A Presentation on Operations

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A Presentation on OperationsProducing Goods and
Services M.Tariq Yousafzai ibc208tamu_at_gmail.c
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Learning Objectives

• Discuss the strategic value adding roles
  operations play in the supply chain
• Appreciate the tradeoffs and challenges involved
  in production operations
• Understand the primary production strategies
• Discuss the primary assembly processes and
  production methods for goods creation
• Describe various production process layouts

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Introduction

• Operations focus on the make/build portion of
  supply chain.
• They focus on production of goods and services
  needed to fulfill customer requirements.
• Involves the transformation of inputs into
  outputs that customers demands
• For example Dell
• Hospital?

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Introduction

• In the execution of these processes, production
  facilities must interact with supply chain
  functions that have been discussed
• Both manufacturers and service providers need
  ready access to inventories of key inputs from
  their suppliers.

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The Role of Production Operations in SCM

• Many supply chain and logistics activities focus
  on operations
• Procurement operations that provide access to
  materials
• Transportation operations that supports the floe
  of goods
• Distribution operations that streamline order
  fulfillment and so on

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The Role of Production Operations in SCM
continued

• It takes a great deal of effort and coordination
  to run an effective production operation that is
  supported by and also supports supply chain
• Consider the success of Apple iPhone. A great
  Product design, procurement-assembly-synchronizati
  on, and savvy marketing all contributed to the
  success of commercial juggernaut

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Production Process Functionality
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The Production Process funtionality

• No two processes are organized exactly alike or
  perform to the same level
• For example Burger King, McDonalds, and Subway
  each make sandwiches but have slightly different
  product strategies that derive their process
  design and assembly methods
• Subway and Burger King (to a lesser extent) offer
  assemble-to-order products
• McDonald produces products in anticipation of
  demand using standardized product components.

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Production Tradeoffs

• One of the most important issues for supply chain
  professional to understand is the tradeoffs
  involved within production operations and between
  production operations, other supply chain
  functions, and corporate strategy.
• All decisions are interrelated and can impact
  costs, productivity, and quality in other areas.

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Common tradeoffs

• Volume-variety tradeoff is a primary issue in
  production.
• In situations where production processes have
  high fixed costs and equipment like chemical
  production and paper manufacturing, it makes
  sense to use Volume
• In contrast, processes that can produce a range
  of products are said to have economies of scope.

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(2) Responsiveness and efficiency

• Related to production facility decisions
• Centralized production facilities provide
  operating cost and inventory efficiencies
• While regional production facilities allow
  companies to be closer to customers and more
  responsive
• Product focused facility and process focused
  facilities

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Total Costs of Manufacturing
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Production tradeoffs continued

• Make Versus Buy decision
• Whether to conduct your own production operations
  or to outsource production to external suppliers.
• Internal production processes are more visible
  and easier to control from quality viewpoint
• Outsourced production may lead to lower product
  costs and allow the company to focus its
  resources on other, more strategic needs.

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Production Challenges

• For example US automobile Industry
• GM and For Needs to compete with Toyota lean
  production capabilities, Honda product quality,,
  and be responsive to low cost producers like
  Hyundai and Kia.
• Henry Ford mass customization is out of order
• What he said

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Production Strategies
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Lean manufacturing wastes
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Adaptive manufacturing

• The goal of this strategy is to provide companies
  with the ability to replace planning and
  replanning with execution based on real-time
  demand.
• In simple words technologies in this process can
  enable companies to sense and respond to
  exceptions that impact manufacturing
• Limited adoption of this technology

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Assembly Processes

• Products can be built either according to plan or
  demand
• MTS
• ATO
• BTO
• ETO
• Each assembly process is appropriate for a given
  situation

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Make-to-stock (MTS)

• Traditional Production method where ent-item
  products are usually finished before receipt of a
  customer order
• Customer orders filled from finished goods
  inventories.
• Makes it cost effective and shortens lead time
• Accurate forecasting and inventory control are
  critical issues in MTS, and warehousing of end
  products is the norm

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ATO Assemble-to-order

• Commences after receipt of order from customer
• The finished product is generally a combination
  of standard components and options or accessories
  specified by the customer
• In configure-to-order production processes, the
  manufacturer or customer selects a base product
  and configures all the variable parameters
  associated with that product. This is also known
  as mass customization process

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BTO (Build/Make-To-Order)

• Delays assembly until a confirmed order is
  received (postponement).
• The end item is generally a combination of
  standard and custom-designed components that meet
  the unique needs of a customer
• It differs from ATO in the higher level of
  customization and lower volume level of
  production.

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ETO Engineer-to-Order

• Focuses on the creation of highly tailored
  products for customers whose specifications
  require unique engineering design or significant
  customization
• No two products are identical
• Each order requires detailed cost estimates and
  tailored pricing
• Long lead times
• Raw materials may be stocked but are not
  assembled into the finished good until a customer
  order is received and the product is designed

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Delayed Differentiation

• Delayed differentiation is one hybrid strategy in
  which a common product platform is built to
  stock.
• It is later differentiated by assigning to it
  certain customer-specific features, only after
  demand is realized.
• Hence manufacturing occurs in two stages
• (a) An MTS stage where one or more
  undifferentiated platforms are produced and
  stocked
• (b) An ATO stage where product differentiation
  takes place in response to specific customer
  orders

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Production Process Layout

• One of the key drivers of how production
  activities will be carried out is facility
  layout.
• It involves the arrangement of machines, storage
  areas, and other resources within the four walls
  of a manufacturing or an assembly facility
• The layout is influenced by the production
  strategy and assembly process employed by
  organization

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Facility Layout Matrix
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A project layout

• Is a fixed location layout where the product
  remains in place for the duration of production
• Materials and labor are moved to production
• For example
• Home building
• Road construction
• Tunnels etc

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A workcenter

• A process focused layout that groups together
  similar equipment and or functions
• The materials move from department to department
  for completion of similar activities and tasks

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Manufacturing cell

• Process focused layout that dedicates production
  areas to narrow range of products that are
  similar in processing requirements
• Four activities involved in its set up
• (1) Identifying families of parts with similar
  flow paths
• (2) Grouping machines to cells based on part
  families
• (3) Arranging cells so material movement is
  minimized and
• (4) locating large shared machines at the point
  of use

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Assembly Line

• Product focused layout in which machines and
  workers are arranged according to the progressive
  sequence of operations need to make a product.
• Often used for mass production of goods, the
  assembly steps are completed at workstations that
  are typically linked to materials handling
  equipment.

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Continuous Process facilities

• Similar to assembly lines, with a product flowing
  through a predetermined sequence of stops.
• The main difference is the continuous, rather
  than discrete nature of flow.
• Widely used for high volume products such as
  gasoline, paper towels, and soft drink
  concentrates
• These highly automated, capital intensive
  facilities need to run almost nonstop to gain
  maximum efficiency