Manufacturing Processes - Little’s Law - The Product-Process Matrix - Management Assignment Help

Assignment Task:

Learning Objectives

1. Understand what a production process is.

2. Define Little’s law.

3. Demonstrate how production processes are organized.

4. Describe the product-process matrix.

5. Provide an overview of how the different types of production processes are designed.

Production Process Terms

• Lead time – the time needed to respond to a customer order

• Customer order decoupling point – where inventory is positioned to allow entities in the supply chain to operate independently

• Lean manufacturing – a means of achieving high levels of customer service while minimizing waste and using just-in-time inventory management (producing with the minimum possible level of inventory holding)

Production Processes

• Production processes are used to make any manufactured item

  • Step 1 – Source the parts needed

  • Step 2 – Make the product

  • Step 3 – Deliver the product

Types of Firms

Make-to-Stock

Serving customers from finished goods inventory (Items are produced based on forecasted quantities and stored until customer orders are received)

Assemble-to-Order

Assembling products after receiving a customer order by combining a number of preassembled modules to meet the customer’s specifications

Make-to-Order

Making the customer’s product when it is ordered, from raw materials, parts, and components

Engineer-to-Order

Working with the customer to design and then make the product

Make-to-Stock

• Examples of products: Televisions, Clothing, Packaged food

• Decoupling point: at the retailer

  • Inventory close to customers
  • Short lead time 
  • High inventory costs

• Essential issue: To balance the level of inventory against the level of customer service 

  • Trade-off between the costs of inventory and level of customer service must be made

Assemble-to-Order

• Example of product: The desktop computers made by Dell

• Decoupling-point: at the assembly factory

  • More flexibility and lower inventory level than for the make-to-stock approach (we don’t have to keep in stock all the different variants of finished goods, we assemble only the variants the customer wants)
  • Lower inventory cost than for the make-to-stock approach
  • Longer lead time than for make to stock

• One of the capabilities required for success is an engineering design that enables as much flexibility as possible in combining components

Make-to-Order/Engineer-to-Order

• Examples of products: Boeing airplanes

• Decoupling point: at the manufacturing site or the supplier site

  • Very low inventory cost
  • Long lead time

Inventory Measures

• Total average value of inventory -  the sum of the value (at cost) of the raw material, work-in process, and finished goods inventory

  • Commonly tracked in accounting systems and reported in financial statements

• Inventory turns -  the cost of goods sold divided by the average inventory value

• Days of supply -  the inverse of inventory turns scaled to days

Inventory turnover ratio

• Inventory turnover ratio (inventory turn)-  the cost of goods sold divided by the average inventory value

  • It allows comparisons of two firms

• High turnover ratio: 

  • Advantage: reduce inventory holding costs 

  • Disadvantage: may result in stock shortages 

• Low turnover ratio: 

  • Disadvantage: may point to overstocking, obsolescence, or deficiencies in the product line or marketing effort. 

  • In some instances a low rate may be appropriate, such as cases where higher inventory levels occur in anticipation of rapidly rising prices or expected market shortages.

Organization of Production Processes

Project – the product remains in a fixed location, equipment is moved to the product

Workcenter (job shop) - similar equipment or functions are grouped together

Manufacturing cell - a dedicated area where products that are similar in processing requirements are produced

Assembly line - work processes are arranged according to the progressive steps by which the product is made

Continuous process – it is an assembly line where the flow is continuous such as with liquids or gaz

Product-Process Matrix

Project Layout

• The product remains in a fixed location

• Manufacturing equipment is moved to the product 

• Areas on the site are designated for various purposes: material staging, subassembly construction, site access for heavy equipment, etc

Continuous process

• Like an assembly line but the flow is continuous such as in the case of liquids and gaz

• Production follows a predetermined sequence of steps 

• Usually highly automated 

• Examples: Conversion and processing of materials such as petroleum, chemicals, and drugs

Workcenter (job shop)

• Designed to produce a set of products with low volume and high variety

• Similar equipment or functions are grouped together, to form workcenters (or departments)

• Parts travel from workcenter to workcenter and can have a different path according to the product type (flexibility)

• Most common approach to developing this type of layout is to arrange workcenters in a way that minimizes  the movement of material (Optimal placement often means placing workcenters with large interdepartmental traffic adjacent to each other)

Manufacturing Cell Development

1. Group parts into families that follow a common sequence of steps.

2. Identify dominant flow patterns for each part family

3. Machines and the associated processes are physically regrouped into cells

Regrouped Machines

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