1. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 1 Chapter 7: Managing Material Flows Process Management: Creating Value Along the Supply Chain (1 st edition) Wisner and Stanley

2. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 2 Chapter Outline Introduction Material Flow Mapping Material Flow Analysis Manufacturing Flexibility Layout Design Material Scheduling Warehouse Material Flow Summary

3. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 3 Learning Objectives After completing this chapter, you should be able to: Understand the concepts of material flow and why these are important to the firm. Describe the various types of flow analysis and the impact that flow has on the organization. Describe how the material flow analysis techniques are conducted.

4. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 4 Learning Objectives (cont.) After completing this chapter, you should be able to: Understand the Theory of Constraints and how it is applied. Describe how plant layout and material scheduling impacts material flow. Describe the different types of material flow concerns in warehouses.

5. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 5 Introduction Different types of flow occur in all organizations (EX): Buyer initiates purchase order The order flows to the supplying firm The supplying firm accepts the order and produces the product or service ordered Meanwhile the customer waits in a line Upon completion product or service is delivered to the customer The customer provides payment to the supplier This example includes material, customer and work, cash and information flows Essence of flow management: any non-value-adding element that stops flow is a problem that must be identified and managed or eliminated

6. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 6 Material Flow Mapping Process mapping: mapping material flows within a process is the first step in managing material flows. Important for understanding material flows Process map symbols Start or end of process. A process operation. Work is performed. Delay or storage. Decision. Physical movement or transportation. Information flow.

7. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 7 Material Flow Mapping Process mapping helps company to Understand the material flows in a process, Identify the current sequence of activities making up the process, Identify and evaluate or eliminate the activities that are not adding value Improve the remaining process activities

8. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 8 Material Flow Analysis Material flow analysis for process improvement: when the initial process map is complete, possible to know where inventories are delayed or stored, the paths that inventories follow and the sequence of activities Then possible to measure travel distances and travel times, time spent in storage and in processing, and time spent waiting on materials and to identify better routes for people, machinery and materials. Typical process changes might include; Decreasing process variability through use of automation Synchronizing capacity with demand by increasing process capacity Cross-training workers Using fewer, reliable suppliers Revising process layouts to reduce material travel time

9. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 9 The Theory of Constraints (TOC) One of the most successful material flow analysis techniques Rather than balancing capacities, the flow of product through the system should be balanced Bottleneck: Any factor that limits system performance and restricts its output.

10. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 10 Where is the Bottleneck? 1. Check loan documents and put them in order (10 minutes) 2. Categorize loans (20 minutes) 3. Check for credit rating (15 minutes) 6. Complete paperwork for new loan (10 minutes) 4. Enter loan application data into the system (12 minutes) Customer 5. Is loan approved? (5 min) Yes No Bottleneck

11. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 11 Material Flow Analysis (cont.) Drum, buffer, rope (DBR) concept Figure 7.2 Machine 1Machine 2Machine 3Machine 4 [70 units/day] [100 units/day] [50 units/day] [75 units/day] Buffer Constraint (Drum) Rope (50 units/day)

12. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 12 Manufacturing Flexibility One objective of material flow management is increased flexibility to alter production, product design, or delivery schedules. Flexible manufacturing system (FMS) is a highly automated production system consisting of automated material handling and transferring machines working together under a central computer control system. Benefits of FMS implementation; Increased flexibility and product variety Improved responsiveness Increased machinery utilization Productivity improvement Reduction in manufacturing cost by lowering direct labor cost and minimizing scrap, re-work, and material wastage Reduction in production lead time permitting manufacturers to respond more quickly to the variability of market demand

13. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 13 Manufacturing Flexibility Computer integrated manufacturing (CIM): automated version of the manufacturing process where the three major manufacturing functions- product and process design, planning and control and the manufacturing process itself- are replaced by the automated technologies. Computer numerically controlled (CNC) machines: programmable machines Everything that an operator would be required to do with conventional machine tools is programmable with CNC machines.

14. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 14 Layout Design Facility layout significantly impacts material flow Well-designed layouts reduce non-value-adding movements and the overall distance traveled within the facility Product-focused layouts Assembly line Cellular / group technology layouts: allocates dissimilar machines into cells to work on products that have similar shapes and processing requirements Process-focused / intermittent process layouts

15. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 15 Warehouse Material Flow Plant layout impacts material flow Acts as a buffer between the manufacturer and the customer Warehouse layout considerations U-shaped layout: inbound shipments arrive and are unpacked at receiving, where items are either moved to the storage or to the cross-docking process. Cross-docking: Cross docking means to take a finished good from the manufacturing plant and deliver it directly to the customer with little or no handling in between. Cross docking reduces handling and storage of inventory, the step of filling a warehouse with inventory before shipping it out is virtually eliminated

16. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 16 Warehouse Material Flow Flow-through layout: designed to accommodate a large volume of cross-docking while having some storage capabilities for slow moving items Modular-flow layout : separate segments are designed for specific warehousing applications

17. COPYRIGHT © 2008 Thomson South-Western, a part of The Thomson Corporation. Thomson, the Star logo, and South-Western are trademarks used herein under license. 17 Warehouse Material Flow (cont.) Warehouse layout considerations (cont.) Popularity storage methodology Similarity storage methodology Size and shape storage methodology