Deenbandhu Chhotu Ram University of Science and
Technology, Murthal Sonipat, Haryana (131039)
Industrial engineering
Amit Kumar Patel
17001004012
Assignment-II
Q. 1- Explain the following in brief;
a) Forecasting and its role in decision making.
b) Aggregate planning and master production schedule.
c) Gantt Chart
Ans- a) Forecasting and its role in decision
making:Forecasting: shift from probabilities to possibilities
Change is a hallmark of contact center strategic planning (without this, strategic planning would be
unnecessary). But the kind of change that the contact center industry has typically encountered has
been that which is somewhat slow and predictable. Contact center forecasting has always been
successful because performance drivers like contact volumes and agent attrition, and all the other
performance drivers that influence our plans, were predictable.
The current business environment has flipped this notion on its head. The speed and extent of
change for many industries has rendered the traditional statistical models and methodologies used
for forecasting out of date. This is a statistician’s nightmare: forecasting methodologies don’t work,
because history is no longer a guide. Forecasters have always been able to rely on historical
seasonality and trends as a guidepost, but these aids no longer work. In this environment, one might
be tempted to blame the forecasting analyst for their forecasting error and to declare strategic
planning a thing of the past. After all, if you cannot forecast accurately, you cannot plan accurately.
But the opposite is actually true. In the absence of a solid and believable forecast, strategic planning
becomes both more difficult and a thousand times more important.
Why is this? It is because with unprecedented business change comes unprecedented business risk.
With a robust, quick, and accurate planning process, business risk is quantifiable and the planning
process can help alleviate operational and financial risk. This requires the contact center forecasting
function to change its strategy. Instead of using forecasting technologies to determine the scenario
most likely to occur, the forecasting technologies, along with some sound and experienced
judgment, should be utilized to determine the ranges of possible scenarios, and their approximate
likelihood. In the past, our focus has always been around a single volume forecast, but this is now no
longer possible. We must plan for all contingencies, and make our resource decisions based upon
the expected repercussions of each staffing scenario being considered.
The art of forecasting, in a business environment of significant change, is to enumerate the possible
volume forecasts, the expected range of handle times, and those of each of the other performance
drivers that can impact the competing resource plans. The obligation of the executive is to focus on
the business risk associated with each decision and each forecast, and to determine the resource
plan that is most aligned with their corporate objectives. How can we do this?
Managing uncertainty and determining business risk
When forecasts are fairly stable, the operational risk associated with an optimal, well-engineered
strategic plan is the occurrence of some unforeseen event, typically of short duration. These take the
shape of random system outages, unexpected contact demand, or external events that change the
nature of a customer query. While stressful, these do not typically result in long-term damage to the
operation or to the company’s financials. Certainly, poorly constructed strategic plans have
significant risks associated with their own weak design.
In times of systematic change, however, the risk can be much more extreme. There are many stories
about resource mistakes that lead to service failures that take months and months to correct, or
decisions that result in huge costs with little company gain. During times of significant change,
corporate strategy and the resulting executive queries are even more important. Strategic questions
are not just about fixing performance today. Such questions involve evaluating and changing the
direction of the company. During periods of instability, executives are often looking for those
business strategies that will match the new expected industry standard — and try to determine
when this new standard will occur. During uncertain times, strategy is what interests senior
management.
So how do we determine the business risk associated with any given resource or operational
strategy? The process is fairly simple, and is called “E-PROM,” aka Enterprise Performance-Risk
Outcome Matrix. This type of analysis is enabled by the newer mathematical technologies available
in today’s strategic planning systems, and the process is this:
1. For each forecast possibility, determine the optimal strategic plan (e.g., hiring and resource plans)
2. Evaluate the set of optimal plans against the set of forecast possibilities, for service expected,
costs, etc.
3. Evaluate any middling “sub-optimal” strategic plans
4. Choose the best set of decisions based upon all appropriate measures of business risk
With modern strategic planning systems, this process should take very little time. Even so, this
process is repeated whenever there is significant variance to plan and as the business environment
evolves. This process of actively evaluating the business’s resource decisions as the business
environment changes is essential to managing an operation in an environment such as those today.
b) Aggregate planning and master production
schedule.
Aggregate planning is the process of developing, analyzing, and maintaining a preliminary,
approximate schedule of the overall operations of an organization. The aggregate plan
generally contains targeted sales forecasts, production levels, inventory levels, and
customer backlogs. This schedule is intended to satisfy the demand forecast at a minimum
cost. Properly done, aggregate planning should minimize the effects of shortsighted, day-today scheduling, in which small amounts of material may be ordered one week, with an
accompanying layoff of workers, followed by ordering larger amounts and rehiring workers
the next week. This longer-term perspective on resource use can help minimize short-term
requirements changes with a resulting cost savings.
Steps taken to produce an aggregate plan begin with the determination of demand and the
determination of current capacity. Capacity is expressed as total number of units per time
period that can be produced (this requires that an average number of units be computed
since the total may include a product mix utilizing distinctly different production times).
Demand is expressed as total number of units needed. If the two are not in balance (equal),
the firm must decide whether to increase or decrease capacity to meet demand or increase
or decrease demand to meet capacity. In order to accomplish this, a number of options are
available.
Options for situations in which demand needs to be increased in order to match capacity
include:
1.
2.
3.
4.
Pricing. Varying pricing to increase demand in periods when demand is less than
peak. For example, matinee prices for movie theaters, off-season rates for hotels,
weekend rates for telephone service, and pricing for items that experience seasonal
demand.
Promotion. Advertising, direct marketing, and other forms of promotion are used to
shift demand.
Back ordering. By postponing delivery on current orders demand is shifted to period
when capacity is not fully utilized. This is really just a form of smoothing demand.
Service industries are able to smooth demand by taking reservations or by making
appointments in an attempt to avoid walk-in customers. Some refer to this as
"partitioning" demand.
New demand creation. A new, but complementary demand is created for a product
or service. When restaurant customers have to wait, they are frequently diverted into
a complementary (but not complimentary) service, the bar. Other examples include
the addition of video arcades within movie theaters, and the expansion of services at
convenience stores.
Options which can be used to increase or decrease capacity to match current demand
include:
1.
2.
3.
4.
5.
6.
7.
Hire/lay off. By hiring additional workers as needed or by laying off workers not
currently required to meet demand, firms can maintain a balance between capacity
and demand.
Overtime. By asking or requiring workers to work extra hours a day or an extra day
per week, firms can create a temporary increase in capacity without the added
expense of hiring additional workers.
Part-time or casual labor. By utilizing temporary workers or casual labor (workers
who are considered permanent but only work when needed, on an on-call basis, and
typically without the benefits given to full-time workers).
Inventory. Finished-goods inventory can be built up in periods of slack demand and
then used to fill demand during periods of high demand. In this way no new workers
have to be hired, no temporary or casual labor is needed, and no overtime is
incurred.
Subcontracting. Frequently firms choose to allow another manufacturer or service
provider to provide the product or service to the subcontracting firm's customers. By
subcontracting work to an alternative source, additional capacity is temporarily
obtained.
Cross-training. Cross-trained employees may be able to perform tasks in several
operations, creating some flexibility when scheduling capacity.
Other methods. While varying workforce size and utilization, inventory
buildup/backlogging, and subcontracting are well-known alternatives, there are other,
more novel ways that find use in industry. Among these options are sharing
employees with counter-cyclical companies and attempting to find interesting and
meaningful projects for employees to do during slack times.
AGGREGATE PLANNING STRATEGIES
There are two pure planning strategies available to the aggregate planner: a level strategy
and a chase strategy. Firms may choose to utilize one of the pure strategies in isolation, or
they may opt for a strategy that combines the two.
LEVEL STRATEGY.
A level strategy seeks to produce an aggregate plan that maintains a steady production rate
and/or a steady employment level. In order to satisfy changes in customer demand, the firm
must raise or lower inventory levels in anticipation of increased or decreased levels of
forecast demand. The firm maintains a level workforce and a steady rate of output when
demand is somewhat low. This allows the firm to establish higher inventory levels than are
currently needed. As demand increases, the firm is able to continue a steady production
rate/steady employment level, while allowing the inventory surplus to absorb the increased
demand.
A second alternative would be to use a backlog or backorder. A backorder is simply a
promise to deliver the product at a later date when it is more readily available, usually when
capacity begins to catch up with diminishing demand. In essence, the backorder is a device
for moving demand from one period to another, preferably one in which demand is lower,
thereby smoothing demand requirements over time.
A level strategy allows a firm to maintain a constant level of output and still meet demand.
This is desirable from an employee relations standpoint. Negative results of the level
strategy would include the cost of excess inventory, subcontracting or overtime costs, and
backorder costs, which typically are the cost of expediting orders and the loss of customer
goodwill.
CHASE STRATEGY.
A chase strategy implies matching demand and capacity period by period. This could result
in a considerable amount of hiring, firing or laying off of employees; insecure and unhappy
employees; increased inventory carrying costs; problems with labor unions; and erratic
utilization of plant and equipment. It also implies a great deal of flexibility on the firm's part.
The major advantage of a chase strategy is that it allows inventory to be held to the lowest
level possible, and for some firms this is a considerable savings. Most firms embracing the
just-in-time production concept utilize a chase strategy approach to aggregate planning.
Most firms find it advantageous to utilize a combination of the level and chase strategy. A
combination strategy (sometimes called a hybrid or mixed strategy) can be found to better
meet organizational goals and policies and achieve lower costs than either of the pure
strategies used independently.
TECHNIQUES FOR AGGREGATE
PLANNING
Techniques for aggregate planning range from informal trial-and-error approaches, which
usually utilize simple tables or graphs, to more formalized and advanced mathematical
techniques. William Stevenson's textbook Production/Operations Management contains an
informal but useful trial-and-error process for aggregate planning presented in outline form.
This general procedure consists of the following steps:
1.
2.
3.
4.
5.
6.
Determine demand for each period.
Determine capacity for each period. This capacity should match demand, which
means it may require the inclusion of overtime or subcontracting.
Identify company, departmental, or union policies that are pertinent. For example,
maintaining a certain safety stock level, maintaining a reasonably stable workforce,
backorder policies, overtime policies, inventory level policies, and other less explicit
rules such as the nature of employment with the individual industry, the possibility of
a bad image, and the loss of goodwill.
Determine unit costs for units produced. These costs typically include the basic
production costs (fixed and variable costs as well as direct and indirect labor costs).
Also included are the costs associated with making changes in capacity. Inventory
holding costs must also be considered, as should storage, insurance, taxes,
spoilage, and obsolescence costs. Finally, backorder costs must be computed. While
difficult to measure, this generally includes expediting costs, loss of customer
goodwill, and revenue loss from cancelled orders.
Develop alternative plans and compute the cost for each.
If satisfactory plans emerge, select the one that best satisfies objectives. Frequently,
this is the plan with the least cost. Otherwise, return to step 5.
c) Gantt Chart :Definition: A Gantt chart is a useful graphical tool which shows activities or tasks
performed against time. It is also known as visual presentation of a project where the
activities are broken down and displayed on a chart which makes it is easy to understand
and interpret.
Description: A Gantt chart is a popular tool in project management. It basically drills down
activities which need to be done by a fixed time period. It is commonly used for tracking
project schedules.
On the chart, tasks are shown on the vertical axis while the scheduled time-spend is laid out
on the horizontal axis. Each task is represented by a bar that shows the time required for the
project.
The bar then represents or shows percentage of tasks that have been completed. It also
shows dependencies, which simply means the interlinkages between various activities in the
project.
Understanding the interlinkage between activities is very important to monitor and Gantt
charts help the project manager to do just that. It conveys the information about the
completion of other activities in the project. This information is important because of the
interlinkages between various activities and if one activity gets delayed it will have an impact
on others.
Gantt chart is a useful tool in planning and scheduling the projects. It keeps the management
updated as to when the project will get completed. It also keeps the management informed
about any additional resources that are required, and manage dependencies between tasks.
They are commonly used in scheduling production processes, employee roster or
scheduling, events scheduling, production processes, etc. Microsoft Excel can also be used
to create Gantt charts apart from other independent software available in the market.
Q2 Explain the following in brief:a) Objectives and variables of PPC
b) Various means of measuring effectiveness of PPC
c) Sequencing rules
Ans :- a) Objectives and variables of PPC
Introduction
Production function is that part of an organization, which is concerned with the transformation of a
range of inputs into the required outputs (products) having the requisite quality level. Production may
be understood as the step-by-step conversion of one form of material into another form through
chemical or mechanical process to create or enhance the utility of the product to the user. Thus
production is a value addition prohurr .
The ultimate objective of production planning and control, like that of all other manufacturing controls,
is to contribute to the profits of the enterprise. As with inventory management and control, this is
accomplished by keeping the customers satisfied through the meeting of delivery schedules.
The main objectives of PPC may be summarized as followings:a) It is used to establish target and check the deviations by comparing on some performance
measures.
b) Decides the nature and magnitude of different input factors to produce the output.
c) Coordinates different resources of production system in the most effective and economic manner
and to coordinate among different departments.
d) Elimination of bottleneck
e) Utilization of inventory in the optimal way
f) Smooth flow of material
g) To produce in right quantity and quality at right time
h) Scheduling production activities to meet delivery schedule
i) Expediting the system under production
j) To ensure flexibility in production system to accommodate changes and uncertainty
k) Optimizes the use of resources for minimum overall production cost
l) To ensure the production of right product at right time in right quantity with specification rightly
suited to customers
m) Stable production system, with least chaos, confusion and undue hurry.
A production–possibility frontier (PPF) or production possibility curve (PPC) is a curve
which shows various combinations of the amounts of two goods which can be produced
within the given resources and technology/a graphical representation showing all the
possible options of output for two products that can be produced using all factors of
production, where the given resources are fully and efficiently utilized per unit time. A PPF
illustrates several economic concepts, such as allocative efficiency, economies of
scale, opportunity cost (or marginal rate of transformation), productive efficiency,
and scarcity of resources (the fundamental economic problem that all societies face).
This tradeoff is usually considered for an economy, but also applies to each individual,
household, and economic organization. One good can only be produced by diverting
resources from other goods, and so by producing less of them.
Graphically bounding the production set for fixed input quantities, the PPF curve shows the
maximum possible production level of one commodity for any given production level of the
other, given the existing state of technology. By doing so, it defines productive efficiency in
the context of that production set: a point on the frontier indicates efficient use of the
available inputs (such as points B, D and C in the graph), a point beneath the curve (such as
A) indicates inefficiency, and a point beyond the curve (such as X) indicates impossibility.
An example PPF with illustrative points marked
PPFs are normally drawn as bulging upwards or outwards from the origin ("concave" when
viewed from the origin), but they can be represented as bulging downward (inwards) or
linear (straight), depending on a number of assumptions.
An outward shift of the PPC results from growth of the availability of inputs, such as physical
capital or labour, or from technological progress in knowledge of how to transform inputs into
outputs. Such a shift reflects, for instance, economic growth of an economy already
operating at its full productivity (on the PPF), which means that more of both outputs can
now be produced during the specified period of time without sacrificing the output of either
good. Conversely, the PPF will shift inward if the labour force shrinks, the supply of raw
materials is depleted, or a natural disaster decreases the stock of physical capital.
However, most economic contractions reflect not that less can be produced but that the
economy has started operating below the frontier, as typically, both labour and physical
capital are underemployed, remaining therefore idle.
In microeconomics, the PPF shows the options open to an individual, household, or firm in a
two good world. By definition, each point on the curve is productively efficient, but, given the
nature of market demand, some points will be more profitable than others. Equilibrium for a
firm will be the combination of outputs on the PPF that is most profitable.
From a macroeconomic perspective, the PPF illustrates the production possibilities available
to a nation or economy during a given period of time for broad categories of output. It is
traditionally used to show the movement between committing all funds to consumption on
the y-axis versus investment on the x-axis. However, an economy may achieve productive
efficiency without necessarily being allocatively efficient. Market failure (such as imperfect
competition or externalities) and some institutions of social decision-making (such as
government and tradition) may lead to the wrong combination of goods being produced
(hence the wrong mix of resources being allocated between producing the two goods)
compared to what consumers would prefer, given what is feasible on the PPF.
b) Various means of measuring effectiveness
of PPC
Functions of production planning and controlling is classified into:
7.
Pre-planning function
8.
Planning function
9.
Control function
Production Planning and Control Functions
The functions of production planning and controlling are depicted in the following figure.
10.
PRE-PLANNING FUNCTION
Pre-planning is a macro level planning and deals with analysis of data and is an outline of
the planning policy based upon the forecasted demand, market analysis and product
design and development. This stage is concerned with process design (new processes
and developments, equipment policy and replacement and work flow (Plant layout). The
pre-planning function of PPC is concerned with decision-making with respect to methods,
machines and work flow with respect to availability, scope and capacity.
Functions of production planning and control
11.
PLANNING FUNCTION
The planning function starts once the task to be accomplished is specified, with the
analysis of four M’s, i.e., Machines, Methods, Materials and Manpower. This is followed
by process planning (routing). Both short-term (near future) and long-term planning are
considered. Standardization, simplification of products and processes are given due
consideration.
12.
CONTROL FUNCTION
Control phase is effected by dispatching, inspection and expediting materials control,
analysis of work-in-process. Finally, evaluation makes the PPC cycle complete and
corrective actions are taken through a feedback from analysis. A good communication,
and feedback system is essential to enhance and ensure effectiveness of PPC.
Parameters for PPC
13.
14.
The functions of PPC can be explained with the following parameters:
Materials: Raw materials, finished parts and bought out components should be made
available in required quantities and at required time to ensure the correct start and end
for each operation resulting in uninterrupted production. The function includes the
specification of materials (quality and quantity) delivery dates, variety reduction
(standardization) procurement and make or buy decisions.
Machines and equipment:This function is related with the detailed analysis of
available production facilities, equipment down time, maintenance policy procedure and
schedules. Concerned with economy of jigs and fixtures, equipment availability. Thus, the
duties include the analysis of facilities and making their availability with minimum down
time because of breakdowns.
15.
Methods:
This function is concerned with the analysis of alternatives and selection of the best
method with due consideration to constraints imposed. Developing specifications for
processes is an important aspect of PPC and determination of sequence of operations.
16.
Process planning (Routing):
It is concerned with selection of path or route which the raw material should follow to get
transformed into finished product. The duties include:
1.
Fixation of path of travel giving due consideration to layout.
2.
Breaking down of operations to define each operation in detail.
3.
Deciding the set up time and process time for each operation.
17.
Estimating:
Once the overall method and sequence of operations is fixed and process sheet for each
operation is available, then the operations times are estimated. This function is carried
out using extensive analysis of operations along with methods and routing and a standard
time for operation are established using work measurement techniques.
18.
Loading and scheduling:
Scheduling is concerned with preparation of machine loads and fixation of starting and
completion dates for each of the operations. Machines have to be loaded according to
their capability of performing the given task and according to their capacity. Thus the
duties include:
1.
Loading, the machines as per their capability and capacity.
2.
Determining the start and completion times for each operation.
3.
To coordinate with sales department regarding delivery schedules.
19.
Dispatching:
This is the execution phase of planning. It is the process of setting production activities in
motion through release of orders and instructions. It authorizes the start of production
activities by releasing materials, components, tools, fixtures and instruction sheets to the
operator. The activities involved are:
1.
To assign definite work to definite machines, work centers and men.
2.
To issue required materials from stores.
3.
To issue jigs, fixtures and make them available at correct point of use.
4.
Release necessary work orders, time tickets, etc., to authorize timely start of
operations.
5.
To record start and finish time of each job on each machine or by each man.
20.
Expediting: This is the control tool that keeps a close observation on the progress of
the work. It is logical step after dispatching which is called ‘follow-up’. It coordinates
extensively to execute the production plan. Progressing function can be divided into three
parts, i.e., follow up of materials, follow up of work-in-process and follow up of assembly.
The duties include:
1.
Identification of bottlenecks and delays and interruptions because of which the
production schedule may be disrupted.
2.
To devise action plans (remedies) for correcting the errors.
3.
To see that production rate is in line with schedule.
21.
Inspection:
It is a major control tool. Though the aspects of quality control are the separate function,
this is of very much important to PPC both for the execution of the current plans and its
scope for future planning. This forms the basis for knowing the limitations with respects to
methods, processes, etc., which is very much useful for evaluation phase.
22.
Evaluation:
This stage though neglected is a crucial to the improvement of productive efficiency. A
thorough analysis of all the factors influencing the production planning and control helps
to identify the weak spots and the corrective action with respect to pre-planning and
planning will be effected by a feedback. The success of this step depends on the
communication, data and information gathering and analysis.
23.
c) Sequencing rules
Job Sequencing Rules include the following:
Earliest Due Date - Within some organizations, they sequence jobs based off their earliest due date.
This is at times referred to as due date assignment, and it places high priority on processing jobs with
early due dates. You can measure job shop quality performance through the number of late jobs, average
tardiness across late jobs, and average tardiness among all jobs.
Shortest Processing Time - Another common method of job sequencing based on completion time is
shortest processing time. Shortest processing time assigns jobs with the shortest processing times first.
Similar to the longest processing time scheduling method, shortest processing time requires a time
estimation for each job. Shortest processing time can effectively reduce average flow time for jobs.
Longest Processing Time - The longest processing time method assigns highest priority jobs with the
longest processing time. When scheduling longer jobs first, schedulers can reduce a large amount of
much more time consuming jobs at the end of the job schedule. This form of job sequencing is extremely
beneficial to manufacturers.
First-Come, First Serve - A large sum of shops utilize the first-come, first-served job sequencing
method. This method processes orders in the order of arrival at their production facility. Arrival time is a
key component and factor within the job sequencing rule, which is what separates it from other methods
such as longest processing time and shortest processing time. No estimation time is required for first
come, first serve job scheduling.
Q3 Explain the following in brief;
a) Various approaches to product design.
b) Product life cycle
c) Overview of supply chain management
Ans :- a) Various approaches to
product design
Product design as a verb is to create a new product to be sold by a business to its customers. A
very broad coefficient and effective generation and development of ideas through a process that
leads to new products. Thus, it is a major aspect of new product development.
Due to the absence of a consensually accepted definition that reflects the breadth of the topic
sufficiently, two discrete, yet interdependent, definitions are needed: one that explicitly defines
product design in reference to the artifact, the other that defines the product design process in
relation to this artifact.
Product design as a noun: the set of properties of an artifact, consisting of the discrete properties of
the form (i.e., the aesthetics of the tangible good or service) and the function (i.e. its capabilities)
together with the holistic properties of the integrated form and function.
Product design process: the set of strategic and tactical activities, from idea generation to
commercialization, used to create a product design. In a systematic approach, product designers
conceptualize and evaluate ideas, turning them into tangible inventions and products. The product
designer's role is to combine art, science, and technology to create new products that people can
use. Their evolving role has been facilitated by digital tools that now allow designers to do things
that include communicate, visualize, analyze, 3D modeling and actually produce tangible ideas in a
way that would have taken greater manpower in the past.
Product design is sometimes confused with (and certainly overlaps with) industrial design, and has
recently become a broad term inclusive of service, software, and physical product design. Industrial
design is concerned with bringing artistic form and usability, usually associated with craft design
and ergonomics, together in order to mass-produce goods.[4] Other aspects of product design and
industrial design include engineering design, particularly when matters of functionality or utility
(e.g. problem-solving) are at issue, though such boundaries are not always clear.
Product design processEdit
There are various product design processes, and many focus on different aspects. One example
formulation/model of the process is described by Don Koberg and Jim Bagnellin, in "The Seven
Universal Stages of Creative Problem-Solving." The process is usually completed by a group of people
with different skills and training—e.g. industrial designers, field experts (prospective users),
engineers (for engineering design aspects), depending upon the nature and type of product
involved. The process often involves figuring out what is required, brainstorming possible ideas,
creating mock prototypes, and then generating the product. However, that is not the end. Product
designers would still need to execute the idea, making it into an actual product and evaluating its
success (seeing if any improvements are necessary).
The product design process has experienced huge leaps in evolution over the last few years with the
rise and adoption of 3D printing. New consumer-friendly 3D printers can produce dimensional
objects and print upwards with a plastic like substance opposed to traditional printers that spread
ink across a page.
The product design process, as expressed by Koberg and Bagnell, typically involves three main
aspects:
Analysis
Concept
Synthesis
Depending on the kind of product being designed, the latter two sections are most often revisited
(e.g. depending on how often the design needs revision, to improve it or to better fit the criteria).
This is a continuous loop, where feedback is the main component.[6] Koberg and Bagnell offer more
specifics on the process: In their model, "analysis" consists of two stages, "concept" is only one
stage, and "synthesis" encompasses the other four. (These terms notably vary in usage in different
design frameworks. Here, they are used in the way they're used by Koberg and Bagnell.)
AnalysisEdit
Accept Situation: Here, the designers decide on committing to the project and finding a solution
to the problem. They pool their resources into figuring out how to solve the task most efficiently.[6]
Analyze: In this stage, everyone in the team begins research. They gather general and specific
materials which will help to figure out how their problem might be solved. This can range from
statistics, questionnaires, and articles, among many other sources.
ConceptEdit
Define: This is where the key issue of the matter is defined. The conditions of the problem become
objectives, and restraints on the situation become the parameters within which the new design must
be constructed.
SynthesisEdit
Ideate: The designers here brainstorm different ideas, solutions for their design problem. The ideal
brainstorming session does not involve any bias or judgment, but instead builds on original ideas.
Select: By now, the designers have narrowed down their ideas to a select few, which can be
guaranteed successes and from there they can outline their plan to make the product.
Implement: This is where the prototypes are built, the plan outlined in the previous step is
realized and the product starts to become an actual object.
Evaluate: In the last stage, the product is tested, and from there, improvements are made. Although
this is the last stage, it does not mean that the process is over. The finished prototype may not work
as well as hoped so new ideas .
b) Product life cycle
PLC is an assumption that every product goes through that involves the same pattern of
introduction into the market, growth, maturity, and decline. As the product spends more
time in the market and it makes its way through the cycle, its sales increase. Each
product’s PLC is different in the length of scope and duration, and each product is at risk
of not making it out of the introduction phase. However, the company strategy should
remain consistent throughout each of the phases.
The PLC, in brief, is as follows:
Stage 1: Product Development: The new product is introduced; this is when all of the
research and development happens.
Stage 2: Product Growth: The product is more than an idea or a prototype. At this stage,
the product is manufactured, marketed, and released. Distribution increases, demand
increases, and competition also increases.
Stage 3: Product Maturity: During this stage, the product is widely available, and there
are many competitors in the marketplace. You market the product to different segments,
but more spending on advertising will have no impact on its demand.
Stage 4: Product Decline: The product is losing market share, or becoming obsolete. It is
well past its point of highest demand, and the demand decreases.
Additionally, the product life cycle affects the average selling price (ASP). The ASP is
how much you generally sell your products or services for. When a product has many
competitors or it is in the decline stage of its PLC, the ASP will be lower.
Product image also drives the ASP. Products with an image of exclusivity have a higher
ASP. For example, Louis Vuitton luggage is considered a luxury brand of products that
are made by hand and use the finest materials. There is a limited assortment of
products, a long wait time to procure one, and a higher than average price point. The
company has even sped up their manufacturing process, but the price point still reflects
the exclusivity and time to market of a custom bag. In fact, Louis Vuitton increased its
prices in 2013 to attract more high-end consumers because they experienced a decline.
This approach is an interesting twist on the PLC since normally the prices would drop
with the waning in demand.
Product Life Cycle Example and Marketing
Let’s look at how the green juice product category has moved through the product life
cycle.
Introduction: Green juice becomes available in health food stores, in plain packaging,
and marketed as a health food. Marketing decides all pricing and branding decisions.
Growth: Green juice becomes available in big-box grocery store refrigerated aisles. The
packaging is redesigned to be more attractive. There’s an introduction of carrot juice and
berry juice. The distributors are working to increase the brand recognition and the
market share.
Maturity: The product is reinvented and marketed. The calorie count is reduced, and the
recipe “tastes even better.” Individual, half-gallon and gallon-sized packaging are
offered. Market saturation has been achieved, so to maintain share the juice is marketed
as an integral part of your diet, not just a fun treat.
Decline: This product is not in decline yet. However, specific companies whose market
share has decreased due to the extreme competition in this segment may be developing
an exit strategy.
See more information on PLC by reading How to Use the Product Life Cycle to Help
Your Products Succeed.
The three main elements of PLM are:
24.
•The Information and Communication Technology (ICT): This is all about the
necessary unified platforms and systems, including the architecture, tools, and
standards.
25.
•The Processes: This includes all of the people, skills, and organizations involved.
26.
•The Methods: This is the procedures, rules, and practices.
PLM is proliferating because the economy has gone global. Outsourcing and new supply
chain initiatives, along with shorter production runs require that companies have reliable
and up-to-the-minute information for manufacturing. And because the internet makes it
feasible to share information quickly with far away partners. Now, PLM allows for the
adjustment of manufacturing specifications during production. This process would
typically take days or weeks with siloed engineering and production departments,
especially if the production facility were in another country.
PLM increases your speed to market in several different ways:
27.
Managing your changes over time
28.
Keeping your organization up-to-date with the product knowledge
29.
Integrating the enterprise systems
30.
Logging the raw materials and parts
31.
Tracking the manufacturing procedures
32.
Managing product intent and customer expectations
33.
Cataloging the chemical and physical properties
34.
Maintaining version history and control
35.
Keeping record of past, present, and future concepts and products
36.
Recording changes in customer demands, regulations, improvements, and costs .
c) Overview of supply chain
management
A supply chain is a collection of suppliers required to create one specific product for a
company. The chain is made up of nodes or “links,” which can include multiple
manufacturers for parts, then the completed product, then the warehouse where it is
stored, then its distribution centers, and finally, the store where a consumer can
purchase it. The concept of the chain is important, because each link is connected in a
specific direction and order, and the next link cannot be reached without going through
the previous one. Each link adds time and costs, and can involve labor, parts, and
transportation. Every product a company carries may have its own supply chain, though
they may use certain suppliers for multiple products. You can see why this gets so
complicated, especially for international supply chains.
The process described above was that of a typical retail supply chain. However, there
are many different types in practice. Here are three examples from well-known masters
of supply chains:
Example: Walmart and “Big Box” Retailers
The “Big Box” store, which represents one of the major disruptions of the retail model
from the last century, thrives on size, ubiquity, and well-planned supply chains to drive
out the competition. How else would a company like Walmart make a profit on a t-shirt
made overseas that retails for $5.00?
Walmart succeeds by having fewer links in its supply chain, and buying more generic
goods directly from manufacturers, rather than from suppliers with brand names and
markup. It uses “Vendor Managed Inventory” to mandate that manufacturers are
responsible for managing products in warehouses owned by Walmart. The company is
also is particularly choosy with suppliers, partnering only with those who can meet the
quantity and frequency it demands with low prices, and with locations that limit
transportation needs. They manage their supply chain like one firm, with all partners
operating on the same communication network.
By buying at large enough quantities to take advantage of economies of scale, moving
products directly from manufacturers to warehouses, and then delivering to stores which
are large enough to be distribution centers, it reduces links in the supply chain and cost
per item, translating to low prices for consumers.
Example: Amazon and “Ecommerce Platforms”
Having overtaken Walmart as the world’s largest retailer in the last decade, Amazon’s
“online big box” concept is a perfect example of unique supply chains. As an ecommerce shop, obviously they cut the retail store out and ship from distribution center
to consumer’s homes directly. Where Amazon innovates is both in its supplier-side and
its final supply chain link - delivery.
Just about anyone can sell things on Amazon because it’s a platform, not just a shop. As
a result, Amazon has more things than any other online store, so when people shop
online, they think of Amazon. Then, it produces everyday goods cheaply, and underbids
suppliers. Next, their warehouses make serious use of automation to store items going
to like destinations together, ready for immediate transport. Finally, its investments in
delivery staff and technology make 2-day shipping a basic expectation, and even sameday delivery a possibility. Amazon ditches third-party logistics (3PL) and fulfills orders
itself.
Example: Tesla and Specialized, Owned Chains
Automotive manufacturing has come a long way since Henry Ford used assembly line
manufacturing to speed up the production of a single car model in a single color. Now, in
a time when even American carmakers are opening factories abroad, Tesla is making
innovative, incredibly popular, and luxurious cars right in California, a location with
incredibly costly real estate.
Rather than having a long supply chain of cheap part makers, they have a vertically
integrated supply chain, with a full-service auto plant near its corporate headquarters
and plans for a supplier park and a massive battery factory, and Tesla owns it all. Even
more interesting is the digital supply chain the company promotes - new firmware and
algorithm updates are pushed out to existing car owners over the cloud.
What Is Supply Chain Management?
As the name implies, supply chain management (SCM) is handling and optimizing all the
many complicated facets of a supply chain, involving goods and services. Even ensuring
timely handoff from manufacturer to shipper to supplier to shipper to buyer is a massive
task, but to do it cost effectively and build net value is truly a challenge.
Supply chain management is so important because modern commerce exists in a
networked global economy. Most businesses are specialized - even department and big
box stores are only really equipped to sell to customers, despite their wide variety of
products. The value of vertical integration is hard to justify when communication costs
and SCM tools are so inexpensive - it almost always makes more sense to outsource for
price efficiency.
History
The concept of supply chain management was in effect long before the term was
created in 1982. In the colonial era, international trade by ship was already making for
complicated transportation issues and the need for efficiency. During the Industrial
Revolution, the ability to quickly produce goods with machine assistance led to the need
to manage significant inventory and constant consumption. By the time history arrives at
Henry Ford’s famous assembly line for the world’s first car production in 1913, supply
chain management had become an art.
As the century wore on, more companies were producing more goods and looking for
ways to reduce costs. They vertically integrated into owned supply chains to try reducing
costs at each stage. In the 1980s and on, globalization became a realistic dream for
many companies, because of computer systems, easier communication, and commercefriendly trade laws. Around the 1990s, it became a common practice for firms to
specialize, and focus on core competencies and outsourcing the rest, abandoning the
vertical integration of the previous era. At this point, supply chains became truly
complex, in order to coordinate hundreds of otherwise unrelated and geographicallydistant manufacturers, suppliers, shippers, warehousers, and retailers.
Now, in the “SCM 2.0” era, the Internet and new methodologies have led to collaborative
platforms and democratized processes. This is allowing smaller competitors to use some
of the same manufacturers as major players, and reducing inefficiencies for those
manufacturers as a result. Better communication and planning tools are providing a way
for small and large companies alike to manage even more complex supply chains.
Variants of SCM
Global SCM: The combination of global manufacturing with supply chain management,
which must account for tariffs and local taxes as goods and services travel
internationally to ultimately provide greater value at the end of the chain.
SAP SCM: Systems, Applications, and Products (SAP) is a software company that
revolutionized logistics and enterprise resource planning. It provides an automated way
to manage supply chain networking, supply chain planning, and supply chain execution,
along with production planning, business forecasting, and demand planning.
Logistics and SCM: The art of coordinating efforts between every member of the supply
chain to get products from their source to the consumer.
Purchasing and SCM: The focus on the monetary aspect of SCM, from costs to value
added at each link in the supply chain.
Principles of Good Supply Chain StraStrategThe Basics of
Supply Chain Management Processes
There are key supply chain processes that you must take into consideration to effectively
understand and manage them. These processes are all at play regardless of the type of
supply chain you’re using.
Customer relationship management (CRM) comes first, because as the principles of
SCM state, you must adapt everything in the supply chain to the customer. If no one is
buying, there’s no need to produce anything. At the front of your supply chain, where a
store’s staff interacts with its consumers, they must have plans in place for ongoing
relationships. They need CRM tools to gather customer information for marketing and
market research, all to determine the products and services to offer in the future.
Customer service management is another process that ties in, as it is where you gather
negative and positive feedback to determine future needs.
Demand management is closely linked with the previous two, as it takes customer
interactions and orders into account to determine the workload all the way up the supply
chain. At its core, customers buying more means make more, and customers buying
less means make less. Customer forecasting is an important task that analysts must
perform well to determine the current demand and what it will be in the future, to prevent
waste in the supply chain.
Product development is an important part of the supply chain that is informed by
consumer demand. You must work with CRM and customer service data to determine
what they want, which influences new products, product line extensions, and also what
to stop making. You must integrate suppliers in this process because it affects cost,
quality, and delivery time.
Supplier relationship management goes without saying - if you want to produce your
products on time and on budget, you need a solid rapport with everyone you’re
outsourcing to in the chain. This impacts manufacturing flow management, which
ensures everything gets where it needs to go without delay, and at the correct spec.
Order fulfilment involves coordinating with distribution centers and either retail locations
or 3PL to get the product direct to consumers. You’ve now made it all the way back to
the beginning of the cycle, and need to pay attention to new CRM and customer service
data.
Returns management, also known as the “reverse supply chain,” is a vital part of the
flow of products that doesn’t fit perfectly into the clean supply chain cycle. It involves
picking up online orders from 3PL locations or from consumers’ addresses and
accepting returns at retail locations. Once these items are put back into inventory, they
must be ready to get to a different customer while the product run is still live.
What Supply Chain Managers Look for When Managing
Supplier Relationships
One of the most complex parts of SCM is handling all the other people in the supply
chain. They have their own needs and motivations, and to keep them all happy and
working together with partners they are only loosely affiliated with is a challenge especially when trying to meet deadlines and turn a profit. The following are what
managers should focus on most in such relationships:
Org Chart and Leadership Style: How is the supplier’s organization set up? Is it a vertical
or horizontal structure? Is the leadership strong and long lasting, or fickle and prone to
change? You need to know who you’ll be interfacing with, and who will be the next one
in line should some shakeup occur. Business relationships are always between people,
and don’t always survive a reorg.
Management Style: How do the leaders at this supplier run their shop? Make sure it
works with your crew. A micromanager at a relatively replaceable link in your supply
chain will waste inordinate time, just as a hands-off manager at a vital link could result in
sloppy delivery or substandard product quality.
Company Culture: Always important for working with suppliers, determine what kinds of
people rise to the top, and how everyone acts when nobody's watching. If, for example,
middle managers are constantly in fear for their jobs because of ruthless quarterly
performance reviews, they may over-promise, make excuses, or otherwise be unstable
work partners.
Product Flows: Once you know that you can work with the people, make sure their
facilities are in order. Are they equipped for orders of the size and frequency you plan to
make? How do they handle emergency, fast-turn around orders? What about other
customers - are they only able to use their facilities for your product flows at certain
portions of the month due to full inventory? Leave no stone unturned.
Information Flows: Just as vital is the ability to control information about the day-to-day
flow of materials, and to communicate and coordinate long-term plans. Is the supplier up
on their product details, inventory, and SKU organization? Is their security and
encryption up to the standards of your company, and your industry? Big data is useless
if the right people don’t see it in time.
Rewards and Risks: Take into account opportunities and threats of working with this
supplier. Maybe they’re well-equipped to handle your exact product because they also
work with your competitors. Perhaps they are new and establishing themselves, so offer
a substantial discount, but may not be able to deliver on time? Do what’s best for the
company, and use risk assessment to keep your whole supply chain operable.