SUMMARY INTRODUCTION INDUSTRIAL ENGINEERING (SHTUB&COHEN)
CH1 – INTRODUCTION
INDUSTRIAL ENGINEERING
Engineering design is a process of translation of requirements, specifications and needs into
a language understood by the people responsible for making the new product, service,
facility, or system. Industrial Engineering deals with the design, management and control of
operational processes. Classical knowledge is combined with the human factor, ergonomics,
sociology and psychology. Industrial engineers design processes and perform projects and
ongoing activities that may involve facilities, products and systems, which are used to supply
products and services. They focus on the human factor. They are also involved in optimal
usage of resources, and the design and implementation of information systems.
Organizations use systems to supply services and products; a collection of resources such
as people, computers, information, machinery and facilities working to achieve a common
goal. Industrial engineers are involved in designing organizational processes, performing
projects and ongoing activities, and planning their operations. Skills used by Industrial
Engineers are engineering language, physics, knowledge of economics and financial
management, knowledge of mathematics and statistics, knowledge of human resources
management and knowledge of computerized information systems.
MODELS
A model is a simplified presentation of reality. Most models are mathematical, or conceptual
and they should always be simple enough but at the same time representative of the
situation. A solution found by analyzing a model should always be tested by a sensitivity
analysis, to assess its suitability for solving the real problem. Models can be used to solve
routine as well as non-routine problems. Simple models are static, advanced simulation
modelling tools are based on the system dynamics approach, in which time is integrated.
These dynamic models consist of levels and rates (that determine change of levels). A lot of
simulation models are created in the last years. When simulation models are used for
decision making the model presents three aspects of the real world; the flow of objects (or
resources), the flow of information and the decision-making process. Advantages of such
models are the possibility to run large simulations (even when decision makers are away),
disadvantage is that group decision making and intuition are hard or impossible to integrate.
TEACHING INDUSTRIAL ENGINEERING
IE is taught through lectures, books and projects, mostly using the case study approach and
the modeling approach. First years mostly cover basics, second and third years mostly cover
advanced courses, and fourth years mostly cover elective courses.
HISTORICAL OVERVIEW
People have been planning undertakings for the entire history. A turning point in
development of IE was the Industrial Revolution, when mechanical energy replaced human
energy and production began to transfer to factories. Adam Smith introduced division of
labor, and Whitney the earliest forms of mass production, Taylor introduced scientific
management theory. This last one brought awareness of the importance of proper production
planning. Brothers Gilbert developed a method to predict how long it would take to complete
a task, later another technique, Motion & Time Management was developed by
Westinghouse. Ford developed the assembly line, Gantt developed a chart for scheduling
processes. Harris developed an optimization model for determining batch sizes and Mayo
and Hawthorne did famous sociological an psychological research, the beginning of HRM. In
WWII operations research methodologies were developed, which are based on the
construction of mathematical and statistical methods of complex problems. Nowadays this is
often done by computers. Operations research deals with a lot of uncertainty in the big
service branch of these days. During the fifties planning and managing projects were
developed, including PERT. CPM was developed at the same time, and in the seventies and
eighties MRP software was made. In Japan, Totally Quality Management was developed and
this was later adopted in a lot of western countries, due to the amazing quality. Later it
became the ISO-9000. Toyota production systems was also developed in Japan, which used
JIT techniques. This technique was also adopted by other countries. At the same time a lot of
computer programs were developed for all kinds of needs. Globalization emphasized the
need for rapid response to constant change and led to the development of Business Process
Reengineering. Business have started using ERP which, based on integrated management
approach, provide an integrated solution for many organizational functions: production,
purchasing, finance, marketing, human resources, plant maintenance, service and project
management. The focus is now on creating value for the customer while minimizing waste,
following TPS. Internet has made E-businesses boom and brought big data. This has led to
data mining and transformation of OR. It is now important to integrate the environment of the
organization with the organization. This formed ERP, MES, CRM and SRM. It also formed
supply chain management (SCM).
IMPACT OF GLABALISATION
Globalization and the development of the internet have pushed many organizations to a new
level of competitiveness. Competition can be seen in one of the four dimensions cost, quality,
time, and flexibility. IE delivers the tools to improve these. Cost-based competition is hard
and is very much influenced by the extent to which clients want brands, or low costs. Quality
competition can be on the quality of services and products, but also on the quality of
operational processes. Time competition can be on customer waiting time, supply lead time
and production time. Flexibility is the ability to adapt itself in a short time, and when this is
high, it gives the organization a competitive advantage, since it can produce specific items
for customers. The right balance of these four factors is market-dependent.
INDUSTRIAL ENGINEERING SYSTEMS
The boundary of a (sub)system is an important issue. There are two approaches: the closed
one, in which only the own unit in the organization is optimized, which might lead to bad
outcomes, and the open system, in which the entire organization and all units in it work to
achieve a common goal. This is made possible by the information technology of nowadays.
PROCESS DESIGN
Industrial engineers implement processes. Hammer and Champy considered five basic
processes: The development process (start with idea, end with new product or service),
Preparation of infrastructure (Start with prototype, end with facility for product), Sales (Start
with market research, end with order), Delivery (Start with order, end with delivery and
payment) and Service (start with request for service, end with providing service to
satisfaction). Methods have been developed to support the planning of processes aimed at
maximizing the value received by the customer by mapping the value chain. An Industrial
Engineer should collaborate with other departments to understand the environment.
NEED FOR INTEGRATED AND DYNAMIC PROCESSES
To address the competition in the markets, processes should be designed taking into
account time, cost, flexibility, and quality.
SUPER SUMMARY
The role of an industrial engineer is to ensure the organization’s success in dynamics and
competitive markets, the emphasis is on the design of processes using information systems
to cope with cost, quality, time and flexibility requirements.
CH2 – MODELING THE ORGANIZATIONAL STRUCTURE & FACILITY LAYOUT
INTRODUCTION
The processes mentioned in the previous chapter (Development, Preparation of
infrastructure, Sales, Supply, and Service) are usually carried out by teams. Their relations
are presented in an organizational structure model. To choose the right one we need
physiology and psychology. Also facility layout is important in this.
WHAT IS AN ORGANIZATION
An organization is the unification of a group of people for carrying out processes or activities
to achieve certain purposes, typically on a continuing basis. Louis said there were multiple
forms: Organization as a Human Creation; organizations are created by humans in order to
fulfill specific needs. Organizations as Production Systems; Organizations are systems
where inputs such as material and information are combined to create outputs such as
products and services. Organizations as Economic Entities: Organizations are economic
entities, aimed at providing economic goals. Organizations as Social Systems; Organizations
are a framework in which people are grouped together to work and achieve common goals,
financial or otherwise. Organizations as Goal-Oriented Systems: An organization is a
collection of individuals, each of whom has needs, expectations, and personal goals in
addition to the goas defined by the organization. Organizations as Open Systems:
Organizations are subject to forces and requirements dictated by their environment, and are
a combination of all of the above definitions.
Successful organizations are systems
with the ability to adapt themselves to new situations.
DEVELOPMENT OF ORGANIZATIONS
Organizations exist for a long time and the development of organizations has had a lot of
factors. Modern society’s rapidly evolving technology motivates professionalization.
Organizations are established when experts in different areas must work together in order to
succeed in today’s market. Principles of division of labor and specialization are fundamental
in many organizations, but the benefits of these principles are only realized if good
coordination exists between the various people and
organizational components. The more the process is
repetitive, the easier it is to coordinate. Formal
organizations are organizations with a clear delineation of
responsibilities, authority and reporting requirements while
non formal organizations are based on common interests,
shared beliefs, social values, emotions, etc. These can
also exists within each other.
EXAMPLES OF ORGANIZATIONAL STRUCTURE
Many organizations use a variation of the upcoming organizational structures. The structure
is related to both the quantity and variety of products/services.
Project-oriented Organizational structures have teams working on the same
mission or project, like a task force. The structure is temporary. Advantages: Team members
focus on same mission, stakeholders can contact manager, composition of the team
matches the project, no suffering from boundaries separating the organizational units.
Disadvantages: No pooling of resources (lower benefits), Experts do not learn from experts
in other teams, not stable because of the time limitation, communication between units is
limited.
Matrix organizational structures are mainly used when there are many projects with
similarities requiring several areas of expertise, because it maintains several professional
units that provide service to various projects. It combines project oriented and functional
structures. In this way usage of expertise is maximized and the customer has a clear contact
point in the project manager. Disadvantage is that an employee can have multiple bosses.
Functional structures are based on the clustering or grouping of members of the
organization according to their expertise and the functions they perform. Due to limited span
of control these functional divisions can be divided into parts. Advantages: Pooling together
similar resources which will create higher benefits, flow of information within each group in
the functional organization is usually good, the creation of groups with the same expertise is
easier to facilitate so span of control can grow, stable, career path is easier to forecast.
Disadvantages: Communication between different groups might be difficult, cooperation
between employees in different groups may be poor, clients with special needs may have
problems.
Process-Based and Concurrent Engineering Organizations succeed when
product/service variety exists to a small degree, and the quantity of each type is very large.
Experts in different areas work together as a team in the product design process. It differs
from all other structures since its reason to exist is development of new products and the
maintenance and control during its lifespan. Using this structure development is much faster
due to less uncertainty and the non-serial process.
Product/Service-Based Organizations are constructed according to the main
processes required for producing and distributing the commodity. The main difference with
the process-based structure is that it works on one or a few very similar products. Advantage
is the high efficiency of teams, disadvantage is the lack of flexibility.
HUMANS AND ORGANISATIONS
When designing the workplace and the organization, Industrial engineers should aim at
increasing the productivity and efficiency, maintaining and strengthening the important
values, increasing the motivation of employees, and strengthening ties between employees
and the organization and other employees.
HUMAN FACTOR INDSUTRIAL ENGINEERING COURSES
To achieve these goas, an industrial engineer must use appropriate knowledge of the
following disciplines: Organizational psychology: Seeks to identify factors that affect the
relationships between people in the organization with the aim of improving the performances
of the organization and strengthening these relationships. Organizational sociology: Examine
the relationships between humans and the organization and the factors that affect these
relationships. Psychology: Focus within IE is on aspects related to the work environment, like
learning and motivation. Ergonomics: Seeks to make the interface between operator and
machines more productive and efficient. Physiology: Strongly related to ergonomics, need to
understand the human body. Anatomy: Strongly related to ergonomics, need to understand
the human body.
LEARNING
Learning is the phenomenon of improving performance through repetition. The function of the
time it takes to perform
an
t(x)= t(1)x-b
operation t as a function
of the
Where t(1) is duration of first repetition, b is a
number repetitions x is
the
task specific constant. T(x) is the cumulative
following:
time to produce x units. b is to be calculated by
2log(slope).
This model is used for production planning.
MOTIVATION
Motivation influences the learning curve. Maslow pyramid of needs assumes that there is a
hierarchy of needs, and an organization should know where its employees are and focus on
fulfilling these needs (physiological needs,
security & safety requirements, social needs,
status, self-actualization). MacGregor developed
the model of theories of X and Y. X assumes that
workers are lazy and passive, Y that workers are
energetic and active. X needs strict management,
Y less. Compared to Maslow, X characterizes the
needs at the bottom, and Y the upper ones.
Maslow developed theory Z, which assumes that
most managers and employees are interested in
advancing the organization. A lot of these theories have been developed and the help
engineers designing organizational structures, role definitions, work environments and
systems for learning and motivation.
ORGANZING WORKPLACE EQUIPMENT AND MACHINERY
Industrial engineers learn how to organize the physical resources that are used on the
production floor or for the provision of services. This is called layout planning.
Workshop layouts have a few machines spread across the shop floor to enable both
buffer accumulation and easy movement. It is good for an organization with many projects
and small job shops. They are organized to minimize material flow.
Functional layouts group similar machines on the shop floor, because in this way
expertise is created, work can be divided, and it can process a wide range of products.
Overall management is hard, adjustment of machines happens often (or inventories are
created), no one is responsible for one product and routing is complex.
Group technology makes cells with typical sequences of machines for product
groups in order to minimize waiting and transportation, it is easy to manage and stimulates
specializations.
Flow shop produces very large quantities and thus is very specialized. It uses a layout where machines are sequenced following the specific requirements of a product.
Movement is simple, idle times can be minimized, limited skill is required, and responsibility
is clear. The range of products is limited, it requires considerable investment and flexibility is
low.
Assembly lines are flow shops. They have a sequential flow of materials.
Continuous production layout is often used with chemicals or for example oil, and
involves no human intervention.
ORGANIZATION-WIDE PROCESSES
OVERCOMING THE ORGANIZATIONAL STRUCTURE AND WALLS FOR BETTER
COMPETITIVENESS
Units in an organization are often very separated (silo) and communication is low.
Coordination between those units is required to improve performance of processes. Partial
information should be lowered by good coordination. Industrial engineers are responsible for
maintaining the information system and the organizational structure and keep changing both
in response to the dynamic environment and technology.
AUTOMATION
Manual labor can be replaced by automatic means, each alternative has its advantages an
disadvantages in terms of cost, quality, response time an flexibility.
SUPER SUMMARY
Organizations can be seen in many ways (Human Creation, Production System, Economic
Entities, Open System, Social system, Goal-oriented System). Determining the structure of
an organizations is part of the management process and should support effective control
over operations and efficient use of resources. Common structures are the project oriented
one, matrix organizations, functional organizations, and product based organisations. The
human factor is important within an organization so psychology etc. and learning and
motivation are important. Multiple job floor layouts can be chosen according to the processes
within the organization (Workshop, Functional, Group Technology, Flow shop, and Assembly
lines).
CH3 – PROJECT MANAGEMENT
INTRODUCTION
Industrial engineers fulfill a crucial function in managing non repetitive effort to achieve
specific goals. Such efforts are organized as projects that are performed under time, budget
and resource constraints and aimed at developing a product, service or system. Production
and service systems can be clustered into P&S systems that supply a large number of
identical products/services over a long time of span, P&S systems that supply a limited
variety of products/services in batches, and P&S systems that carry out projects.
WHAT IS A PROJECT
A project is a one-time undertaking to achieve a set of objectives under time, budget and
resource constraints. Organization of work in a project has advantages: Flexibility: Plans can
be changed to meet the constraints with optimal usage of resources. A clear point of contact:
Within the project manager. Dealing with uncertainty: Managing uncertainty and risk are
integral parts of project management. Effective teamwork: Clear definition of responsibilities
and communication and shared goals. Common language: Despite different backgrounds.
Projects can be classified to their initiation process: Projects initiating from an identified
internal need, projects initiating from a request by another organization, and projects initiated
to meet the needs of customers.
UNCERTAINTY AND RISKS
Projects are subject to uncertainty because of lack of historical information. Special planning
and control were developed, based on the assumption that either uncertainty is negligible, or
substantial but it can be assessed correctly. A model for planning is chosen based on the
sources and level of uncertainty. Possible sources are availability of resources, uncertainty in
the environment, and technological uncertainty. It is possible to deal with uncertainty and the
risk that it generates in projects in different ways: Accept the risk and threat it if it
materializes, Share the risk, Or reduce the risk.
PROJECT LIFE CYCLE
The need to compromise with constraints resulted in the development of project
management techniques. One of them is the project life cycle.
Project initiation: a need is discovered, possible solutions are identified, the best
solution is chosen after analysis of all possible solutions, Specs and Scope Of Work are
made.
Project planning phase: Specs and SOW are the basis of the plan, the project is
planned keeping the constraints in mind, the organizational structure is determined, who will
work on it, and what system of control is used. The result is a plan which states what should
be done, when it should be done and what resources are used.
Project execution: The project is executed, while it is tracked and monitored to
identify deviations. Resources are allocated.
Project termination: The resources are released, the product is transferred and
explained. Lessons are learned for the future.
PROJECT INITIATION
GATHERING INFORMATION
Gathering information from all stakeholders is crucial. It is important to analyze them early
on, to understand their needs and expectations. Sometimes a third party is needed for this.
Some projects are outsourced using a request for proposal (aanbesteding).
SELECTION OF ALTERNATIVES WITHIN THE PROJECT SCOPE
In the initiation phase alternatives for the project are considered. In order to choose one the
weights and scores model can be used. Criteria are ranked according to their relative
importance, and the alternatives are ranked w.r.t. each criteria. The weighted sum of the
scores is used as a measure of the value benefit to the stakeholders. If two projects have the
same score the one with the lowest risk is chosen.
PROJECT SCHEDULING
The statement of work SOW defines the project’s work content. Resources are needed,
timing is important since too early or too late costs money. That’s why a project is scheduled.
This piece is very similar to DETOM and I will not summarize it. It is about Gantt charts and
CPM and AON & AOA.
UNCERTAINTY AND PROJECT DURATION
When uncertainty is low the expected times can be used for CPM. Otherwise other
techniques like PERT or Monte Carlo can be used.
RESOURCE SCHEDULING
When doing a project resources should be scheduled to prevent research shortage or idle
times. When there are shortages you can either delay parts, hire or buy more researches. It
is desirable to keep the resource level as constant as possible.
PROJECT EXECUTION
MONITORING AND CONTROL
Monitoring and control needs to be done to identify and prevent deviations. Uncertainty can
have many reasons. When possible deviations are identified, these should be tackled by for
example arranging more resources, more time, or changes to the work content.
TESTING
Testing is an important part of project control. These tests are done to ensure project
deliverables meet the requirements, before, during or after the project.
PROJECT ENDING
When a project is ended resources should be released (and might be reassigned), the
project deliverables should be delivered to and accepted by the customers, the organization
should ensure it learns from the past project, and support should be created for newly used
or developed products (and old products might be executed).
COMPUTERIZED SYSTEMS FOR PROJECT MANAGEMENT
For project management a lot of computerized software is available with features for both
customers and project managers and employees. It can integrate a lot of data.
SUPER SUMMARY
Many organizations undertake one-time mission to achieve goals, because of uncertainty
special tools are needed, industrial engineers must master the tools for planning, controlling
and managing.
CH4 – INFORMATION SYSTEMS
INTRODUCTION
Because of information systems and data decisions are more grounded nowadays.
Information systems are used a lot since much data is available. Ways to collect data are still
developing. Information systems are used within and between organizations. In the supply
chain Data, Decision making and Physical aspects are present. Data can be classified
according to importance and urgency.
Important data is saved for later to be analyzed.
USE OF INFORMATION TO SUPPORT DECISION MAKING
There are three kinds of decisions.
Strategical decisions are long-term decisions usually having significant economic
impact and high importance.
Tactical decisions are medium-term decisions, for example, changing a supplier.
Operational decisions are short-term decisions made very frequently at lower levels
of the organization.
Another division is the following:
Routine decisions are usually lower level decisions and made often. They are easier
and more useful to automate.
Non routine or ad hoc decisions are difficult and hard or impossible to automate. It
involves intuition and experience.
Strategic decisions are difficult or impossible to automate. It can be supported by data and
information systems. Information systems can be used to monitor and control companies.
For a good implementation of information systems training is needed. Nowadays, in contrast
to the history, information systems are linked between all departments and sometimes even
between organizations. The basis of supply chain management is the availability of
advanced information systems that can share information among supply chain partners.
DATA HANDLING
Information systems are based on data that accurately represents the real situation, are
timely and are readily available. To achieve this the following steps are required:
Data collection: with (new) technologies such as pattern recognition, speech
recognition an AI along with sensors etc. enable gathering of data. These are then
transferred to a computer using EDI systems. Using RFID, barcodes and magnetic tag
readers data can be collected accurately and cheap.
Data storage: Data is stored in databases. The internet allows fast retrieval of this
data.
Data retrieval: Information systems retrieve data and present it to decision makers.
Data analysis: Data analysis must work through a large variety of data types, with
the objective being sometimes to summarize and other times to also show trends,
correlations, or patterns.
For data processing are many tools available. Popular are Standard Query Language, Online
Analytical Processing, R programming language, Apache Hadoop. At the end of the process
described previously, the data become information that supports decision making, helps in
monitoring and control, or is used for automatic and managerial decision making.
COMPONENTS OF THE INFORMATION SYSTEM
Several components of information systems support the management of supply chains: the
transaction processing system, the management information system and the decision
support system.
DATABASE SYSTEM
Database systems are designed to handle large amounts of data, have physical space for
this, contain a retrieval system, and protects against technical failure and unauthorized
access. It separates the logical place of data from the physical place. There are three levels
of abstraction: the physical level (the lowest level of abstraction of data, detailed
10111010110) the conceptual or logical level (the next higher level of abstraction,
describes where data is stored and the relationships  tables), and the observation level
(the highest level of abstraction, desktop).
QUERIES AND STRUCTURED QUERY LANGUAGE
Query language is a language through which the user seeks information from the database.
Query languages can be procedural (the user tells the system to perform an operation) and
nonprocedural (the user just asks the system for data). SQL is a standard query language.
DATA FLOW DIAGRAMS
Data flow diagrams show the flow of data in a computerized system. They show required
data, its sources, the operations performed on it, where it is stored, and the output is used to
create. Bubbles show processes or functions, rectangles external entity, two parallel lines
that represent a database and an arrow that represent flow of data.
MODEL BASE
Data must (often) be processed in order to be useful. Routine, non-routine and monitoring
and control models are supported by information systems. The model base is the same as
the data base but then with models. Choosing the appropriate model is very important. A lot
of companies buy off-the-shelf information systems since they are far cheaper. It’s important
to choose the right system, otherwise it might limit the organization.
QUALITY OF INFORMATION
The quality of information generated from processing the data is dependent on the quality of
data, as well as on the user’s ability to understand the information. Garbage in, garbage out.
Processing data takes many forms.
FORECASTING
Good information systems provide high-quality information (understood, valid, relevant,
accurate and complete). In reality there is always some information missing and we can
estimate it, forecasts, using data from the past, observations. We can also measure the
quality of forecasts.
MOVING AVERAGE MODEL
The simplest forecast form: it takes the average of a number of n periods before the wanted
period.
ESTIMATING THE QUALITY OF FORECASTS
MAD measures the average of the absolute values of the difference between the forecasting
and the observations. MES measures the average of squared error values. You might want
to take a look at these formulas in the book.
EXPONENTIAL SMOOTHING MODEL
The exponential smoothing model is based on the following equation:
It is a weighted average of all past observations where weight is an exponential function of
alpha. When we optimize alpha using MAD and MES we get the adopted forecasting model.
CH5 – SUPPLY CHAIN MANAGEMENT: THE INTERFACE WITH THE
CUSTOMER
INTRODUCTION
Supply chains are a collection of organizations linked to each other by customer-supplier
relationships/interfaces. Efficient design and management of the interfaces is very important.
The relationship may take many forms and the interface is very complex. Competition can be
on time, cost, flexibility and quality. Starting point of the interface design is the VOC (voice of
the customer), and understand the ways that you and the competition satisfies the needs.
Analysis can be useful. Expectations should be analyzed and also costs. Interface design
focuses on the flow of information and material, and decision making. Different forms of how
to handle orders are discussed. Minimizing stock is important for costs. Also lot sizing is
important.
THE IMPACT OF INVENTORY
Forecast based orders (example: Food and beverage)
Work orders and procurement orders are based on forecasts of future demand.
+ Short delivery time
+ Large quantities can be produced with low costs
- Inventory costs (also vs interest)
- Risk of damage of inventory
- Stock reduces flexibility
Production to order (example: Ship)
Work orders and procurement orders are based on received customer order moments.
(Sometimes also combined with design to order).
+ Saving inventory costs
+ Flexibility to accommodate special requests
- Long lead times
- Small quantities produced
Assemble to order (example: DELL)
Compromise between PTO and FBO.
The way production is chosen relies heavily on the resources, market, end products and
customer needs.
BILL OF MATERIALS
The structure of the BOM can help in the design of the customer
interface. When for example a resource is turned into a wide
variety of products, it is useful to hold a stock of the resource.
Subassemblies can also be stocked.
MASTER PRODUCTION SCHEDULE
An MPS was already discussed in DETOM. Only additions are in this summary. An MPS is
based on future demand in the form of customer orders, in the form of forecasts, or both.
When forecasts are used products can be ATP; available-to-promise. MPS management is
important since it contains commitments and resource allocation and is continuously
updated. Management requires a joint effort of marketing, inventory management,
manufacturing and purchasing, since they have different goals. Introduction of new
requirements, updating of existed requirements, and monitoring and control of production
and delivery and taking corrective actions are within MPS management.
DELIVERY TIME AND TIME-BASED COMPETITION
Ensuring shorter delivery time to customers improves the competitiveness. In time-based
competition the goal is to shorten the lead time as much as possible. An organization that
strives to improve its delivery time should examine the activities performed during the
process. In order to shorten the delivery time, organizations try to examine and improve
every activity related to data processing, decision making and processing and focus on
eliminating unnecessary activities, shortening duration of activities, minimizing delays, and
minimizing dependencies between activities.
AVOIDING UNNECESSARY ACTIVITIES
A simple rule of thumb is that an activity has an added value only if the customer is willing to
pay for it. It is not always possible to eliminate/shorten activities that do not add value.
Walmart has developed cross docks for efficient delivery processes, an example of an
unnecessary activity is data-typing multiple times (automatic data acquisition is a solution).
To reduce lead-time companies can also improve processes in order to eliminate activities
(like repair with sustainable processes).
SHORTENING THE DURATION OF VALUE-ADDED AND NECESSARY ACTIVITIES
Computers can be used to automate activities or support persons performing these. Data
processing and decision-making activities are also analyzed. Development of appropriate
information systems and decision support systems and the integration of these allow further
reduction of time. Reducing delays in the process:
Delay in transport
- Transportation batch sizing: waiting on all products because of batches, instead of
moving one at a time.
- Availability of transportation resources
- Poor monitoring and control
Delay in operations
- Setup times
- Process batch sizing: can be solved by reducing setup times
- Bottlenecks in the process
Delay in Decision-making
- Uncertainty
- Serial decision making because of
o Old information flow methods
o Cross-hierarchical and unit flow
o Bureaucratic delay
o No predefined policies
o Manual control in data processing
QUALITY BASED COMPETITION
Quality is the ability to satisfy customers. Customers are satisfied when their expectations
are fulfilled. This can be in the following dimensions:
- Performance: how the product or service meets the purpose.
- Additional attractive features: contribute to exceeding expectations.
- Reliability: probability to malfunction in a time.
- Compatibility: The extent to which a product/service complies with prevalent
standards.
- Durability: The operational and technical service life duration.
- Serviceability: Speed, courtesy and professionalism of service when failures occur.
- Aesthetic: Design, color, etc
- Perceived quality: Subjective measure related to the product or service.
QUALITY FUNCTION DEPLOYMENT MODEL
The QFD model translates the VOC into a product or service. It supports the identification
and implementation of customer requirements at every stage in the development of a new
product or service. It supports a structured design process for concurrent engineering (a new
product gets designed by a team, in which everything from birth to death of a product is
integrated). It combines rows of requirements with columns of technical parameters, and can
contain comparison to other products. Building a QFD:
1. Identify customer requirements
2. Determine relative importance on scale of 1-10
3. Identify engineering characteristics.
4. Evaluate relationships between customer requirements and characteristics with
symbols.
5. Determine the importance of each engineering characteristic by multiplying symbol
with relative importance.
6. Compare customer requirements to the competition
7. Determine target values
8. Relationships between engineering characteristics are determined.
In addition to QFD models, organizations use other models as well that can be divided into
quality control (continuous effort to monitor against deterioration and failures) and quality
assurance (quality should be designed and built into the product and process).
COST-BASED COMPETITION
Cost detracts from profit and so it is a competitive performance measure. The safest way to
increase profits is to carefully reduce the cost of products while keeping up the quality. To
reduce costs the effort should focus on maximizing the value to the customer while
minimizing waste. Planning of the product and process should eliminate features and
activities that do not add value. Lean manufacturing focusses on creating value for the
customer by eliminating waste. Waste is any use of resources that does not add value for the
customer and he is not willing to pay for. To implement Lean, value stream mapping (VSM)
was developed. It maps flows in the organization and its purpose is to identify and eliminate
activities that do not provide extra value. The entire organization should focus on minimizing
costs.
FLEXIBILITY-BASED COMPETITION
In the changing environment of nowadays flexibility, the ability to adapt products and
processes to changing requirements, at low cost and quickly, is important. Flexibility is the
ability to introduce a change in a product or process according to customer requirements or
the changing environment. Flexibility is achieved through proper process design and product
design adapted to flexibility. Because of recent computer usage flexibility can now be
combined with lowering costs, where this was impossible in the past. Systems like Computer
integrated manufacturing (CIM) allow for flexibility manufacturing systems (FMS).
Characteristics and volume of products can be changed easily. People should also be
integrated into this by training.
SUPER SUMMARY
Competitive advantages are vital for organizations. Interface between customers and
organization is of great importance. VOC’s can be translated into products and services, for
example by using a QFD and MPS.
CH6 – INTERFACE WITH SUPPLIERS AND SUBCONTRACTORS
PROCUREMENT AND OUTSOURCING FOR GAINING COMPETITIVE ADVANTAGE
To successfully compete in today’s markets organizations must adopt a strategy that fits the
market conditions, the organization’s goals and its capabilities and that provides an edge for
the company on time-based, cost based, quality based and flexibility based competition.
Sometimes it can be more practical and economical or in line with the strategy, to use
external sources to provide the required capabilities. Products or services that are not
directly relevant to the organization’s field of expertise are often purchased, because
suppliers and subcontractors often deliver with lower cost, higher quality an higher flexibility
in a shorter time. The use of suppliers and subcontractors as external sources of capacity or
expertise is known as outsourcing. The process of contacting with external organizations for
obtaining resources is also known as procurement, purchasing of acquisition. Purchasing
from an external source may be useful in the short term, the long term of both-and is
beneficial as long as it enhances the organization’s competitive advantage in terms of cost,
time, quality and flexibility. To make sure purchasing is justified and will improve
competitiveness the following points should be assessed; compare DIY to make or buy,
carefully choose suppliers, decide on quantities, periods and logistics, decide on the type of
contract, and decide on tools and process to monitor performance and quality.
PURCHASING FROM AN EXTERNAL SOURCE: THE MAKE OR BUY DECISIONS
It is often feasible to produce materials, components or
services in-house. Making should be considered when it
is cheaper, or for control and quality considerations.
Capacity considerations
An external source of additional capacity may be needed
when demand fluctuates, resources are hard to get, or
when the organization does not want to invest in
producing additional capacity in-house.
Know-how considerations
Purchasing from external resources is good when technological or commercial know-how is
not available and hard to get.
Core technology considerations
Outsourcing is sometimes bad when core technologies are being protected.
Economies of scale considerations
By learning and decreasing cost as a function of volume, it may be uneconomical to produce
certain products that can be outsourced because quantities are too low.
Quality considerations
Using the expertise and the high quality of external suppliers can be a way to improve the
competitiveness.
Control considerations
To ensure compliance, supplier monitoring and management is necessary, and is one of the
most important tasks when outsourcing is used. Strong contracts can reduce risks.
Accessibility considerations
Purchasing decisions can completely depend on accessibility constraints.
INTRODUCTION TO SUPPLIERS MANAGEMENT
Supplier management is of utmost importance and can be divided in finding potential
suppliers by requests for quotations, bids or proposals (1), selecting the right suppliers (2)
and managing the process of executing the contract (3).
(1) FINDING POTENTIAL SUPPLIERS BY REQUESTS
Issuing a request for information (RFI) is a popular wat to find out main players when a new
field of expertise or technology is considered, answers assist the organization in writing the
specifications of the requested product or service which is used in the request for quotation
(RFQ) or request for proposal (RFP). When no new information is needed, an RFQ is a
powerful tool for information of pricing. After issuing an RFP contracts can be signed. An
RFP provides information on product or service requirements (functional, physical, and
technical characteristics), delivery process requirements (such as time, place and flexibility
requirements), quality assurance and quality control requirements, and contractual
requirements (payment terms, guarantees, and management of change).
Developing the specifications
Specifications exist on various levels and help the suppliers to assess their potential ability to
provide the products or services required, and to estimate the associated time and cost for
the deliverables.
Quality issues
In the past quality was often measured on the basis of the percentage of products of
defective products. Nowadays, quality of products is defined in terms of their characteristics
and how we use them; fitness of use. This is much better and eliminates quality controls to
such a level that resources can be delivered to the point they are needed in the production
without checks. Sources of problems are located and fixed. Sometimes teams of experts
from the purchasing department help the supplier to improve its quality.
Contractual issues
There is a wide variety of contracts from which the optimal one has to be chosen.
(2) SELECTING THE RIGHT SUPPLIERS
When the requirements are defined, the supplier selection begins. The best suppliers are
chosen and a method to choose is then to let them bid for the lowest price. Sometimes offers
are split for less dependence. A different approach is to select a supplier for every part and
built a partnership relation. An intermediate approach whit a small number of suppliers is
often chosen. The potential buyers should assess the potential supplier on process
capabilities, quality assurance, financial stability of the supplier, cost structures, the ability to
perform value analysis, production scheduling, and the ability of the supplier to comply with
the agreements and his/her record in this area. Many companies require suppliers to comply
with ISO-9000 standards, or SCOR.
(3) MANAGING THE PROCESS: CONTRACT MANAGEMENT
Different kinds of products are the fixed-price contract, cost plus fixed fee contract, cost plus
incentive fee contract, cost plus award fee contract, and cost plus percentage of cost. Read
for further description of these page 150(end)-151. The right contract should be chosen on
the basis of uncertainty, market forces, and the relative merits. After the contract is signed,
focus shifts to the management of the contract. Relationships can be categorized in three
categories, Testing; the buyer uses product testing to prevent defects, Prevention (Toyota);
the buyer teaches the supplier how to achieve the required product and process quality, and
Partnership; a long-term relationship between the buyer and the supplier is built. The level of
cooperation between the buyer and supplier can take different forms, the first is with onetime contracts that define the goods, the second with long-term agreements, sometimes
even with integrated planning systems, and the third is Just In Time, where a supplier send
frequent shipments and does quality control itself, this is a form of outsourcing.
E-COMMERCE AND SUPPLIER MANAGEMENT
E-commerce is commerce via computer networks and information communication technology
(ICT) (ordering from website, communicating via skype are examples). It can effectively
eliminate transaction and communications costs. It is divided into Business to customer
(B2C; bol.com, amazon) and business to business (B2B, for example with online
communication). CommerceNet was a pioneer in this. General Electric Lightning Company is
a good example of ecommerce with reorganization resulting into radically less costs, labor
and time, and increasing uniformity of information in their systems. Purchasing through ecommerce reduces operational problems, allows to band together, reduces the costs of
searching for suppliers, and makes negotiation less-time consuming.
INVENTORY MANAGEMENT COST/BENEFIT CONSIDERATIONS
Trade-off analysis between the benefits of carrying inventory and its cost is important, and
answers questions regarding what is needed to store, how much should be stored and
where.
BENEFITS OF INVENTORIES
Because of their costs, maintaining inventories should be considered only if they enhance
the competitive advantage of the organization. Benefits of inventories are:
Time-based competition
Lead times can be decreased dramatically by holding inventories, but decrease flexibility and
increase cost. Dealing with uncertainty: Fluctuations in demand in B2C and trends and
seasonality in B2B make high uncertainty, which can be dealt with by holding stocks.
Avoiding shortages: When the cost of shortages is high, usually organisations protect to
shortages by holding inventory. Reducing dependence (decoupling): Where demand is
seasonal, or where there are bottlenecks, it may be economical to produce at a steady rate
and to stock.
Cost-Based competition
When it is cheap to buy or produce (or transport) in bigger quantities, inventories can be
useful to reduce costs.
Technological considerations
It can be useful to create inventories when set-up costs are so large that the capacity of the
machine in scope should be used to its maximum.
COST RELATED TO INVENTORIES
Inventory costs can be classified into capital cost; the cost of maintaining the inventory, as
well as the facility and equipment used for holding and handling, and missed interest.
Operational costs; costs of operating the systems, salaries, and costs of materials used for
inventories, and taxes etc. Costs related to risks; cost of insurances.
PARETO ANALYSIS (OR ABC)
The decision to hold inventory should be based on these costs and benefits. Different
inventories should be managed by proper models and governed by the right policies. A
common method for classifying inventory items (since not all are the same) is ABC or Pareto
Analysis. Type A: 20% of inventory is 80% percent of the value. Type B: 30% is 15% of the
value, and type c: 50% is about 5% of the value. Another way of using this is by the annual
usage value (AUV). The two-bin model manages type C items by using two bins that are
sended for refill when the first is emptied, and then the second is used.
INVENTORY MANAGEMENT MODELS AND THE ASSUMPTIONS ON WHICH THEY ARE
BASED
Inventory management models provide a recommendation for when to order an inventory
item and how much. These are based on assumptions such as dependencies between
inventory items, the number of inventory items managed simultaneously, uncertainty, and
optimality.
ECONOMIC ORDER QUANTITY MODEL (eoq detom)
Demand rate is known and constant, no shortages are allowed, lead time is constant and
known, cost per unit is constant and known, fixed cost per order is constant and known,
inventory holding cost is constant and known and costs per period are minimalized.
CH7 – SCHEDULING
INTRODUCTION
Operations scheduling comes after product/service quantities are determined and thus it
deals mainly with the time dimension of the given activities. Service processes apply mostly
to people, and the order of service is mostly first come first serve. Each scheduling model is
based on simplifying assumptions. Job shop scheduling provides a difficult combinatorial
problem, since products have unique routings. Gantt charts, flow time, due dates, and delays
(tardiness) are basic elements of machine scheduling. Possible goals are maximizing
completed jobs, minimizing flow time, minimizing process inventory, minimizing idle time, and
minimizing costs. Constraints are taken into scheduling, an important example is imposed by
the limited capacity of the job shops’ machines (for example; time needed>time available),
which results in a capacity constraint.
SINGLE MACHINE SCHEDULING
The simplest approach to scheduling is to focus on the single machine and schedule it
according to one simple (one parameter) or complex (multiple parameters) priority rule.
Simple priority rules: FIFO, LIFO, Earliest due date, Shortest processing time,
current job. Current job; Choose the next activity that uses similar items and processing to
minimize setup time.
Complex priority rules: Slack time remaining (STR); lowest difference between due
date and time required earlier. Critical ratio (CR); Lowest ratio (time required/due date)
earlier. Slack time remaining per operation (STR/OP); Lowest ratio (STR/number of
operations) earlier.
Scheduling strongly depends on the environment in which is scheduled.
SCHEDULING THE JOB SHOP
The job shop environment is suited to producing multitudes of different products, small job
shops can handle higher complexity and as the quantity gets bigger, multiple machines
which perform the same action are purchased and often clustered. Each job (group of
identical items) varies and usually a work order or route card is provided. Scheduling is a
decision regarding when each job shop machine specified in the work order routing will
process each job. The physical location of machines has an impact on the schedule. The
functional-oriented layout makes job scheduling hard since so many combinations are
possible. Ideally, scheduling is optimal, done by a mathematical model that considers all
circumstances. Due to the complexity of such models, this approach works only on relatively
small problems with a not so complex work order. Another approach is problem
decomposition, sorting multiple problems as one. The simplest approach to scheduling job
shops is to focus on the WIP of jobs in front of each machine, ignoring all other jobs. This
provides a simple but not so good solution. Priority rules can be tested by a simulation in a
certain environment. By decomposing the problem into several single-machine problems
simple priority rules can be used. Gantt charts can be used to visualize scheduling. See the
examples on 177-180. The assumptions made to schedule could be incorrect and influence
the outcome. In Goldratt’s theory of constraints (TOC) machine capacity is taken into
account. He developed Drum Buffer Rope DBR: a good schedule for the bottleneck is a good
schedule for the whole job. Everything in front should match the bottleneck, and everything
after should finish asap.
SCHEDULE CONTROL
Static means that all jobs in the period are ready to start processing, and no new jobs arrive
until all are finished. Deterministic means that there are no uncertainties. In real situations,
the scheduling is often dynamic and stochastic. To deal with this control systems were
created, which control the current situation via RFID and barcodes with the planned
schedule, and considers if corrective actions, like expediting (modification by management of
the planned schedule) are needed. A simple monitoring and control system is based on IP
inventory in front of a machine, when this gets to high it indicates a bottleneck and it should
be used in over time. Excessive bottleneck starvation (idle time of bottleneck) is another
indication of corrective actions.
FLOW SHOP SCHEDULING
Flow shops are based on clustering products sharing similar routing. Higher efficiency and
easier scheduling compensate for the limited flexibility. When the flow shop is processing a
few different products (still with the same routing) it is called a flow line. When all items are
the same, it is a production line. When a variety of different product models are assembled
on the same line, models for line balancing are used. Johnson Algorithm provides scheduling
for 2 machines (Explained in DETOM), it minimizes the time it takes to finish the entire task.
APPLYING THE JIT PHILOSOPHY IN SCHEDULING
In JIT material is pulled by the next operation only when it is needed to minimize IP
inventory. JIT focusses on reducing costs, maximizing value for customers, while minimizing
waste (no added-value). Waste can come from defective product quality, waste of
inventories, waste of space and material-handling waste. JIT scheduling rests on;
-
-
the reduction of setup time and setup cost of machines and equipment, which can be
realized by smaller transfer batches as processing batches. The effort to reduce
setup time is based on the method called single minute exchange of die (SMED).
Reduction of in-process inventory, by using Kanban cards (cards attached to
products with information, limited available) or reducing physical space.
Reduction of material-handling activities, by better layout, smaller transfer batches,
and good scheduling.
ILLUSTRATING THE KANBAN CARD SYSTEM
The Kanban system uses cards attached to the products: pull and production cards. The
following figure illustrates it where C uses products from A, and b is an inventory.
THEORY OF CONSTRAINTS AND THE DRUM BUGGER ROPE APPROACH TO
SCHEDULING
TOC says the ability to maximize production or profits is limited by a few constraints and
bottlenecks. Scheduling based on TOC uses these four steps and is called DBR:
1. Identify the constraints of capacity, defining bottlenecks.
2. Schedule bottlenecks to maximize the goals of the organization
3. Schedule all the resources that precede the bottleneck to make sure it is not idle
4. Schedule everything after to finish asap
SUPER SUMMARY
For job shop as well as for flow shops there are scheduling techniques. JIY scheduling and
TOC are important models.
CH9 – ENTERPRISE RESOURCE PLANNING
INTRODUCTION
ERP was born out of the first computerized materials requirement planning systems. First all
of the departments in an organization used their own software. Later came ERP which
combined this software. A well designed and implemented ERP system provides high-quality
data which makes employees able to make better and faster decisions. Many organizations
use ERP software nowadays. Modern ERP systems are designed to support the five basic
processes (See chapter 1).
FUNCTIONALITIES AND COMPONENTS OF ERP SYSTEMS
Most ERP systems contain multiple modules, only some of them are used by an
organization. They seek for the optimal combination. Typical modules are now discussed.
PRODUCTION MANAGEMENT
This module is used to plan and control the manufacturing activities of the company. It
contains BOMs, routings, work centers management, MPS, shop floor control, management
of production orders. ERP vendors produce specific modules from some companies with
specific needs, for example those with continuous production. The ERP models use
constantly gathered data to adjust production planning.
PROJECT MANAGEMENT
This module supports the planning, execution monitoring, and control of non-repetitive
undertakings or projects. It contains models for scheduling, resource management,
budgeting, risk management and portfolio management. All kinds of organizations (different
structures etc.) do projects, so an ERP must be able to handle all of these.
HUMAN RESOURCES
This module supports personnel management and its administration, including recruitment,
salaries, incentives, benefits and compensation management, personnel cost planning, HR
funds and position management and retirement pension plans. It contains work scheduling,
shift planning, time recording, time evaluations and incentive wages. The payroll component
is an important module, as well as training.
MATERIALS MANAGEMENT
This module provides information on the materials moved in, within and out of the
organization and the valuation of those. It supports tracking, controlling, and management of
materials. Lot-sizing and material consumption forecasting is often included, and it can
calculate of sorts of cost of production. Supplier modules can be integrated. Sometimes this
module is extended to outsourcing.
FINANCIAL MODULE
This module supports the management of money, provides information on financial events,
and figures and numbers on outbound, inbound etc.
ASSET MANAGEMENT MODULE
This module supports the management of fixed assets of the organization such as machines
and equipment. It includes depreciation (NL:afschrijving (het minder waard laten worden van
dingen in je bedrijf, om rekening te houden met slijtage)) and maintenance.
PLANT MAINTENANCE
This module supports the management of scheduled preventative maintenance, as well as
unscheduled breakdown maintenance.
QUALITY MANAGEMENT
This module supports the management of quality planning, quality assurance, and quality
control.
SALES AND DISTRIBUTION
This module helps the sales function in selling, shipping and billing products and services.
This helps in promising things to customers. It is closely connected with financial modules
and material management.
THE DATABASE AND THE MODEL BASE
Important components of the ERP systems are its model and database. It uses a single
database since this eliminates the change of duplication faults.
WORKFLOW MANAGEMENT (dit stuk is heel vaag en komt niet echt tot een punt)
Workflow management is a capability that many ERP systems possess. It enables
supporting processes, automatically advancing and controlling them without regard to interorganizational boundaries. Business processes are a collection of activities performed by
one or more employees from one or more organizational functions. ERP eliminates
boundaries between divisions. Processes can be sequential and linear, but also loops can
form. The management of all the sub-processes that can exist within an organization is
becoming increasingly complex. ERP helps in this situation. Workflow management systems
are designed to support the definition, administration, coordination, monitoring and control of
processes. Workflow management systems are used for planning, monitoring, and control of
processes especially when employees have to cooperate.
BUSINESS INTELLIGENCE
Business intelligence is used to perform non-routine, ad hoc analysis based on large
amounts of unstructured raw data that reside in different locations in the database, such as
an attempt to make a customer profile from very much data.
Data mining
The availability of ERP system single database presents an opportunity to search for
seemingly unrelated data items and to see whether there are patterns from which useful
information can be retrieved to support decision-making. The goal of data mining is the
extraction of patterns and knowledge from the data in the ERP database. For success, there
must be very much data.
PROCESS DESIGN AND REENGINEERING
Some ERP packages come with built-in templates of business processes, that represent a
competitive business model or best practice. Careful examination of such templated is
important as the adoption of a process template that does not fit the strategy, environment
and culture of the organization may lead to a failure. These best practices differ per ERP
producer, so some ERP systems are more suitable for certain organizations. As a result,
organizations combine different modules from different systems (“best breed”), and others
invest in to redesign of their processes to make it fit; business process reengineering.
Diagrams can help in understanding the process flow, and the relationship between the
participants in the process. Flowcharts use a variety of symbols to symbolize a variety of
activities. A technique commonly used in BPR is benchmarking.
ERP IMPLEMENTATION PROJECTS
Industrial engineers often lead ERP implementation projects. Such projects are risky and
difficult, and the stakes are high as they touch every aspect of the organization. See for
some good examples of failures (not highly necessary) page 234.
Success factors in implementation are listening to the stakeholders, developing a good and
agreed on plan, selecting the right project manager, risk management (and afterwards
decide what to do with these risks), process reengineering, customization, user training,
testing, and the role of industrial engineers in ERP projects.
CH10 – HUMAN FACTOR
INTRODUCTION
The work environment of employees consists of physical aspects, functional aspects,
organizational aspects, and compensation aspects. To answer questions on these aspects
industrial engineers need to know about anthropometry and ergonomics, work design and
work measurement, organizational structures, work analysis and methods design, and
remuneration and incentive systems.
HISTORY
Interest in the human factor arose when workers began to respond to their distress after the
industrialization. Taylor developed scientific management and researched motivation. Then
people were mostly interested in the lower levels of the Maslow pyramid, nowadays also the
higher needs are important. Ergonomics developed. Besides Taylor’s theorems other
theories were developed as well. Herzberg suggested dividing the environmental factors in
hygienic factors and motivating factors. Other approaches are based on human relations
analysis, which say that the work environment needs to be planned and social needs should
be considered. This led to O&M and HRM. HRM and other managerial philosophies were
started after the Hawthorne studies. It also laid the foundation for a new scientific discipline,
organizational behavior. Meanwhile in Japan Toyota developed JIT and other philosophies.
Industrial engineers try using human capabilities by optimizing the environment for these. A
combination of the various aspects of the human factor is essential for efficient human
performance in the workplace.
ERGONOMICS
The science of ergonomics is the practice of designing/planning workers’ work environment
while considering the relevant abilities and limitations of working in such an environment. It
addresses anatomical, physiological and psychological aspects. Worker performance is
improved, health is protected and output, productivity and satisfaction are increased. Safety
is the most important. Next up is anatomical factors, that can be divided into anthropometry
(body’s measurements matching tools) and biomechanics (force exertion of body).
Physiological factors can be divided into the physiology of effort (studies the human body to
produce energy) and industrial physiology (studies influence of the work env. on the body).
Industrial engineering enables workers to carry out decisions in motoric (manual labor,
physiological aspects of body) and cognitive tasks (office work, thinking).
MOTORIC TASKS
Specialization in motoric tasks requires developing work expertise through practice,
repetition, and improvement of the work method. Cumulative Trauma Disorder is a known
chronic disease caused by motion repetitiveness.
BODY POSTURE
Some usual body postures can do serious harm to the body when repeated often. This can
be encountered by designing a good environment to work in.
ACCES AND SPACE DESIGN
Aside from focusing on work postures, ergonomists who design workstations must consider
clearance and reach design. The problem of lack of space etc. can be solved by designing
for very small and large persons.
ANTHROPOMETRY
Ergonomic design of tools, workstations, equipment, and control panels is based on
knowledge of the human body’s abilities and limitations. It is very important to design
workstations that are suitable for the great variance between workers.
WORKLOAD LIFTING AND EXERTION IN THE WORKPLACE
Fatigue in the workplace is caused by excessive workload and is counterproductive, a source
of safety risk, and decreases awareness. National body’s and governments make laws to
ensure that not to heavy things are lifted etc. The recommended weight limit and lifting index
are examples of that.
WORKPLACE ENVIRONMENTAL FACTORS
Noise
Workplaces are designed to minimize dBA (noise) to
protect of damage to the ears. For this there are limits
made by governments. See the formula to the right.
Light
To promote task efficiency and visual comfort,
illumination should be good, as well as circumstances
of the light as evenness.
Temperature
Ventilation
SPECIALIZATION AND THE DEVELOPMENT OF WORKERS’ MEDICAL PROBLEMS
Specialization based work often involves frequent repetition of the same action which can
lead to CTD (RSI). This is bad and the design of workplaces should be adapted to it.
DESIGN FLEXIBILITY
It is important to make sure that the design is flexible and enables simple adjustment for
each worker, as well as to establish mandatory breaks that will enable the worker’s body to
recover.
COGNITIVE TASKS
Cognitive tasks include mental processes such as perception, information processing, etc.
Many cognitive models handle processes such as information processing, situation
evaluation, decision making and planning. They refer to the characteristics of cognitive tasks.
Examples are the human information-processing model (Wickens, focuses on how humans
process information), the action-cycle model (Norman, examines how people reach their
goals while using external world feedback), and the skill, rule and knowledge-based model
(Rasmussen, assumes that control and performance are a function of hierarchic cognitive
control system that operates on the mentioned three levels). The first is useful for how the
workplace should be designed, the second is useful when there is uncertainty, and the third
makes clear that the design of the task and the work environment should be adjusted to all
cognitive levels.
COMPLEX COGNITIVE SYSTEMS: DIAGNOSIS AND DECISION MAKING
Analysis that is dedicated to characterizing a system’s status and finding the root cause for it
is called diagnosis. Decision making is a situation in which a person has to decide on a
course of action. Computerized support spares time on simple decisions and it makes it
easier to make higher level decisions. Expert systems give all the possible answers but let
humans make the final decision.
KEY ELEMENTS IN WORK ENVIRONMENT DESIGN
Designing one uniform method for work environment design is undoable. Each computer
interface must be adjusted to the types of jobs and the users (new, partially skilled, expert)
intended to work on that particular system.
NIELSEN’S TEN PRINCIPLES FOR DESIGNING A CONVENIENT SYSTEM
10 principles for designing interfaces for an interactive system.
1. System status visibility
2. Compatibility between the system and the real world
3. The user’s command of the application
4. Consistency and standards
5. Error prevention
6. Flexibility and efficiency of use
7. Aesthetics and minimal design
8. Identifying and correcting errors
9. Help and documentation
10. Visibility
HUMAN RESOURCE MANAGEMENT
Human resource management is a discipline that entail preparing the human resource for
work, operating it, and maintaining it.
Job design
The process of determining the activities to be performed in the context of each job and of
defining the performance method, knowledge, data and tools required to perform.
Basic terms
Task, Work, Job, Job design
Approaches to job design
- The mechanistic job-design approach views humans as machines
- The perceptual-motor approach emphasizes needs but also simplifies tasks
- The biological approach emphasizes biological needs
- The motivational approach emphasizes social and emotional needs
Job design strategies
Job enrichment (add important responsibility, based on skill variety, significance, identity,
autonomy, feedback), Job enlargement (more activities), Job rotation.
Job evaluation
A process intended to determine the relative contribution of various jobs to the organization
and accordingly determine the compensation and reward system. The main objective of job
evaluation is to maintain internal consistency in the organization so that workers with
identical jobs receive similar pay.
- Ranking method; ranks to importance
o Simple ranking; ranked to contribution
o Alternation ranking; first most important then less important so on
o Paired comparison; compares pairs
- Classification method; creates occupational categories and classifies jobs according
to these categories.
- Criteria comparison method; ranks jobs according to predetermined criteria
- Point-factor rating method; criteria, grades, and weights
- Single factor systems; single criterion, like TSD and decision banding
Job evaluation should be fair. In order to establish this, computer systems like JESS were
developed. Expert systems can also be used. Besides Job value, market-based pay
systems, knowledge-based pay systems and skill-based pay systems are used.
Introducing a Job evaluation system into the organization
What system will be used, who will use it and for what will the system be used are important
decisions. Evaluators should then be trained and it should be tested.
CH 11 – INTRODUCTION TO SUPPLY CHAIN MANAGEMENT (SCM)
INTRODUCTION
Procurement (Dutch: Inkoop) is different between big companies since they are willing to pay
for having a reliable source, and this leads to strategic partnerships. The customary term for
a system of organizations that sell and purchase from one another is a supply chain. They
have one objective. Optimal SCM is a major issue in many industries because of the
importance of creating an efficient and economical flow of products and services. SCM
entails risk management and requires knowledge on many surfaces.
BACKGROUND: TERMS, DEFINITIONS AND HISTORIC OVERVIEW
What is a supply chain?
Intuitive description of the term supply chain
The transition from raw material to the finished product that reaches the end consumer is a
supply chain. Inventory and transport management are major components in SCM, and so
computers (communication) is. Software is developed for SCM.
Terms and Definitions
Supply Chain
A supply chain is a system of organizations, people, activities, information and resources that
are involved in the transfer of a product or service from a supplier to a customer. 2 other
definitions are given in the book.
Supply Chain Management
A supply chain is a group of organizations directly connected in at least one back-and-forth
flow of products, or services, or funds or information from a source to a customer. SCM
entails setting goals and priorities, supervising the transition from the design of the supply
chain to the supply chain operation and deciding how to use various resources to obtain the
goals of such a chain. 7 other definitions are given in the book.
Supply network
A wide supply chain.
Lean management
An approach that primarily fosters efficient operations without spending a significant amount
of money.
Supply chain events management
Considers all the events and factors that may disrupt the supply chain.
Software for SCEM entails monitoring, notification, simulation, control and measurement.
Extended enterprise
Partner suppliers and companies of a company.
Historical development of the term SCM
Vertical integration
Name used a while ago for supply chains. A company performs activities along the product
supply chain. A number of phases are carried out by the same organization. Horizontal
integration refers to a situation in which an organization focuses on one process or area that
may serve several supply chains.
Creation of the area of supply chains
Japanese organizations showed the importance and success of management of inventory
and transportation along the supply chain.
Information integration era
Information nowadays begins to flow through the organization, that’s a new thing: the
integration of information. This started with the development of Electronic Data Interchange
systems (EDI) and Enterprise Resource Planning (ERP). Issues in this are more related to
trust.
Supply chain maturity
Level 1; manufacturing, storage, distribution and material control systems (hereafter:
MSDMCS) that are not interconnected.
- Level 2; MSDMCS are integrated under one program connected to the ERP of
various organizations along the chain.
- Level 3; Fully integrated with information.
Globalization Era
Significant numbers of organizations begin to integrate flobal sources in their core business.
Specialization in core fields and SCM outsourcing
Expert organizations are doing SCM for some companies. This trend can be divided into:
- Level 1 Specialization: Outsourcing Transportation and Distribution
- Level 2 Specialization: SCM as a service: totally outsourced
SCM in Shared Platforms and Portals
The next phase entailed the creation of collaborative platforms that connect buyers and
suppliers across the supply chain. Sometimes these platforms are also connected to financial
institutes. A system developed for this was SCM 2.0.
-
SUPPLY CHAIN CHARACTERISTICS
Major Roles of Supply Chain organizations
Supply chains consist of organizations which can have different roles:
- Manufacturers of raw materials
- Component manufacturers
- Manufacturers of subassemblies and assemblies
- Intermediary suppliers
- Finished product manufacturers (final assembly)
- Distributors
- Sale agencies
- Wholesalers
- Retailers
- End users
Every link involves inventory, transport, product reception, and post-reception storage.
Several roles can be part of multiple supply chains.
Bullwhip Effect
Small changes in end users’ consumption are expressed as larger
fluctuations that grow and become larger along the chain, as they
approach the raw material manufacturers, because of a delay in
information which make them unaware of the decrease that is
already happening again. 10 main factors:
1. Diverse methods of forecasting
2. Order and batching policies
3. Fluctuation in product pricing
4. Demand manipulations
5. Supply lead time duration
6. Lack of transparency
7. Too many links
8. Local optimization
9. Fear of shortage
10. Lack of learning and training
Advantage of integrated chain management: cost reduction and bullwhip effect
eradication
One of the reasons for improved performance is increased sharing of information. Also
synergy is involved, and MPS based on all links improves performance too.
SCM has the following effect on the 10 factors of the Bullwhip effect:
1. Forecast mistakes are avoided
2. Batch sizes are reduced by integrated information
3. Better understanding
4. Understand demand fluctuations by demand manipulations
5. Supply synchronization
6. Better transparency
7. Better communication between links
8. Enables global optimization
9. Information sharing reduces the odds of shortage
10. Learning is more likely.
MAJOR CHARACTERISTICS AND CONSIDERATIONS IN SUPPLY CHAIN PLANNING
- What should be the nature and characteristics of supply chain information systems?
Inter-organizational, and widely shared.
- How to determine and implement information sources, quality and sharing?
New sources are developed, quality should be high sharing is good.
- What to manufacture and what to purchase in each link of the chain?
Supply chain planning entails finding the right answer what to buy.
- What are the components of the chain (or what are the links?)?
It is important to also know the quality of suppliers’ suppliers.
- What is the structure of engagement with suppliers?
Long or short term.
These discussions make SCM complex.
TYPES OF CONTRACTS AND ENGAGEMENTS
Selecting the right supplier engagement is very important. After deciding to purchase good, a
supplier should be chosen.
Short-term engagements
The simplest form is commercial off-the-shelf, which is nothing more as going to a store and
buying something for your country, also called B2B, business to business purchases. For
outsourcing a project, purchasing items and not stored items, a tender sends out an request
for proposal RFP (Dutch: openbare aanbesteding). The best reaction from suppliers is
chosen and signed. Short-term engagements facilitate competition, but it doesn’t have
commitment and low guarantee.
Long-term engagements
These are often seen as strategic partnerships. It can be based on details, or on a framework
contract. Trust and commitment are created.
Management of supply contracts
Uncertainty factors should be contained in contracts. Flexibility mechanisms and insurances
should be contained.
INFORMATION AND ITS IMPORTANCE (vanaf hier is H11 echt heel vaag, heb er het beste
van proberen te maken)
Value of information in supply chains
Information on inventory through the supply chain can be very important, since it can
eradicate the bullwhip effect and a more efficient and stable flow of inventory and product
may be planned. The information can be wrong due to inventory shrinkage, incorrect product
location and incorrect product scanning. To prevent this from happening, the quality of
inventory data should be improved through technology, such as new barcode readers.
Information technology in supply chains
Information collection systems translate physical, financial and economic transactions into
information entered into the system. The development of new techniques has made the
processing of such data much more efficient and of higher quality. Databases store
information, and these also have experienced much development recently. Analytical
programs in the model base analyze data from the bases to plan, make decisions and
monitor developments. The software used in SCM has developed much over the years, they
now contain model that support decision making. The usage of cloud services is very new.
They are often provided as software as a service products, by application service providers
(ASPs). Information standardization is becoming more important, there is a growing trend in
sharing information and internet-based platforms are replacing other databases.
Use of information
Helo and Szekely classify SCM programs according to type of use of information:
Warehouse management systems, Transport management systems, ERP, Acquisition
procurement and inventory management programs, and Enterprise application integration.
Information is mainly used in decision making. Here the difference between external and
internal information is important. External information can significantly improve supply chain
performance. Information about suppliers and customers’ manufacturing plans, including
their actual supply, can reduce uncertainty. It is a real challenge to make all the links share
their information, they only will if they will gain profit from this.
DESIGNING THE SUPPLY CHAIN
Choosing the participants
When choosing it suppliers, organizations will focus on to what type of end customer they will
deliver, and it will choose its suppliers according to that identity. Sometimes a link is
dominant, for example when a link wants to obtain certain certificates, like hallal or kosher
food, the other links should adapt to these new requirements. Single organizations will
choose their suppliers on considerations of cost, quality, flexibility and supply times, but also
other factors will influence the choice, as described in chapter 6 ((2) selecting the right
supplier). The organization may also consider the risks involved in working with a certain
supplier, as well as its ability to protect itself against these risks. Links can choose for
themselves if these use more links in the supply chain or want to distribute themselves, for
example. Many and varied alternatives are available for choosing the participants in the
chain. Companies like distributors are third party logistics (3PL).
Selection of Information system
The selection of the information system is a derivative of cost-benefit analysis. A company
will choose the information systems best suited to its needs. Sometimes they influence or
persuade suppliers to use the same system. The choice includes the information collection
systems, and databases, the model base and the system and systems like MRP and ERP.
Typical functionalities associated with the information system supply chain include
forecasting, inventory management, purchase management, warehouse management and
supplier management. The benefit that can be gained from a system is hard to calculate, but
is often expressed as the benefit: the improvement achieved by the implementation of a
certain information system. Usage of cloud platforms produces uniformity and access to the
information.
Design considerations and tools
The design of the supply chain is a process of choosing between alternatives. The choices
made are based on the participants, locations, roles, facilities, equipment and models to be
used. It is based on cost, time, quality and flexibility considerations, and the ability to cope
with uncertainty and its related risks.
Cost considerations include the fixed costs of building the system, and variable costs for
operating the system.
Time considerations are a major factor in supply chain design, for example on transportation.
Quality considerations are very important and usually divided into establishing connections,
the quality of supply processes and the quality of the products themselves.
Flexibility considerations considers the ability to cope with changing market requirements.
The uncertainty factor and its risks are important; risks are identified, reduced or prevented,
and contingency plans are prepared.
SUPPLY CHAIN MONITORING AND CONTROL
Objectives and constraints
The main supply chain objectives are:
Reducing costs; Costs can be lowered in separate single organizations, but also the overall
cost can be lowered, by lowering the inventory cost through the sharing of information
Shortening supply times; Inventories can lower supply times. Just like there are batch sizing
and reorder-models for single organizations, there are too for the supply chain, such as the
transshipments model, that connects links that have shortages with those that have
surpluses.
Increasing quality; the quality of goods or services supplied by the supply chain has an effect
on demand, as does the quality of the supply process itself. In most supply chains, there is a
direct connection between the levels of quality of the various links because it is impossible to
assemble a high standard product from low-quality products that were supplied.
Increasing flexibility; The flexibility of the supply chain can be defined and measured in
different ways, it can be for example in the time it takes to make a change in the structure, in
the quantity or in the supply time. Since it impacts demand, flexibility is often increased to the
associated supply chain constraints.
These are general objectives of a supply chain, but some have different ones, like those
reacting to nature disasters. For the purpose of comparison Beamon notes several objectives
for supply chain management: financial objectives, objectives related to availability to
customer, efficiency-related objectives, flexibility-related objectives, and quality related
objectives. Constraints can be divided into local constraints of a link in the chain like limited
production per time, and constraints to the supply chain as a whole like the limited time for
preservation of food. There are also constraints coming from outside the chain, such as
regulations.
Long-term and Short-term decisions
Supply chains are mostly long term engagements. The design consists of long-term decision
such as big investments. After carrying out these decisions, the supply chain should be
managed efficiently, in which there are two types of short term decisions: routine repetitive
decisions (like batch sizing) and one-time decisions (for a particular case, can affect both
short and long-term). There are information systems that include all these kinds of decisions.
Supply chain performance control and monitoring
Any supply chain meets uncertainty and related risks. Risk management can make less
uncertainty. The supply chain operations reference (SCOR) model serves sometimes for
monitoring and control. This model focuses on planning, sourcing, manufacturing and
distribution. Monitoring is carried out by ongoing collection of information about actual activity
and the outcomes of actions. Control is (later) carried out by making corrective action
decisions and the implementation of these. The quality control system consists of the
definition of the relevant quality requirements and performance indicators, (translating goals
into performance indicators), quality assurance, and quality control.
CH 12 – INTRODUCTION TO SERVICE ENIGNEERING
INTRODUCTION
Services are defined as handling customers, or as the benefit derived by the customer while
receiving service, or simply as work performed for the customer, and are non-storable and
intangible. Often outsourced projects are services for the client, which can have tangible
results. Many services are also related to the provision of products. Seven general
characteristics of service processes are; everyone knows service (1), characteristics are
situation dependent (2), the dimensions of product quality or work quality are not equal to the
dimensions of service quality (3), they often offer a service pack that includes intangible and
tangible products and components (4), close and intensive contact with the customer (5),
service management requires marketing, HRM, and OM (6), encounters must be managed in
the best way (7). Service systems integrate technology and organizational networks
designed to provide services that meet customers’ needs, desires and expectations. The
level of demand for services is uncertain. Things as simply displaying and selling products
are already a service. Service management consists of the customers, the infrastructure
(roads, storehouses, telephone linkages), and management and operation processes. The
customer experience must be managed. An additional key to success of service processes is
service-minded HRM, understanding the environment and proper risk management. Viewing
the customer as the center and building a positive customer experience is the main objective.
Customer experience includes both measurable and not measurable components.
SERVICE PROCESSES
General Characteristics of service processes
Service process focuses on delivering services to end customers (organizations and
customers), and the purpose is to provide value and to satisfy them against a reasonable
profit. Impressions are linked to previous experiences, which are linked to levels of service.
The improvement of more costs and efforts decrease as the service level increases. There
are also factors that influence the level of service but are not related to cost etc., as
friendliness and attention. Service engineering facilitates taking care of all service aspects,
including the financial aspect. Financial decisions in a service system are usually related to
the capacity, which is critical for experience but comes at high cost. Waiting in line harms the
company’s reputation and therefore it is very costly. Capacity cost grow with expansion of
capacity. There is a balance point at which the
service capacity is optimal in the sense that the
total cost mentioned above are minimal. If you do
not understand the graph to the right well, read
page 342 and 343, it is important. The bad
measurability and lack of direct connection
between waiting time and capacity make it hard to
calculate the actual costs. The randomness of the
quantity of arrivals per time unit as well as the
service times can be predicted by estimating the
expectancy as a central indicator and the standard
deviation as a dispersion indicator. Service processes differentiate form manufacturing on:
The extent of customer contact
Service has much contact, especially when service is non-standard. Mining for example is
not a service since it is away from the customer.
Service pack
A service pack includes all the tangible things, points of contact, and time of the “producer”.
In CH5 8 characteristics of quality of products and services are described, to with the
environment, the waiting time, level of friendliness and courtesy, and the professionalism can
be added uniquely for services. It contains measurable and unmeasurable components.
Customer experience
The customer experience is the way in which the customers perceive all their interfaces with
the service system in relation to their needs and expectations. A key component is the wait
time. To manage all interfaces organizations have adopted customer experience systems;
customer experience management (CEM). It consists of building a platform of the desired
experience and the value of the service pack for the customers, analyzing the customer
experience, designing the brand experience, building the customer interface and ongoing
renewals and improvement of the experience. It is also important to understand the
experience of providers. Many companies use customer relationship management (CRM),
which document all the information and assist in keeping in touch. This cannot fully replace
CEM.
Response time Limitation (Availability)
Services cannot be held in stock and that limits the availability, which is the percentage of
time that the system can immediately accept and service customers. Efficiency is measured
by the percentage of time during which the system provides the service. Too high efficiency
would cause long waiting times so 90% is better as 100%.
Demand randomness
The demand for services and the time needed for a service cannot be accurately predicted.
Standard deviation can also be used in forecasting.
Demand dynamism
Service demand is sometimes dynamic and changes over time.
Level of service
The level of service is the indicator that characterizes the quality of service and often refers
to the target level. Methods of measuring level of service (in for example call centers) are the
average wait time, abandon rate, average handling time, and the first call resolution. Every
level of service depends on determining a reference point, which can include a scale and a
minimal performance level besides a performance goal.
CLASSIFICATION OF SERVICE SYSTEMS
Major Service processes common to most types of service systems
Arrival of customers/orders
These can be uncertain, static, or dynamic.
Customer acceptance
This is the first interaction, and not all the arrivals may enter the service.
Provision of core service
The core service is the service on which the organization focusses, and this is often
composed of a bundle of complementing services.
Support process
This is a process that facilitates handling malfunctions, complaints and unusual requests.
Data from support processes helps to analyze the quality of services.
Control process
The control process involves monitoring service reliability and customer satisfaction.
Classifying service processes by type of service-provider/customer
Type of service provider
Public service: These are publicly owned services whose purpose is to provide the service
under a limited budget. (Government hospitals)
Business service: Business service aims to increase the organization’s profit while
maintaining a high level of service. (Insurance companies)
Type of customers
Service for organizations and business customers: The customers are various businesses,
the service is provided to representatives. (Big telecommunications companies)
Service for private customers: Service for end users. (Restaurant)
Classification of service systems by industrial sector
It is customary to classify services by their industrial sector. There are many of these and all
will have different characteristics between industries, and within industries under other
circumstances.
KEY CHARACTERISTICS AND CONSIDERATIONS IN DESIGNING SERVICE SYSTEMS
The planning and design of service systems must take customers in consideration. Therefore
it is important to segment the market and to analyze the audience. Planning is a process in
which the vision of an optimal service lead to strategic planning which leads to operational
planning. 7 characteristics of a well-designed service system are; the service components
are integrated, the system is user friendly, the system is sufficiently flexible and resistant to
malfunctions, the system allows the service to be performed consistently, easily and at high
level, service is strongly and efficiently linked to support, the quality and contribution are
obvious, the system is characterized by efficiency and low cost relative to its performance. 6
strategic decisions in the context of designing service are the level of customer care, service
speed and convenience, service cost, variety of services, quality of service system’s physical
components, and specials skills for providing high-level services. A big part of strategy is
related to culture and training. Service organizations emphasize 10 considerations; service
accessibility and availability, thoughtfulness and openness towards providers, leadership on
quality, listening to customers, quality of the physical components, manner of handling
malfunctions, competitive service level, value of service quality, consistency in meeting
customer needs, and guidance and instruction. The system also includes the following
dimensions:
Service demand forecasting
Demand is forecasted in different ways to provide as much service possible.
Level of service
As described above.
Service location design
Location can be important when real encounters have to be made, but also when this is not
the case, but for some other geographical factors.
Determining the number of employees who provide the service
Determining how many employees are needed is closely related to demand forecasting and
the average service pace. The percentage of time in which the providers are actually busy is
called capacity utilization.
Designing the number of waiting positions in the queue
It is beneficial only to add waiting positions when the benefit derived from adding a waiting
position exceed its cost.
Ergonomic and esthetic design of the waiting system and the service system
This design is connected to regulations and the customer experience.
Customer service design
Customers prefer to interact with a human being when they are being helped.
Maintenance and repair systems
Can be outsourced.
In-house repairs
A lot of service providing companies are dependent on the proper function of nonhuman
resources. These can have failures which can be solved with maintenance. Preventative
maintenance is easier to plan and more certain as malfunction repair. Statistical tools, like
mean time between failure (MTBF) can be used to describe the frequency. The mean time to
repair (MTTR). The machine is active during: MTBF/(MTBF+MTTR).
Repairs at customer’s home or at a customer service lab
Planning repair service at the customer’s house requires taking into account labor that is
both mobile and professional, equipment that is reliable and mobile, and inventory of parts
for replacement. Lab service requires evaluation of the labor needed to reduce wait times
below a reasonable threshold, forecasting the quantity and duration of malfunctions.
Planning customer satisfaction surveys
Customer satisfaction surveys or service surveys aim at identifying the customer’s demands
and requirements, listening to and handling complaints if any, and seeking solutions that will
improve the customer experience. A famous questionnaire is SERVQUAL, which uses 22
questions on reliability, assurance, tangibles, empathy, and responsiveness.
Service arrival processes
Every service includes customer arrival processes and customer departure processes. The
processes involved in customer arrival at the place of service are known in statistics and
operations research as birth processes, and departure as death processes. The process of
arrival is characterized by;
The size of the arriving population
Finite: a small and finite population in which the arrival of the first customers has impact on
the probability of a second customer.
Infinite: an infinite population with no impact between customers.
Type of arrival
Individual: separately
Groups/units: in groups
Waiting positions
Blocked: A limited number of waiting positions, and when all waiting positions are taken,
customers will leave.
Unblocked: An unlimited number of positions and all that arrive will join.
Staying/patience
Everyone could stay, some could leave after a time, and some leave immediately.
Time between arrivals
The time can be fixed, random with no dependency, and random with some dependency.
Often circumstances are simplified.
Arrival processes that change over time
Many service processes are characterized by arrival paces that change over time.
Characterizing the arrival pace expectancy is very important for preparation and for
determining the required human resources. The sum of arrivals is the sum of all arrivals, the
expectancy of the sum of arrivals is the sum of the time periods multiplied by their respective
pace expectancy. It is important to divide into time frames, like days or weeks. The time
frame is usually characterized by a cycle, of which the total demand is usually influence by
hourly, weekly, monthly and seasonal cycles.
Introduction to queuing systems
Queues are typical of most service systems and constitute an important component of
service quality. Queues often originate from differences in arrivals and service times.
Queuing theory describes the probability distribution of queue length and various parameters
of a queuing system for various queuing system types as well as for a network of queues. It
is interesting to calculate the expectancy of the wait time, queue length, and the time in
which service personal is busy (load). See page 367 for examples of information from
queueing theory. A queuing system includes customers, service personnel, a queue regime,
the queue capacity, and the system structure.
Kendall’s standard queue notation
This is the standard system used to describe and classify simple (=one sequential waiting
line) queuing systems. It describes them as A/S/c
A – describes the arrival process
S – describes the service process
c – the number of servers
For A and S the following can be filled in:
M – Memoryless Markovian (any independent process)
D – Deterministic times
E k – Erlang distribution with k stages
G – General distribution (could be anything)
A description could be for example M/M/1 (A=M/S=M/c=1)
Later on the following were added:
K – number of waiting positions
N – population size
D – queuing discipline (possible options in figure 12.20)
The notation is now A/S/c/K/N/D
MAIN SERVICE DISCIPLINES (D in Kendall)
FCFS: Service is given in the order of arrival.
LCFS: Service is given in the reversed order of arrival.
SPT: The customer with the shortest service duration is served first.
LPT: The customer with the longest service duration is served first
SIRO: Service is in random order
URGENCY: The most urgent customer is next up
GENERAL DISCIPLINE: This is a notation for a general queue without discipline
Preemption or not: When preemption happens the current in process customer is
ejected to make place for the preferred one.
SERVICE SYSTEM SIMULATION
Since there can be many characteristics that complicate analysis of a queue, it is customary
to use simulations in order to analyze complex service systems. This often uses simulation.
What is simulation?
Simulation is a tool that can assist in building a model that mimics the operation of an actual
system. A model is a partial description of reality built for a specific purpose, while
disregarding aspects that are irrelevant or complicated with respect to the description of
reality. Simulation mimics the behavior of a system and therefore often makes it possible to
learn about the system and its traits, behavior and responses to various scenarios. Model
validation is designed to ensure that the model is producing correct predictions and the
factors that were disregarded or filtered while building the model do not cause the model to
deviate.
Advantages:
- Can analyze complex systems
- Can include any constraints
- Time can be “shrunk”
- Perform scenario analysis
- Not integrated in actual situation, so
there is no disturbance
Disadvantages
- Much time needed to make one
- Does not provide an optimal solution
- Quality depends on how well it is
built
- Not implementable into another
system
Major types of simulation
Industrial engineers usually use simulation for making decision in times of uncertainty.
The following picture is explained on pages 373 to 375, but if you understand, this is not
necessary to read.
Monte Carlo simulation
The Monte Carlo method is based on generating random numbers to integrate uncertainty in
simulation. The Monte Carlo simulation is a problem-solving method that selects numbers
that are randomly scattered in a range between 0 and 1 so that it is equally probably that any
value between 0 and 1 will be selected.
Discrete event simulation programs
There are complex and random systems whose behavior cannot be modeled without
simulation. Most service systems are discrete: the program progresses from one event to the
next in a sequential and calculated manner. These programs, like GPSS, GASP, and
SIMSCRIPT often use (1) Monte Carlo, (2) branching junctions, (3) servers or machines, and
(4) logic for modeling various phenomena. New discrete simulation models are ARENA,
ExtendSim, Promodel, SAS simulation studio, SimEvent, and SIMUL8. The simulation
programs facilitate the analysis of complex models and are very flexible and enable building
a model for nearly all types of queues and queuing networks. The flow and logic of ARENA
are as follows: 12.24 shows how it works, 12.25 shows a still at a certain point in time, and
12.26 shows and animation discrete event simulation programs often make.
Important characteristics of discrete simulation programs
On pages 379 and 380 are 17 important points which are totally obvious, just look at them.
CUSTOMER PATIENCE: LEVEL OF SERVICE
Level of service
The level of service usually assesses the level of performance and availability of the
promised service. In callcenters measures for these are the average waiting time, average
holding time, average speed of answer, first call resolution, threshold service frequency
(percentage of customers waiting less as a predetermined value) and abandon rate. In
inventory management there are two versions for measuring the level of service: Level 1;
uses alpha for the percentage of cycles during which there is no shortage, and level 2; uses
beta for the percentage of deliveries straight from inventory.
Customer patience
People are impatient and when they are served this has multiple positive effects. Impatient
customers are the ones that disrupt the system and cause problems and losses, which can
be expressed in giving up in advance, abandoning after a wait, complaints while queuing,
avoiding the place next time, and damaging reputation by giving it a bad name. Therefore,
investments should be made to decrease waiting times.
GENERAL APPROACH TO PLANNING NUMBER OF SERVICE PERSONNEL
Rush hours and their importance
Rush hours are the hours in which the most customers arrive, and it is usually very advisable
to plan human resources and system service capacity for rush hours.
The term utilization and its connection to wait time expectancy
Utilization is a measure of the percentage of time in which the service providers are busy.
The percentage of time in which the service providers are busy is the ratio between the
arrival rate and the service rate.
As utilization approaches 100%, waiting time approaches infinity.
Additional methods of reducing service time
In addition to having more personnel at work, the following can improve service pace and
quality: Training, time slotting, call routing systems, dynamic labor allocation, demand
regulation, offline service, complete offline service, use of internet and self-service.
FEEDBACK: CUSTOMER SATISFACTION SURVEYS
Without customer feedback, the quality of service cannot be measure and improved.
Feedback is a critical stage of service and closes the feedback loop between the service
providers and the customers. The accepted feedback method in service systems is to
conduct customer satisfaction surveys. This is often used because customers will not come
to the company on their own initiative. This should be done periodically. When the perception
of the product, the service, and the relationship exceeds expectations, customer satisfaction
is high and the organization is competitive. We classify the satisfaction surveys according to
surveys about service processes and surveys about products. Examples of both can be
found on page 386 and 387. It is customary to rank customers’ responses on a five-point
Likert scale (1 = poor, 2 = fair etc.). It is important to validate responses. The roles of CSS
are to measure the relative importance of each topic, examining customers’ satisfaction
regarding each topic. Surveys can be conducted on a focus group, with customers at the
place of service, a phone survey, on email, and by mail.