EMIS 8364
ENGINEERING MANAGEMENT
Fall 2009
Ganesh Harpavat, Ph. D., M.B.A.
Tel. No. (972) 691 - 2850
Lecture # 10
Topic: Managing Production Operations
Management of Production Operations Involves:
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In-house or outsourcing decisions
Site selection
Facility design and construction
Plant layout
Human resource planning
Production process planning
Manufacturing planning and control
Quality control
Distribution resource planning
Inventory control and management
Repair and warranty management
Facilities Design Projects:
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New facility construction
New design in an existing facility
Redesign of a restricted area
Adding a machine in an existing facility
Computer Routines for Facilities Layout:
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Construction type
Improvement type
Plant Layout:
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Fixed position layout
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Product layout
Process layout
Group Technology
Computer Aided Layout:
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Computerized Relative Allocation of Facilities Technique (CRAFT)
Computerized Facilities Design (COFAD)
Plant Layout Analysis and Evaluation Technique (PLANET)
Computerized Relationship Layout Planning (CORELAP)
Automated Layout Design Program (ALDEP)
Types of Inventory:
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Raw Material
Purchased Parts
Supplies
Work-In-Process
Finished Goods
Break-even analysis:
The break-even point for any product is the volume beyond which profit is realized and
below which the product is not profitable.
There should be sufficient volume to cover the fixed cost for the product.
Assume:
Variable cost = V per unit
Price = P per unit
Variable contribution = P – V
Total fixed cost = F
No. of Units required to cover fixed cost is called the break-even point.
Vb = F / ( P – V )
Example 1: Price P = $1.2 per unit, Variable cost V = $0.5 per unit, Total fixed cost F =
$100,000, then the break-even volume Vb is given by:
Vb = 100,000 / (1.2 - .5)
= 142,857
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Example 2: Price P = $250 per unit, Variable cost V1 = $150 per unit, Total fixed cost F1
= $100,000, then:
Vb1 = 100,000 / (250-150)
= 1000
Automation or upgrade involves increasing the investment in production equipment
(fixed cost) in order to make production more efficient, i.e., reducing the variable cost.
For example, if an additional investment of $80,000 (i.e., the total fixed cost is increased
to F2 = $180,000) results in decreasing the variable cost by $50 per unit ( i.e., the variable
cost per unit V2 is decreased to $100 per unit), then the break-even volume is given by:
Vb2 = 180,000/(250-100)
And Vb2 = 1200 (Increase)
Generally speaking, an increase in fixed cost will result in a higher break-even volume
and therefore additional investment is only justified based on the actual production
volume.
The additional investment will not generate a higher profit at the new break-even volume.
In fact, a higher profit will be generated only at a volume above the point of no
difference. The point of no difference is defined as the point where the two costs, (i.e.,
total cost with additional investment and total cost without additional investment) are
equal. Mathematically , the point of no difference volume Vnd is given by:
Vnd = (Increase in the fixed cost) / (Decrease in variable cost per unit)
In the above example, Vnd = 80,000/50 = 1,600 units and the additional investment of
$80,000 will generate a higher profit if the actual production volume is above 1,600 units.
Experience (Learning) Curve:
The experience curve describes how the time required (cost) vary with volume.
Manufacturing tasks are learned by operators, so they take less time to complete. It is
observed that in many repetitious human activities, the time required to produce a unit of
output is reduced by a constant factor when the number of units produced is doubled.
With a 90% learning curve, for example, if the first unit takes 1000 hours to produce, the
second will take 900 hours, the fourth 810, the eighth 729, and so on. Mathematically
speaking, if it takes Y1 time to make the first unit, Y2 time to make the second unit, Y3
time to make the third unit and … Yn to produce the nth unit, then we have:
Y2 / Y1 = k
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Y4 / Y2 = k
Y8 / Y16 = k
Y2n / Yn = k
And,
Yn = Y1 . n –b
Or,
ln Yn = ln Y1 – b ln n
( b = - ln k / ln 2 and a straight line on a ln – ln graph paper)
For the 90% curve, b = 0.152
(Y2 / Y1 = k = 0.9 = 2-b )
What will be the value of b for a 80% learning curve?
Production Planning Steps:
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Process Planning (Routing)
Loading
Scheduling
Dispatching
Production Control
There is no such thing as a perfect plan
Manual Process Planning:
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A skilled individual examines a part drawing to develop the necessary
instructions for the process plan.
Requires knowledge of the manufacturing capabilities of the factory: machine
and process capabilities, tooling, materials, standard practices, and associated
costs. Little of this information may be documented. Often this information
exists only in the minds of the process planners.
Widely used, time consuming, plans developed over a period of time may not
be consistent nor objective.
Manual process planners must have sufficient knowledge and experience. It
may take a relatively long time and is usually costly to develop the skill of a
successful planner.
The Computer-Aided Process Planning Method:
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Computer-Aided - key factor in CAD/CAM
Computer Integrated Manufacturing (CIM) cannot occur until process
planning is automated, consequently, automated process planning is the link
between CAD and CAM.
The process planning function converts the design into instructions used to
make the specific part.
Group technology is an important element in CAD/CAM integration, because
it provides a basis and a methodology for engineering and manufacturing
communications.
Computers in Process Planning:
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Systematically produce accurate and consistent process plans.
Reduce the cost and lead time of process planning.
Reduce skill requirements of process planners.
Increase productivity of process planners.
The application programs such as cost and manufacturing lead time estimation
can easily be interfaced.
Routing can be consistently optimized.
Reproduction lead time can be reduced.
Responsiveness to engineering changes can be increased.
The Variant CAPP Method:
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A process plan for a new part is created by recalling, identifying, and
retrieving an existing plan for a similar part and making necessary
modifications for the new part.
Provide an interactive environment between the planner and the computer.
This type of system is geared to planners with limited computer knowledge.
The process planning task for a new part starts with coding and classifying the
part into a part family using group technology.
Requires a data base containing standard process plans which consists of all
instructions (such as operations, tools, and notes) for any part in that family.
Requires editing programs.
Variant Process Planning Approach:
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Define the coding scheme - adopt existing or develop a new coding scheme to
label parts for classification.
Group the parts into families.
Develop a standard process plan - Develop a plan for each part family based
on the common features of the part types. This process plan can be used for
every part type within the family with suitable modifications.
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Retrieve and modify the standard plan - assign new parts to a part family
based on the coding and classification scheme and retrieve and modify the
standard plan to accommodate the unique features of the new part.
Variant Process Planning Advantages:
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Efficient processing and evaluation of complicated activities and decisions.
Standardized procedures
Lower development and hardware costs and shorter development times.
Variant Process Planning Disadvantages:
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Inconsistency in editing.
Adequately accommodating various combinations of material, geometry, size,
precision, quality, alternative processing sequences and machine loading
among many other factors is difficult.
Process plan quality depends on the knowledge and experience of the process
planners.
The Generative CAPP Method:
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Process plans are automatically generated by means of decision logic,
formulas, technology algorithms, and textual and geometry based data.
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Process knowledge in the form of decision logic and data - the automatic
matching of parts geometry requirements with the manufacturing capabilities
using process knowledge in the form of decision logic and data.
Geometry - Based Coding Scheme - define all geometric features for all process related
surfaces together with feature dimensions, locations, and tolerances and the surface finish
desired on the features.
Manufacturing Planning and Control System (MPCS):
Primary objective of an MPCS:
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Ensure that the desired products are manufactured at the right time, in the right
quantities, meeting quality specifications, at minimum cost.
Translating end-item demand into feasible manufacturing plans, establishing
detailed planning of material flows and capacity to support the overall
manufacturing plans, and finally helping to execute these plans by such
actions as detailed cell scheduling and purchasing.
Major Elements of a MPCS:
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Demand management
Aggregate production planning
Master production schedule
Rough-cut capacity planning
Material requirements/Manufacturing or Enterprise resources planning
Capacity planning
Order release
Shop-floor scheduling and control
Demand Management:
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Demand forecasting
Order transactions entry
Customer contact - related activities
Physical distribution management
Forecasting Approaches:
Qualitative approaches:
Rely on the opinions of experts to predict certain events of interest
Techniques for making prediction for technological forecasting and long-range
planning (5-20 years)
Explanatory approaches:
Include econometric models and casual relationships
Descriptive approaches:
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Includes statistical models
Assumption - the demand history in the form of time series can be analyzed
for the constant component, trends, seasonalities, and then extrapolate into
future.
Aggregate production planning:
Objective - reconcile the difference between the forecast demand of products and
manufacturing constraints, such as capacity and availability of material and labor
over the planning horizon. ( Level the production schedule so that the workforce
can be stabilized and production costs are minimized.)
Appropriate for firms with a large variety of products, time-varying demand, a
long planning horizon, and fixed available resources. Demand and production
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requirements are represented in common, manageable aggregate units such as
plant hours or direct labor hours (not individual products).
Typically an aggregate plan is composed of 12 one-month intervals. Each interval
denotes a planned level of production, required workforce, and anticipated
inventory levels.
Master Production Schedule:
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Specifies the quantity of each product to be produced in each period during the
planning horizon.
Dis-aggregation of the aggregate plan to designate required quantities of
specific finished goods by time period.
Not an executable manufacturing plan - capacities and inventories have not
been considered.
Rough-cut capacity planning:
Objective - ensure that master production schedule is feasible and identify
capacity restrictions.
Available resources are compared with the resource requirements profile obtained
from all the work centers considering all the product families.
Material Requirements Planning (MRP):
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Objective - determine how many of each item in the bill of materials must be
manufactured or purchased and when ( detailed production plans).
Information system consisting of logical procedures for managing inventories
of component assemblies, subassemblies, parts, and raw materials in the
manufacturing environment.
Bills of materials for each product to be produced are examined to ascertain
what detailed parts are needed. Next, the requirements for each of detailed part
are determined. Then these requirements are reduced by the inventories on
hand and parts on order. The result represents the amount of each detailed part
that must be produced in each planning interval in order to satisfy the master
production schedule.
MRP - Key Concepts:
MRP requires the following data:
Master production plan
Independent versus dependent Demand
Replenishment rules by item
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Order quantity
Gross requirements
Scrap allowance
Common-use items
Safety stock
Scheduled receipts
Bill of Materials
On-hand inventories
Parts explosion
Net requirements
Purchased or manufactured order status by item
Planned order releases
Lead time
Replenishment Rules:
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Fixed order quantity
Economic order quantity (EOQ)
Lot for lot
Fixed-period order quantity
Manufacturing Resource Planning (MRP II):
It incorporates machine capacity, personnel planning and total integrated manufacturing
control systems.
Enterprise Resource Planning (ERP):
ERP is concerned with making sure that a firm’s manufacturing decisions are not
made without taking into account their impact on the supply chain, both upstream
and downstream and all other major areas in the business, including engineering,
accounting, and marketing.
Most of the ERP systems include a DRP, MRP or MRP II module, or a capacity
planning link.
ERP Software package options:
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A basic information systems infrastructure, or “open computing environment,”
with third party companies writing programs that work within the system and
its standards.
Bundle together programs that support different business functions into
separate “module”; then buyers decide which modules to include in their
package.
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Capacity planning:
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Determining available resources such as labor and equipment in order to
develop an executable manufacturing plan.
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The process of evaluating the capacity requirements of a tentative
manufacturing plan begins with the due dates of each order. Using lead times,
bills of materials, and routines, each order is back-scheduled from the due date
through the required operations to determine when a particular work center
will be utilized.
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Overload conditions may be revealed.
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Since the capacity and order release are constantly changing, some types of
adjustment to the manufacturing plan are occurring daily.
Resolving Overload Conditions:
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Changes in the master production schedule
Overtime/multiple shifts/subcontracting options
Developing alternative process plans for effective resource utilization
Splitting lots
Increasing or decreasing employment levels to respond to capacity changes
Maintain uniform production rate and absorb demand fluctuations by
accumulating inventories.
Increasing capacity by adding capital equipment.
Explore the possibility of planned backlogs if customers are willing to accept
delays in filling their orders.
Or combination of these strategies
Order Release:
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A directive to work, released to the shop floor, which involves:
Scheduling of job orders on the work centers
Sequencing of jobs on the work centers
Allocation of jigs and fixtures
Loading of work centers considering optimal loading conditions
Coordination of material handling, storage, warehousing, and machine tools
Material inventories allocated to the order
Documentation to provide information required for completing the job and
monitoring the status.
Shop Floor Control:
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Major functions of a shop-floor control system - schedule job orders on the work
centers, to sequence the jobs in order on a work center, and to provide accurate
and timely order status information.
Work order status information is used:
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To determine the progress of manufacturing activities
To determine priorities for scheduling jobs in the shop in response to changes
in job order status.
To maintain and control work in progress
To provide output data for capacity control purposes
Order Status Information:
Data collected from the shop floor is utilized in several ways, such as to develop
new schedules, to provide order status visibility, and to generate measures of
performance. The following order status information is representative of what a
good shop-floor control system might provide:
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Current location of parts, tools, operators, etc.
Estimated completion date
Remaining operations
Times for all remaining operations
Starting batch size and current batch size
Job efficiency to date
Through-put Time:
Work-order manufacturing through-put time is composed of the following
elements:
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Run time (Operation or machine run time multiplied by batch size)
Setup time
Move time
Queue time
Shop Floor Control - Operations Scheduling
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Machine loading - Allocation of work orders to the work centers such that due
dates are satisfied
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Job sequencing - Determining the sequence of each work order through each
work center.
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Typical scheduling objectives:
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Meeting due dates
Minimizing manufacturing throughput time
Minimize work-in-process
Maximize work center utilization
Job Sequencing and Priority Rules:
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First-come, First-served (FCFS)
Shortest processing time (SPT) rule gives the highest priority to the job with
the shortest processing time.
Earliest due date (EDD) rule gives the highest priority to jobs with the earliest
due date
Least slack (LS) rule assigns the highest priority to the job with least slack.
Least slack per operation (LSPO) rule assigns priority based on the smallest
value obtained by dividing the slack by the number of operations remaining.
Critical ratio (CR) rule assigns priority based on a ratio of the time remaining
until due date to the lead time remaining.
Finite Capacity Scheduling:
A finite capacity scheduler is a software tool that takes a list of manufacturing
requirements and system constraints (in the form of machine hours, or labor
hours, for example), and produces a feasible schedule. The schedulers typically
use deterministic methods or algorithms to find a solution schedule, which may
not necessarily be the “best”, but is a great improvement over manual scheduling.
An approach growing in popularity is to use a scheduler to determine a good
schedule, then use a simulation model to simulate the proposed schedule and see
how well the system really performs.
Distribution Resource Planning (DRP):
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DRP - Management of inventory throughout the supply system
Due to the many sources of variation throughout the supply chain, current
inventory management practices tend to be reactive
Many firms today consistently target the logistics and distribution areas as
processes that could provide significant future cost savings.
By integrating the output of an MRP II module with a raw materials inventory
management tool, one has much better insight into the raw materials
warehouse functioning (upstream integration).
Push System Manufacturing Characteristics:
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Large lot sizes and long production lead times.
The lot being produced may not be correct in relation to the master production
schedule of end items because of the dynamic nature of the demand and
production processes.
Starving - parts are not completed and required at the successive stages,
causing shortages.
Blocking - too much inventory of some components at a stage, interferes with
flow from the preceding stage.
A single flow process in which both information and material flow in the same
direction from one stage to another.
Just-in-Time (JIT) and Pull System Manufacturing:
Just-in-Time(JIT) is a method involving very small raw material or in-process inventory
quantities, small manufacturing lots, such that a small batch of each component or
subassembly is produced and delivered "just in time" to be used in the next production
step. This is also called a Pull System.
Pull System is Characterized by:
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Feedback information moves from the subsequent to proceeding stages.
MPS is used only to give a broad outline of the requirements for resources.
MPS is not used to decide the production rate for each workstation.
Kanban is used to trigger production at every stage. A Kanban represents the
immediate requirements of the next stage.
Kanban:
Kanban - a card attached to a standard container that authorizes the production
and withdrawal of parts between workstations.
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Withdrawal (or Conveyance) Kanban - authorization for movement
(withdrawal) of parts from one work center to another
Production Kanban - release an order to the preceding process to build the
number of parts equal to the lot size specified on the card.
Rules for Operating a Kanban:
Rule 1: No withdrawal of parts without a Kanban - a Kanban controls production
on a just-in-time basis, producing necessary parts in the right quantities at the
right time.
Rule 2: The subsequent process comes to withdraw only what is needed, specified
by the Kanban. Waste would occur if the preceding process supplied more parts
than are actually needed.
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Rule 3: Do not send the nonconforming parts to the subsequent process. This rule
requires that: The process should be designed such that the nonconforming parts
are identified at the source and the problem in the process is brought to the
immediate attention.
More Rules for Operating Kanban:
Rule 4: The preceding process should produce only the exact quantity of parts
withdrawn by the subsequent process. To ensure minimum inventory, it is
necessary to have: 1) No more production than is required by the number of
Kanbans, and, 2) Production in every work center in the sequence in which the
Kanbans are received.
Rule 5: Smoothing of production. Otherwise, peak demand will decide the
inventory levels, equipment, and workers.
Rule 6: Fine tuning of production using Kanban. Small variations in production
requirements are adjusted by: Stopping the process if the production requirements
decrease and using overtime and improvements in the processes if the production
requirements increase.
Alternative JIT Systems:
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Periodic Pull system - manual information processing of a standard Kanban is
replaced by on-line computerized processing.
Constant Work-in-process Systems (CONWIP) - Pull based production system
used in environments where the standard Kanban system is impractical
because of a large number of part types or significant setup times. In contrast
to Kanban cards, which are part number specific, CONWIP production cards
are assigned to the entire production line.
Long Pull System - one unit is allowed to enter the system at the same time
one unit is pulled at the end of the pull.
No one best Kanban for every situation
Other variations can be developed as needed.
Just-in-Time Purchasing Activities:
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Determine the purchase lot size
Selecting suppliers
Evaluating suppliers
Receiving inspection
Negotiating and bidding process
Determining product specification
Paperwork
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Packaging
Flexibility:
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A collection of properties of a manufacturing system that support changes in
production activities and capabilities.
The ability of the manufacturing system to respond effectively to both internal
and external changes by having built-in redundancy of versatile equipment.
The ability to economically change from one product to the next.
The ability to ramp production volumes up and down to fit the demand of the
market.
Involves increasing range, increasing mobility, or achieving uniform
performance across a specific range.
Types of Flexibility:
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Machine Flexibility - the capability of a machine to perform a variety of
operations on a variety of part types and sizes
Routing Flexibility - part(s)can be manufactured or assembled along
alternative routes on alternative machines, in alternative sequences, or with
alternative resources.
Process Flexibility (mix flexibility) - ability to absorb changes in the product
mix by performing similar operations or producing similar products or parts
on multipurpose equipment.
Product Flexibility (mix change flexibility) - ability to change over to a new
set of products economically and quickly in response to markets or
engineering changes.
Expansion Flexibility - ability to augment manufacturing system to
accommodate a changed requirements.
Flexible Manufacturing System:
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Series of flexible machines, automated material - handling system, automated
tool changer, and other equipment such as coordinate measuring machines and
part washers
Under high-level centralized computer control.
FMS Physical Subsystem:
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Workstations – Numeric Control (NC) machine tools, inspection equipment,
washing devices, load and unload areas, and work areas.
Workholding and tooling systems - tooling, tool storage and tool changers,
tool identification systems, coolant, and chip removal systems.
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Storage-retrieval systems - consisting of pallet stands at each workstation
other devices such as carousels used to store parts temporarily between
workstations or operations.
Material-handling systems - consisting of powered vehicles, towline
conveyors, automated guided vehicles (AGVs), and other systems to transfer
parts between workstations.
FMS Control Subsystem:
Control system - required to organize, coordinate, and control various subsystems:
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Work-order processing and part control system
Machine-tool control system including inspection machines
Tool management and control system
Quality control management system
Maintenance control system
Management control system
Interfacing of subsystems with central computer
FMS Detailed Decision Making:
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Part selection and tool management
Fixture and pallet selection
Machine grouping and loading, considering part and tool assignments
Part selection and tool management:
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Determination of a subset of part types for processing
Considerations include due date and availability of tools.
Alternative methods include the batching approach, the flexible approach
Tool Allocation:
Allocation strategies to insure proper tools are available at the right machines at
the desired times for processing of the scheduled parts:
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Bulk Exchange Policy
Tool Migration Policy
Resident Tooling Policy
Tool Sharing Policy
Flexibility Study: Paper Industry:
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Paper products are comparable across plants.
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Paper products differ in small number of ways, mostly by basis weight, or area
density, or the paper and grade, (Each particular pulp and weight combination
is a grade.)
Differences are straightforward to measure. (Enabled the concrete measures of
both the range of products that a given plant could produce and the time it
took a plant to switch from making one product to making another product.)
Paper Industry Flexibility Study Findings:
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No clear link between the scale of an operation and its ability to change
swiftly between products.
Newer, large scale processing resulted in better capability to perform quick
changeovers than older, smaller machines.
Direct inverse relationship between the scale of an operation and the breath of
products it could produce (larger plants made a smaller range of product
characteristics).
No relationships among the various forms of flexibility.
The more experience a workforce had (as measured by length of service), the
greater the range of products the plant could make. However, changeover
times, (mobility), were worse in plants with more experienced workforces.
Paper Industry Computer Integration Findings:
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Little correlation between the degree of computer integration and the degree of
operational flexibility.
Computer integration did not decrease the time needed to switch from making
one product to making another. While the worst manual-change system took
much longer than the slowest computer-integrated system, the best manualchange teams were much faster than the computer integrated system.
Computer hardware and software designed specifically for the purpose of
improving the changeover process, such as automatic grade-change systems,
did not decrease the time required to make grade changes in the plants and
actually inhibited the ability of plants to produce a broad range of grades.
Pursuing Flexibility:
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What form of flexibility does the company need from its plants?
Determine the type of workforce or equipment they need to enhance
flexibility.
Find ways to measure the type of flexibility sought and emphasize the
importance of those measures to the workforce.
Training
Case: Kildare:
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Kildare Paper Mill: a complex equipped with medium-size paper machines
making relatively high-volume fine papers with 1,500 employees.
In the early 1990s, Kildare’s markets were a severe slump, and mills with
giant, lower-cost machines dominated the industry.
Several competitors had launched reengineering programs aimed at improving
their responsiveness to customers.
Kildare followed suit and began to reengineer the order-to-delivery process to
make the mill even more responsive than the competition.
Kidare’s Initial Response:
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The mill created a training program to teach operators the skills that would
enable them to make the swift product changeovers required by the new
strategy. The computerized recipes and other procedures used to produce each
grade of paper were documented and standardized.
The measurement and reward system continued to focus on the plant’s
capacity utilization rate,
By mid-1993, after an intense, yearlong effort, Kildare had cut its lead times in
half and had achieved its target of becoming world class in responsiveness.
The mill’s improved responsiveness had enabled it to hold on to existing
customers, who were pleased by Kildare’s ability to fill their orders more
quickly
The mill had not been able to increase its market share or sales significantly.
Lean Manufacturing (Toyota Production System):
Lean manufacturing also called the Toyota Production System is basically about getting
the right things to the right place at right time in the right quantity, while minimizing
waste and being flexible and open to change. The lean manufacturing approach is
characterized by an emphasis on speed and flexibility rather than volume and cost;
employees should be broadly trained rather than specialized; communication should take
place informally and horizontally among line workers rather than through prescribed
hierarchical paths. Production throughput time is more important than labor or
equipment utilization. Inventory, like rejects, is considered waste. Supplier relationships
should be long term and cooperative. Activities associated with product development
should be done concurrently, not sequentially, and should be carried out by crossfunctional teams. The key principles are as follows:
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Perfect first time quality – zero defects
Waste minimization – capital, people and resources
Continuous improvement
Pull, just in time production
Flexibility without sacrificing efficiency
Vendor partnership – Long-term relationship
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Toyota is often credited with pioneering the key elements of the lean production model.
In the United States, one of the best documented of Toyota’s plants is the Toyota-General
Motors joint venture, the New United Motor Manufacturing, Inc. (NUMMI) plant in
California.
NUMMI Organization:
NUMMI teams are composed of four to five workers.
Work cycle approximately sixty seconds.
Both team members and team leaders are hourly workers.
Teams are responsible for quality assurance, preventive maintenance, and internal job
rotation schedules.
Teams define work methods and standards.
Teams are linked in series, in a traditional assembly line pattern.
Job designs are very Tayloristic in their narrow scope and gesture-by-gesture
regimentation.
Union representatives and managers jointly select team leaders based on objective tests.
No pay premium offered for the accumulation of new skills.
Lean Supply Chain:
The Lean Supply Chain is characterized by long term and cooperative relationships with
fewer suppliers.
Approaches to reduce the number of suppliers:
Tier Suppliers - subcontract entire subsystems
Simplify design - eliminate parts and part numbers by using common parts
Consolidate purchases
Develop long term single source agreements
Industry consolidation
Human Centered Manufacturing:
Human -centered manufacturing is characterized by greatly lengthened work cycles and a
return to craft like work forms that give teams substantial latitude in how they perform
their tasks and authority over what have traditionally been higher-level management
decisions. Volvo’s Uddevalla plant exemplifies the human - centered alternative.
Uddevalla Organization:
Uddevalla teams are composed of ten workers.
Work cycle approximately two hours.
Eight production teams, working in parallel, assemble vehicles from the subsystems up.
Teams have much broader responsibilities than at NUMMI.
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Teams focus on the aggregate balance of tasks within the whole assembly cycle, not
detailed gesture-by-gesture standardization.
Teams select their own team leaders, decide job rotation schedules, hires, and overtime
schedules.
Team members’ pay is increased with the accumulation of proved expertise.
NUMMI vs. Uddevalla:
Performance:
NUMMI took over a closed GM plant in Fremont, CA and hired about 85% of its
workforce from the ranks of laid-off GM-Fremont workers. Pilot production began in
December 1984, and by 1986, NUMMI was almost as productive as its sister Toyota
plant in Takaoka and more productive than any other GM plant.
Total hourly and salaried hours per vehicle (1986 average)
NUMMI:
20.8
Takaoka:
18.0
GM-Framingham
40.7
Old (1978)GM-Fremont:
43.1
Uddevalla(1991 est.):
40.0
Quality of Worklife:
NUMMI:
Absenteeism: 3%.
Participation in the suggestion program increased to over 90%, workers made over
10,000 suggestions in 1991 (average of about 5/worker), implementation rate for
suggestion is over 80%.
Proportion of people describing themselves as satisfied or very satisfied with their job:
76% in 1987; 85% in 1989; 90% in 1991.
Uddevalla:
Absenteeism: 22% (12% sick leave, 10% LTD - typical of other Volvo manufacturing
facilities)
A survey of worker satisfaction across Volvo plants revealed that Uddevalla scored in a
similar range to the Volvo Torslanda (traditional assembly line manufacturing) plant.
NUMMI’s Productive Superiority:
NUMMI’s effort to constantly improve the details of the production process is the key to
productivity and quality in a product as standardized as automobile. This constant
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improvement effort creates a certain level of stress, but as the worker attitude surveys
show, the level is not so high as to degenerate into strain and distress.
Uddevalla workers had detailed information on their work cycle performance, but with a
two hour long cycle, they had no way to track their task performance at a more detailed
level.
You cannot sustain continual improvement in the production of products as standardized
as automobiles without clear and detailed methods and standards.
Uddevalla ahead of its time?
In response to tight Japanese labor market, the difficulty of attracting workers to auto
assembly, and long-term projections of labor shortages, Nissan has eliminated the
conveyor belt, has installed significantly more automation, and is using many of the
ergonomic job designs that characterized Uddevala. Toyota’s new Tahura plant embodies
many similar innovations. (Japanese auto executives were among the most frequent
visitors to Uddevalla)
Hybrid manufacturing lines: a form of cellular manufacturing, at NEC and Sony
currently combine mass production techniques with craft-based manufacturing practices
to produce goods in small lots with the flexibility to make changes.
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