Processes, Technology, Capacity
Chapter 6, Part 2
Global Outsourcing Issues
(pages 13 – 16)
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Supply chain logistics – getting parts or products on time
Quality problems
Loss of capabilities (issue in both domestic and global
outsourcing)
Safety, security, and stability
Changes in the value of currency
Cultural differences and communication issues
Corporate image
Financial Justification of Technology
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Revenue enhancement
Maintenance of business: how much business will we lose
without the new technology?
Purchase cost
Operating costs
Annual savings
Replacement analysis
Avoid piecemeal analysis: what is the impact of this decision on
the overall process? You need a strategic technology plan.
Risk and uncertainty
Technology Primer
Product Design

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Computer-aided design (CAD): use of computer
software to design products
Computer-aided engineering (CAE): use of computer
software to evaluate and improve product designs
Group technology (GT): Classifies designs into
families for easy retrieval and modification. Also used
to classify parts for Just-in-time manufacturing.
Collaborative product commerce (CPC): Permits
electronic exchange of information among product
designers and suppliers
Technology Primer
Computer-Aided Process Planning (CAPP)
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Generates process plans based on CAD/CAE data and
a database of products with similar manufacturing
requirements (pages 230-231)
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Assembly charts show how the product is put together
Operations sheets list the manufacturing operations to be
performed, with details on machines, tools, time, and
possibly worker skills
Quality checksheets specify quality standards and quality
data to be recorded.
Process plans are used to generate manufacturing
instructions for computer-aided manufacturing (CAM)
Data Flow in Manufacturing Technology
Computer
aided
design
(CAD)
Computer
aided
process
planning
(CAPP)
Product
design
data
No
Computer
aided
engineering
(CAE)
Manufacturing
instructions
Computer
aided
manufacturing
(CAM)
Final
design?
Final
Yes
design
data
Finished
goods
Technology Primer
Information Technology
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Bar codes: used for product identification, product tracking, and
package tracking
Radio frequency identification (RFID): An integrated circuit
embedded in a tag that can send, receive, and record
information
 Can detect and identify products without opening shipping
containers
Technology Primer
Information Technology (2)
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Enterprise resource planning (ERP) systems:
Software for managing basic requirements of an
enterprise, including sales & marketing, finance and
accounting, production & materials management, and
human resources. All applications use a common
"data warehouse".
Extended ERP (ERP II) systems: Extends ERP to
include suppliers and customers.
Technology Primer
Information Technology (3)
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Vision systems are computer systems with
artificial intelligence that can "see" objects
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Often built into robots.
Used for sorting and positioning parts
Used for inspection. Suspect parts can be
inspected by a second vision system or by a
person
Can recognize images of hands, etc.
Technology Primer
Information Technology (4)

Biometrics
 Used to identify people and grant access to
facilities, work areas, equipment, etc.
 Include a vision system, database, and artificial
intelligence.
 Stored image of some portion of each user's body.
May use hand, thumb, or iris (colored part of eye).
 Vision system develops and stores images.
 Artificial intelligence compares body part of person
seeking access with stored image.
Technology Primer
Manufacturing Technology

Computer numerically controlled (CNC) machines:
 Machines controlled by software code to perform a
variety of operations
 equipped with automated tool changers
 also collect processing information and quality
data
 controlled by a central computer system
 can be networked into flexible manufacturing cells
and flexible manufacturing systems
Technology Primer
Manufacturing Technology (2)
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Robots: reprogrammable manipulators that can
perform repetitive tasks. They are more
consistent than workers but less flexible. Used
for
 Monotonous work, such as assembly line
work
 Work that is hard or unhealthy for people,
such as painting or nuclear plant cleanup
 Work that requires great precision
 Making integrated circuits
 Surgery – guided by a surgeon
 May include vision systems to identify parts
Technology Primer
Manufacturing Technology (3)

Flexible manufacturing system (FMS): A collection of
CNC machines and/or robots connected by an
automated material handling system to produce a
wide variety of parts
 All machines in the system will be under the
command of a single computer.
 The system usually has automatic inspection
capability
 Automated materials handling is usually done by a
conveyor belt
Flexible Manufacturing System
Tools
Computer control room
Tools
Conveyor
Machine
Machine
Machine
Machine
Machine
Machine
Parts
Load
Unload
Finished
goods
Advantages of FMS Technology
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Fast response - short manufacturing
lead time
High product flexibility
High quality
Very efficient if total production volume
is high
Transparency Masters to accompany Operations
Management, 5E (Heizer & Render)
7s-20
© 1998 by Prentice Hall, Inc.
A Simon & Schuster Company
Upper Saddle River, N.J. 07458
Advantages of FMS Technology (2)

Low unit costs
Very little direct labor
Less material waste
Very low work in process inventory
Transparency Masters to accompany Operations
Management, 5E (Heizer & Render)
7s-20
© 1998 by Prentice Hall, Inc.
A Simon & Schuster Company
Upper Saddle River, N.J. 07458
Disadvantages of FMS Technology


High capital cost - need high total
product volume to justify investment
Expertise required to design and
maintain the system
Transparency Masters to accompany Operations
Management, 5E (Heizer & Render)
7s-20
© 1998 by Prentice Hall, Inc.
A Simon & Schuster Company
Upper Saddle River, N.J. 07458
Computer Integrated Manufacturing (CIM)
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CAD, CAE, and CAPP
Flexible Manufacturing System
Production planning and inventory management
Purchasing
Common databases and control systems for all these
functions
Provides product flexibility, cost savings, and short
manufacturing lead times
Components of e-Manufacturing
Capacity Decisions
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Capacity

maximum
capability to
produce
 rated
capacity is
theoretical
 effective
capacity
includes
efficiency
and
utilization
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Capacity utilization
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Capacity efficiency
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how well a machine or worker
performs compared to a standard
output level
Capacity load
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percent of available time spend
working
standard hours of work assigned
to a facility
Capacity load percent
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ratio of load to capacity
Capacity Expansion Strategies
Capacity Decisions (cont.)
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Capacity increase depends on
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Best operating level
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volume and certainty of anticipated demand
strategic objectives
costs of expansion and operation
% of capacity utilization that minimizes unit costs
Capacity cushion
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% of capacity held in reserve for unexpected occurrences
Economies of Scale
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It costs less per unit to produce high levels of output
 fixed costs can be spread over a larger number of
units
 production or operating costs do not increase
linearly with output levels
 quantity discounts are available for material
purchases
 operating efficiency increases as workers gain
experience
 More efficient process technology can be used
Best Operating Level for a Hotel
Diseconomies of Scale
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Occur above a certain level of output
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Diseconomies of distribution
Diseconomies of bureaucracy (more
management overhead)
Diseconomies of confusion (complexity)
Diseconomies of vulnerability (risk)
Diseconomies of Confusion
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