Manufacturing Systems
Context of Manufacturing
Manufacturing Systems
1.The Context of Manufacturing
2.Quality Management
3.Project Management
4.Concurrent Engineering
5.Manufacturing System Design and Control
The Context of Manufacturing
Manufacturing is part of a bigger scheme
known as operations.
Operations takes in all systems that involve
getting work done.
•services
•manufacture
The same principles apply to both.
The Context of Manufacturing
Operations is a transformation process.
Inputs are transformed into outputs.
Goal is to create and add value to the inputs
during the transformation.
Inputs
Materials
Labour
Equipment
Capital
Outputs
Transformation
process
Goods
Services
Manufacture: adding value to a raw material
by changing its shape or properties.
Manufacturing
Technical terms: manufacturing process is used
to turn raw material into finished items.
Machinery
Power
Starting
material
Manufacturing
process
Processed
Part
Tooling
Labour
Scrap and
waste
Manufacturing
Economics terms: the value added to the inputs
is important.
Manufacturing
Process
Added Value
€€
€
Starting
material
Material in
process
€€€
Processed
Part
Manufacturing
Industries can be grouped into:
• Primary – exploit natural resources
• Secondary – converts primary outputs into
consumer goods - manufacturing
• Tertiary – contributes to the service sector
Business Strategies
•Companies exist to make a profit
•Products offered by more than one company
•Companies compete for market share
•Company needs a strategy
Direction
Focus
Business Strategies
A strategy consists of four steps:
1. Define a primary task
2. Assess core competencies
3. Determine order qualifiers and order winners
4. Position the firm
Business Strategies
1. Define a primary task
Represents the purpose of the firm - what is its
business
Identifies the area in which it will be competing stated in broad terms.
e.g. Iarnrod Eireann is in the business of Transportation,
not Railways
Often expressed as a mission statement.
Amazon.com - ‘To provide the fastest, easiest, most
enjoyable shopping experience’
Business Strategies
2. Assess core competencies
Identify what the company does best
Usually based on knowledge or processes
Rarely single product or technology – easily copied
Dell Computer: is the ability to quickly assemble computers
to order and to deliver them to customers without delay.
Business Strategies
3. Determine order qualifiers and order winners
An order qualifier is a characteristic of a product that will
make a consumer consider buying it.
An order winner is the characteristic of a product that will
make the consumer purchase it.
Buying a car:
Order qualifier - price
Order winner - model with the most features
Business Strategies
4. Position the firm
Choose one or two important things to concentrate on and
do extremely well.
Defines:
•how well the firm competes in the marketplace
•what unique value it will deliver to the consumer
Relative strengths of competitors must be taken into
account
Apple computers do not compete with companies such as Dell for its
market – they concentrate on a niche market for innovative products
such as the iPhone, IPod where they are often first to the market.
Manufacturing Strategies
Different ways of offering a product:
•Make to stock
Products are designed, produced and delivered to
customer specifications in response to an order
•Make to order
Products are designed and produced for a ‘standard’
customer in anticipation of demand.
•Assemble to order
Base unit or module is produced onto which options can
be added according the specification of the customer.
Manufacturing Strategies
Types of Production Processes:
1. Project
• Long time to complete
• Large investment in resources
• One item to customer order
2. Batch production
• Product produced in batches
• Volume relatively low
• Demand for item can fluctuate
Manufacturing Strategies
Types of Production Processes:
3. Mass Production
• Large volume of standard product
• Demand is stable
• Demand is high
4. Continuous Production
• Very high volume products
• Highly standardised
• Highly automated systems
Product Process Matrix
Relationship between volume levels and standardisation
of a product and its manufacturing process
Continuous
Production
High
Volume of
products
Mass
Production
Batch
Production
Projects
Low
Low
High
Standardisation
Functional Organisation of a
Manufacturing Enterprise
Finance / Accounting
Orders
Quality
requirements
Design Specs
Material
availability
Quality data etc.
Manufacturing
Hiring/Firing
Training
Legal requirements
Job design
Union negotiations etc.
Human Resources
Sales Forecasts
Customer orders
Customer
feedback
Promotions
Status of order
Marketing
Suppliers
Budgets
Stockholder requirements
Cost Analysis
Production and Inventory data
Key Success Factors in Manufacturing
Competitiveness
Global market means more customers but
also more competition
Companies will usually compete on:
•Cost - Ryanair, Penneys
•Quality - Toyota, Mercedes
•Flexibility - Dell
•Speed - Dell, McDonalds
Simple System for Costing
Often a choice is available:
•Make the product individually
→Costs more
→No setup cost
•Set up tooling and mass produce
→Setup cost
→Cost less to make once set up
Simple System for Costing
Break even Analysis
Used to choose the most economical
method for making a given number of parts.
or
Finding the least number of parts to justify
setting up a mass production system
Simple System for Costing
Break even Analysis
Total Cost of process A
Break Even
Quantity
Total Cost of process B
Cost
Choose Process
A
Number of units made
Choose Process
B
Simple System for Costing
Example:
Qty: 500 required
•Skilled labour costs €2.50 per item to manufacture
using the lathe.
•Unskilled labour costs €0.50 to manufacture using
the automated press.
•The setup cost of the press tool is €500
Simple Systems for Costing
€1,000
€900
€800
Cost
€700
€600
€500
€400
€300
€200
€100
€0
0
50
100
150
200
Quantity Made
250
300
350
400
Simple Systems for Costing
Calculating BEQ numerically
BEQ 
Setup Cost
( Manual Cost per item)  ( Automated Cost per item)
BEQ = 500/(2.50 – 0.5)
= 500/2
= 250 Items