Production management Content – Core work process – 6 W – Production classification – EOQ – Lean Manufacturing – Systems of Management production

2 Service and Manufacturing Technologies Technology refers to the work processes, techniques, machines, and actions used to transform input into outputs Technology influences organizational structure Understanding technology helps dictate how organizations can be designed for efficiency Core technology relates to the transformation process to provide goods/service Non-core technology is not directly related to the primary mission of the organization ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

3 Core Transformation Process for a Manufacturing Company ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Production management Method 6W – What produce – Who is producing – Which method – Where – When – Why 6 ? Operations management is defined as the field of management that specializes in the production gods and services and uses special tools and techniques for solving problems. Daft, 2008, p.697

Manufacturing Firms Technical complexity defines the extent of mechanization of the manufacturing process Three basic technology groups defined by Woodward: – Small-batch and unit production – Large-batch and mass production – Continuous-process production 5 ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

6 Woodward’s Classification Based on System of Production 6 ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

7 Flexible Manufacturing Technology vs. Traditional Technologies ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Dimension of production batch – fixed determined dimension of batch Q d, – dimension of batch changing with demand – costs for start of production – losses from holding of supplies – formula for measurement of indent

Batch extent determination x max = Q x x min = 0 Q tctc T

Roster of production tasks at time -Retrogressive scheduling -Forward scheduling

Days Indent 1 1.operation 2.operation 3.operation 4.operation Indent 2 1.operation 2.operation 3.operation 4.operation

Days Indent 1 1.operation 2.operation 3.operation 4.operation Indent 2 1.operation 2.operation 3.operation 4.operation

13 Lean Manufacturing Highly trained employees at every stage of production Cut waste and improve quality Incorporates technological elements Paved the way for mass customization – Using mass-production technology to quickly and cost-effectively assemble individual goods for customers ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

14 Performance and Structural Implications Flexible manufacturing allows diverse products to be made on one assembly line Computer-aided craftsmanship More efficient Increased productivity Decreased scrap Customer satisfaction ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Production management Method 6W – What produce – Who is producing – Which method – Where – When – Why 6 ?

Core Organization Service Technology ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

Trend Toward Lean Services Customer expectations are rising Expectations have required that service firms must become lean, too – Cut waste (7+1 wastes) – Improve customer service Adopt continuous improvement approach 17 ©2013 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

manufacturing-reduce-waste

Systems of Management production MRP 1 Manufacturing Resource Planning -advantages and imperfections KANBAN - in Japanesse „card“ Store of supplies Productio n level 1 Productio n level 2 Productio n level 3 Store of products

MRP System

Inputs to the MRP System 1. Master production schedule Expressed in terms of time buckets 2. Bill of materials file – product structure and list of component parts in each product 3. Inventory record file (item master file) – includes: Item master data – part number, order quantities, lead times Inventory status – time-phased record of inventory status Subsidiary data – purchase orders, engineering changes

Outputs of the MRP System 1. Planned order releases Purchase orders – to buy raw materials and parts Work orders – to make parts and products 2. Report of planned order releases in future periods 3. Rescheduling notices 4. Cancellation notices 5. Inventory status reports 6. Performance reports 7. Exception reports 8. Inventory forecasts

Benefits MRP by users 1. Reduction in inventory 2. Quicker response to changes in demand 3. Reduced setup and changeover costs 4. Better machine utilization 5. Improved capacity to respond to changes in master production schedule 6. Aid in developing the master schedule

JIT management system (Just in Time) - oriented on one target – to satisfy necessary of customers. - principles of JIT obtain whole management of material fluxes Methods of advanced planning APS (Advanced Production Scheduling) systems We level fluxes of materials and nonproduction capacity

Material Requirements Planning (MRP) Computational technique that converts the master production schedule for end products into a detailed schedule for the raw materials and components used in the end products Useful for dependent demand items, not independent demand items Independent demand items Final products and spare parts Dependent demand items Component parts used in final products

Manufacturing Resource Planning (MRP II) Computer-based system for planning, scheduling, and controlling the materials, resources, and supporting activities needed to meet the master production schedule Typical modules in MRP II: Management planning – aggregate production planning, master production scheduling Customer service – sales forecasting, order entry, finished goods inventory Operations planning – MRP enhanced with capacity requirements planning Operations execution – purchasing, production scheduling and control, shop floor control

Enterprise Resource Planning (ERP) Defined as a computer software system that organizes and integrates all of the data and business functions of an organization through a single, central database The functions include: Sales; Purchasing; Marketing; Operations Distribution; Logistics; Inventory control; Accounting; Finance; Human resources ERP runs as a client-server system - users access the systém through their PCs ERP operates company-wide, not just plant-based

Confrontation of component systems Product store Productive level 1 Productive level 2 Productive level 3 Product store MRPOrders Raw material store Productive level 1 Productive level 2 Productive level 3 Product store Order KANBAN Raw material store Productive level 1 Productive level 2 Productive level 3 Product store Orders APS