide33
A firm must choose a business strategy - attribute values for its portfolio of products - that differentiates it from the competition.
  • A firm must choose process capabilities, attribute values for its process, that support its business strategy.
slide34
A business strategy can be driven by market opportunities or by a competitive advantage in process capabilities.
  • In both cases, there must be a fit between process capability and business strategy.
slide35

Matching Process Choice with Product Strategy Choice

Area of strategic fit

Process flexibility

Low High

Low High

Product variety

slide36

Matching Process Choice with Product Strategy Choice (Continued…)

Lead time

Area of strategic fit

High Low

Low High

Demand uncertainty

the evolution of process capabilities
The Evolution of Process Capabilities
  • Volume (1920/30/40’s)
  • Cost (1950/60’s)
  • Quality (1970/80’s)
  • Time (1980/1990’s)
  • Flexibility (1990/2000’s)
  • Mass customization (2000’s & beyond)