Production process

1. Production Processes
Prepared by Yen-Hsiang, Ting

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 The high-level view of what is required to make something
can be divided into three simple steps.
 Sourcing the part we need
 Making the item
 Sending the item to the customer
 Depending on the item being produced, the supply chain can
be very long with subcontractors and manufacturing plants
spread out over the globe or short where parts are sourced and
the product made locally.
1.Production Processes

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Exhibit 6.1 Positioning Inventory in the Supply Chain
1.Production Processes

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1.Production Processes
 A key concept in production processes is the customer order
decoupling point, which determines where inventory is
positioned to allow processes or entities in the supply chain to
operate independently.
 Selection of decoupling points is a strategic decision that
determines customer lead times and can greatly impact
inventory investment.
 There is trade-off where quicker response to customer
demand comes at the expanse of greater inventory investment
because finished goods inventory is more expensive than raw
material inventory.

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 Firms that serve customers from finished goods inventory are
known as make-to-stock firms.
 Those that combine a number of preassembled modules to
meet a customer’s specifications are called assemble-to-
order firms.
 Those that make the customer’s product from raw materials,
parts, and components are make-to-order firms.
 An engineer-to-order firm will work with the customer to
design the product, and then make it from purchased
materials, parts, and components.
1.Production Processes

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 The essential issue in satisfying customers in the make-to-
stock environment is to balance the level of finished
inventory against the level of service to the customer.
 The trade-off can be improved by better estimates (or
knowledge) of customer demand, by more rapid
transportation alternatives, by speedier production, and by
more flexible manufacturing.
 Many make-to-stock firms invest in lean manufacturing
programs in order to achieve higher service levels for a
given inventory investment. Ex. Toyota JIT.
1.Production Processes

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 In the assemble-to-order environment, a primary task is to
define a customer’s order in terms of alternative components
and options since it is these components that are carried in
inventory. Ex. Dell
 The engineering design that enables as much flexibility as
possible in combining components, options, and modules
into finished products.
1.Production Processes

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 In the make-to-order and engineer-to-order environments the
customer order decoupling point could be in either raw
materials at the manufacturing site or possibly even with the
supplier inventory. Ex. Boeing
1.Production Processes

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 The need for engineering resources in the engineer-to-order
case is somewhat different than make-to-order since
engineering determines what materials will be required, and
what steps will be required in manufacturing. Depending on
how similar the products are it might not even be possible to
pre-order parts.
 Rather than inventory, the emphasis in these environments
may be more toward managing capacity of critical resources
such as engineering and construction crews.
1.Production Processes

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 Process selection refers to the strategic decision of selecting
which kind of production processes to use to produce a
product or provide a service.
 For example, in the case of Toshiba notebook computers, if
the volume is very low, we may just have a worker manually
assemble each computer by hand. In contrast, if the volume
is higher, setting up an assembly line is appropriate.
2.How Production Process are Organized

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 The formats by which a facility is arranged are defined by the
general pattern of work flow; there are five basic structures:
 Project layout: The product (bulk or weight) remains in a fixed
location. Manufacturing equipment is moved to the product
rather than vice versa.
 Workcenter (Job shop): Where similar equipment or functions
are grouped together, and according to the established sequence
of operations, from workcenter to workcenter.
 Manufacturing cell: A dedicated area where products that are
similar in processing requirements are produced. These cells are
designed to perform a specific set of processes, and the cells are
dedicated to a limited range of products.
2.How Production Process are Organized

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 Assembly line: Work processes are arranged according to the
progressive steps by which the product is made.
 Continuous process: Similar to an assembly line in that
production follows a predetermined sequence of steps, but the
flow is continuous such as with liquids, rather than discrete.
Such structures are usually highly automated.
2.How Production Process are Organized

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2.How Production Process are Organized
Exhibit 6.2 Product–Process Matrix: Framework Describing Layout Strategies

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 The choice of which specific equipment to use in a process
often can be based on an analysis of cost trade-offs.
 Less specialized equipment is referred to as “general-
purpose,” meaning that it can be used easily in many different
ways if it is set up in the proper way.
 More specialized equipment, referred to as “special-purpose,”
is often available as an alternative to a general-purpose
machine.
 A standard approach to choosing among alternative
processes or equipment is break-even analysis. A break-even
chart visually presents alternative profits and losses due to
the number of units produced or sold.
3.Break-Even Analysis

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Ex. Suppose a manufacturer has identified the following options for
obtaining a machined part:
1)It can buy the part at $200 per unit (including materials) negligible fixed
cost
2)It can make the part on a numerically controlled semiautomatic lathe at
$75 per unit (including materials) fixed cost $80,000
3)It can make the part on a machining center at $15 per unit (including
materials) fixed cost $200,000
The total cost for each option is
3.Break-Even Analysis

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3.Break-Even Analysis

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 Consider the effect of revenue, assuming the part sells for $300 each
Profit (or loss) is the distance between the revenue line and the alternative
process cost.
 At 1,000 units, for example, maximum profit is the difference between the
$300,000 revenue (point C) and the semiautomatic lathe cost of $155,000
(point D). For this quantity the semiautomatic lathe is the cheapest
alternative available.
3.Break-Even Analysis

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 Project Layout
 In developing a project layout, visualize the
product as the hub of a wheel, with materials
and equipment arranged concentrically around
the production point in the order of use and
movement difficulty,
 In a project layout, a high degree of task
ordering is common. To the extent that this task
ordering, or precedence, determines production
stages a project layout may be developed by
arranging materials according to their assembly
priority.
4.Designing a Production System

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 Workcenters
 The most common approach to developing this
type of layout is to arrange workcenters in a
way that optimizes the movement of material.
 A workcenter sometimes is referred to as a
department and is focused on a particular type
of operation.
 In many installations, optimal placement often
means placing workcenters with large amounts
of interdepartmental traffic adjacent to each
other.
4.Designing a Production System

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 Manufacturing Cell
 A manufacturing cell is formed by allocating
dissimilar machines to cells that are designed to
work on products that have similar shapes and
processing requirements.
 Manufacturing cells are widely used in metal
fabricating, computer chip manufacture, and
assembly work.
4.Designing a Production System

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 Assembly Line Continuous Process Layouts
 An assembly line is a layout design for the
special purpose of building a product by going
through a progressive set of steps.
 The assembly steps are done in areas referred to
as “stations,” and typically the stations are
linked by some form of material handling
device.
 Assembly-line design used so often by
manufacturing firms around the world. Often
the item being produced by the continuous
process is a liquid or chemical that actually
“flows” through the system
4.Designing a Production System

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 Manufacturing process flow design is a method to evaluate the
specific processes that raw materials, parts, and subassemblies
follow as they move through the plant.
 The most common production management tools used in
planning and designing the process flow are assembly drawing,
assembly charts, route sheets, and flow process charts.
 Each of these charts is a useful diagnostic tool and can be used to
improve operations during the steady state of the production
system.
5.Manufacturing Process Flow Design

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Assembly Drawing
5.Manufacturing Process Flow Design

24. 24Assembly Chart
5.Manufacturing Process Flow Design

25. 25Operation and Route Sheet
5.Manufacturing Process Flow Design

26. 26Process Flowchart
5.Manufacturing Process Flow Design

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 Designing a customer-pleasing product is an art.
 Effective manufacturing process design requires a clear
understanding of what the factory can and cannot do relative to
process structures.
 Frequently a choice exists as to when demand seems likely to
favor a switch from one to the other. Making such decisions also
requires understanding the nuances of each process choice to
determine whether the process really fits new product
specifications.
Summery
Summary