Manufacturing, Service
Operations and Logistics
from Prof. Goldsman’s lecture notes
Outline
Manufacturing and Service
Terminologies
Product/Process Matrix
Vocabulary List
Manufacturing
Service
Setup, setup cost
Lot or batch size
Product mix
Capacity
Custom process/project
Jobshop
Batch flow/batch process
Line flow/flowshop/flowline/mass production
Continuous flow
Product/process matrix
Capital intensive, labor intensive
Manufacturing versus Service
Manufacturing: makes things
Physical goods: books, cellphones, pipes, bricks,
cars, …
Service: makes intangible items
Education, lawyers and other professionals,
repairs, hotels, entertainment, …
Created, delivered, and consumed at once
<< capital investments compared to manufacturing
Why Service Matters?
Growing sector
Newer, hence more opportunities for IEs
Environmental concerns turning
manufacturing into service
Buy transportation, not a car!
Product/Process Matrix
PRODUCT MIX
PROCESS PATTERN
One of a
kind or few
Very jumbled flow;
process segments loosely
linked
PROJECT
JOB
Low Vol.
many
products
Worker motivation;
balance; maintaining
enough flexibility
LINE FLOW
Stay on the diagonal!
Bidding; delivery;
product design,
flexibility
Challenges for
management
Scheduling; materials
handling; shifting
bottlenecks
BATCH
FLOW
Line flow
Challenges for
Mangement
Very high Vol.
Std product
(commodity)
SHOP
Jumbled flow; but a
dominant flow exists
Cont, automated, rigid
flow; process segments
tightly linked
Higher Vol.
several major
products
Quality
(product
diff’n); flex in
output vol.
CONTINUOUS
FLOW
Price
Capital expenses for big
chunk capacity;
technological changes;
material mgt; vertical
integration
Note That…
During the lifecycle of a product (Product
Life Cycle), the process strategy may
change
Computers?
Many real process don’t fit so neatly into
these categories
It’s just a guidelines!
Supply Chain Management
“Consist of all stages involved, directly or indirectly, in
fulfilling a customer request. The supply chain not only
includes the manufacturer and suppliers, but also
transporters, warehouses, retailers and customer
themselves” – Chopra and Meindl
Suppliers’
Suppliers
Assembler
Suppliers
Logistics
Providers
Distributors
Customer
Supply Chain Management
Physical
Product
SCM
Information
Money
The Traditional Supply Chain
Suppliers
Manufacturers
Information Flows
Goods Flow
Wholesale
Distributors
Retailers
Customers
Today’s Supply Chain
Wholesale
Distributors
Retailers
Manufacturers
Supplier
Exchanges
Customers
Logistics
Exchanges
Virtual
Manufacturers
Contract
Manufacturers
Logistics
Providers
Information Flows
Goods Flow
Customer
Exchanges
Four Categories of SCM*)
PLAN
SOURCE
DELIVER
MAKE
*) Michael Hugo
Plan-Source-Make-Deliver
Plan
• Demand Forecasting
• Product Pricing
• Inventory Management
Source
• Procurement
• Credit and Collections
Make
Deliver
• Product Design
• Productions Scheduling
• Facility Management
• Order Management
• Delivery Scheduling
•
•
•
•
•
•
Delivery Performance
Inventory Reduction
Fulfillment Cycle Time
Forecast Accuracy
Overall Productivity
Lower Supply-Chain
Costs
• Fill Rates
• Improved Capacity
Realization
Benefit of SCM
Increase
Competitiveness
Customer Results: Increased ROI
 Planning Cycle Time
 Operating Expenses
(Overtime)
 Customer
Service
 Throughput
revenues
ROI
assets
 Inventory
 Order LT
 Production LT
expenses
Key Drivers
Key drivers to the SCM process are:
– Shorter life cycles
– Reduced costs
– Improved customer service
Supply Chain Solutions Covers
ROI
impact
scheduling
manufacturing planning
scheduling
move
master
planning
strategic
business
planning
transportation planning
distribution planning
Program Binusian 2012
months
demand management
days
hours
demand
fulfillment
weeks
store
sell
strategic
year +
buy
make
tactical
operational
17
SCM: Manufacturing Perspective
P
R
O
D
U
C
T
C
O
M
P
L
E
X
I
T
Y
Special machine
building
Make -to-order
production
Assembly production /
Assemble -to- order
Production by lots
Period -based
production /takted
flow production
Process manufacturing
Mass production
PRODUCT STABILITY